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Kentucky Fried Chicken 2012 Annual Report Download

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Table of contents

  • Page 1
    Staying the Course China and a Whole Lot More 2012 Yum! Brands Annual Customer Mania Report
  • Page 2
    ... except for per share amounts) Year-end 2012 2011 % B/(W) change Company sales Total revenues... Earnings Per Common Share (a) $ 0.13 (0.13) Reported Diluted Earnings Per Common Share Cash...Flows Provided by Operating Activities (a) See our 2012 Form 10-K for further discussion of Special ...
  • Page 3
    Dear Partners, I'm pleased to report that in 2012 we delivered full-year EPS growth of ...we achieved at least 13% and exceeded our annual target of at least 10%. This kind of consistent performance ... extremely proud that our five year average annual shareholder return, including stock appreciation and ...
  • Page 4
    ... well as showcase our management talent from around the world. The theme of our 2012 meeting was "On the Ground Floor of Global Growth: China and a Whole ... layers and expanding dayparts. Additionally, we invested over $1.1 billion in 2012 in the future growth of our business and expect to invest at ...
  • Page 5
    ... the country. At Yum! China, we crossed the billion dollar profit mark in 2012, opened our 4,000th KFC, our 800th Pizza Hut Casual Dining ...(that's right, 889 restaurants!) - a remarkable achievement by anyone's standards. KFC now has 4,260 restaurants in more than 850 cities ...
  • Page 6
    ... suffered a setback in China following an investigation into KFC China's poultry supply and the resulting ... events significantly impacted consumer confidence in KFC, and resulted in a sharp decline in sales ... accounted for 42% of our segments' profits in 2012, and because it's clear it will take time ...
  • Page 7
    ...everywhere. We made India a separate division in 2012 because of the great potential of the country as well ...developer of 138 new units, including 80 KFCs. This is the second year in a row we have ..., compared to 58 restaurants per million in the U.S. In 2012, Yum! Restaurants International (YRI) which...
  • Page 8
    .... After buying the Rostik's business (Russia's leading chicken chain) in 2010, we have now ... new branding and the overwhelming customer response to KFC products, we are confident Russia will be a sizable, ...to add another 45 restaurants in 2013. By the end of 2012, we expanded to 14 African countries, ...
  • Page 9
    ... performer in Cleanliness and the only QSR to rank in the Top 3 on Cleanliness, Hospitality, Accuracy and Speed in the 2012 Annual QSR Drive-Thru Study. The combination ... year, including growth of 8% at Taco Bell, 3% at Pizza Hut and 3% at KFC. Taco Bell earned its place in QSR and social ...
  • Page 10
    ... in rural areas. While we still have a lot of wood to chop with KFC in the U.S., KFC successfully reversed the past 4 years of negative same-store sales ... ahead. Our long-term goal is for Taco Bell to Product innovations helped KFC to reverse the past 4 years of negative same-store sales growth. go ...
  • Page 11
    ... highgrowth emerging market that has over 100 KFC and Pizza Hut restaurants. Our success... We generated almost $2.3 billion in cash from operations in 2012. As I hope I've conveyed in this letter, we're... addition to buying back stock ($985 million in 2012), we are paying shareholders a solid dividend ...
  • Page 12
    ...'re a company with a huge heart and we recognize there is much more we can and will do to live up to that. After reading this Annual Report, I hope you'll agree our plan to STAY THE COURSE is great news for 2013 and beyond. I want to thank all our...
  • Page 13
    future back the vision defining global company that feeds the world famous recognition culture where everyone counts Drive HWWT2 leadership principles every day! Make it a magnet for the best talent Be an "ABR black belt"...Be a "Know How junkie" dynamic, vibrant brands everywhere with one ...
  • Page 14
    dynasty growth model our future back vision our goal Be the Defining Global Company That Feeds the World. Be the Best in the World at Building Great Restaurant Brands! our passion Customer Mania...put a YUM on customers' faces around the world our formula for success People Capability First...
  • Page 15
    ... Brands, Inc. 1441 Gardiner Lane Louisville, Kentucky 40213 April 5, 2013 Dear Fellow ... at 1900 Colonel Sanders Lane in Louisville, Kentucky. This year we are pleased to once again ... are available at www.yum.com/investors/investor_materials. asp. The Annual Report on Form 10-K is available at www.yum....
  • Page 16
  • Page 17
    ..., Inc. 1441 Gardiner Lane Louisville, Kentucky 40213 Notice of Annual Meeting of Shareholders Wednesday, May ...on March 18, 2013. ANNUAL REPORT: A copy of our 2012 Annual Report on Form 10-K is... important information contained in the proxy statement and Annual Report. The Notice also instructs you on ...
  • Page 18
    ...OWNERSHIP INFORMATION SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE EXECUTIVE COMPENSATION 27 29 ... Management Planning and Development Committee Report ...43 Summary Compensation Table ...44 ... COMPENSATION PLAN INFORMATION AUDIT COMMITTEE REPORT ADDITIONAL INFORMATION APPENDIX A YUM! BRANDS...
  • Page 19
    ...1441 Gardiner Lane Louisville, Kentucky 40213 PROXY STATEMENT For Annual Meeting of Shareholders To Be Held ... Company matters. In addition, our management will report on the Company's performance over the last fiscal... on how to access this proxy statement and our Annual Report and vote online. If...
  • Page 20
    ...your admission ticket. If you received the proxy statement and Annual Report by mail, you will find an admission ticket attached to ...I voting on? You will be voting on the following five (5) items of business at the Annual Meeting: • The election of twelve (12) directors to serve until ...
  • Page 21
    ...14, 2013. Proxy Statement Can I vote at the Annual Meeting? Shares registered directly in your... as the shareholder of record may be voted in person at the Annual Meeting. Shares held in street name... date and returning it to us prior to the Annual Meeting; • Voting again by telephone or through...
  • Page 22
    ...of March 18, 2013, must be present in person or represented by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the Annual Meeting. How many votes are needed to elect directors? You may...
  • Page 23
    ... the voting results? The Company will announce the voting results of the Annual Meeting on a Current Report on Form 8-K filed within four business days ..., our management knows of no matters that will be presented for consideration at the Annual Meeting other than those matters discussed in this ...
  • Page 24
    ...'s Political Contributions and U.S. Government Advocacy Policy, and information about how to report concerns about the Company. To access these documents on the Company... Directors presently consists of 12 directors whose terms expire at this Annual Meeting. As discussed in more detail later in this ...
  • Page 25
    ... 8 of the Company's 11 then directors attended the 2012 Annual Meeting. How does the Board select ..., Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The nomination must contain the information... and effectiveness of the Board of Directors. In August 2012, the Board created a new position of lead...
  • Page 26
    ... no term limit and is subject only to annual approval by the independent members of the Board. Prior to August 2012, the Board had a presiding director ... of Conduct also sets forth information and procedures for employees to report ethical or accounting concerns, misconduct or violations of the Code ...
  • Page 27
    ... compensation programs through a risk assessment conducted by management and reports its conclusions to the full Board. Proxy Statement Has the ... top level employees is associated with the long term performance of the Company. • The annual incentive target setting process is closely linked to ...
  • Page 28
    ..., YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The Nominating and Governance Committee of the Board ...of the Management Planning and Development Committee. What are the Company's policies on reporting of concerns regarding accounting? The Audit Committee has established policies...
  • Page 29
    .../ Finance Committees. Number of Meetings Functions of the Committee in Fiscal 2012 • Possesses sole authority regarding the selection and ... Governance Principles • Receives comments from all directors and reports annually to the Board with assessment of the Board's performance • ...
  • Page 30
    ... serving on the Board of Directors. Non-Employee Directors Annual Compensation. The annual compensation for each director who is not an employee of YUM ... Board. YUM directors receive a significant portion of their annual compensation in stock. The Company believes that the emphasis on the equity ...
  • Page 31
    ...12) nominees recommended by the Nominating and Governance Committee of the Board of Directors for election this year to hold office until the 2014 Annual Meeting and until their respective successors are elected and qualified are provided below. The biographies of each of the nominees below ...
  • Page 32
    ...& Co., a position he has held since 2012. Mr. Cavanagh is also a member of JPMorgan Chase & Co.'s Operating Committee. From 2010 to 2012, he was the Chief Executive Officer of... director of Harleysville Group Inc. from 2000 until 2012. Specific qualifications, experience, skills ...
  • Page 33
    ITEM 1 ELECTION OF DIRECTORS J. David Grissom Age 74 Director since 2003 Chairman, Mayfair Capital, Inc. Chairman, The Glenview Trust Company J. David Grissom is Chairman of Mayfair Capital, Inc., a private investment firm formed by Mr. Grissom in 1989. In addition, Mr. Grissom has been ...
  • Page 34
    ...served as President of YUM from October 1997 to April 2012. Mr. Novak previously served as Group... was the Vice President of North Asia for both KFC and Pizza Hut. Specific qualin.., business development, business integrations, financial reporting, compliance and controls • Public company...
  • Page 35
    ...ELECTION OF DIRECTORS If elected, we expect that all of the aforementioned nominees will serve as directors and hold office until the 2014 Annual Meeting of Shareholders and until their respective successors have been elected and qualified. Based on the recommendation of the Nominating and ...
  • Page 36
    ... for professional services rendered by KPMG for the audit of the Company's annual financial statements for 2012 and 2011, and fees billed ... condensed consolidated financial statements included in the Company's quarterly reports, audits of the effectiveness of the Company's internal controls over ...
  • Page 37
    ... and overall compliance with the pre-approval policy. The Corporate Controller reports periodically to the Audit Committee about the status of outstanding engagements, including ...marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new...
  • Page 38
    ... (the "Committee") considered the say-on-pay voting results at the 2012 Annual Meeting of Shareholders and, as a result, reached out to..., we ask our shareholders to vote in favor of the following resolution at the Annual Meeting: RESOLVED, that the shareholders approve the compensation awarded to our...
  • Page 39
    ITEM 4 Re-Approval of YUM! Brands, Inc. Long Term Incentive Plan Performance Measures (Item 4 on the Proxy Card) What am I voting on? A proposal to re-approve the material terms of the performance measures available under the YUM! Brands, Inc. Long Term Incentive Plan ("LTIP"), as required by the ...
  • Page 40
    ... vest until the individual first performs services). As of December 29, 2012, the Company and its subsidiaries had approximately 523,000 employees. ... in control, and certain involuntary termination), except in the case of annual incentive deferrals where the minimum vesting period is two years ...
  • Page 41
    ..., however, restricted shares or restricted units granted as settlement of earned annual incentives or base salary will be counted as covering one share and will... stock units and restricted stock granted with respect to the deferral of salary or annual cash incentive awards and in lieu of the receipt ...
  • Page 42
    ... requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. What is the recommendation of the Board of Directors? The Board of Directors Recommends That You Vote FOR Approval of This Proposal. YUM! BRANDS, INC...
  • Page 43
    ... has advised us that it intends to present the following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of... of recycled content goals for packaging. The board shall prepare a report by September 1, 2013 on the company's efforts to implement this strategy. ...
  • Page 44
    ... efforts in general may be found in our 2012 Corporate Social Responsibility report at www.yum.com/CSR. Proxy Statement Why does the ... present in person or represented by proxy and entitled to vote at the Annual Meeting. What is the recommendation of the Board of Directors? The Board of Directors ...
  • Page 45
    ... Who are our largest shareholders? As of December 31, 2012 the Company did not know of any ... of YUM common stock as of December 31, 2012 by • each of our directors, • each of the executive ... equivalents beneficially owned as of December 31, 2012. Included are shares that could have been ...
  • Page 46
    ...incentive compensation plans. For stock options, we report shares equal to the number of options exercisable ... Development Committee that vested on December 29, 2012 and to which performance was certified in January ... joined the Board effective November 16, 2012. (6) This amount includes 26,000 shares...
  • Page 47
    ... required to furnish YUM with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to YUM and representations that no ... 16(a) filing requirements during fiscal 2012. Proxy Statement YUM! BRANDS, INC. -...
