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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 ...$ 2.74 2,170 Special Items Earnings Per Common Share (a) $ 0.13 (0.13) Reported Diluted ... our 2012 Form 10-K for further discussion of Special Items. Contents Dear Partners...1 Building ...
  • Page 3
    ... Return on Invested Capital of 22%. Our strong cash flow generation allowed us to increase our dividend rate 18%, to an annual rate of $1.34 per share. Our share price increased 13% for the full year, on top of 20% in 2011. Looking back, we ...
  • Page 4
    ... our Investor and Analyst Day in New York. This meeting gives us the opportunity to "go public" with our goals and commitments as well as showcase our management talent from around ... around the world. Over 39,000 Building sales layers and expanding day parts. As a matter of fact, ...
  • Page 5
    ...we crossed the billion dollar profit mark in 2012, opened our 4,000th KFC, our 800th Pizza Hut Casual Dining Restaurant, and opened 889 ... to expand into new cities and increase its penetration levels in existing markets. At 826 units, Pizza Hut Casual Dining is the leader in its category. Both KFC 3
  • Page 6
    ... our two big brands KFC and Pizza Hut Casual Dining. We will also continue to invest behind Pizza Hut Home Service, Little Sheep and East Dawning. Our new unit target of at least 700 remains unchanged for 2013. Pizza Hut Casual Dining restaurants in China. 826 ...
  • Page 7
    ... row we have built more than 100 new units, and we expect that number to grow as we build even more capability in India. Our concepts appeal to a... before foreign currency translation, and developed a record 949 new units, with 65% of them in emerging markets. It's clear we are a ...
  • Page 8
    innovative experiences with KFC, Pizza Hut Casual Dining, Pizza Hut Home Service and Taco Bell. We will invest behind building each of these brands in India and expect all of them to drive tremendous future growth. We are on our way to making this business ...
  • Page 9
    ... major headway building each of our brands. Operating profit grew 13%, and same-store sales increased 5% for the 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 media ...
  • Page 10
    ...our development and were net-unit positive for the year. We added 150 net new units at Pizza Hut and over 30 net new units at Taco Bell. With improved unit-level...past 4 years of negative same-store sales growth. go from about 5,000 to 8,000 units and Pizza Hut to expand from over ...
  • Page 11
    ...-leading, long-term shareholder and franchisee value. penetrated markets like Pizza Hut UK and increasing our exposure in emerging and under-penetrated markets. We also... partner in Turkey, a highgrowth emerging market that has over 100 KFC and Pizza Hut restaurants. Our success ...
  • Page 12
    ...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 ... all our team members, restaurant general managers, franchisees, community partners and restaurant support leaders who are giving their all to win...
  • Page 13
    ... back the vision defining global company that feeds the world famous recognition culture where everyone ... Customer Mania come alive for every customer in every restaurant Build dynasties in every country Always connect with customers, always reach, always lead a company with a huge heart Open...
  • 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 ...
  • Page 15
    ... for the Shareholders Meeting to Be Held on May 15, 2013-this Notice and the proxy statement are available at www.yum.com/investors/investor_materials. asp. The Annual Report on Form 10-K is available at www.yum.com/annualreport.
  • Page 16
  • Page 17
    ... come before the meeting. WHO CAN VOTE: You can vote if you were a shareholder of record as of the close of business on March 18, 2013. ANNUAL REPORT: A copy of our 2012 Annual Report on Form 10-K is included with this proxy statement. WEBSITE: ...
  • Page 18
    ...ITEM 5 1 1 6 13 Election of Directors (Item 1 on the Proxy Card)...13 Ratification of Independent Auditors ... and Analysis ...30 Management Planning and Development Committee Report ...43 Summary ... ...55 DIRECTOR COMPENSATION EQUITY COMPENSATION PLAN INFORMATION AUDIT COMMITTEE REPORT ADDITIONAL...
  • Page 19
    ...rules, we are making this proxy statement and our Annual Report available to our shareholders ...containing instructions on how to access this proxy statement and our Annual Report and vote online... of the important information contained in the proxy statement and Annual Report. The Notice also instructs...
