SHANGHAI, Feb. 7, 2018 /PRNewswire/ -- Yum China Holdings,
Inc. (the "Company" or "Yum China") (NYSE: YUMC) today reported
unaudited results for the fourth quarter and full year ended
December 31, 2017. Reported GAAP
results include Special Items, which are excluded from adjusted
measures. Special Items are not allocated to any segment and
therefore only impact reported GAAP results of Yum China. See
"Reconciliation of Reported GAAP Results to Adjusted Measures"
within this release.
Fourth-Quarter Highlights
- Same-store sales grew 5%, with an increase of 7% at KFC and 1%
at Pizza Hut.
- Total system sales grew 9%, including growth of 11% at KFC and
6% at Pizza Hut, excluding foreign currency translation
("F/X").
- Total revenues were $2.2 billion,
an increase of 13% (9%, excluding F/X).
- Opened 339 new restaurants during the quarter.
- Operating Profit was $71 million,
an increase of 23%. Excluding Special Items recorded in the fourth
quarter of 2016 and F/X, Adjusted Operating Profit decreased 9% due
to investment in product upgrades at Pizza Hut during the quarter,
partially offset by strong sales leverage at KFC.
- Recorded an estimated one-time tax charge ("Tax Charge") of
$164 million, or $0.42 per share, related to recent US tax
reform.
- Net Loss was $90 million
including the above estimated Tax Charge. Excluding this impact,
Adjusted Net Income was $74 million,
an increase of 12% (18%, excluding F/X).
- Diluted EPS was negative $0.23
including the above estimated Tax Charge of $0.42. Excluding this impact, Adjusted Diluted
EPS was positive $0.19, an increase
of 12% (18%, excluding F/X).
- Growth of digital initiatives continued with over 110 million
members of KFC and over 35 million members of Pizza Hut loyalty
programs, and mobile payment accounted for about 53% of Company
sales in the quarter.
Full-Year Highlights
- Same-store sales grew 4%, with an increase of 5% at KFC and 1%
at Pizza Hut.
- Total system sales grew 8%, including growth of 9% at KFC and
7% at Pizza Hut, excluding F/X.
- Total revenues were $7.1 billion,
an increase of 6% (8%, excluding F/X).
- Opened 691 new restaurants during the full year, bringing total
store count to 7,983 across more than 1,200 cities.
- Restaurant margin improved 1.5 percentage points to 16.8%,
primarily driven by same-store sales leverage and aided by the
impact of retail tax structure reform.
- Operating Profit was $785
million, an increase of 23%. Excluding Special Items,
Adjusted Operating Profit was $782
million, an increase of 20% (23%, excluding F/X) driven by
strong sales and margin expansion.
- Net Income was $403 million, a
decrease of 20%. Excluding Special Items, Adjusted Net Income was
$564 million, an increase of 20%
(24%, excluding F/X).
- Effective tax rate was 47.0%, or 26.9% excluding Special
Items.
- Diluted EPS was $1.01, a decrease
of 26%. Excluding Special Items, Adjusted Diluted EPS was
$1.42, an increase of 11% (15%,
excluding F/X).
Key Financial Results
|
|
|
Fourth
Quarter
|
|
|
Full
Year
|
|
|
|
|
%
Change
|
|
|
%
Change
|
|
|
|
|
System
Sales
|
|
Same-
Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
System
Sales
|
|
Same-
Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yum China
|
|
+9
|
|
+5
|
|
+6
|
|
+23
|
|
|
+8
|
|
+4
|
|
+6
|
|
+23
|
|
|
KFC
|
|
+11
|
|
+7
|
|
+5
|
|
+53
|
|
|
+9
|
|
+5
|
|
+5
|
|
+26
|
|
|
Pizza Hut
|
|
+6
|
|
+1
|
|
+5
|
|
NM
|
|
|
+7
|
|
+1
|
|
+5
|
|
+5
|
|
|
|
|
Fourth
Quarter
|
|
|
|
Full
Year
|
|
|
|
(in US$ million,
except
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
for per share data
and percentages)
|
|
2017
|
|
|
2016
|
|
|
Reported
|
|
Ex F/X
|
|
|
|
2017
|
|
|
2016
|
|
|
Reported
|
|
Ex F/X
|
|
|
|
Operating
Profit
|
|
$
|
71
|
|
|
$
|
58
|
|
|
+23
|
|
+17
|
|
|
|
$
|
785
|
|
|
$
|
640
|
|
|
+23
|
|
+26
|
|
|
|
Adjusted Operating
Profit1
|
|
$
|
71
|
|
|
$
|
75
|
|
|
(5)
|
|
(9)
|
|
|
|
$
|
782
|
|
|
$
|
655
|
|
|
+20
|
|
+23
|
|
|
|
Net (Loss)
Income
|
|
$
|
(90)
|
|
|
$
|
88
|
|
|
NM
|
|
NM
|
|
|
|
$
|
403
|
|
|
$
|
502
|
|
|
(20)
|
|
(15)
|
|
|
|
Adjusted Net
Income1
|
|
$
|
74
|
|
|
$
|
66
|
|
|
+12
|
|
+18
|
|
|
|
$
|
564
|
|
|
$
|
471
|
|
|
+20
|
|
+24
|
|
|
|
Basic Earnings (Loss)
Per
Common Share
|
|
$
|
(0.23)
|
|
|
$
|
0.23
|
|
|
NM
|
|
NM
|
|
|
|
$
|
1.04
|
|
|
$
|
1.36
|
|
|
(24)
|
|
(19)
|
|
|
|
Adjusted Basic EPS
Per Common
Share1
|
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
+6
|
|
+11
|
|
|
|
$
|
1.46
|
|
|
$
|
1.28
|
|
|
+14
|
|
+19
|
|
|
|
Diluted Earnings
(Loss) Per
Common Share
|
|
$
|
(0.23)
|
|
|
$
|
0.23
|
|
|
NM
|
|
NM
|
|
|
|
$
|
1.01
|
|
|
$
|
1.36
|
|
|
(26)
|
|
(21)
|
|
|
|
Adjusted Diluted EPS
Per
Common Share1
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
+12
|
|
+18
|
|
|
|
$
|
1.42
|
|
|
$
|
1.28
|
|
|
+11
|
|
+15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 See "Reconciliation of Reported GAAP Results to
Adjusted Measures" included in the accompanying tables of this
release for further details.
Note: All comparisons
are versus the same period a year ago.
NM refers to changes over 100%, from negative to positive amounts
or from zero to an amount.
Consistent with prior years, Yum China's fiscal fourth quarter
includes September, October, November and December
results.