  • Page 48
    ...cer - Yum Restaurants International Proxy Statement 2012 Business Highlights The power of YUM lies in... consecutive year that we exceeded our annual target of at least 10% • Opened a record ... to ensure alignment with the interests of our shareholders. For 2012, we highlighted four major growth ...
  • Page 49
    ... 2006 2007 2008 2009 2010 2011 2012 *For purposes of calculating the year-over-year ... items excluded are the same as those excluded in the Company's annual earnings releases. EPS growth is calculated ...ects a calendar year end of December 31, 2012. Proxy Statement In addition to EPS growth, ...
  • Page 50
    ...bonus paid and annual long-term incentive award value has remained relatively ï¬,at from 2009-2012. Since the beginning of 2008, the cumulative total shareholder return ...000 10 000 5 000 0 2008(2) 2009 2010 2011 2012 (1) Represents our CEO's base salary, stock options...
  • Page 51
    ... Shareholder Outreach and Engagement At our 2012 Annual Meeting of Shareholders, over 70% ... interest rates, and to provide him an annual benefit amount that will not ï¬,uctuate from year-to... for the Named Executive Officers is reviewed annually by the Committee, and has the following key ...
  • Page 52
    ...-ups • Independent compensation consultant to advise Management Planning and Development Committee 2012 Executive Compensation Program and Decisions Our annual compensation program has three primary pay components: • Base salary ...
  • Page 53
    ... Named Executive Officers • they are to assist the Committee in its determination of the annual compensation package for our Chief Executive Officer ... Officer compensation at the end of 2011 for pay actions in 2012. The group was chosen because the companies are reï¬,ective of ...
  • Page 54
    ... and system wide revenues. The application of this philosophy means that, for purposes of the 2012 benchmarking, the Company, when considering franchisee sales, was ... historically normal interest rates, and to provide him an annual benefit amount that will not ï¬,uctuate from year-to-year due...
  • Page 55
    ... team performance measures, targets and weighting in January 2012 based on recommendations from management. The objectives were also reviewed ... performance above or below the performance target will have on the calculation of annual bonus. This leverage increases the payouts when targets are exceeded...
  • Page 56
    ...¬cers' compensation. Summary of Earned Annual Incentives for 2012 The table below summarizes how the formula ... on his role as CFO, as well as responsibility for KFC in the U.S. for 4 months at a blend of 90% YUM and 10% KFC team performance and for his role as President for 8 months at 100% YUM ...
  • Page 57
    ... Committee determined his overall individual performance for 2012 was on target and approved a 115 individual ... of the Taco Bell, Pizza Hut and KFC US Divisions and Yum! Restaurants ...Officers are awarded long-term incentives annually based on the Committee's subjective assessment of the following ...
  • Page 58
    ... at page 47. For the performance period covering 2012 - 2014 fiscal years, each Named... on the same underlying formula as theRetirement Plan. The annual benefit payable under these plans... ceased participating in the Pension Equalization Plan in 2012. The Company provides retirement benefits...
  • Page 59
    ...'s retirement from the Company or attainment of age 65. For 2012, Messrs. Grismer and Pant were... employee disability plan was changed to limit the annual benefit coverage to $300,000. For all... purchased individual disability coverage through 2012 (provided employment continues) to restore the lost...
  • Page 60
    ... option and stock appreciation rights grants annually at the Committee's January meeting. This meeting date is ... per year outside of the January time frame. In 2012, we made four Chairman's Awards ...cers received Chairman's Award grants during 2012. Management recommends the awards be made pursuant to ...
  • Page 61
    ... these plans qualify as performance-based compensation. For 2012, the annual salary paid to Mr. Novak .... In this regard, the Committee set the maximum 2012 individual annual bonus for all executives based on... that section be incorporated by reference into our Annual Report on Form 10-K and included in...
  • Page 62
    ... compensation of the Named Executive Officers for our 2012 fiscal year. The Company's Named Executive Ofn.. most highly compensated officers for our 2012 fiscal year determined in accordance with SEC ..., YUM! Brands Salary Bonus Year ($)(1) ($) (b) (c) 2012 1,450,000 - 2011 1,474,038 - ...
  • Page 63
    ... Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements... Program and subject to a risk of forfeiture are reported in column (d). If the deferral or a portion of the deferral.... Novak would have accrued during 2012 under the LRP, including both benefit...
  • Page 64
    ...All Other Compensation in the Summary Compensation Table above for 2012. Perquisites and Tax Insurance other personal ...of Mr. Grismer and Mr. Pant, this column reports the total amount of other benefits provided, ... Mr. Pant, this column also includes Company annual allocations of $91,438 and $300,000 ...
  • Page 65
    ... in control. (3) Amounts in this column reflect the number of 2012 stock appreciation rights ("SARs") and ... price of the SARs/stock options granted in 2012 equals the closing price of YUM common... Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements...
  • Page 66
    ... Executive Officers on December 31, 2012. Option/SAR Awards(1) Number of Number... 1/24/2008 2/5/2009 2/5/2010 2/4/2011 2/8/2012 1/27/2014 1/27/2014 1/28... 1/24/2008 2/5/2009 2/5/2010 2/4/2011 2/8/2012 1/28/2005 11/18/2005... 5/21/2009 2/5/2010 2/5/2010 2/4/2011 2/8/2012 - Grismer - 55,352 3,675,373...
  • Page 67
    ...2/5/2009 2/5/2010 2/4/2011 11/18/2011 2/8/2012 Stock Awards Equity incentive Equity ... price of YUM stock on the NYSE on December 31, 2012. (4) The awards reflected in this column are unvested performance-... they vested on December 29, 2012; instead, these PSUs are reported in the Option Exercises and ...
  • Page 68
    ... performance was met and certified. Mr. Grismer was not eligible for a PSU award for the 2010-2012 performance period and, therefore, there is nothing to report for him. (3) The amounts in column (e) represent the value realized on RSUs and PSUs that became ...
  • Page 69
    ... YUM! Brands Retirement Plan ("Retirement Plan") 2012 FISCAL YEAR PENSION BENEFITS TABLE ... Retirement Plan to which the Company made allocations in 2012. and the YUM! Brands, Inc. Pension ... is the sum of the participant's base pay and annual incentive compensation from the Company, including amounts ...
  • Page 70
    ...) if he retired from the Company on December 31, 2012 and received a lump sum payment. ... Internal Revenue Code Section 417(e)(3) (currently this is the annual 30-year Treasury rate for the 2nd ... Benefits (determined as of December 31, 2012) is calculated assuming that each participant is eligible ...
  • Page 71
    ...Pant are eligible to participate in the LRP. The LRP provides an annual allocation to Mr. Grismer's account equal ... are allocated on the same day the RSUs attributable to the annual incentive are allocated, which is the same day ... Fund. Mr. Grismer deferred his 2012 annual incentive award into the YUM...
  • Page 72
    ...below is the portion of the year-end balance for each executive which has previously been reported as compensation to the executive in the Company's Summary Compensation Table for 2012 and prior years or would have been reported as compensation if...
  • Page 73
    ...Program, which permits the deferral of salary and annual incentive compensation. The last column of the Nonqualin..54 reports each Named Executive Officer's aggregate balance at December 31, 2012.... assuming termination of employment as of December 31, 2012. The table on page 52 provides the present...
  • Page 74
    ... the Named Executive Officers had died on December 31, 2012, the survivors of Messrs. Novak, Grismer, Su, Carucci and Pant ... executive will be entitled to receive the following: Proxy Statement • a proportionate annual incentive assuming achievement of target performance goals under the ...
  • Page 75
    EXECUTIVE COMPENSATION If a change in control had occurred as of December 31, 2012, the following payments, or other benefits would have been made. Novak Grismer Su Carucci ...,982,800 $ 1,982,180 $ 8,410,000 $ 4,932,000 $ 3,720,076 Annual Incentive 4,584,320 760,760 2,039,813 1,846,785 1,620,000 ...
  • Page 76
    ...amounts do not reflect amounts paid to or realized by the director for fiscal 2012. For a discussion of the assumptions used to value the awards, see the discussion...Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15...
  • Page 77
    ... INFORMATION Planning and Development Committee (Mr. Walter in 2012) receives an additional $15,000 stock retainer annually. Initial Stock ... and business travel accident insurance policies. The annual cost of this coverage was approximately $2 million. This is not included in ...
  • Page 78
    EQUITY COMPENSATION PLAN INFORMATION What are the key features of the 1997 Plan? The 1997 Plan provides for the issuance of up to 90,000,000 shares of stock. Effective January 1, 2002, only restricted shares could be issued under this plan. This plan is utilized with respect to payouts on shares ...
  • Page 79
    ... amended and restated effective November 16, 2012. The charter is reviewed by management at least annually, and any recommended changes are... auditors and manages the Company's relationship with its independent auditors (who report directly to the Committee). The Committee has the authority to obtain ...
  • Page 80
    ... independent auditors and the Committee's review of the representations of management and the report of the independent auditors to the Board of Directors, and subject to ... financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 for fi...
  • Page 81
    ... materials in the mail may elect to receive future annual reports and proxy statements from us and ... reduce our environmental impact and to reduce Annual Report printing and mailing costs. ... and, if applicable, this proxy statement and Annual Report, to multiple shareholders sharing an address unless ...
  • Page 82
    ...Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213 by December 6, 2013. The proposal should ... for election as directors or to introduce an item of business at an Annual Meeting of Shareholders that is not included in our...¬ed in our bylaws. If the 2014 Annual Meeting is not held within 30...
  • Page 83
    ... the Option or SAR is granted; except that the Exercise Price shall not be less than the closing price of a share of Stock on the date of grant as reported on the composite tape for securities listed on the New York Stock Exchange (or if no sales of stock were made on said exchange on such date, on ...
  • Page 84
    ... shall be not less than three years (provided that the required period for full vesting shall, instead, not be less than two years in the case of annual incentive deferrals payable in restricted shares) (subject to acceleration of vesting, to the extent permitted by (d) A-2 YUM! BRANDS, INC. - ...
  • Page 85
    ... restricted shares or restricted units delivered pursuant to the settlement of earned annual incentives or base salary, each share of Stock shall be...except that Stock Units or Restricted Shares granted with respect to the deferral of annual cash incentive awards under the Company's deferral plan will...
  • Page 86
    APPENDIX (ii) (iii) the number and type of Shares (or other property) subject to outstanding Awards; the grant or Exercise Price with respect to outstanding Awards; and Awards and/or Award agreements; (ii) (iv) the terms, conditions or restrictions of outstanding provided, however, that all ...
  • Page 87
    APPENDIX for actions, inactions, decisions, indecisions or any other role in relation to the Plan by a protected party if made or undertaken in good faith or in reliance on the advice of counsel (who may be counsel for the Company), or made or undertaken by someone other than a protected party. ...
  • Page 88
    APPENDIX (b) The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee or other individual the right to be retained in the employ of the Company or any Subsidiary or the right to continue to provide services to the Company or ...
  • Page 89
    APPENDIX 6.4 Information to be Furnished to Committee. The Company and Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Subsidiaries as to an employee's or Participant's ...
  • Page 90
    ... the "Fair Market Value" of a share of Stock as of any date, Fair Market Value shall mean the average between the lowest and highest reported sale prices of the Stock on that date on the principal exchange on which the Stock is then listed or admitted to trading. If the day is not a business day, ...
  • Page 91
    APPENDIX in which at least a fifty percent voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a successor ...
  • Page 92
    ... EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15... No.) 1441 Gardiner Lane, Louisville, Kentucky 40213 (Address of principal executive ofn..-affiliates of the registrant as of June 16, 2012 computed by reference to the closing price of the registrant...
  • Page 93
    Table of Contents PART I ITEM 1 ITEM 1A ITEM 1B ITEM 2 ITEM 3 ITEM 4 3 Business ...3 Risk Factors ...6 Unresolved Staff Comments ...9 Properties...10 Legal Proceedings ...10 Mine Safety Disclosures ...11 PART II ITEM 5 ITEM 6 ITEM 7 ITEM 7A ITEM 8 ITEM 9 ITEM 9A ITEM 9B 12 Market for the ...