  • Page 20
    ... admission ticket. If you received the proxy statement and Annual Report by mail, you will find an admission ticket attached to the proxy card sent ...of general interest following the Annual Meeting. In order to give a greater number of shareholders an opportunity to ask questions,...
  • Page 21
    ...11:59 p.m., Eastern Daylight Saving Time, on May 14, 2013. Proxy Statement Can I vote at the Annual Meeting? Shares registered directly in your name as the shareholder of record may be voted in person at the Annual Meeting. Shares held in street name may be voted in ...
  • Page 22
    ...firms have the authority under the New York Stock Exchange rules to vote shares for which their customers do not provide voting...proxy by Internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of the outstanding shares of YUM common stock, as of March 18, 2013, must...
  • Page 23
    ... announce 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 of the Annual Meeting. What if other matters are presented for consideration at the ...
  • Page 24
    ...elected? Our Board of Directors presently consists of 12 directors whose terms expire at this Annual Meeting. As discussed in more detail later in this section... that 9 of the 12 current and continuing directors are independent under the rules of the New York Stock Exchange ("NYSE"). 6 YUM! BRANDS, ...
  • Page 25
    ...Meeting of Shareholders? The Board of Director's policy is that all directors should attend the Annual Meeting and 8 of the Company's 11 then directors attended the 2012 Annual Meeting. How does the Board select nominees for the Board? The Nominating and ...
  • Page 26
    GOVERNANCE OF THE COMPANY its annual review which included engaging in dialogue and receiving input from a number of... management. The lead director position has no term limit and is subject only to annual approval...management. The lead director position has no term limit and is subject only to annual ...
  • Page 27
    ...top level employees is associated with the long term performance of the Company. • The annual incentive target setting process is closely linked to the annual financial planning process and supports the Company's overall strategic plan. • ...
  • Page 28
    ... and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and... addition to our policy on communicating with our non-management directors. Any person, whether or not an employee, who has a concern about the conduct of the Company or any ...
  • Page 29
    ...and financial control • Reviews the annual audited financial statements and results of the audit with management and the independent... Corporate Governance Principles • Receives comments from all directors and reports annually to the Board with assessment of the Board's performance...
  • Page 30
    ..., the Company requires stock ownership by directors. The Board of Directors expects non-management directors to hold a meaningful number of shares of Company common stock and expects non-management directors to retain shares acquired as compensation as a ...
  • Page 31
    ... below contains information regarding the person's service as a director, business experience, director positions held currently or at any time during the ... sound judgment, as well as a commitment of service to YUM and our Board. Finally, we value their significant ...
  • Page 32
    ....'s Treasury & Securities Services business, one of the world's largest cash management providers and... • Expertise in branding, marketing, sales and international business development • Public company directorship... M. Graddick-Weir Age 58 Director Since 2012 Executive Vice President, Human...
  • Page 33
    ...-related services company • Expertise in finance, marketing and international business development • Public ... Proxy Statement Bonnie G. Hill Age 71 Director since 2003 President, B. Hill ... Executive Officer of National Gypsum Company, a building products manufacturer, since 1999 ...
  • Page 34
    ... Officer, KFC and Pizza Hut from August 1996 to July 1997, at which time he became acting ... Division. Prior to this position, he was the Vice President of North Asia for both KFC and Pizza Hut. Specific qualifications, experience, skills and expertise: • Operating and management ...
  • Page 35
    ... the aforementioned nominees will serve as directors and hold office until the 2014 Annual Meeting of Shareholders and until their respective ... of Directors. What vote is required to elect directors? A nominee will be elected as a director if the number of "FOR" votes exceeds the ...
  • Page 36
    ... following table presents fees for professional services rendered by KPMG for the audit of the Company's annual financial statements for 2012 and 2011, and fees billed for audit-related services, tax services and all other services rendered by KPMG for 2012 and 2011. 2012 ...
  • Page 37
    ...marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new restaurants outside the United ... in the highly competitive market for talent, while maximizing shareholder returns. This approach has made our management team a key ...
  • Page 38
    ...(from approximately 90% stock appreciation rights and 10% performance share plan units in 2012); ... vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. While this vote is advisory and non-binding on the Company, the Board of Directors and ...