Percentages may not recompute due to rounding.
System sales and same-store sales percentages exclude the impact of
F/X.
CEO and COO Comments
"2017 marks the first full year of
Yum China as an independently listed company and we are pleased
with high single-digit system sales growth and double-digit
operating profit growth. Our development team has again exceeded
expectations in opening 691 new restaurants in 2017. I am very
pleased to hand over the reins to Joey
Wat as our new CEO from March
1st; she has demonstrated an excellent track
record and is the right person leading Yum China as we head into
2018, with challenging sales and profit laps particularly in the
first half of the year" said Micky Pant, CEO of Yum China.
"All of us at Yum China are committed
to building leading brands for the long term through
innovation. We will focus on our strategic priorities on
digital and delivery, while continuing to improve our food and
in-store experience. While we finished 2017 with a solid sales
momentum, we continue to face challenges of the revitalization of
Pizza Hut and lapping of two very successful Chinese New Year
promotions. However I remain confident in the growth opportunities
and long term prospects of Yum China." remarked Joey Wat, President and COO of Yum
China.
US Tax Reform Impact
- As a result of the Tax Cuts and Jobs Act (the "Tax Act"), the
Company incurred an estimated Tax Charge of $164 million, or $0.42 per share, during the fourth quarter,
primarily related to the transition tax on deemed repatriation of
unremitted earnings of foreign subsidiaries, and the revaluation of
certain deferred tax assets.
Dividend and Share Repurchase
- The Board of Directors declared a cash dividend of $0.10 per share on Yum China's common stock,
payable as of the close of business on March
21, 2018, to stockholders of record as of the close of
business on February 28, 2018.
- In 2017, Yum China repurchased 3.4 million shares totaling
$128 million at an average price of
$38.18 per share.
New-Unit Development and Asset Upgrade
- Opened 339 new restaurants in the fourth quarter and 691 new
restaurants for the year, driven by development of the KFC
brand.
- Remodeled 359 restaurants in the fourth quarter and 788
restaurants for the full year, focusing on KFC. Over 75% of Yum
China's current store portfolio has been remodeled or built in the
past five years.
|
|
|
|
New
Units
|
|
|
Restaurant
Count
|
|
|
|
|
|
|
Fourth
|
|
|
|
|
As of Fourth
Quarter End
|
|
|
|
|
|
|
Quarter
|
|
Full
Year
|
|
|
2017
|
|
2016
|
|
|
|
Yum China
|
|
|
339
|
|
691
|
|
|
7,983
|
|
7,562
|
|
|
|
KFC
|
|
|
193
|
|
408
|
|
|
5,488
|
|
5,224
|
|
|
|
Pizza Hut
|
|
|
78
|
|
180
|
|
|
2,195
|
|
2,081
|
|
|
|
Little Sheep, East
Dawning, Taco Bell
|
|
|
68
|
|
103
|
|
|
300
|
|
257
|
|
|
Restaurant Margin
- For the quarter, Yum China restaurant margin improved 0.3
percentage points to 11.3%, primarily attributable to the
same-store sales leverage and margin expansion at KFC, partially
offset by investment in product upgrades at Pizza Hut.
- For the year, Yum China restaurant margin improved 1.5
percentage points to 16.8%, primarily driven by same-store sales
leverage and aided by the impact of retail tax structure reform,
partially offset by wage inflation of 7% and promotion costs.
|
|
|
Fourth
Quarter
|
|
|
|
Full
Year
|
|
|
|
|
|
2017
|
|
2016
|
|
%
ppts
change
|
|
|
|
2017
|
|
2016
|
|
%
ppts
change
|
|
|
|
Yum China
|
|
11.3
|
%
|
|
11.0
|
%
|
|
0.3
|
|
|
|
16.8
|
%
|
|
15.3
|
%
|
|
1.5
|
|
|
|
KFC
|
|
13.7
|
%
|
|
11.7
|
%
|
|
2.0
|
|
|
|
18.1
|
%
|
|
16.3
|
%
|
|
1.8
|
|
|
|
Pizza Hut
|
|
5.6
|
%
|
|
9.8
|
%
|
|
(4.2)
|
|
|
|
13.9
|
%
|
|
13.4
|
%
|
|
0.5
|
|
|
Digital and Delivery
- Loyalty program members increased to over 110 million for KFC
and over 35 million for Pizza Hut at year end.
- Mobile payments accounted for about 53% of Company sales during
the fourth quarter of 2017.
- Delivery contributed to 14% of Company sales for 2017.
Conference Call
Yum China Holdings, Inc. will host a conference call to review
the Company's financial performance and strategies at
7:00 p.m. US Eastern Time on
Wednesday, February 7, 2018
(8:00 a.m. Beijing/HK time on Thursday, February 8, 2018). A copy of the
presentation will be available on the Yum China Holdings, Inc.
website, http://ir.yumchina.com
US:
|
|
+1-845-675-0437
|
Hong Kong:
|
|
+852-3018-6771
|
Mainland
China:
|
|
400-620-8038 or
800-819-0121
|
International:
|
|
+65-6713-5090
|
Passcode:
|
|
Yum China
|
A replay of the conference call may be accessed by phone at the
following numbers until February 18,
2018:
US:
|
|
+1-855-452-5696
|
International:
|
|
+61-2-8199-0299
|
Passcode:
|
|
3685906
|
The webcast and the playback can be accessed via the internet by
visiting the Yum China Holdings, Inc. website,
http://ir.yumchina.com
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as "expect,"
"expectation," "believe," "anticipate," "may," "could," "intend,"
"belief," "plan," "estimate," "target," "predict," "likely,"
"will," "should," "forecast," "outlook" or similar terminology.
These statements are based on current estimates and assumptions
made by us in light of our experience and perception of historical
trends, current conditions and expected future developments, as
well as other factors that we believe are appropriate and
reasonable under the circumstances, but there can be no assurance
that such estimates and assumptions will prove to be correct.
Forward-looking statements include, without limitation, statements
regarding the future business plans, earnings and performance
of Yum China, anticipated effects of population and macroeconomic
trends, statements regarding the capital structure of Yum China,
and the estimated impact of the recent US tax reform.