  • Page 94
    Forward-Looking Statements In this Form 10-K, as well as in other written reports and oral statements that we make from time to time, we present "forward-looking ...set forth herein in future filings or communications regarding our business results. Form 10-K 2 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 95
    ...YUM, together with its subsidiaries, is referred to in this Form 10-K annual report ("Form 10-K") as the Company. The terms ... are located at 1441 Gardiner Lane, Louisville, Kentucky 40213, and the telephone number at that location... food. In addition, Taco Bell and KFC offer a drive-thru option in many...
  • Page 96
    ...the India units are Company-owned. • As of year end 2012, Taco Bell was the leader in the U.S. Mexican QSR segment,...secret blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed up his ... and territories throughout the world. As of year end 2012, KFC had 4,260 units in China, ...
  • Page 97
    .... U.S. Division The Company, along with the representatives of the Company's KFC, Pizza Hut and Taco Bell ... future environmental legislation or regulations. During 2012, there were no material capital ... believes that many of these marks, including its Kentucky Fried Chicken®, KFC®, Pizza Hutn..
  • Page 98
    ... of our business. Employees As of year end 2012, the Company and its Concepts employed approximately ... the Investor Relations section of its internet website at www.yum.com its annual report on Form 10-K, quarterly ...past, and could occur in the future. Any report or publicity linking us or one of our...
  • Page 99
    ...currency exchange rates, which may adversely affect reported earnings. More specifically, an increase in ...the Euro, could have an adverse effect on our reported earnings. There can be no assurance as ...for leased properties on which we are contingently liable. YUM! BRANDS, INC. - 2012 Form 10-K 7...
  • Page 100
    ... resources away from our operations and negatively impact reported earnings. With respect to insured claims, a judgment for ... of poultry and cause customers to eat less chicken, which could negatively impact our pron.. could increase our exposure to litigation and 8 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 101
    ... could create additional risk. On February 1, 2012 we acquired an additional 66% interest ...no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission ... 180 days or more preceding the end of its 2012 fiscal year and that remain unresolved....
  • Page 102
    ...Irvine, California. The KFC U.S. and YUM corporate headquarters and a research facility in Louisville, Kentucky ...likely to have a material adverse effect on the Company's annual results of operations, financial Franchisees Form ... other labor law violations. 10 YUM! BRANDS, INC. - 2012 Form 10-K...
  • Page 103
    ... YUM. He has served in this position since May 2012. Prior to this position, Mr. Carucci served as Chief.... Eaton served as Chief Executive Officer of KFC U.S. and YUM Operational Excellence Officer .... He has served in this position since May 2012. Prior to this position, Mr. Grismer served as ...
  • Page 104
    ... Matters and Issuer Purchases of Equity Securities 2012 Quarter First Second Third Fourth High ...57 Dividends Paid 0.25 0.25 0.25 0.285 $ In 2012, the Company declared two cash dividends of ... of which had a distribution date of February 3, 2012. The Company targets an annual dividend payout ratio of ...
  • Page 105
    ... table provides information as of December 29, 2012 with respect to shares of Common Stock repurchased ...our outstanding Common Stock. On November 16, 2012, our Board of Directors authorized additional ... million of Common Stock under the November 2012 authorization. Stock Performance Graph This graph ...
  • Page 106
    ..., INC. AND SUBSIDIARIES Fiscal Year 2010 2012 2011 2009 2008 SELECTED FINANCIAL DATA (... Franchisees Licensees System China system sales growth(c) Reported Local currency(d) YRI system sales growth... Local currency(d) India system sales growth(c) Reported Local currency(d) U.S. same store sales growth...
  • Page 107
    ... ownership in, and consolidation of, the operating entity that owns the KFCs in Shanghai, China, and the 2008 gain of ... distortion of foreign currency fluctuations. Fiscal years 2012, 2010, 2009 and 2008 include 52... brands - KFC, Pizza Hut and Taco Bell - are the global leaders in the chicken, pizza ...
  • Page 108
    ... and unallocated income and expenses. In 2012, our India Division began being reported as a standalone reporting...rates referenced above represent our average annual targets for the next several years. Consistent ...billion in mainland China, the Company is rapidly adding KFC and Pizza Hut Casual Dining ...
  • Page 109
    ...Trends or Uncertainties Impacting or Expected to Impact Comparisons of Reported or Future Results Special Items In addition ...), the YUM Retirement Plan settlement charge in 2012, the gain upon acquisition of Little Sheep... reductions from Pizza Hut UK and KFC U.S. restaurants impaired upon our decision...
  • Page 110
    ... Special Items Special Items EPS REPORTED EPS Reconciliation of Effective Tax Rate ... Settlement Charge During the fourth quarter of 2012, the Company allowed certain former employees ... of Income. Since the acquisition, we have reported the results of operations for the entity in the appropriate line ...
  • Page 111
    ... subsequent to the refranchising as the fair value of the Taiwan reporting unit exceeded its carrying amount. The amount ... levels of antibiotics in chicken. Some of this chicken was purchased by two poultry suppliers of KFC China. ...not have a 53rd week in 2011. YUM! BRANDS, INC. - 2012 Form 10-K 19
  • Page 112
    ... $12 million, a payment of $9 million was made in July 2012 and the remainder is expected to be paid in cash during ..., pre-tax (78) $ Refranchisings reduce our reported revenues and restaurant profits and ... restaurants) and KFCs in Taiwan (124 restaurants). 20 YUM! BRANDS, INC. - 2012 Form 10...
  • Page 113
    ... of refranchising on Operating Profit as described above: 2012 Decreased Restaurant profit Increased Franchise..., 2010, the Company received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS.... We believe that the Company has properly reported taxable income and paid taxes...
  • Page 114
    ...Acquisitions(c) Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 27,852 1,058 ...Builds Acquisitions(c) Refranchising Closures BALANCE AT END OF 2012 % of Total Franchisees 153 4 47 (3) 201... Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 12,421 735...
  • Page 115
    ... Builds Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 14,977 231 (... New Builds Acquisitions Closures BALANCE AT END OF 2012 % of Total Franchisees 301 88 (4) (1) - 384 ... 472 Little Sheep units acquired on February 1, 2012. Form 10-K Multibrand restaurants are included ...
  • Page 116
    ... due to closures as well as any necessary rounding. 2012 vs. 2011 U.S. 5% (4) N/A (2) (1)% -% 2011 vs. 2010 U.S.... 3% 3 3 1 10% 6% For the year ended December 29, 2012, system sales growth includes a 1% and ... sales and Restaurant profit for each reportable segment by year. Store portfolio actions ...
  • Page 117
    ... Analysis of Financial Condition and Results of Operations In 2012, the increase in China Company sales associated with ... commodity inï¬,ation of $90 million, or 8%. YRI 2012 vs. 2011 Income/(Expense) Company ...341 (743) (608) (700) 290 12.4% $ $ In 2012, the increase in YRI Company sales and ...
  • Page 118
    ...11 5 China YRI U.S. India Unallocated WORLDWIDE $ $ 2012 334 $ 414 467 24 271... 191 1,277 The increase in China G&A expenses for 2012, was driven by increased compensation costs due... higher headcount. The increase in YRI G&A expenses for 2012 was driven by increased investment in strategic growth...
  • Page 119
    ... transformation measures. The increase in Unallocated G&A expenses for 2012 was driven primarily by higher pension costs,... of refranchising, partially offset by lapping bi-annual franchise convention costs. YRI Franchise ... (gain) loss by reportable operating segment. YUM! BRANDS, INC. - 2012 Form 10...
  • Page 120
    ....9% China Division Operating Profit increased 9% in 2012, excluding foreign currency, driven by the impact ... G&A expenses. U.S. Operating Profit increased 13% in 2012. The increase was driven by the impact of same-store... Interest income INTEREST EXPENSE, NET $ $ 2012 169 (20) 149 $ $ 2011 184...
  • Page 121
    ... where tax rates are generally lower than the U.S. rate. In 2012, this benefit was negatively impacted by the repatriation of current year foreign ... 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably impacted by the resolution of uncertain tax ...
  • Page 122
    ... an ongoing annual dividend payout ratio of 35% to 40% of net income. On February 1, 2012... under the Credit Facility at December 29, 2012. The interest rate for most borrowings under... (excluding applicable transaction fees) under the 2012 authorization. Shares are repurchased opportunistically as part...
  • Page 123
    ... obligations and payments as of December 29, 2012 included: Less than 1 Year 144 .... Our funding policy for the Plan is to contribute annually amounts that will at least equal the minimum amounts ...¬ed to net income in its entirety in the same reporting period. ASU 2013-2 is effective for fiscal...
  • Page 124
    ...our other reporting units were substantially in excess of their respective carrying values as of the 2012 ... intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances... impairment was recorded. Form 10-K 32 YUM! BRANDS, INC. - 2012 Form 10...
  • Page 125
    ...value is disposed of in a refranchising transaction. During 2012, the Company's reporting units with the most significant... 5% of beginning-of-year goodwill). Within our KFC U.S. operating segment, 218 restaurants were... due receivable balances at December 29, 2012. As such, we believe our allowance...
  • Page 126
    ... of being realized upon settlement. At December 29, 2012 we had $309 million of unrecognized ... for financial reporting exceed the tax basis, totaling approximately $2.6 billion at December 29, 2012,... expense amounts for any particular quarterly or annual period could be affected by changes in our ...
  • Page 127
    ... impact on the related debt. At December 29, 2012 and December 31, 2011 a hypothetical... exchange rates impact the translation of our reported foreign currency denominated earnings, cash...) totaled approximately $4.2 billion as of December 29, 2012. Operating in international markets exposes the Company...
  • Page 128
    ... Information Page Reference Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ..., 2010 Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 Consolidated ...cit) for the fiscal years ended December 29, 2012, December 31, 2011 and December 25...
  • Page 129
    ... 8 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm ... effective internal control over financial reporting, and for its assessment of the effectiveness of internal control... Louisville, Kentucky February 19, 2013 Form 10-K YUM! BRANDS, INC. - 2012...
  • Page 130
    ...! BRANDS, INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 (in millions, except per share data) 2012 $ 11,833 1,800 13,633 $ 2011 10,893 1,733...175 1,594 416 1,178 20 1,158 2.44 2.38 0.92 38 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 131
    ... INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 Year..., INC. See accompanying Notes to Consolidated Financial Statements. $ 2012 1,608 $ 2010 1,178 $ 27 (3) 3 - (19) 9 156 (... 1 1 1,179 24 1,155 Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 39
  • Page 132
    ..., INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 (in millions) 2012 $ 1,608 $ 645 37 (78) (119) 84 (74) 28 (47) ... accompanying Notes to Consolidated Financial Statements. Form 10-K $ 40 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 133
    ... BRANDS, INC. AND SUBSIDIARIES DECEMBER 29, 2012 AND DECEMBER 31, 2011 (in millions) 2012 2011 ASSETS Current Assets Cash and cash equivalents Accounts and ... shares and 460 shares issued in 2012 and 2011, respectively Retained earnings ...) 1,823 93 1,916 8,834 YUM! BRANDS, INC. - 2012 Form 10-K 41
  • Page 134
    .... AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 ... tax impact of $11 million) BALANCE AT DECEMBER 29, 2012 See accompanying Notes to Consolidated Financial Statements. ...) 16 (22) 451 $ $ 2,286 $ (132) $ 99 42 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 135
    ... operating segment ("U.S."). As a result of changes to our management reporting structure, in 2012 we began ... consolidate. Certain investments in entities that operate KFCs in China are accounted for by the equity method. These ... license arrangements provide our YUM! BRANDS, INC. - 2012 Form 10-K 43...
  • Page 136
    ... credit of the primary beneficiary. Therefore, we report all assets and liabilities of these advertising... effect at the balance sheet date. As of December 29, 2012, net cumulative translation adjustment gains ...December 29, 2012. These reclassifications had no effect on previously reported Net ...