  • Page 39
    ... does not seek to increase the number of shares of common stock that may be issued under... than the Chief Financial Officer, to $1 million per year. This limit does not... be the responsibility of the Committee. The Management Planning and Development Committee of the Company's Board currently serves...
  • Page 40
    ...or independent of any option grant. A SAR entitles the Participant to receive the amount by which the fair market value of a specified number of shares on the exercise date exceeds an exercise price established by the Committee. The exercise price ...
  • Page 41
    ... the LTIP is satisfied by tendering shares of stock to the Company (by either actual delivery or by attestation), only the number of shares of ... of shares of stock available for delivery under the LTIP. For purposes of applying the limit of the number of shares of stock available under the LTIP, ...
  • Page 42
    ITEM 4 RE-APPROVAL OF YUM! BRANDS, INC. LONG TERM INCENTIVE PLAN PERFORMANCE ...and the then fair market value of the distributed shares. The Company will be entitled to a corresponding tax deduction.... fair market value of those shares, and the Company will be entitled to a corresponding tax deduction....
  • Page 43
    ... shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of the proponent ... that ends up as ocean debris. Proxy Statement YUM! Brands 2010 corporate social .... The report, to be prepared at reasonable cost, may omit confidential information. SUPPORTING STATEMENT ...
  • Page 44
    ... PACKAGING RECYCLING Management Statement in Opposition to Shareholder Proposal What is the Company's position regarding this proposal? The Board of Directors recommends that ... food packaging and including greater recycled content: • Pizza Hut U.S.'s, packaging includes 95% fiber sourced ...
  • Page 45
    ... within five years following their appointment to their current position. The table shows the number of shares of common stock and common stock equivalents beneficially owned as of December 31, 2012. Included are shares that could have been acquired within 60 ...
  • Page 46
    ... 1,622,761 8,165,534 2,030,781 10,196,315 (1) Shares owned outright. These amounts include the following shares held pursuant... options and SARs awarded under our employee or director incentive compensation plans. For stock options, we report shares equal to the number of options exercisable within 60...
  • Page 47
    ... our directors, executive officers and persons who own more than 10% of the outstanding shares of YUM common stock to file with the SEC reports of their ownership and changes in their ownership of YUM common stock. Directors, executive officers and greater-...
  • Page 48
    ...-year growth in earnings per share (excluding special items) of 13%-marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new restaurants outside the United States • Grew operating ...
  • Page 49
    ... year-over-year EPS growth and the related increase in our stock price and Total Shareholder Return ("TSR") over the... initial impact of expensing stock options in 2005. The special items excluded are the same as those excluded in the Company's annual earnings releases. EPS growth is calculated based ...
  • Page 50
    ... comprised of base salary, bonus paid and annual long-term incentive award value has remained relatively ï¬,at from 2009-2012. Since the beginning...(1) in $ 20 000 15 000 10 000 5 000 0 2008(2) 2009 2010 2011 2012 (1) Represents our CEO's base salary, stock options/SARS, ...
  • Page 51
    ..., Mr. Novak will receive an allocation to his pension account equal to 9.5% of his salary and target bonus and will receive an annual interest allocation on his account balance equal to 120% of the applicable federal rate. (See footnote (5) to the Summary ...
  • Page 52
    ...Long-term equity performance-based incentives Our target pay philosophy for these components as compared to the market is (see page 35 for discussion on ... Named Executive Officers' total compensation target for the current year which includes base salary, annual bonus opportunities and long-term ...
  • Page 53
    ... any member of the Management Planning and Development Committee or management • Meridian's partners and employees who provide services to the Committee are prohibited from owning YUM stock per Meridian's firm policy Use of ...
  • Page 54
    ... Officer, the Company generally attempts to deliver pay at the 75th percentile of the market if ... and it was used as a frame of reference for establishing compensation targets for base salary, annual bonus ...Paid - Used actual bonus paid rather than target bonus when benchmarking pay opportunities ...
  • Page 55
    ... the goals support the Company's overall strategic objectives. The performance targets were developed through the Company's annual financial planning process, which takes into account division growth strategies, historical performance, and the ...
  • Page 56
    .... (2) Actual operating profit growth was adjusted for the impact of certain non-recurring costs within our Pizza Hut U.K. market. (3) Actual system sales growth was adjusted for the impact of the 53rd week and the divestiture of LJS/A&W ...