Forward-looking statements are not guarantees of performance and
are inherently subject to known and unknown risks and uncertainties
that are difficult to predict and could cause our actual results to
differ materially from those indicated by those statements. We
cannot assure you that any of our expectations, estimates or
assumptions will be achieved. The forward-looking statements
included in this press release are only made as of the date of this
press release, and we disclaim any obligation to publicly update
any forward-looking statement to reflect subsequent events or
circumstances, except as required by law. Numerous factors could
cause our actual results to differ materially from those expressed
or implied by forward-looking statements, including, without
limitation: whether we are able to achieve development goals at the
times and in the amounts currently anticipated, if at all, the
success of our marketing campaigns and product innovation, our
ability to maintain food safety and quality control systems, our
ability to control costs and expenses, including tax costs, as well
as changes in political, economic and regulatory conditions in
China. In addition, other risks
and uncertainties not presently known to us or that we currently
believe to be immaterial could affect the accuracy of any such
forward-looking statements. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.
You should consult our filings with the Securities and Exchange
Commission (including the information set forth under the captions
"Risk Factors" and "Forward-Looking Statements" in our Annual
Report on Form 10-K for additional detail about factors that could
affect our financial and other results.
About Yum China Holdings, Inc.
Yum China Holdings, Inc. is a licensee of Yum! Brands in
mainland China. It has exclusive
rights in mainland China to KFC,
China's leading quick-service
restaurant brand, Pizza Hut, the leading casual dining restaurant
brand in China, and Taco Bell, a Mexican-inspired quick-service
restaurant brand. Yum China also owns the Little Sheep and
East Dawning concepts outright. Yum China is well positioned for
growth thanks to its strong competitive position, integration of
its brands into Chinese popular culture and consumers' daily lives,
expanding geographic footprint in China and existing operational expertise. It
has a strong capital position, no external debt and expects to
continue growing its system sales and profit by adding new
restaurants and through growing same-store sales. Yum China had
more than 7,900 restaurants and more than 450,000 employees in over
1,200 cities at 2017 year end. A new generation of younger
consumers who are digitally sophisticated and brand driven are
fueling growth in consumption in China. The ongoing growth of the middle class
and urban population in China is
expected to create the world's largest market for restaurant
brands, with Yum China poised to be the market leader.
Investor Relations
Contacts:
|
|
|
Michelle Shen, +86 21
2407 8260
Director,
Finance
Florence Lip, +86 21
2407 7678
Director,
Finance
|
|
|
|
Media
Contact
|
|
|
Forest Liu, +86 21
2407 7505
Director, Financial
Media
|
Yum China
Holdings, Inc.
|
Consolidated and
Combined Summary of Results
|
(amounts in US$
million, except for number of shares and per share
amounts)
|
(unaudited)
|
|
|
|
Quarter
ended
|
|
|
% Change
|
|
Year ended
|
|
|
% Change
|
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,180
|
|
|
$
|
1,938
|
|
|
13
|
|
|
$
|
6,998
|
|
|
$
|
6,622
|
|
|
6
|
|
Franchise fees and
income
|
|
|
48
|
|
|
|
40
|
|
|
20
|
|
|
|
146
|
|
|
|
130
|
|
|
12
|
|
Total
revenues
|
|
|
2,228
|
|
|
|
1,978
|
|
|
13
|
|
|
|
7,144
|
|
|
|
6,752
|
|
|
6
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
660
|
|
|
|
558
|
|
|
(18)
|
|
|
|
2,033
|
|
|
|
1,919
|
|
|
(6)
|
|
Payroll and employee
benefits
|
|
|
533
|
|
|
|
469
|
|
|
(14)
|
|
|
|
1,551
|
|
|
|
1,432
|
|
|
(8)
|
|
Occupancy and other
operating expenses
|
|
|
744
|
|
|
|
697
|
|
|
(7)
|
|
|
|
2,245
|
|
|
|
2,259
|
|
|
1
|
|
Company restaurant
expenses
|
|
|
1,937
|
|
|
|
1,724
|
|
|
(12)
|
|
|
|
5,829
|
|
|
|
5,610
|
|
|
(4)
|
|
General and
administrative expenses
|
|
|
193
|
|
|
|
153
|
|
|
(27)
|
|
|
|
487
|
|
|
|
424
|
|
|
(15)
|
|
Franchise
expenses
|
|
|
21
|
|
|
|
20
|
|
|
(5)
|
|
|
|
69
|
|
|
|
71
|
|
|
3
|
|
Closures and
impairment expenses, net
|
|
|
27
|
|
|
|
42
|
|
|
34
|
|
|
|
47
|
|
|
|
78
|
|
|
40
|
|
Refranchising gain,
net
|
|
|
(3)
|
|
|
|
(7)
|
|
|
(47)
|
|
|
|
(5)
|
|
|
|
(15)
|
|
|
(63)
|
|
Other income,
net
|
|
|
(18)
|
|
|
|
(12)
|
|
|
47
|
|
|
|
(68)
|
|
|
|
(56)
|
|
|
21
|
|
Total costs and
expenses, net
|
|
|
2,157
|
|
|
|
1,920
|
|
|
(12)
|
|
|
|
6,359
|
|
|
|
6,112
|
|
|
(4)
|
|
Operating
Profit
|
|
|
71
|
|
|
|
58
|
|
|
23
|
|
|
|
785
|
|
|
|
640
|
|
|
23
|
|
Interest income,
net
|
|
|
12
|
|
|
|
4
|
|
|
NM
|
|
|
|
25
|
|
|
|
11
|
|
|
NM
|
|
Changes in fair value
of financial instruments
|
|
|
-
|
|
|
|
21
|
|
|
NM
|
|
|
|
-
|
|
|
|
21
|
|
|
NM
|
|
Income Before
Income Taxes
|
|
|
83
|
|
|
|
83
|
|
|
-
|
|
|
|
810
|
|
|
|
672
|
|
|
21
|
|
Income tax
(provision) benefit
|
|
|
(168)
|
|
|
|
7
|
|
|
NM
|
|
|
|
(381)
|
|
|
|
(158)
|
|
|
NM
|
|
Net income (loss) -
including noncontrolling
interests
|
|
|
(85)
|
|
|
|
90
|
|
|
NM
|
|
|
|
429
|
|
|
|
514
|
|
|
(16)
|
|
Net income -
noncontrolling interests
|
|
|
5
|
|
|
|
2
|
|
|
NM
|
|
|
|
26
|
|
|
|
12
|
|
|
NM
|
|
Net Income
(Loss) - Yum China Holdings, Inc.