  • Page 137
    ... $557 million in 2012, 2011 and 2010, respectively. We report substantially all ... intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances... indicator of potential impairment for our semi-annual impairment testing of these restaurant assets...
  • Page 138
    ... change in measurement of a tax position taken in a prior annual period (including any related interest and...were included in Franchise and license expenses in 2012, 2011 and 2010, respectively. Trade ...million (net of an allowance of $4 million) at December 29, 2012 and December 31, 2011, respectively....
  • Page 139
    ... assumed is determined by comparing the fair value of the reporting unit before the acquisition to the fair value of the reporting unit after the acquisition. We evaluate goodwill for impairment on an annual basis or... immediately. For derivative Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 47
  • Page 140
    ... 25, 2010, respectively, arising from the impairment of the KFCs offered for sale in the year ended December ..., 2010 within our U.S. segment for performance reporting purposes. Rather, we recorded such ... expenses in the fourth quarter of 2012 which was not allocated for segment reporting purposes. See...
  • Page 141
    ... impacted both the U.S. and YRI segments' Operating Profit by 1% in 2012, the impact on our consolidated Operating Profit was not...the Consolidated Statements of Income. From the date of the acquisition, we have reported the results of operations for the entity in the appropriate line items of...
  • Page 142
    ... Consolidated Balance Sheet as of December 29, 2012 and will be amortized into YRI's Franchise... offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus... allocated to any segment for performance reporting purposes: 2012 Store closure (income) costs...
  • Page 143
    ...loss Continuing fees and rental income $ NOTE 7 Other (Income) Expense $ 2012 (47) $ (74) 6 (115 ) $ 2011 (47) $ - (6) (... acquisition of Little Sheep that were allocated to the China Division for performance reporting purposes. NOTE 8 Supplemental Balance Sheet Information $ 2012 55 $ 56 161 272...
  • Page 144
    ... and other, net(b) Balance as of December 29, 2012 Goodwill, gross Accumulated impairment losses ...26 million of goodwill assigned to our LJS and A&W reporting unit that was previously fully impaired. Goodwill that was assigned to our KFC U.S. and Taco Bell U.S. reporting units upon the acquisition of...
  • Page 145
    ... in 2013, $24 million in 2014, $23 million annually in 2015 and 2016 and $21 ...-TERM DEBT INCLUDING HEDGE ACCOUNTING ADJUSTMENT In 2012, the Company executed a five-year syndicated ... all debt covenant requirements at December 29, 2012 with a considerable amount of cushion. Additionally, the Credit ...
  • Page 146
    ... issuance date and are payable semi-annually thereafter. (b) Includes the effects of the amortization of any ..., maintenance and insurance. At December 29, 2012 we operated nearly 7,600 restaurants,... $279 million, respectively. At December 29, 2012, unearned income associated with direct financing...
  • Page 147
    ... fair value of the hedged item. At December 29, 2012, foreign currency forward contracts outstanding had... have been reported as an additional $22 million to Long-term debt at December 29, 2012 ... continually assess the creditworthiness of counterparties. At December 29, 2012 and December 31, 2011, all ...
  • Page 148
    ...were impaired either as a result of our semi-annual impairment review or when it was more likely than ... a restaurant or restaurant group would be refranchised. 2012 Pizza Hut UK refranchising impairment ... year of service. During the fourth quarter of 2012, the Company allowed certain former employees ...
  • Page 149
    ... in the Consolidated Balance Sheet: U.S. Pension Plans 2012 - $ (19) (326) (345) $ International Pension ...(14) - (5) 945 $ (345) $ International Pension Plans 2012 2011 $ 187 $ 2 8 1 - - - - 5 (4) - (6) 193 $ 183 $ 21 ...loss Prior service cost $ $ U.S. Pension Plans 2012 421 $ 7 428 $ 2011 540 3 543...
  • Page 150
    ...obligation in excess of plan assets: U.S. Pension Plans 2012 1,290 $ 1,239 945 International Pension ...obligation in excess of plan assets: U.S. Pension Plans 2012 1,290 $ 1,239 945 International Pension... related to the U.S. business transformation measures taken in 2012, 2011 and 2010. Pension (gains...
  • Page 151
    ... benefit obligations at the measurement dates: U.S. Pension Plans 2012 2011 4.40% 4.90% 3.75% 3.75% ... above that were settled after December 29, 2012 Our primary objectives regarding the investment ... up 81% of total pension plan assets at the 2012 measurement date, are to reduce interest rate and...
  • Page 152
    ... cost trend rates for the following year as of 2012 and 2011 are 7.4% and 7.5%, respectively, with expected ... other comprehensive loss was $8 million at the end of 2012 and $12 million at the end of 2011.... participants to defer receipt of a portion of their annual salary and all or a portion of their ...
  • Page 153
    ...pricing model with the following weighted-average assumptions: 2012 0.8% 6.0 29.0% 1.8% 2011 2.0% 5.9 28.2% 2.0% 2010 2.4% 6.0 30... options. The expected dividend yield is based on the annual dividend yield at the time of grant. The fair ... options and SARs granted during 2012, 2011 and 2010 was $15.00,...
  • Page 154
    ... $ $ $ $ $ $ $ $ $ $ $ $ Cash received from stock option exercises for 2012, 2011 and 2010, was $62 million...(a) $ 733(b) $ 390(b) Authorization Date November 2012 November 2011 January 2011 March... for future repurchases under our November 2012 share repurchase authorization. Accumulated Other...
  • Page 155
    ... where tax rates are generally lower than the U.S. rate. In 2012, this benefit was negatively impacted by the repatriation of current year foreign ... 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably impacted by the resolution of uncertain tax ...
  • Page 156
    ... in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have... tax is approximately $2.6 billion at December 29, 2012. A determination of the deferred tax liability on this amount... (16) (45) 600 At December 29, 2012, the Company has foreign operating and...
  • Page 157
    ... 23, 2010, the Company received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS") ... 2008. The potential $ additional taxes for 2009 through 2012, computed on a similar basis to the 2004-2008 ..., operating, franchising and licensing the worldwide KFC, Pizza Hut and Taco Bell ...
  • Page 158
    ...Net; and Income Before Income Taxes 2012 2011 2010 $ 1,015 $ 908 $ 755 ...145 $ 1,659 $ 1,594 Depreciation and Amortization 2012 2011 332 $ 257 $ 162 181 ... 177 6 5 4 8 645 $ 628 $ Capital Spending 2012 2011 655 $ 405 $ 251 240 ... 1,099 $ 940 $ Identifiable Assets 2012 2011 3,752 $ 2,527 $ 2,663 2,847 ...
  • Page 159
    ... to the U.S., YRI or China Division segments for performance reporting purposes. (b) Includes equity income from investments ..., for China. (c) 2012, 2011 and 2010 include depreciation reductions arising from the impairment of KFC ... under such leases at December 29, 2012 and December 31, 2011 was not ...
  • Page 160
    ... healthcare and long-term disability claims, including reported and incurred but not reported claims, based on information provided by independent actuaries. Due to the inherent volatility of actuarially ... could be material to our growth in quarterly and annual Net income. We believe that we have...
  • Page 161
    ... the possible issuance of an injunction. On September 17, 2012, the court issued an order modifying its October ...certification under the FLSA on January 10, 2012, granted conditional certification and... Consolidated Financial Statements. On July 27, 2012, a putative class action lawsuit, styled...
  • Page 162
    ...Data (Unaudited) First Quarter Second Quarter 2012 Third Quarter 3,142 $ 427 3,569 ..., as required. Other financial information presented in the annual report is derived from the financial statements. We ... believe our controls as of December 29, 2012 provide reasonable assurance that our assets...
  • Page 163
    ...reporting was effective as of December 29, 2012. KPMG LLP, an independent registered public accounting firm,... audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and the effectiveness... during the quarter ended December 29, 2012. ITEM 9B Other Information None...
  • Page 164
    ...than 120 days after December 29, 2012. Information regarding executive officers ...than 120 days after December 29, 2012. Form 10-K ITEM 12 Security ...than 120 days after December 29, 2012. ITEM 13 Certain Relationships and ...than 120 days after December 29, 2012. ITEM 14 Principal Accountant Fees ...
  • Page 165
    ... Statement Schedules (a) (1) (2) Financial Statements: Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K. Financial ... required to be filed as an exhibit to this Form 10-K. (3) Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 73
  • Page 166
    ... registrant has duly caused this Form 10-K annual report to be signed on its behalf by the undersigned, thereunto duly... Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by... February 19, 2013 Form 10-K 74 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 167
    ...4, 2010. Credit Agreement, dated March 22, 2012 among YUM, the lenders party thereto, JPMorgan...on Form 10-Q for quarter ended March 24, 2012. YUM Director Deferred Compensation Plan, ... incorporated herein by reference from Exhibit 10.7 to YUM's Annual Report on Form 10-K for the fiscal year ended ...
  • Page 168
    ...YUM Purchasing Co-op Agreement, dated as of January 1, 2012, between YUM and the Unified ... incorporated by reference from Exhibit 10.21.1 to YUM's Annual Report on Form 10-K for the fiscal year ended... Indicates a management contract or compensatory plan. 76 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 169
    Shareholder Information Inquiries Regarding Your YUM Holdings REGISTERED SHAREHOLDERS (those who hold YUM shares in their own names) should address communications concerning statements, address changes, lost certificates and other administrative matters to: American Stock Transfer & Trust ...
  • Page 170
    ... the symbol YUM. Franchise Inquiries ONLINE FRANCHISE INFORMATION Information about potential franchise opportunities is available at www.yumfranchises.com Yum! Brands' Annual Report contains many of the valuable trademarks owned and used by Yum! ...
  • Page 171
    ... Creed 55 Chief Executive Officer, Taco Bell Jonathan S. Linen 69 Advisor to Chairman, American Express Company John Cywinski 50 President, KFC U.S. Thomas C. Nelson 50 Chairman, Chief Executive Officer and President, National Gypsum Company Roger Eaton 52 Chief Operations Officer, Yum! Brands, ...
  • Page 172
    Alone We're Delicious. Together We're Yum!® Yum! Brands, Inc., trades under the symbol YUM and is proud to meet the listing requirements of the NYSE, the world's leading equities market.


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  • Kentucky Fried Chicken 2012 Annual Report - Page 1
    Staying the Course China and a Whole Lot More 2012 Yum! Brands Annual Customer Mania Report
  • Kentucky Fried Chicken 2012 Annual Report - Page 2
    ... except for per share amounts) Year-end 2012 2011 % B/(W) change Company sales Total revenues... Earnings Per Common Share (a) $ 0.13 (0.13) Reported Diluted Earnings Per Common Share Cash...Flows Provided by Operating Activities (a) See our 2012 Form 10-K for further discussion of Special ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 3
    Dear Partners, I'm pleased to report that in 2012 we delivered full-year EPS growth of ...we achieved at least 13% and exceeded our annual target of at least 10%. This kind of consistent performance ... extremely proud that our five year average annual shareholder return, including stock appreciation and ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 4
    ... well as showcase our management talent from around the world. The theme of our 2012 meeting was "On the Ground Floor of Global Growth: China and a Whole ... layers and expanding dayparts. Additionally, we invested over $1.1 billion in 2012 in the future growth of our business and expect to invest at ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 5
    ... the country. At Yum! China, we crossed the billion dollar profit mark in 2012, opened our 4,000th KFC, our 800th Pizza Hut Casual Dining ...(that's right, 889 restaurants!) - a remarkable achievement by anyone's standards. KFC now has 4,260 restaurants in more than 850 cities ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 6
    ... suffered a setback in China following an investigation into KFC China's poultry supply and the resulting ... events significantly impacted consumer confidence in KFC, and resulted in a sharp decline in sales ... accounted for 42% of our segments' profits in 2012, and because it's clear it will take time ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 7
    ...everywhere. We made India a separate division in 2012 because of the great potential of the country as well ...developer of 138 new units, including 80 KFCs. This is the second year in a row we have ..., compared to 58 restaurants per million in the U.S. In 2012, Yum! Restaurants International (YRI) which...