  • Page 57
    ... was on target and approved a 115 individual performance factor. This determination was based upon his leadership of the Taco Bell, Pizza Hut and KFC US Divisions and Yum! Restaurants International Division along with the successful transition ...
  • Page 58
    ... annual growth rate as set forth in the chart below: EPS Growth Payout as % of Target
  • Page 59
    ... 11,090,659 12 Pant 50,000 106,769 $ 7,089,462 9 (1) Calculated as of December 31, 2012 and represents shares owned outright and vested RSUs granted to Mr. Novak in 2008 and all RSUs acquired under the Company's Executive Income Deferral Program. ...
  • Page 60
    ...and stock appreciation rights grants annually at the Committee's January meeting. This meeting date is set by the Board of Directors more than six months prior to the actual meeting. The Committee sets the annual grant date as the second business day after our fourth quarter earnings...
  • Page 61
    ... review and discussion, recommended that section be incorporated by reference into our Annual Report on Form 10-K and included in this proxy statement. THE MANAGEMENT PLANNING AND DEVELOPMENT COMMITTEE Robert D. Walter, Chair David...
  • Page 62
    ... Executive Officers for our 2012 fiscal year. The Company's Named Executive Ofn.. 2,118,973 Proxy Statement Name and Principal Position (a) David C. Novak Chairman,...,038 - 2010 1,400,000 - 2012 500,308 Stock Awards ($)(2) (d) 773,022 ...,880 493,551 - - 1,014,347 2012 1,088,462 2011 1,007,692...
  • Page 63
    ... awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." (4) Except as ...
  • Page 64
    ... with life insurance coverage up to one times the employee's salary plus target bonus. The amount of income deemed received with ...Mr. Grismer and Mr. Pant, this column also includes Company annual allocations of $91,438 and $300,000 respectively to an unfunded, unsecured account based retirement plan...
  • Page 65
    ...stock awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." There can be ...
  • Page 66
    ...,134 1,668,898 605,966 - - Stock Awards Equity incentive Equity incentive Market plan awards: plan awards: Number Value of market or Number of of Shares payout value unearned or Units Shares or Units of of unearned shares, units of Stock...
  • Page 67
    ...Equity incentive Market plan awards: plan awards: Number Value of market or Number of of Shares payout value unearned or Units Shares or Units of... that vests after five years. (3) The market value of these awards are calculated by multiplying the number of shares covered by the award...
  • Page 68
    EXECUTIVE COMPENSATION Option Exercises and Stock Vested The table below shows the number of shares of YUM common stock acquired during 2012 upon exercise of ... and broker commissions. Option Awards Stock Awards Value Number of Value Number of realized on Shares Acquired Realized on ...
  • Page 69
    ... value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such ... YUM! Brands Retirement Plan ("Retirement Plan") 2012 FISCAL YEAR PENSION BENEFITS TABLE Number of Years of Present Value of Payments During Credited...
  • Page 70
    ... actuarial assumptions for lump sums required by Internal Revenue Code Section 417(e)(3) (currently this is the annual 30-year Treasury rate for the 2nd month preceding the date of distribution and the gender blended 1994 Group Annuity Reserving Table ...
  • Page 71
    ... performance of actual investments; that is, they provide market rate returns and do not provide for... their annual incentive into this fund acquire additional phantom shares (called restricted stock ... Returns. The LRP provides an annual earnings credit to each participant's account based on the value ...
  • Page 72
    ...in the narrative above this table. The EID Program earnings are market based returns and, therefore, are not reported in the Summary Compensation Table. For... market earnings accruing to each of their accounts under the LRP. For above market earnings on nonqualified deferred compensation, see...
  • Page 73
    ... 2012, given the Named Executive Officer's compensation and service levels as of such date and, if applicable, based on the Company's closing stock price on that date. These benefits are in addition to benefits available generally...
  • Page 74
    ... Novak, Grismer, Su, Carucci and Pant would have received Company-paid life insurance of $3,360,000; $1,100,000; $2,365,...be entitled to receive the following: Proxy Statement • a proportionate annual incentive assuming achievement of target performance goals under the bonus plan or, if higher, ...