|
|
$
|
(90)
|
|
|
$
|
88
|
|
|
NM
|
|
|
$
|
403
|
|
|
$
|
502
|
|
|
(20)
|
|
Effective tax
rate
|
|
|
203.0
|
%
|
|
|
(8.4)%
|
|
|
NM
|
|
|
|
47
|
%
|
|
|
23.5
|
%
|
|
(23.5)
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings
(Loss) Per Common Share
|
|
$
|
(0.23)
|
|
|
$
|
0.23
|
|
|
NM
|
|
|
$
|
1.04
|
|
|
$
|
1.36
|
|
|
(24)
|
|
Weighted average
shares outstanding
|
|
|
385,548,233
|
|
|
|
375,718,539
|
|
|
3
|
|
|
|
386,533,783
|
|
|
|
367,744,992
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Common Share
|
|
$
|
(0.23)
|
|
|
$
|
0.23
|
|
|
NM
|
|
|
$
|
1.01
|
|
|
$
|
1.36
|
|
|
(26)
|
|
Weighted average
shares outstanding
|
|
|
399,229,895
|
|
|
|
379,915,075
|
|
|
5
|
|
|
|
398,089,606
|
|
|
|
369,143,838
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and
paper
|
|
|
30.2
|
|
|
|
28.8
|
|
|
(1.4)
|
ppts.
|
|
|
29.0
|
|
|
|
29.0
|
|
|
-
|
ppts.
|
Payroll and employee
benefits
|
|
|
24.5
|
|
|
|
24.2
|
|
|
(0.3)
|
ppts.
|
|
|
22.2
|
|
|
|
21.6
|
|
|
(0.6)
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
34.0
|
|
|
|
36.0
|
|
|
2.0
|
ppts.
|
|
|
32.0
|
|
|
|
34.1
|
|
|
2.1
|
ppts.
|
Restaurant
margin
|
|
|
11.3
|
%
|
|
|
11.0
|
%
|
|
0.3
|
ppts.
|
|
|
16.8
|
%
|
|
|
15.3
|
%
|
|
1.5
|
ppts.
|
Operating
margin
|
|
|
3.2
|
%
|
|
|
3.0
|
%
|
|
0.2
|
ppts.
|
|
|
11.2
|
%
|
|
|
9.7
|
%
|
|
1.5
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
Quarter
ended
|
|
|
% Change
|
|
Year ended
|
|
|
% Change
|
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
1,522
|
|
|
$
|
1,334
|
|
|
14
|
|
|
$
|
4,864
|
|
|
$
|
4,572
|
|
|
6
|
|
Franchise fees and
income
|
|
|
41
|
|
|
|
37
|
|
|
11
|
|
|
|
134
|
|
|
|
124
|
|
|
8
|
|
Total
revenues
|
|
|
1,563
|
|
|
|
1,371
|
|
|
14
|
|
|
|
4,998
|
|
|
|
4,696
|
|
|
6
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
465
|
|
|
|
402
|
|
|
(16)
|
|
|
|
1,454
|
|
|
|
1,372
|
|
|
(6)
|
|
Payroll and employee
benefits
|
|
|
346
|
|
|
|
308
|
|
|
(13)
|
|
|
|
1,012
|
|
|
|
933
|
|
|
(9)
|
|
Occupancy and other
operating expenses
|
|
|
502
|
|
|
|
468
|
|
|
(7)
|
|
|
|
1,518
|
|
|
|
1,522
|
|
|
-
|
|
Company restaurant
expenses
|
|
|
1,313
|
|
|
|
1,178
|
|
|
(12)
|
|
|
|
3,984
|
|
|
|
3,827
|
|
|
(4)
|
|
General and
administrative expenses
|
|
|
70
|
|
|
|
60
|
|
|
(15)
|
|
|
|
176
|
|
|
|
161
|
|
|
(9)
|
|
Franchise
expenses
|
|
|
21
|
|
|
|
18
|
|
|
(12)
|
|
|
|
67
|
|
|
|
68
|
|
|
2
|
|
Closures and
impairment expenses, net
|
|
|
10
|
|
|
|
16
|
|
|
43
|
|
|
|
20
|
|
|
|
41
|
|
|
52
|
|
Other income,
net
|
|
|
(11)
|
|
|
|
(7)
|
|
|
56
|
|
|
|
(56)
|
|
|
|
(45)
|
|
|
24
|
|
Total costs and
expenses, net
|
|
|
1,403
|
|
|
|
1,265
|
|
|
(11)
|
|
|
|
4,191
|
|
|
|
4,052
|
|
|
(3)
|
|
Operating
Profit
|
|
$
|
160
|
|
|
$
|
106
|
|
|
53
|
|
|
$
|
807
|
|
|
$
|
644
|
|
|
26
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and
paper
|
|
|
30.5
|
|
|
|
30.1
|
|
|
(0.4)
|
ppts.
|
|
|
29.9
|
|
|
|
30.0
|
|
|
0.1
|
ppts.
|
Payroll and employee
benefits
|
|
|
22.8
|
|
|
|
23.1
|
|
|
0.3
|
ppts.
|
|
|
20.8
|
|
|
|
20.4
|
|
|
(0.4)
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
33.0
|
|
|
|
35.1
|
|
|
2.1
|
ppts.
|
|
|
31.2
|
|
|
|
33.3
|
|
|
2.1
|
ppts.
|
Restaurant
margin
|
|
|
13.7
|
%
|
|
|
11.7
|
%
|
|
2.0
|
ppts.
|
|
|
18.1
|
%
|
|
|
16.3
|
%
|
|
1.8
|
ppts.
|
Operating
margin
|
|
|
10.6
|
%
|
|
|
7.9
|
%
|
|
2.7
|
ppts.
|
|
|
16.6
|
%
|
|
|
14.1
|
%
|
|
2.5
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
Pizza Hut
Operating Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
Quarter
ended
|
|
|
% Change
|
|
Year ended
|
|
|
% Change
|
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
|
12/31/2017
|
|
|
12/31/2016
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
641
|
|
|
$
|
588
|
|
|
9
|
|
|
$
|
2,090
|
|
|
$
|
1,993
|
|
|
5
|
|
Franchise fees and
income
|
|
|
-
|
|
|
|
-
|
|
|
(7)
|
|
|
|
2
|
|
|
|
2
|
|
|
15
|
|
Total
revenues
|
|
|
641
|
|
|
|
588
|
|
|
9
|
|
|
|
2,092
|
|
|
|
1,995
|
|
|
5
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
190
|
|
|
|
151
|
|
|
(26)
|
|
|
|
566
|
|
|
|
527
|
|
|
(7)
|
|
Payroll and employee
benefits
|
|
|
178
|
|
|
|
157
|
|
|
(14)
|
|
|
|
519
|
|
|
|
483
|
|
|
(7)
|
|
Occupancy and other
operating expenses
|
|
|
237
|
|
|
|
223
|
|
|
(6)
|
|
|
|
713
|
|
|
|
716
|
|
|
-
|
|
Company restaurant
expenses
|
|
|
605
|
|
|
|
531
|
|
|
(14)
|
|
|
|
1,798
|
|
|
|
1,726
|
|
|
(4)
|
|
General and
administrative expenses
|
|
|
38
|
|
|
|
32
|
|
|
(26)
|
|
|
|
108
|
|
|
|
100
|
|
|
(8)
|
|
Franchise
expenses
|
|
|
-
|
|
|
|
2
|
|
|
69
|
|
|
|
2
|
|
|
|
3
|
|
|
41
|
|
Closures and
impairment expenses, net
|
|
|
18
|
|
|
|
6
|
|
|
NM
|
|
|
|
27
|
|
|
|
17
|
|
|
(60)
|
|
Total costs and
expenses, net
|
|
|
661
|
|
|
|
571
|
|
|
(16)
|
|
|
|
1,935
|
|
|
|
1,846
|
|
|
(5)
|
|
Operating Profit
(Loss)
|
|
$
|
(20)
|
|
|
$
|
17
|
|
|
NM
|
|
|
$
|
157
|
|
|
$
|
149
|
|
|
5
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and
paper
|
|
|
29.6
|
|
|
|
25.6
|
|
|
(4.0)
|
ppts.