  • Kentucky Fried Chicken 2012 Annual Report - Page 8
    .... After buying the Rostik's business (Russia's leading chicken chain) in 2010, we have now ... new branding and the overwhelming customer response to KFC products, we are confident Russia will be a sizable, ...to add another 45 restaurants in 2013. By the end of 2012, we expanded to 14 African countries, ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 9
    ... performer in Cleanliness and the only QSR to rank in the Top 3 on Cleanliness, Hospitality, Accuracy and Speed in the 2012 Annual QSR Drive-Thru Study. The combination ... year, including growth of 8% at Taco Bell, 3% at Pizza Hut and 3% at KFC. Taco Bell earned its place in QSR and social ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 10
    ... in rural areas. While we still have a lot of wood to chop with KFC in the U.S., KFC successfully reversed the past 4 years of negative same-store sales ... ahead. Our long-term goal is for Taco Bell to Product innovations helped KFC to reverse the past 4 years of negative same-store sales growth. go ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 11
    ... highgrowth emerging market that has over 100 KFC and Pizza Hut restaurants. Our success... We generated almost $2.3 billion in cash from operations in 2012. As I hope I've conveyed in this letter, we're... addition to buying back stock ($985 million in 2012), we are paying shareholders a solid dividend ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 12
    ...'re a company with a huge heart and we recognize there is much more we can and will do to live up to that. After reading this Annual Report, I hope you'll agree our plan to STAY THE COURSE is great news for 2013 and beyond. I want to thank all our...
  • Kentucky Fried Chicken 2012 Annual Report - Page 13
    future back the vision defining global company that feeds the world famous recognition culture where everyone counts Drive HWWT2 leadership principles every day! Make it a magnet for the best talent Be an "ABR black belt"...Be a "Know How junkie" dynamic, vibrant brands everywhere with one ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 14
    dynasty growth model our future back vision our goal Be the Defining Global Company That Feeds the World. Be the Best in the World at Building Great Restaurant Brands! our passion Customer Mania...put a YUM on customers' faces around the world our formula for success People Capability First...
  • Kentucky Fried Chicken 2012 Annual Report - Page 15
    ... Brands, Inc. 1441 Gardiner Lane Louisville, Kentucky 40213 April 5, 2013 Dear Fellow ... at 1900 Colonel Sanders Lane in Louisville, Kentucky. This year we are pleased to once again ... are available at www.yum.com/investors/investor_materials. asp. The Annual Report on Form 10-K is available at www.yum....
  • Kentucky Fried Chicken 2012 Annual Report - Page 16
  • Kentucky Fried Chicken 2012 Annual Report - Page 17
    ..., Inc. 1441 Gardiner Lane Louisville, Kentucky 40213 Notice of Annual Meeting of Shareholders Wednesday, May ...on March 18, 2013. ANNUAL REPORT: A copy of our 2012 Annual Report on Form 10-K is... important information contained in the proxy statement and Annual Report. The Notice also instructs you on ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 18
    ...OWNERSHIP INFORMATION SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE EXECUTIVE COMPENSATION 27 29 ... Management Planning and Development Committee Report ...43 Summary Compensation Table ...44 ... COMPENSATION PLAN INFORMATION AUDIT COMMITTEE REPORT ADDITIONAL INFORMATION APPENDIX A YUM! BRANDS...
  • Kentucky Fried Chicken 2012 Annual Report - Page 19
    ...1441 Gardiner Lane Louisville, Kentucky 40213 PROXY STATEMENT For Annual Meeting of Shareholders To Be Held ... Company matters. In addition, our management will report on the Company's performance over the last fiscal... on how to access this proxy statement and our Annual Report and vote online. If...
  • Kentucky Fried Chicken 2012 Annual Report - Page 20
    ...your admission ticket. If you received the proxy statement and Annual Report by mail, you will find an admission ticket attached to ...I voting on? You will be voting on the following five (5) items of business at the Annual Meeting: • The election of twelve (12) directors to serve until ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 21
    ...14, 2013. Proxy Statement Can I vote at the Annual Meeting? Shares registered directly in your... as the shareholder of record may be voted in person at the Annual Meeting. Shares held in street name... date and returning it to us prior to the Annual Meeting; • Voting again by telephone or through...
  • Kentucky Fried Chicken 2012 Annual Report - Page 22
    ...of March 18, 2013, must be present in person or represented by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the Annual Meeting. How many votes are needed to elect directors? You may...
  • Kentucky Fried Chicken 2012 Annual Report - Page 23
    ... the voting results? The Company will announce the voting results of the Annual Meeting on a Current Report on Form 8-K filed within four business days ..., our management knows of no matters that will be presented for consideration at the Annual Meeting other than those matters discussed in this ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 24
    ...'s Political Contributions and U.S. Government Advocacy Policy, and information about how to report concerns about the Company. To access these documents on the Company... Directors presently consists of 12 directors whose terms expire at this Annual Meeting. As discussed in more detail later in this ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 25
    ... 8 of the Company's 11 then directors attended the 2012 Annual Meeting. How does the Board select ..., Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The nomination must contain the information... and effectiveness of the Board of Directors. In August 2012, the Board created a new position of lead...
  • Kentucky Fried Chicken 2012 Annual Report - Page 26
    ... no term limit and is subject only to annual approval by the independent members of the Board. Prior to August 2012, the Board had a presiding director ... of Conduct also sets forth information and procedures for employees to report ethical or accounting concerns, misconduct or violations of the Code ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 27
    ... compensation programs through a risk assessment conducted by management and reports its conclusions to the full Board. Proxy Statement Has the ... top level employees is associated with the long term performance of the Company. • The annual incentive target setting process is closely linked to ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 28
    ..., YUM! Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213. The Nominating and Governance Committee of the Board ...of the Management Planning and Development Committee. What are the Company's policies on reporting of concerns regarding accounting? The Audit Committee has established policies...
  • Kentucky Fried Chicken 2012 Annual Report - Page 29
    .../ Finance Committees. Number of Meetings Functions of the Committee in Fiscal 2012 • Possesses sole authority regarding the selection and ... Governance Principles • Receives comments from all directors and reports annually to the Board with assessment of the Board's performance • ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 30
    ... serving on the Board of Directors. Non-Employee Directors Annual Compensation. The annual compensation for each director who is not an employee of YUM ... Board. YUM directors receive a significant portion of their annual compensation in stock. The Company believes that the emphasis on the equity ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 31
    ...12) nominees recommended by the Nominating and Governance Committee of the Board of Directors for election this year to hold office until the 2014 Annual Meeting and until their respective successors are elected and qualified are provided below. The biographies of each of the nominees below ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 32
    ...& Co., a position he has held since 2012. Mr. Cavanagh is also a member of JPMorgan Chase & Co.'s Operating Committee. From 2010 to 2012, he was the Chief Executive Officer of... director of Harleysville Group Inc. from 2000 until 2012. Specific qualifications, experience, skills ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 33
    ITEM 1 ELECTION OF DIRECTORS J. David Grissom Age 74 Director since 2003 Chairman, Mayfair Capital, Inc. Chairman, The Glenview Trust Company J. David Grissom is Chairman of Mayfair Capital, Inc., a private investment firm formed by Mr. Grissom in 1989. In addition, Mr. Grissom has been ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 34
    ...served as President of YUM from October 1997 to April 2012. Mr. Novak previously served as Group... was the Vice President of North Asia for both KFC and Pizza Hut. Specific qualin.., business development, business integrations, financial reporting, compliance and controls • Public company...
  • Kentucky Fried Chicken 2012 Annual Report - Page 35
    ...ELECTION OF DIRECTORS If elected, we expect that all of the aforementioned nominees will serve as directors and hold office until the 2014 Annual Meeting of Shareholders and until their respective successors have been elected and qualified. Based on the recommendation of the Nominating and ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 36
    ... for professional services rendered by KPMG for the audit of the Company's annual financial statements for 2012 and 2011, and fees billed ... condensed consolidated financial statements included in the Company's quarterly reports, audits of the effectiveness of the Company's internal controls over ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 37
    ... and overall compliance with the pre-approval policy. The Corporate Controller reports periodically to the Audit Committee about the status of outstanding engagements, including ...marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new...
  • Kentucky Fried Chicken 2012 Annual Report - Page 38
    ... (the "Committee") considered the say-on-pay voting results at the 2012 Annual Meeting of Shareholders and, as a result, reached out to..., we ask our shareholders to vote in favor of the following resolution at the Annual Meeting: RESOLVED, that the shareholders approve the compensation awarded to our...
  • Kentucky Fried Chicken 2012 Annual Report - Page 39
    ITEM 4 Re-Approval of YUM! Brands, Inc. Long Term Incentive Plan Performance Measures (Item 4 on the Proxy Card) What am I voting on? A proposal to re-approve the material terms of the performance measures available under the YUM! Brands, Inc. Long Term Incentive Plan ("LTIP"), as required by the ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 40
    ... vest until the individual first performs services). As of December 29, 2012, the Company and its subsidiaries had approximately 523,000 employees. ... in control, and certain involuntary termination), except in the case of annual incentive deferrals where the minimum vesting period is two years ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 41
    ..., however, restricted shares or restricted units granted as settlement of earned annual incentives or base salary will be counted as covering one share and will... stock units and restricted stock granted with respect to the deferral of salary or annual cash incentive awards and in lieu of the receipt ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 42
    ... requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. What is the recommendation of the Board of Directors? The Board of Directors Recommends That You Vote FOR Approval of This Proposal. YUM! BRANDS, INC...
  • Kentucky Fried Chicken 2012 Annual Report - Page 43
    ... has advised us that it intends to present the following shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of... of recycled content goals for packaging. The board shall prepare a report by September 1, 2013 on the company's efforts to implement this strategy. ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 44
    ... efforts in general may be found in our 2012 Corporate Social Responsibility report at www.yum.com/CSR. Proxy Statement Why does the ... present in person or represented by proxy and entitled to vote at the Annual Meeting. What is the recommendation of the Board of Directors? The Board of Directors ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 45
    ... Who are our largest shareholders? As of December 31, 2012 the Company did not know of any ... of YUM common stock as of December 31, 2012 by • each of our directors, • each of the executive ... equivalents beneficially owned as of December 31, 2012. Included are shares that could have been ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 46
    ...incentive compensation plans. For stock options, we report shares equal to the number of options exercisable ... Development Committee that vested on December 29, 2012 and to which performance was certified in January ... joined the Board effective November 16, 2012. (6) This amount includes 26,000 shares...
  • Kentucky Fried Chicken 2012 Annual Report - Page 47
    ... required to furnish YUM with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to YUM and representations that no ... 16(a) filing requirements during fiscal 2012. Proxy Statement YUM! BRANDS, INC. -...
  • Kentucky Fried Chicken 2012 Annual Report - Page 48
    ...cer - Yum Restaurants International Proxy Statement 2012 Business Highlights The power of YUM lies in... consecutive year that we exceeded our annual target of at least 10% • Opened a record ... to ensure alignment with the interests of our shareholders. For 2012, we highlighted four major growth ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 49
    ... 2006 2007 2008 2009 2010 2011 2012 *For purposes of calculating the year-over-year ... items excluded are the same as those excluded in the Company's annual earnings releases. EPS growth is calculated ...ects a calendar year end of December 31, 2012. Proxy Statement In addition to EPS growth, ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 50
    ...bonus paid and annual long-term incentive award value has remained relatively ï¬,at from 2009-2012. Since the beginning of 2008, the cumulative total shareholder return ...000 10 000 5 000 0 2008(2) 2009 2010 2011 2012 (1) Represents our CEO's base salary, stock options...