  • Page 75
    ... $ 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,... does not exceed the threshold for which excise tax is payable by more than 10%. In accordance with the Company's change in control severance agreements, Mr. Grismer's severance payment would be...
  • Page 76
    ... awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." (3) At December ...
  • Page 77
    ...15,000 stock retainer annually. Initial Stock Grant upon Joining Board. Non-employee directors also receive a one-time stock grant with a fair market value of $... not sell any of the Company's common stock received as compensation for service on the Board until the director has ceased being...
  • Page 78
    ... SharePower Plan is administered by the Management Planning and Development Committee of the Board of Directors. The exercise price of a stock option ... The RGM Plan provides for the issuance of up to 30,000,000 shares of common stock at a price equal to or greater than the closing price of our stock ...
  • Page 79
    ... was amended and restated effective November 16, 2012. The charter is reviewed by management at least annually, and any recommended changes are presented to the Audit Committee for ... effectiveness of internal control over financial reporting. YUM! BRANDS, INC. - 2013 Proxy Statement 61
  • Page 80
    ... Committee Charter, the Committee recommended to the Board of Directors that it include the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 for filing with the ...
  • Page 81
    ... may elect to receive future annual reports and proxy statements from us and to vote their shares through the Internet instead...single Notice and, if applicable, this proxy statement and Annual Report, to multiple shareholders sharing an address unless contrary instructions have been received from the...
  • Page 82
    ... must follow to nominate persons for election as directors or to introduce an item of business at an Annual Meeting of Shareholders that is not included in... procedures provide that nominations for director nominees and/or an item of business to be introduced at an Annual Meeting of Shareholders must ...
  • Page 83
    ... (as determined in accordance with subsection 2.5), value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of shares of Stock at the time of exercise; over (b) an Exercise Price established by the ...
  • Page 84
    ...than the Fair Market Value of the Stock at the time of such grant; provided, however, that an exercise price ...earnings per share; market value added or economic value added; profits; return ... two years in the case of annual incentive deferrals payable in restricted shares) (subject to acceleration...
  • Page 85
    ...ciaries under the Plan shall be 70,600,000 (which number includes all shares ... the maximum number of shares of Stock available for delivery under the Plan. If the exercise price... place, being exchanged for a different number or class of shares or other securities of the Company, or for shares of stock...
  • Page 86
    ... the Participant, through the surrender of shares of Stock which the Participant already owns, or through the surrender of shares of Stock to which the Participant is otherwise entitled under the Plan. Subsections 4.5, 4.6 and 4.7 shall be ...
  • Page 87
    ... a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). Subject to the overall limitation on the number of shares of Stock that may be delivered under the Plan, the Committee may use available shares of Stock as the form ...
  • Page 88
    ..., Restricted Stock Units, and Performance Shares (including any Award payable in Stock which is granted in conjunction with a Company deferral program)...shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the ...
  • Page 89
    ... for it to discharge its duties. The records of the Company and Subsidiaries as to an employee's or Participant's employment (or other provision of services), termination of ... Board; (ii) no amendments may increase the limitations on the number of shares set forth in subsections 4.2(b) and 4.2(e) or ...
  • Page 90
    ... services. Fair Market Value. For purposes of determining the "Fair Market Value" of a share of Stock ... Market Value shall mean the average between the lowest and highest reported sale...' cease for any reason to constitute a majority of the number of directors then serving; individuals who, on the date...
  • Page 91
    ... section 409A, options and SARs shall not be granted to employees or directors of Subsidiaries unless the ownership of the Subsidiary satisfies ... Reg. §1.409A-1(b)(5)(iii). (i) Stock. The term "Stock" shall mean shares of common stock of the Company. Proxy Statement YUM! BRANDS, INC. - 2013 ...
  • Page 92
    ... SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE... the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). The aggregate market value of the voting stock (which consists solely of shares of Common ...
  • Page 93
    ... and Results of Operations...15 Quantitative and Qualitative Disclosures About Market Risk ...35 Financial Statements and ... and Related Transactions, and Director Independence ...72 Principal Accountant Fees and Services ...72 PART IV ITEM 15 73 Exhibits and Financial Statement Schedules...73
  • Page 94
    ... Form 10-K, as well as in other written reports and oral statements that we make from time to time, we present "forward-looking statements"... this Form 10-K and (ii) the factors described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item...