|
|
|
27.1
|
|
|
|
26.4
|
|
|
(0.7)
|
ppts.
|
Payroll and employee
benefits
|
|
|
27.9
|
|
|
|
26.8
|
|
|
(1.1)
|
ppts.
|
|
|
24.9
|
|
|
|
24.3
|
|
|
(0.6)
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
36.9
|
|
|
|
37.8
|
|
|
0.9
|
ppts.
|
|
|
34.1
|
|
|
|
35.9
|
|
|
1.8
|
ppts.
|
Restaurant
margin
|
|
|
5.6
|
%
|
|
|
9.8
|
%
|
|
(4.2)
|
ppts.
|
|
|
13.9
|
%
|
|
|
13.4
|
%
|
|
0.5
|
ppts.
|
Operating
margin
|
|
|
(3.2)
|
%
|
|
|
3.4
|
%
|
|
(6.7)
|
ppts.
|
|
|
7.5
|
%
|
|
|
7.5
|
%
|
|
-
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
Consolidated
Balance Sheets
|
(amounts in US$
million, except for number of shares)
|
(unaudited)
|
|
|
|
12/31/2017
|
|
12/31/2016
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,059
|
|
$
|
885
|
Short-term
investments
|
|
|
205
|
|
|
79
|
Accounts receivable,
net
|
|
|
81
|
|
|
74
|
Inventories,
net
|
|
|
297
|
|
|
268
|
Prepaid expenses and
other current assets
|
|
|
160
|
|
|
120
|
Total Current
Assets
|
|
|
1,802
|
|
|
1,426
|
Property, plant and
equipment, net
|
|
|
1,691
|
|
|
1,647
|
Goodwill
|
|
|
108
|
|
|
79
|
Intangible assets,
net
|
|
|
101
|
|
|
88
|
Investments in
unconsolidated affiliates
|
|
|
89
|
|
|
71
|
Other
assets
|
|
|
373
|
|
|
254
|
Deferred income
taxes
|
|
|
99
|
|
|
162
|
Total
Assets
|
|
|
4,263
|
|
|
3,727
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
|
978
|
|
|
971
|
Income taxes
payable
|
|
|
39
|
|
|
33
|
Total Current
Liabilities
|
|
|
1,017
|
|
|
1,004
|
Capital lease
obligations
|
|
|
28
|
|
|
28
|
Other liabilities and
deferred credits
|
|
|
354
|
|
|
252
|
Total
Liabilities
|
|
|
1,399
|
|
|
1,284
|
Redeemable
Noncontrolling Interest
|
|
|
5
|
|
|
-
|
Equity
|
|
|
|
|
|
|
Common stock,
$0.01 par value; 1,000,000,000 shares authorized;
388,860,534.42 shares and 383,344,835.42 shares issued at December
31, 2017 and
December 31, 2016, respectively; 384,720,152 shares and
383,344,835.42 shares
outstanding at December 31, 2017 and December 31, 2016,
respectively
|
|
|
4
|
|
|
4
|
Treasury
stock
|
|
|
(148)
|
|
|
(20)
|
Additional paid-in
capital
|
|
|
2,383
|
|
|
2,352
|
Retained
earnings
|
|
|
405
|
|
|
40
|
Accumulated other
comprehensive income
|
|
|
138
|
|
|
1
|
Total Equity - Yum
China Holdings, Inc.
|
|
|
2,782
|
|
|
2,377
|
Noncontrolling
interests
|
|
|
77
|
|
|
66
|
Total
Equity
|
|
|
2,859
|
|
|
2,443
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
|
4,263
|
|
$
|
3,727
|
Yum China
Holdings, Inc.