  • Kentucky Fried Chicken 2012 Annual Report - Page 51
    ... Shareholder Outreach and Engagement At our 2012 Annual Meeting of Shareholders, over 70% ... interest rates, and to provide him an annual benefit amount that will not ï¬,uctuate from year-to... for the Named Executive Officers is reviewed annually by the Committee, and has the following key ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 52
    ...-ups • Independent compensation consultant to advise Management Planning and Development Committee 2012 Executive Compensation Program and Decisions Our annual compensation program has three primary pay components: • Base salary ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 53
    ... Named Executive Officers • they are to assist the Committee in its determination of the annual compensation package for our Chief Executive Officer ... Officer compensation at the end of 2011 for pay actions in 2012. The group was chosen because the companies are reï¬,ective of ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 54
    ... and system wide revenues. The application of this philosophy means that, for purposes of the 2012 benchmarking, the Company, when considering franchisee sales, was ... historically normal interest rates, and to provide him an annual benefit amount that will not ï¬,uctuate from year-to-year due...
  • Kentucky Fried Chicken 2012 Annual Report - Page 55
    ... team performance measures, targets and weighting in January 2012 based on recommendations from management. The objectives were also reviewed ... performance above or below the performance target will have on the calculation of annual bonus. This leverage increases the payouts when targets are exceeded...
  • Kentucky Fried Chicken 2012 Annual Report - Page 56
    ...¬cers' compensation. Summary of Earned Annual Incentives for 2012 The table below summarizes how the formula ... on his role as CFO, as well as responsibility for KFC in the U.S. for 4 months at a blend of 90% YUM and 10% KFC team performance and for his role as President for 8 months at 100% YUM ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 57
    ... Committee determined his overall individual performance for 2012 was on target and approved a 115 individual ... of the Taco Bell, Pizza Hut and KFC US Divisions and Yum! Restaurants ...Officers are awarded long-term incentives annually based on the Committee's subjective assessment of the following ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 58
    ... at page 47. For the performance period covering 2012 - 2014 fiscal years, each Named... on the same underlying formula as theRetirement Plan. The annual benefit payable under these plans... ceased participating in the Pension Equalization Plan in 2012. The Company provides retirement benefits...
  • Kentucky Fried Chicken 2012 Annual Report - Page 59
    ...'s retirement from the Company or attainment of age 65. For 2012, Messrs. Grismer and Pant were... employee disability plan was changed to limit the annual benefit coverage to $300,000. For all... purchased individual disability coverage through 2012 (provided employment continues) to restore the lost...
  • Kentucky Fried Chicken 2012 Annual Report - Page 60
    ... option and stock appreciation rights grants annually at the Committee's January meeting. This meeting date is ... per year outside of the January time frame. In 2012, we made four Chairman's Awards ...cers received Chairman's Award grants during 2012. Management recommends the awards be made pursuant to ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 61
    ... these plans qualify as performance-based compensation. For 2012, the annual salary paid to Mr. Novak .... In this regard, the Committee set the maximum 2012 individual annual bonus for all executives based on... that section be incorporated by reference into our Annual Report on Form 10-K and included in...
  • Kentucky Fried Chicken 2012 Annual Report - Page 62
    ... compensation of the Named Executive Officers for our 2012 fiscal year. The Company's Named Executive Ofn.. most highly compensated officers for our 2012 fiscal year determined in accordance with SEC ..., YUM! Brands Salary Bonus Year ($)(1) ($) (b) (c) 2012 1,450,000 - 2011 1,474,038 - ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 63
    ... Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements... Program and subject to a risk of forfeiture are reported in column (d). If the deferral or a portion of the deferral.... Novak would have accrued during 2012 under the LRP, including both benefit...
  • Kentucky Fried Chicken 2012 Annual Report - Page 64
    ...All Other Compensation in the Summary Compensation Table above for 2012. Perquisites and Tax Insurance other personal ...of Mr. Grismer and Mr. Pant, this column reports the total amount of other benefits provided, ... Mr. Pant, this column also includes Company annual allocations of $91,438 and $300,000 ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 65
    ... in control. (3) Amounts in this column reflect the number of 2012 stock appreciation rights ("SARs") and ... price of the SARs/stock options granted in 2012 equals the closing price of YUM common... Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements...
  • Kentucky Fried Chicken 2012 Annual Report - Page 66
    ... Executive Officers on December 31, 2012. Option/SAR Awards(1) Number of Number... 1/24/2008 2/5/2009 2/5/2010 2/4/2011 2/8/2012 1/27/2014 1/27/2014 1/28... 1/24/2008 2/5/2009 2/5/2010 2/4/2011 2/8/2012 1/28/2005 11/18/2005... 5/21/2009 2/5/2010 2/5/2010 2/4/2011 2/8/2012 - Grismer - 55,352 3,675,373...
  • Kentucky Fried Chicken 2012 Annual Report - Page 67
    ...2/5/2009 2/5/2010 2/4/2011 11/18/2011 2/8/2012 Stock Awards Equity incentive Equity ... price of YUM stock on the NYSE on December 31, 2012. (4) The awards reflected in this column are unvested performance-... they vested on December 29, 2012; instead, these PSUs are reported in the Option Exercises and ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 68
    ... performance was met and certified. Mr. Grismer was not eligible for a PSU award for the 2010-2012 performance period and, therefore, there is nothing to report for him. (3) The amounts in column (e) represent the value realized on RSUs and PSUs that became ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 69
    ... YUM! Brands Retirement Plan ("Retirement Plan") 2012 FISCAL YEAR PENSION BENEFITS TABLE ... Retirement Plan to which the Company made allocations in 2012. and the YUM! Brands, Inc. Pension ... is the sum of the participant's base pay and annual incentive compensation from the Company, including amounts ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 70
    ...) if he retired from the Company on December 31, 2012 and received a lump sum payment. ... Internal Revenue Code Section 417(e)(3) (currently this is the annual 30-year Treasury rate for the 2nd ... Benefits (determined as of December 31, 2012) is calculated assuming that each participant is eligible ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 71
    ...Pant are eligible to participate in the LRP. The LRP provides an annual allocation to Mr. Grismer's account equal ... are allocated on the same day the RSUs attributable to the annual incentive are allocated, which is the same day ... Fund. Mr. Grismer deferred his 2012 annual incentive award into the YUM...
  • Kentucky Fried Chicken 2012 Annual Report - Page 72
    ...below is the portion of the year-end balance for each executive which has previously been reported as compensation to the executive in the Company's Summary Compensation Table for 2012 and prior years or would have been reported as compensation if...
  • Kentucky Fried Chicken 2012 Annual Report - Page 73
    ...Program, which permits the deferral of salary and annual incentive compensation. The last column of the Nonqualin..54 reports each Named Executive Officer's aggregate balance at December 31, 2012.... assuming termination of employment as of December 31, 2012. The table on page 52 provides the present...
  • Kentucky Fried Chicken 2012 Annual Report - Page 74
    ... the Named Executive Officers had died on December 31, 2012, the survivors of Messrs. Novak, Grismer, Su, Carucci and Pant ... executive will be entitled to receive the following: Proxy Statement • a proportionate annual incentive assuming achievement of target performance goals under the ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 75
    EXECUTIVE COMPENSATION If a change in control had occurred as of December 31, 2012, the following payments, or other benefits would have been made. Novak Grismer Su Carucci ...,982,800 $ 1,982,180 $ 8,410,000 $ 4,932,000 $ 3,720,076 Annual Incentive 4,584,320 760,760 2,039,813 1,846,785 1,620,000 ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 76
    ...amounts do not reflect amounts paid to or realized by the director for fiscal 2012. For a discussion of the assumptions used to value the awards, see the discussion...Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15...
  • Kentucky Fried Chicken 2012 Annual Report - Page 77
    ... INFORMATION Planning and Development Committee (Mr. Walter in 2012) receives an additional $15,000 stock retainer annually. Initial Stock ... and business travel accident insurance policies. The annual cost of this coverage was approximately $2 million. This is not included in ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 78
    EQUITY COMPENSATION PLAN INFORMATION What are the key features of the 1997 Plan? The 1997 Plan provides for the issuance of up to 90,000,000 shares of stock. Effective January 1, 2002, only restricted shares could be issued under this plan. This plan is utilized with respect to payouts on shares ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 79
    ... amended and restated effective November 16, 2012. The charter is reviewed by management at least annually, and any recommended changes are... auditors and manages the Company's relationship with its independent auditors (who report directly to the Committee). The Committee has the authority to obtain ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 80
    ... independent auditors and the Committee's review of the representations of management and the report of the independent auditors to the Board of Directors, and subject to ... financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 for fi...
  • Kentucky Fried Chicken 2012 Annual Report - Page 81
    ... materials in the mail may elect to receive future annual reports and proxy statements from us and ... reduce our environmental impact and to reduce Annual Report printing and mailing costs. ... and, if applicable, this proxy statement and Annual Report, to multiple shareholders sharing an address unless ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 82
    ...Brands, Inc., 1441 Gardiner Lane, Louisville, Kentucky 40213 by December 6, 2013. The proposal should ... for election as directors or to introduce an item of business at an Annual Meeting of Shareholders that is not included in our...¬ed in our bylaws. If the 2014 Annual Meeting is not held within 30...
  • Kentucky Fried Chicken 2012 Annual Report - Page 83
    ... the Option or SAR is granted; except that the Exercise Price shall not be less than the closing price of a share of Stock on the date of grant as reported on the composite tape for securities listed on the New York Stock Exchange (or if no sales of stock were made on said exchange on such date, on ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 84
    ... shall be not less than three years (provided that the required period for full vesting shall, instead, not be less than two years in the case of annual incentive deferrals payable in restricted shares) (subject to acceleration of vesting, to the extent permitted by (d) A-2 YUM! BRANDS, INC. - ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 85
    ... restricted shares or restricted units delivered pursuant to the settlement of earned annual incentives or base salary, each share of Stock shall be...except that Stock Units or Restricted Shares granted with respect to the deferral of annual cash incentive awards under the Company's deferral plan will...
  • Kentucky Fried Chicken 2012 Annual Report - Page 86
    APPENDIX (ii) (iii) the number and type of Shares (or other property) subject to outstanding Awards; the grant or Exercise Price with respect to outstanding Awards; and Awards and/or Award agreements; (ii) (iv) the terms, conditions or restrictions of outstanding provided, however, that all ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 87
    APPENDIX for actions, inactions, decisions, indecisions or any other role in relation to the Plan by a protected party if made or undertaken in good faith or in reliance on the advice of counsel (who may be counsel for the Company), or made or undertaken by someone other than a protected party. ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 88
    APPENDIX (b) The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee or other individual the right to be retained in the employ of the Company or any Subsidiary or the right to continue to provide services to the Company or ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 89
    APPENDIX 6.4 Information to be Furnished to Committee. The Company and Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Subsidiaries as to an employee's or Participant's ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 90
    ... the "Fair Market Value" of a share of Stock as of any date, Fair Market Value shall mean the average between the lowest and highest reported sale prices of the Stock on that date on the principal exchange on which the Stock is then listed or admitted to trading. If the day is not a business day, ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 91
    APPENDIX in which at least a fifty percent voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a successor ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 92
    ... EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15... No.) 1441 Gardiner Lane, Louisville, Kentucky 40213 (Address of principal executive ofn..-affiliates of the registrant as of June 16, 2012 computed by reference to the closing price of the registrant...
  • Kentucky Fried Chicken 2012 Annual Report - Page 93
    Table of Contents PART I ITEM 1 ITEM 1A ITEM 1B ITEM 2 ITEM 3 ITEM 4 3 Business ...3 Risk Factors ...6 Unresolved Staff Comments ...9 Properties...10 Legal Proceedings ...10 Mine Safety Disclosures ...11 PART II ITEM 5 ITEM 6 ITEM 7 ITEM 7A ITEM 8 ITEM 9 ITEM 9A ITEM 9B 12 Market for the ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 94
    Forward-Looking Statements In this Form 10-K, as well as in other written reports and oral statements that we make from time to time, we present "forward-looking ...set forth herein in future filings or communications regarding our business results. Form 10-K 2 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 95
    ...YUM, together with its subsidiaries, is referred to in this Form 10-K annual report ("Form 10-K") as the Company. The terms ... are located at 1441 Gardiner Lane, Louisville, Kentucky 40213, and the telephone number at that location... food. In addition, Taco Bell and KFC offer a drive-thru option in many...