|
Consolidated and
Combined Statements of Cash Flows
|
(amounts in US$
million)
|
(unaudited)
|
|
|
Year ended
|
|
12/31/2017
|
|
12/31/2016
|
Cash Flows -
Operating Activities
|
|
|
|
|
|
Net income -
including noncontrolling interests
|
$
|
429
|
|
$
|
514
|
Depreciation and
amortization
|
|
409
|
|
|
402
|
Closures and
impairment expenses
|
|
47
|
|
|
78
|
Refranchising
gain
|
|
(5)
|
|
|
(15)
|
Deferred income
taxes
|
|
64
|
|
|
(40)
|
Equity income from
investments in unconsolidated affiliates
|
|
(65)
|
|
|
(54)
|
Distributions of
income received from unconsolidated affiliates
|
|
45
|
|
|
35
|
Share-based
compensation expense
|
|
26
|
|
|
16
|
Changes in fair value
of financial instruments
|
|
-
|
|
|
(21)
|
Changes in accounts
receivable
|
|
(1)
|
|
|
(54)
|
Changes in
inventories
|
|
(11)
|
|
|
(96)
|
Changes in prepaid
expenses and other current assets
|
|
(13)
|
|
|
7
|
Changes in accounts
payable and other current liabilities
|
|
(58)
|
|
|
123
|
Changes in income
taxes payable
|
|
3
|
|
|
6
|
Other, net
|
|
14
|
|
|
(35)
|
Net Cash Provided
by Operating Activities
|
|
884
|
|
|
866
|
Cash Flows -
Investing Activities
|
|
|
|
|
|
Capital
spending
|
|
(415)
|
|
|
(436)
|
Purchase of
short-term investments
|
|
(596)
|
|
|
(136)
|
Maturities of
short-term investments
|
|
479
|
|
|
53
|
Proceeds from
refranchising of restaurants
|
|
7
|
|
|
32
|
Proceeds from
disposal of aircraft
|
|
-
|
|
|
19
|
Acquisition of
business, net of cash acquired
|
|
(25)
|
|
|
-
|
Other, net
|
|
(7)
|
|
|
(3)
|
Net Cash Used in
Investing Activities
|
|
(557)
|
|
|
(471)
|
Cash Flows -
Financing Activities
|
|
|
|
|
|
Net transfers to
Parent
|
|
-
|
|
|
(357)
|
Payment of capital
lease obligations
|
|
(2)
|
|
|
(3)
|
Repurchase of shares
of common stock
|
|
(128)
|
|
|
-
|
Proceeds from
exercise of stock options
|
|
5
|
|
|
-
|
Dividends paid on
common stock
|
|
(38)
|
|
|
-
|
Proceeds from
issuance of common stock and warrants
|
|
-
|
|
|
460
|
Other, net
|
|
(22)
|
|
|
(7)
|
Net Cash (Used in)
Provided by Financing Activities
|
|
(185)
|
|
|
93
|
Effect of Exchange
Rates on Cash and Cash Equivalents
|
|
32
|
|
|
(28)
|
Net Increase in
Cash and Cash Equivalents
|
|
174
|
|
|
460
|
Cash and Cash
Equivalents - Beginning of Period
|
|
885
|
|
|
425
|
Cash and Cash
Equivalents - End of Period
|
$
|
1,059
|
|
$
|
885
|
Reconciliation of
Reported GAAP Results to Adjusted Measures
(amounts in US$ million, except for number of shares and per share
amounts)
(unaudited)
In this press release:
- The Company provides certain percentage changes excluding the
impact of foreign currency translation ("F/X"). 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 and
unconsolidated affiliate restaurants that operate our concepts,
except for non-Company-owned restaurants for which we do not
receive a sales-based royalty. Sales of franchise and
unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at a rate of approximately 6% of
system sales. Franchise and unconsolidated affiliate restaurant
sales are not included in Company sales on the Consolidated and
Combined Statements of Income; however, the franchise 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
growth.
- Same-store sales growth is the estimated percentage change in
sales of all restaurants that have been open and in the Company
system one year or more.
- Company Restaurant profit ("Restaurant profit") is defined as
Company sales less expenses incurred directly by our Company-owned
restaurants in generating Company sales. Company restaurant margin
as a percentage of sales is defined as Restaurant profit divided by
Company sales.
In addition to the results provided in accordance with US
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides measures adjusted for Special Items
which present Adjusted Operating Profit, Adjusted Net Income,
Adjusted Diluted Earnings Per Common Share, Adjusted Effective Tax
Rate and Adjusted EBITDA. Included in Special Items are reversal
of losses associated with sales of aircraft, incremental
restaurant-level impairment upon separation, income from the
reversal of contingent consideration previously recorded for a
business combination, changes in fair value of financial
instruments, an estimated one-time tax charge as a result of the US
Tax Cuts and Jobs Act (the "Tax Act") and impact of the redemption
of the Little Sheep noncontrolling interest. These amounts are
described in (b), (c), (d), (e), (f), (g) and (h) in the
accompanying notes. The Company excludes impact from Special Items
for the purpose of evaluating performance internally. Special Items
are not included in any of our segment results. These adjusted
measures are not intended to replace the presentation of our
financial results in accordance with GAAP. Rather, the
Company believes that the presentation of these adjusted measures
provides additional information to investors to facilitate the
comparison of past and present results, excluding those items that
the Company does not believe are indicative of our ongoing
operations due to their nature. These adjusted measures should
not be considered in isolation or as a substitute for GAAP
financial results, but should be read in conjunction with the
unaudited Consolidated and Combined Summary of Results and other
information presented herein. A reconciliation of the most directly
comparable GAAP measures to adjusted measures follows.
|
Quarter
ended
|
|
|
Year ended
|
|
|
12/31/2017
|
|
12/31/2016
|
|
|
12/31/2017
|
|
12/31/2016
|
|
Detail of Special
Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reversal of loss
associated with sale of aircraft(b)
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
Incremental
restaurant-level impairment upon
separation(c)
|
|
-
|
|
|
|
(17)
|
|
|
|
-
|
|
|
|
(17)
|
|
Income from the
reversal of contingent consideration (d)
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
Special Items Income
(Expense) - Operating Profit
|
|
-
|
|
|
|
(17)
|
|
|
|
3
|
|
|
|
(15)
|
|
Changes in fair value
of financial instruments(e)
|
|
-
|
|
|
|
21
|
|
|
|
-
|
|
|
|
21
|
|
Tax benefit on
Special Items(f)
|
|
-
|
|
|
|
17
|
|
|
|
-
|
|
|
|
16
|
|
Impact from the Tax
Act(g)
|
|
(164)
|
|
|
|
-
|
|
|
|
(164)
|
|
|
|
-
|
|
Special items income
(expense), net of tax - including
noncontrolling interests
|
|
(164)
|
|
|
|
21
|
|
|
|
(161)
|
|
|
|
22
|
|
Special items income,
net of tax -
noncontrolling
interests(h)
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8)
|
|
Special Items Income
(Expense), net of tax -
Yum
China Holdings, Inc.
|
|
(164)
|
|
|
|
21
|
|
|
|
(161)
|
|
|
|
30
|
|
Weighted average
diluted shares outstanding
|
|
399,229,895
|
|
|
|
379,915,075
|
|
|
|
398,089,606
|
|
|
|
369,143,838
|
|
Special Items Diluted
Earnings (Loss) Per Common Share
|
|
(0.42)
|
|
|
|
0.06
|
|
|
|
(0.41)
|
|
|
|
0.08
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
71
|
|
|
|
58
|
|
|
|
785
|
|
|
|
640
|
|
Special Items Income
(Expense) - Operating Profit
|
|
-
|
|
|
|
(17)
|
|
|
|
3
|
|
|
|
(15)
|
|
Adjusted Operating
Profit
|
|
71
|
|
|
|
75
|
|
|
|
782
|
|
|
|
655
|
|
Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
(90)
|
|
|
|
88
|
|
|
|
403
|
|
|
|
502
|
|
Special Items Income
(Expense) - Net Income (Loss)
|
|
(164)
|
|
|
|
21
|
|
|
|
(161)
|
|
|
|
30
|
|
Adjusted Net
Income
|
|
74
|
|
|
|
67
|
|
|
|
564
|
|
|
|
472
|
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (Loss)
Earnings Per Common Share
|
|
(0.23)
|
|
|
|
0.23
|
|
|
|
1.01
|
|
|
|
1.36
|
|
Special Items Diluted
(Loss) Earnings Per Common Share
|
|
(0.42)
|
|
|
|
0.06
|
|
|
|
(0.41)
|
|
|
|
0.08
|
|
Adjusted Diluted
Earnings Per Common Share
|
|
0.19
|
|
|
|
0.17
|
|
|
|
1.42
|
|
|
|
1.28
|
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
203.0
|
%
|
|
|
(8.4)%
|
|
|
|
47.0
|
%
|
|
|
23.5
|
%
|
Impact on Effective
Tax Rate as a result of Special Items
|
|
198.6
|
%
|
|
|
(20.6)%
|
|
|
|
20.1
|
%
|
|
|
(2.7)
|
%
|
Adjusted Effective
Tax Rate
|
|
4.4
|
%
|
|
|
12.2
|
%
|
|
|
26.9
|
%
|
|
|
26.2
|
%
|
Reconciliation
of Net Income (Loss) to Adjusted
EBITDA
|
(amounts in US$
million, except per share amounts)
|
(unaudited)
|
|
Net income (loss),
along with the reconciliation to Adjusted EBITDA, is presented
below.
|
|
|
Quarter
ended
|
|
Year ended
|
|
12/31/2017
|
|
|
12/31/2016
|
|
12/31/2017
|
|
|
12/31/2016
|
Reconciliation of
Net Income (Loss) to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income -
noncontrolling interests
|
$
|
5
|
|
|
$
|
2
|
|
$
|
26
|
|
|
$
|
12
|
Net Income
(Loss) - Yum China Holdings, Inc.
|
|
(90)
|
|
|
|
88
|
|
|
403
|
|
|
|
502
|
Income tax provision
(benefit)
|
|
168
|
|
|
|
(7)
|
|
|
381
|
|
|
|
158
|
Interest income,
net
|
|
(12)
|
|
|
|
(4)
|
|
|
(25)
|
|
|
|
(11)
|
Changes in fair value
of financial instruments
|
|
-
|
|
|
|
(21)
|
|
|
-
|
|
|
|
(21)
|
Operating
Profit
|
|
71
|
|
|
|
58
|
|
|
785
|
|
|
|
640
|
Depreciation and
amortization
|
|
144
|
|
|
|
130
|
|
|
409
|
|
|
|
402
|
Store impairment
charges
|
|
30
|
|
|
|
27
|
|
|
58
|
|
|
|
70
|
Special Items Income
(Expense) - Operating Profit
|
|
-
|
|
|
|
17
|
|
|
(3)
|
|
|
|
15
|
Adjusted
EBITDA
|
$
|
245
|
|
|
$
|
232
|
|
$
|
1,249
|
|
|
$
|
1,127
|
Unit Count by
Brand
|
|
KFC
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
2017
|
Company-owned
|
|
3,913
|
|
|
320
|
|
|
(111)
|
|
|
(10)
|
|
|
4,112
|
Unconsolidated
affiliates
|
|
836
|
|
|
73
|
|
|
(16)
|
|
|
(2)
|
|
|
891
|
Franchise
|
|
475
|
|
|
15
|
|
|
(17)
|
|
|
12
|
|
|
485
|
Total
|
|
5,224
|
|
|
408
|
|
|
(144)
|
|
|
-
|
|
|
5,488
|
|
Pizza
Hut
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
2017
|
Company-owned
|
|
2,057
|
|
|
180
|
|
|
(66)
|
|
|
(5)
|
|
|
2,166
|
Franchise
|
|
24
|
|
|
-
|
|
|
-
|
|
|
5
|
|
|
29
|
Total
|
|
2,081
|
|
|
180
|
|
|
(66)
|
|
|
-
|
|
|
2,195
|
|
All Other
Segments
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
2017
|
Company-owned
|
|
38
|
|
|
3
|
|
|
(7)
|
|
|
(5)
|
|
|
29
|
Franchise
|
|
219
|
|
|
100
|
|
|
(53)
|
|
|
5
|
|
|
271
|
Total
|
|
257
|
|
|
103
|
|
|
(60)
|
|
|
-
|
|
|
300
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
Quarter Ended
12/31/17
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated
|
|
Total
|
Total
revenues
|
$
|
1,563
|
|
$
|
641
|
|
$
|
24
|
|
$
|
-
|
|
$
|
2,228
|
Company restaurant
expenses
|
|
1,313
|
|
|
605
|
|
|
19
|
|
|
-
|
|
|
1,937
|
General and
administrative expenses
|
|
70
|
|
|
38
|
|
|
8
|
|
|
77
|
|
|
193
|
Franchise
expenses
|
|
21
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21
|
Closures and
impairment expenses, net
|
|
10
|
|
|
18
|
|
|
(1)
|
|
|
-
|
|
|
27
|
Refranchising gain,
net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3)
|
|
|
(3)
|
Other income,
net
|
|
(11)
|
|
|
-
|
|
|
(5)
|
|
|
(2)
|
|
|
(18)
|
|
|
1,403
|
|
|
661
|
|
|
21
|
|
|
72
|
|
|
2,157
|
Operating Profit
(Loss)
|
$
|
160
|
|
$
|
(20)
|
|
$
|
3
|
|
$
|
(72)
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
12/31/16
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated
|
|
Total
|
Total
revenues
|
$
|
1,371
|
|
$
|
588
|
|
$
|
19
|
|
$
|
-
|
|
$
|
1,978
|
Company restaurant
expenses
|
|
1,178
|
|
|
531
|
|
|
15
|
|
|
-
|
|
|
1,724
|
General and
administrative expenses
|
|
60
|
|
|
32
|
|
|
4
|
|
|
57
|
|
|
153
|
Franchise
expenses
|
|
18
|
|
|
2
|
|
|
-
|
|
|
-
|
|
|
20
|
Closures and
impairment expenses, net
|
|
16
|
|
|
6
|
|
|
3
|
|
|
17
|
|
|
42
|
Refranchising gain,
net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7)
|
|
|
(7)
|
Other income,
net
|
|
(7)
|
|
|
-
|
|
|
(5)
|
|
|
0
|
|
|
(12)
|
|
|
1,265
|
|
|
571
|
|
|
17
|
|
|
67
|
|
|
1,920
|
Operating Profit
(Loss)
|
$
|
106
|
|
$
|
17
|
|
$
|
2
|
|
$
|
(67)
|
|
$
|
58
|
The above tables reconcile segment information, which is based
on management responsibility, with our Consolidated and Combined
Summary of Results. Corporate and unallocated expenses
comprise items that are not allocated to segments for performance
reporting purposes.