  • Kentucky Fried Chicken 2012 Annual Report - Page 96
    ...the India units are Company-owned. • As of year end 2012, Taco Bell was the leader in the U.S. Mexican QSR segment,...secret blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed up his ... and territories throughout the world. As of year end 2012, KFC had 4,260 units in China, ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 97
    .... U.S. Division The Company, along with the representatives of the Company's KFC, Pizza Hut and Taco Bell ... future environmental legislation or regulations. During 2012, there were no material capital ... believes that many of these marks, including its Kentucky Fried Chicken®, KFC®, Pizza Hutn..
  • Kentucky Fried Chicken 2012 Annual Report - Page 98
    ... of our business. Employees As of year end 2012, the Company and its Concepts employed approximately ... the Investor Relations section of its internet website at www.yum.com its annual report on Form 10-K, quarterly ...past, and could occur in the future. Any report or publicity linking us or one of our...
  • Kentucky Fried Chicken 2012 Annual Report - Page 99
    ...currency exchange rates, which may adversely affect reported earnings. More specifically, an increase in ...the Euro, could have an adverse effect on our reported earnings. There can be no assurance as ...for leased properties on which we are contingently liable. YUM! BRANDS, INC. - 2012 Form 10-K 7...
  • Kentucky Fried Chicken 2012 Annual Report - Page 100
    ... resources away from our operations and negatively impact reported earnings. With respect to insured claims, a judgment for ... of poultry and cause customers to eat less chicken, which could negatively impact our pron.. could increase our exposure to litigation and 8 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 101
    ... could create additional risk. On February 1, 2012 we acquired an additional 66% interest ...no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission ... 180 days or more preceding the end of its 2012 fiscal year and that remain unresolved....
  • Kentucky Fried Chicken 2012 Annual Report - Page 102
    ...Irvine, California. The KFC U.S. and YUM corporate headquarters and a research facility in Louisville, Kentucky ...likely to have a material adverse effect on the Company's annual results of operations, financial Franchisees Form ... other labor law violations. 10 YUM! BRANDS, INC. - 2012 Form 10-K...
  • Kentucky Fried Chicken 2012 Annual Report - Page 103
    ... YUM. He has served in this position since May 2012. Prior to this position, Mr. Carucci served as Chief.... Eaton served as Chief Executive Officer of KFC U.S. and YUM Operational Excellence Officer .... He has served in this position since May 2012. Prior to this position, Mr. Grismer served as ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 104
    ... Matters and Issuer Purchases of Equity Securities 2012 Quarter First Second Third Fourth High ...57 Dividends Paid 0.25 0.25 0.25 0.285 $ In 2012, the Company declared two cash dividends of ... of which had a distribution date of February 3, 2012. The Company targets an annual dividend payout ratio of ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 105
    ... table provides information as of December 29, 2012 with respect to shares of Common Stock repurchased ...our outstanding Common Stock. On November 16, 2012, our Board of Directors authorized additional ... million of Common Stock under the November 2012 authorization. Stock Performance Graph This graph ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 106
    ..., INC. AND SUBSIDIARIES Fiscal Year 2010 2012 2011 2009 2008 SELECTED FINANCIAL DATA (... Franchisees Licensees System China system sales growth(c) Reported Local currency(d) YRI system sales growth... Local currency(d) India system sales growth(c) Reported Local currency(d) U.S. same store sales growth...
  • Kentucky Fried Chicken 2012 Annual Report - Page 107
    ... ownership in, and consolidation of, the operating entity that owns the KFCs in Shanghai, China, and the 2008 gain of ... distortion of foreign currency fluctuations. Fiscal years 2012, 2010, 2009 and 2008 include 52... brands - KFC, Pizza Hut and Taco Bell - are the global leaders in the chicken, pizza ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 108
    ... and unallocated income and expenses. In 2012, our India Division began being reported as a standalone reporting...rates referenced above represent our average annual targets for the next several years. Consistent ...billion in mainland China, the Company is rapidly adding KFC and Pizza Hut Casual Dining ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 109
    ...Trends or Uncertainties Impacting or Expected to Impact Comparisons of Reported or Future Results Special Items In addition ...), the YUM Retirement Plan settlement charge in 2012, the gain upon acquisition of Little Sheep... reductions from Pizza Hut UK and KFC U.S. restaurants impaired upon our decision...
  • Kentucky Fried Chicken 2012 Annual Report - Page 110
    ... Special Items Special Items EPS REPORTED EPS Reconciliation of Effective Tax Rate ... Settlement Charge During the fourth quarter of 2012, the Company allowed certain former employees ... of Income. Since the acquisition, we have reported the results of operations for the entity in the appropriate line ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 111
    ... subsequent to the refranchising as the fair value of the Taiwan reporting unit exceeded its carrying amount. The amount ... levels of antibiotics in chicken. Some of this chicken was purchased by two poultry suppliers of KFC China. ...not have a 53rd week in 2011. YUM! BRANDS, INC. - 2012 Form 10-K 19
  • Kentucky Fried Chicken 2012 Annual Report - Page 112
    ... $12 million, a payment of $9 million was made in July 2012 and the remainder is expected to be paid in cash during ..., pre-tax (78) $ Refranchisings reduce our reported revenues and restaurant profits and ... restaurants) and KFCs in Taiwan (124 restaurants). 20 YUM! BRANDS, INC. - 2012 Form 10...
  • Kentucky Fried Chicken 2012 Annual Report - Page 113
    ... of refranchising on Operating Profit as described above: 2012 Decreased Restaurant profit Increased Franchise..., 2010, the Company received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS.... We believe that the Company has properly reported taxable income and paid taxes...
  • Kentucky Fried Chicken 2012 Annual Report - Page 114
    ...Acquisitions(c) Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 27,852 1,058 ...Builds Acquisitions(c) Refranchising Closures BALANCE AT END OF 2012 % of Total Franchisees 153 4 47 (3) 201... Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 12,421 735...
  • Kentucky Fried Chicken 2012 Annual Report - Page 115
    ... Builds Refranchising Closures Other BALANCE AT END OF 2012 % of Total Franchisees 14,977 231 (... New Builds Acquisitions Closures BALANCE AT END OF 2012 % of Total Franchisees 301 88 (4) (1) - 384 ... 472 Little Sheep units acquired on February 1, 2012. Form 10-K Multibrand restaurants are included ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 116
    ... due to closures as well as any necessary rounding. 2012 vs. 2011 U.S. 5% (4) N/A (2) (1)% -% 2011 vs. 2010 U.S.... 3% 3 3 1 10% 6% For the year ended December 29, 2012, system sales growth includes a 1% and ... sales and Restaurant profit for each reportable segment by year. Store portfolio actions ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 117
    ... Analysis of Financial Condition and Results of Operations In 2012, the increase in China Company sales associated with ... commodity inï¬,ation of $90 million, or 8%. YRI 2012 vs. 2011 Income/(Expense) Company ...341 (743) (608) (700) 290 12.4% $ $ In 2012, the increase in YRI Company sales and ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 118
    ...11 5 China YRI U.S. India Unallocated WORLDWIDE $ $ 2012 334 $ 414 467 24 271... 191 1,277 The increase in China G&A expenses for 2012, was driven by increased compensation costs due... higher headcount. The increase in YRI G&A expenses for 2012 was driven by increased investment in strategic growth...
  • Kentucky Fried Chicken 2012 Annual Report - Page 119
    ... transformation measures. The increase in Unallocated G&A expenses for 2012 was driven primarily by higher pension costs,... of refranchising, partially offset by lapping bi-annual franchise convention costs. YRI Franchise ... (gain) loss by reportable operating segment. YUM! BRANDS, INC. - 2012 Form 10...
  • Kentucky Fried Chicken 2012 Annual Report - Page 120
    ....9% China Division Operating Profit increased 9% in 2012, excluding foreign currency, driven by the impact ... G&A expenses. U.S. Operating Profit increased 13% in 2012. The increase was driven by the impact of same-store... Interest income INTEREST EXPENSE, NET $ $ 2012 169 (20) 149 $ $ 2011 184...
  • Kentucky Fried Chicken 2012 Annual Report - Page 121
    ... where tax rates are generally lower than the U.S. rate. In 2012, this benefit was negatively impacted by the repatriation of current year foreign ... 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably impacted by the resolution of uncertain tax ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 122
    ... an ongoing annual dividend payout ratio of 35% to 40% of net income. On February 1, 2012... under the Credit Facility at December 29, 2012. The interest rate for most borrowings under... (excluding applicable transaction fees) under the 2012 authorization. Shares are repurchased opportunistically as part...
  • Kentucky Fried Chicken 2012 Annual Report - Page 123
    ... obligations and payments as of December 29, 2012 included: Less than 1 Year 144 .... Our funding policy for the Plan is to contribute annually amounts that will at least equal the minimum amounts ...¬ed to net income in its entirety in the same reporting period. ASU 2013-2 is effective for fiscal...
  • Kentucky Fried Chicken 2012 Annual Report - Page 124
    ...our other reporting units were substantially in excess of their respective carrying values as of the 2012 ... intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances... impairment was recorded. Form 10-K 32 YUM! BRANDS, INC. - 2012 Form 10...
  • Kentucky Fried Chicken 2012 Annual Report - Page 125
    ...value is disposed of in a refranchising transaction. During 2012, the Company's reporting units with the most significant... 5% of beginning-of-year goodwill). Within our KFC U.S. operating segment, 218 restaurants were... due receivable balances at December 29, 2012. As such, we believe our allowance...
  • Kentucky Fried Chicken 2012 Annual Report - Page 126
    ... of being realized upon settlement. At December 29, 2012 we had $309 million of unrecognized ... for financial reporting exceed the tax basis, totaling approximately $2.6 billion at December 29, 2012,... expense amounts for any particular quarterly or annual period could be affected by changes in our ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 127
    ... impact on the related debt. At December 29, 2012 and December 31, 2011 a hypothetical... exchange rates impact the translation of our reported foreign currency denominated earnings, cash...) totaled approximately $4.2 billion as of December 29, 2012. Operating in international markets exposes the Company...
  • Kentucky Fried Chicken 2012 Annual Report - Page 128
    ... Information Page Reference Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ..., 2010 Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 Consolidated ...cit) for the fiscal years ended December 29, 2012, December 31, 2011 and December 25...
  • Kentucky Fried Chicken 2012 Annual Report - Page 129
    ... 8 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm ... effective internal control over financial reporting, and for its assessment of the effectiveness of internal control... Louisville, Kentucky February 19, 2013 Form 10-K YUM! BRANDS, INC. - 2012...
  • Kentucky Fried Chicken 2012 Annual Report - Page 130
    ...! BRANDS, INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 (in millions, except per share data) 2012 $ 11,833 1,800 13,633 $ 2011 10,893 1,733...175 1,594 416 1,178 20 1,158 2.44 2.38 0.92 38 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 131
    ... INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 Year..., INC. See accompanying Notes to Consolidated Financial Statements. $ 2012 1,608 $ 2010 1,178 $ 27 (3) 3 - (19) 9 156 (... 1 1 1,179 24 1,155 Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 39
  • Kentucky Fried Chicken 2012 Annual Report - Page 132
    ..., INC. AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 (in millions) 2012 $ 1,608 $ 645 37 (78) (119) 84 (74) 28 (47) ... accompanying Notes to Consolidated Financial Statements. Form 10-K $ 40 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 133
    ... BRANDS, INC. AND SUBSIDIARIES DECEMBER 29, 2012 AND DECEMBER 31, 2011 (in millions) 2012 2011 ASSETS Current Assets Cash and cash equivalents Accounts and ... shares and 460 shares issued in 2012 and 2011, respectively Retained earnings ...) 1,823 93 1,916 8,834 YUM! BRANDS, INC. - 2012 Form 10-K 41
  • Kentucky Fried Chicken 2012 Annual Report - Page 134
    .... AND SUBSIDIARIES FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND DECEMBER 25, 2010 ... tax impact of $11 million) BALANCE AT DECEMBER 29, 2012 See accompanying Notes to Consolidated Financial Statements. ...) 16 (22) 451 $ $ 2,286 $ (132) $ 99 42 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 135
    ... operating segment ("U.S."). As a result of changes to our management reporting structure, in 2012 we began ... consolidate. Certain investments in entities that operate KFCs in China are accounted for by the equity method. These ... license arrangements provide our YUM! BRANDS, INC. - 2012 Form 10-K 43...