The Corporate and Unallocated column in the above tables
includes, among other amounts, all amounts that we have deemed
Special Items. See "Reconciliation of Reported GAAP Results
to Adjusted Measures".
Yum China
Holdings, Inc.
|
Segment
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
Year ended
12/31/17
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated
|
|
Total
|
Total
revenues
|
$
|
4,998
|
|
$
|
2,092
|
|
$
|
54
|
|
$
|
-
|
|
$
|
7,144
|
Company restaurant
expenses
|
|
3,984
|
|
|
1,798
|
|
|
47
|
|
|
-
|
|
|
5,829
|
General and
administrative expenses
|
|
176
|
|
|
108
|
|
|
18
|
|
|
185
|
|
|
487
|
Franchise
expenses
|
|
67
|
|
|
2
|
|
|
-
|
|
|
-
|
|
|
69
|
Closures and
impairment expenses, net
|
|
20
|
|
|
27
|
|
|
-
|
|
|
-
|
|
|
47
|
Refranchising gain,
net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5)
|
|
|
(5)
|
Other income,
net
|
|
(56)
|
|
|
-
|
|
|
(6)
|
|
|
(6)
|
|
|
(68)
|
|
|
4,191
|
|
|
1,935
|
|
|
59
|
|
|
174
|
|
|
6,359
|
Operating Profit
(Loss)
|
$
|
807
|
|
$
|
157
|
|
$
|
(5)
|
|
$
|
(174)
|
|
$
|
785
|
|
Year ended
12/31/16
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated
|
|
Total
|
Total
revenues
|
$
|
4,696
|
|
$
|
1,995
|
|
$
|
61
|
|
$
|
-
|
|
$
|
6,752
|
Company restaurant
expenses
|
|
3,827
|
|
|
1,726
|
|
|
58
|
|
|
(1)
|
|
|
5,610
|
General and
administrative expenses
|
|
161
|
|
|
100
|
|
|
10
|
|
|
153
|
|
|
424
|
Franchise
expenses
|
|
68
|
|
|
3
|
|
|
-
|
|
|
-
|
|
|
71
|
Closures and
impairment expenses, net
|
|
41
|
|
|
17
|
|
|
3
|
|
|
17
|
|
|
78
|
Refranchising gain,
net
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(15)
|
|
|
(15)
|
Other income,
net
|
|
(45)
|
|
|
-
|
|
|
(6)
|
|
|
(5)
|
|
|
(56)
|
|
|
4,052
|
|
|
1,846
|
|
|
65
|
|
|
149
|
|
|
6,112
|
Operating Profit
(Loss)
|
$
|
644
|
|
$
|
149
|
|
$
|
(4)
|
|
$
|
(149)
|
|
$
|
640
|
The above tables reconcile segment information, which is based
on management responsibility, with our Consolidated and Combined
Summary of Results. Corporate and unallocated expenses
comprise items that are not allocated to segments for performance
reporting purposes.
The Corporate and Unallocated column in the above tables
includes, among other amounts, all amounts that we have deemed
Special Items. See "Reconciliation of Reported GAAP Results to
Adjusted Measures".
Notes to the
Consolidated and Combined Summary of Results, Consolidated Balance
Sheets
and Consolidated and Combined Statements of Cash Flows
(amounts in US$ million)
(unaudited)
(a) Amounts presented as of and
for the quarter and year ended December 31,
2017 are unaudited, and the Company's Annual Report on Form
10-K for the year ended December 31,
2017 may contain updates to the information disclosed in
this press release.
(b) During 2015, we made the
decision to dispose of a corporate aircraft in China and recognized a loss of $15 million associated with the planned sale of
the aircraft for the year ended December 31,
2015. We completed the sale during 2016. The sale proceeds
of $19 million was greater than the
net book value of $17 million of the
aircraft at the time of disposal, which resulted in the reversal of
$2 million of the previously
recognized loss.
(c) Incremental restaurant-level
impairment represents additional impairment as a result of
including the impact from the license fee paid to Yum! Brands on
the individual restaurants future cash flow, which is equal to 3%
of net system sales. Such license fee did not impact the impairment
assessment prior to the separation as it was considered an
intercompany charge at the time, whereas it became a charge from a
third party after the spin-off and therefore should be considered
in the impairment assessment.
(d) During the year ended
December 31, 2017, we recognized
income from the reversal of contingent consideration previously
recorded for a business combination as the likelihood of making
payment becomes remote.
(e) In connection with the
investment agreement with strategic investors entered into on
September 1, 2016, the Company issued
19,145,169 shares of common stock on November 1, 2016, subject to post-closing
adjustment by December 30, 2016, and
warrants to purchase additional shares of common stock. The
post-closing adjustment and the warrants were accounted for as
derivative instruments and liability-classified equity contracts,
respectively. These financial instruments were initially measured
at fair value on the date of issuance, with subsequent changes in
fair value of $21 million recognized
in earnings during the year ended December
31, 2016. No subsequent fair value measurements were
recognized after December 30,
2016.
(f) The tax benefit was
determined based upon the impact of the nature of each Special Item
tax effected at the 25% China tax
rate or the 35% US tax rate, except for the $21 million changes in fair value of financial
instruments associated with the strategic investment which resulted
in no income tax expense. Additionally, during the year ended
December 31, 2016, we recognized a
tax benefit of $26 million related to
the legal entity restructuring of our Little Sheep business.
$12 million of this benefit was
attributed to previous Little Sheep impairment losses recognized
within Special Items in 2013 and 2014 and as such was classified as
a Special Item consistent with the classification of those
historical impairments.
(g) The Company incurred an
estimated one-time income tax charge of $164
million in the fourth quarter of 2017, as a result of the
Tax Act, primarily due to the transition tax on deemed repatriation
of unremitted earnings of foreign subsidiaries, and the revaluation
of certain deferred tax assets.
(h) During the year ended
December 31, 2016, the Little Sheep
founding shareholders sold their remaining 7% Little Sheep
ownership interest to the Company pursuant to their redemption
rights. The difference between the purchase price of less than
$1 million, which was determined
using a non-fair value based formula pursuant to the agreement
governing the redemption rights, and the carrying value of their
redeemable noncontrolling interests was recorded as an $8 million loss attributable to noncontrolling
interests.
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content:http://www.prnewswire.com/news-releases/yum-china-reports-fourth-quarter-and-full-year-2017-results-300594944.html
SOURCE Yum China Holdings, Inc