  • Kentucky Fried Chicken 2012 Annual Report - Page 136
    ... credit of the primary beneficiary. Therefore, we report all assets and liabilities of these advertising... effect at the balance sheet date. As of December 29, 2012, net cumulative translation adjustment gains ...December 29, 2012. These reclassifications had no effect on previously reported Net ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 137
    ... $557 million in 2012, 2011 and 2010, respectively. We report substantially all ... intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances... indicator of potential impairment for our semi-annual impairment testing of these restaurant assets...
  • Kentucky Fried Chicken 2012 Annual Report - Page 138
    ... change in measurement of a tax position taken in a prior annual period (including any related interest and...were included in Franchise and license expenses in 2012, 2011 and 2010, respectively. Trade ...million (net of an allowance of $4 million) at December 29, 2012 and December 31, 2011, respectively....
  • Kentucky Fried Chicken 2012 Annual Report - Page 139
    ... assumed is determined by comparing the fair value of the reporting unit before the acquisition to the fair value of the reporting unit after the acquisition. We evaluate goodwill for impairment on an annual basis or... immediately. For derivative Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 47
  • Kentucky Fried Chicken 2012 Annual Report - Page 140
    ... 25, 2010, respectively, arising from the impairment of the KFCs offered for sale in the year ended December ..., 2010 within our U.S. segment for performance reporting purposes. Rather, we recorded such ... expenses in the fourth quarter of 2012 which was not allocated for segment reporting purposes. See...
  • Kentucky Fried Chicken 2012 Annual Report - Page 141
    ... impacted both the U.S. and YRI segments' Operating Profit by 1% in 2012, the impact on our consolidated Operating Profit was not...the Consolidated Statements of Income. From the date of the acquisition, we have reported the results of operations for the entity in the appropriate line items of...
  • Kentucky Fried Chicken 2012 Annual Report - Page 142
    ... Consolidated Balance Sheet as of December 29, 2012 and will be amortized into YRI's Franchise... offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus... allocated to any segment for performance reporting purposes: 2012 Store closure (income) costs...
  • Kentucky Fried Chicken 2012 Annual Report - Page 143
    ...loss Continuing fees and rental income $ NOTE 7 Other (Income) Expense $ 2012 (47) $ (74) 6 (115 ) $ 2011 (47) $ - (6) (... acquisition of Little Sheep that were allocated to the China Division for performance reporting purposes. NOTE 8 Supplemental Balance Sheet Information $ 2012 55 $ 56 161 272...
  • Kentucky Fried Chicken 2012 Annual Report - Page 144
    ... and other, net(b) Balance as of December 29, 2012 Goodwill, gross Accumulated impairment losses ...26 million of goodwill assigned to our LJS and A&W reporting unit that was previously fully impaired. Goodwill that was assigned to our KFC U.S. and Taco Bell U.S. reporting units upon the acquisition of...
  • Kentucky Fried Chicken 2012 Annual Report - Page 145
    ... in 2013, $24 million in 2014, $23 million annually in 2015 and 2016 and $21 ...-TERM DEBT INCLUDING HEDGE ACCOUNTING ADJUSTMENT In 2012, the Company executed a five-year syndicated ... all debt covenant requirements at December 29, 2012 with a considerable amount of cushion. Additionally, the Credit ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 146
    ... issuance date and are payable semi-annually thereafter. (b) Includes the effects of the amortization of any ..., maintenance and insurance. At December 29, 2012 we operated nearly 7,600 restaurants,... $279 million, respectively. At December 29, 2012, unearned income associated with direct financing...
  • Kentucky Fried Chicken 2012 Annual Report - Page 147
    ... fair value of the hedged item. At December 29, 2012, foreign currency forward contracts outstanding had... have been reported as an additional $22 million to Long-term debt at December 29, 2012 ... continually assess the creditworthiness of counterparties. At December 29, 2012 and December 31, 2011, all ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 148
    ...were impaired either as a result of our semi-annual impairment review or when it was more likely than ... a restaurant or restaurant group would be refranchised. 2012 Pizza Hut UK refranchising impairment ... year of service. During the fourth quarter of 2012, the Company allowed certain former employees ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 149
    ... in the Consolidated Balance Sheet: U.S. Pension Plans 2012 - $ (19) (326) (345) $ International Pension ...(14) - (5) 945 $ (345) $ International Pension Plans 2012 2011 $ 187 $ 2 8 1 - - - - 5 (4) - (6) 193 $ 183 $ 21 ...loss Prior service cost $ $ U.S. Pension Plans 2012 421 $ 7 428 $ 2011 540 3 543...
  • Kentucky Fried Chicken 2012 Annual Report - Page 150
    ...obligation in excess of plan assets: U.S. Pension Plans 2012 1,290 $ 1,239 945 International Pension ...obligation in excess of plan assets: U.S. Pension Plans 2012 1,290 $ 1,239 945 International Pension... related to the U.S. business transformation measures taken in 2012, 2011 and 2010. Pension (gains...
  • Kentucky Fried Chicken 2012 Annual Report - Page 151
    ... benefit obligations at the measurement dates: U.S. Pension Plans 2012 2011 4.40% 4.90% 3.75% 3.75% ... above that were settled after December 29, 2012 Our primary objectives regarding the investment ... up 81% of total pension plan assets at the 2012 measurement date, are to reduce interest rate and...
  • Kentucky Fried Chicken 2012 Annual Report - Page 152
    ... cost trend rates for the following year as of 2012 and 2011 are 7.4% and 7.5%, respectively, with expected ... other comprehensive loss was $8 million at the end of 2012 and $12 million at the end of 2011.... participants to defer receipt of a portion of their annual salary and all or a portion of their ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 153
    ...pricing model with the following weighted-average assumptions: 2012 0.8% 6.0 29.0% 1.8% 2011 2.0% 5.9 28.2% 2.0% 2010 2.4% 6.0 30... options. The expected dividend yield is based on the annual dividend yield at the time of grant. The fair ... options and SARs granted during 2012, 2011 and 2010 was $15.00,...
  • Kentucky Fried Chicken 2012 Annual Report - Page 154
    ... $ $ $ $ $ $ $ $ $ $ $ $ Cash received from stock option exercises for 2012, 2011 and 2010, was $62 million...(a) $ 733(b) $ 390(b) Authorization Date November 2012 November 2011 January 2011 March... for future repurchases under our November 2012 share repurchase authorization. Accumulated Other...
  • Kentucky Fried Chicken 2012 Annual Report - Page 155
    ... where tax rates are generally lower than the U.S. rate. In 2012, this benefit was negatively impacted by the repatriation of current year foreign ... 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably impacted by the resolution of uncertain tax ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 156
    ... in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have... tax is approximately $2.6 billion at December 29, 2012. A determination of the deferred tax liability on this amount... (16) (45) 600 At December 29, 2012, the Company has foreign operating and...
  • Kentucky Fried Chicken 2012 Annual Report - Page 157
    ... 23, 2010, the Company received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS") ... 2008. The potential $ additional taxes for 2009 through 2012, computed on a similar basis to the 2004-2008 ..., operating, franchising and licensing the worldwide KFC, Pizza Hut and Taco Bell ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 158
    ...Net; and Income Before Income Taxes 2012 2011 2010 $ 1,015 $ 908 $ 755 ...145 $ 1,659 $ 1,594 Depreciation and Amortization 2012 2011 332 $ 257 $ 162 181 ... 177 6 5 4 8 645 $ 628 $ Capital Spending 2012 2011 655 $ 405 $ 251 240 ... 1,099 $ 940 $ Identifiable Assets 2012 2011 3,752 $ 2,527 $ 2,663 2,847 ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 159
    ... to the U.S., YRI or China Division segments for performance reporting purposes. (b) Includes equity income from investments ..., for China. (c) 2012, 2011 and 2010 include depreciation reductions arising from the impairment of KFC ... under such leases at December 29, 2012 and December 31, 2011 was not ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 160
    ... healthcare and long-term disability claims, including reported and incurred but not reported claims, based on information provided by independent actuaries. Due to the inherent volatility of actuarially ... could be material to our growth in quarterly and annual Net income. We believe that we have...
  • Kentucky Fried Chicken 2012 Annual Report - Page 161
    ... the possible issuance of an injunction. On September 17, 2012, the court issued an order modifying its October ...certification under the FLSA on January 10, 2012, granted conditional certification and... Consolidated Financial Statements. On July 27, 2012, a putative class action lawsuit, styled...
  • Kentucky Fried Chicken 2012 Annual Report - Page 162
    ...Data (Unaudited) First Quarter Second Quarter 2012 Third Quarter 3,142 $ 427 3,569 ..., as required. Other financial information presented in the annual report is derived from the financial statements. We ... believe our controls as of December 29, 2012 provide reasonable assurance that our assets...
  • Kentucky Fried Chicken 2012 Annual Report - Page 163
    ...reporting was effective as of December 29, 2012. KPMG LLP, an independent registered public accounting firm,... audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and the effectiveness... during the quarter ended December 29, 2012. ITEM 9B Other Information None...
  • Kentucky Fried Chicken 2012 Annual Report - Page 164
    ...than 120 days after December 29, 2012. Information regarding executive officers ...than 120 days after December 29, 2012. Form 10-K ITEM 12 Security ...than 120 days after December 29, 2012. ITEM 13 Certain Relationships and ...than 120 days after December 29, 2012. ITEM 14 Principal Accountant Fees ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 165
    ... Statement Schedules (a) (1) (2) Financial Statements: Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K. Financial ... required to be filed as an exhibit to this Form 10-K. (3) Form 10-K YUM! BRANDS, INC. - 2012 Form 10-K 73
  • Kentucky Fried Chicken 2012 Annual Report - Page 166
    ... registrant has duly caused this Form 10-K annual report to be signed on its behalf by the undersigned, thereunto duly... Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by... February 19, 2013 Form 10-K 74 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 167
    ...4, 2010. Credit Agreement, dated March 22, 2012 among YUM, the lenders party thereto, JPMorgan...on Form 10-Q for quarter ended March 24, 2012. YUM Director Deferred Compensation Plan, ... incorporated herein by reference from Exhibit 10.7 to YUM's Annual Report on Form 10-K for the fiscal year ended ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 168
    ...YUM Purchasing Co-op Agreement, dated as of January 1, 2012, between YUM and the Unified ... incorporated by reference from Exhibit 10.21.1 to YUM's Annual Report on Form 10-K for the fiscal year ended... Indicates a management contract or compensatory plan. 76 YUM! BRANDS, INC. - 2012 Form 10-K
  • Kentucky Fried Chicken 2012 Annual Report - Page 169
    Shareholder Information Inquiries Regarding Your YUM Holdings REGISTERED SHAREHOLDERS (those who hold YUM shares in their own names) should address communications concerning statements, address changes, lost certificates and other administrative matters to: American Stock Transfer & Trust ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 170
    ... the symbol YUM. Franchise Inquiries ONLINE FRANCHISE INFORMATION Information about potential franchise opportunities is available at www.yumfranchises.com Yum! Brands' Annual Report contains many of the valuable trademarks owned and used by Yum! ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 171
    ... Creed 55 Chief Executive Officer, Taco Bell Jonathan S. Linen 69 Advisor to Chairman, American Express Company John Cywinski 50 President, KFC U.S. Thomas C. Nelson 50 Chairman, Chief Executive Officer and President, National Gypsum Company Roger Eaton 52 Chief Operations Officer, Yum! Brands, ...
  • Kentucky Fried Chicken 2012 Annual Report - Page 172
    Alone We're Delicious. Together We're Yum!® Yum! Brands, Inc., trades under the symbol YUM and is proud to meet the listing requirements of the NYSE, the world's leading equities market.