  • Page 95
    ... three concepts of KFC, Pizza Hut and Taco Bell (the "Concepts"), the Company develops, operates, franchises and ... restaurants, primarily Company-owned KFCs and Pizza Huts. In 2012, the China Division recorded revenues ... basis. Pizza Hut and, on a much more limited basis, KFC offer delivery service. ...
  • Page 96
    ... 4 percent of the YRI units, 6 percent of the U.S. units, and 1 percent of the India units are Company-owned. • Pizza Hut operates in the delivery and casual dining segments around the world. Outside of the U.S., Pizza Hut often uses ...
  • Page 97
    ..., including U.S.-based suppliers that export to many countries. U.S. Division The Company, along with the representatives of the Company's KFC, Pizza Hut and Taco Bell franchisee groups, are members in the Unified FoodService Purchasing Co-op, LLC (...
  • Page 98
    ... of our business. Employees As of year end 2012, the Company and its Concepts employed approximately 523,000 persons, ... makes available through the Investor Relations section of its internet website at www.yum.com its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on ...
  • Page 99
    ... our results of operations and the value of our foreign assets are affected by fluctuations in currency exchange rates, which may adversely affect reported earnings. More specin.. and meet construction schedules. Expansion into target markets could also be affected by our franchisees'...
  • Page 100
    ... of refranchising restaurants in the U.S., which has reduced and is expected to continue to reduce the percentage of Company ownership of KFCs, Pizza Huts, and Taco Bells in the U.S. Once executed, the success of the refranchising program ...
  • Page 101
    ...such as payroll, sales, use, value-added, net worth, property, withholding and franchise ...levels and promotional initiatives, customer service, reputation, restaurant location, and attractiveness and... or current reports from the staff of the Securities and Exchange Commission that were issued 180 days...
  • Page 102
    ... U.S. and YRI corporate headquarters and a research facility in Plano, Texas are owned by Pizza Hut. Taco Bell leases its corporate headquarters and research facility ... years and generally have renewal options; however, Pizza Hut delivery/ ITEM 3 Legal Proceedings condition or cash ...
  • Page 103
    ... President and Chief Concept Officer of Pizza Hut, a position he held beginning in November 2006. ...2005. Greg Creed, 55, is Chief Executive Officer of Taco Bell. He has served in ...from September 2007 to June 2008; and Chief Financial Officer of Pizza Hut UK from May 2005 to September 2007....
  • Page 104
    ...sets forth the high and low NYSE composite closing sale prices by quarter for the Company's Common Stock and dividends per common share. $ ... $0.285 per share of Common Stock, one of which had a distribution date of February 3, 2012. The Company targets an annual dividend payout ratio of 35% to 40% ...
  • Page 105
    ... 2012 with respect to shares of Common Stock repurchased by the Company during the quarter then ended: Total number of shares purchased (thousands) 436 1,204... of our outstanding Common Stock. On November 16, 2012, our Board of Directors authorized additional share repurchases through ...
  • Page 106
    ... system sales growth(c) Reported Local currency(d) India system sales growth(c) Reported Local currency(d) U.S. same store sales growth(c) Shares outstanding at year end Cash dividends declared per Common Stock Market price per share at year end $ 11,833 1,800 13,...
  • Page 107
    ...Fiscal years 2012, 2010, 2009 and 2008 include 52 weeks and fiscal year 2011 includes 53 ...than 125 countries and territories operating primarily under the KFC, Pizza Hut or Taco Bell brands. In ...results for 2011 and 2010. The Company's primary restaurant brands - KFC, Pizza Hut and Taco Bell - are...
  • Page 108
    ...Company has developed the KFC and Pizza Hut brands into the leading quick service and casual dining restaurant brands, respectively, ...KFC and Pizza Hut Casual Dining restaurants and testing the additional restaurant concepts of Pizza Hut Home Service (pizza delivery) and East Dawning (Chinese food). ...
  • Page 109
    ...(a) REPORTED EFFECTIVE TAX RATE EFFECTIVE TAX RATE BEFORE SPECIAL ITEMS (a) See Note 3 for the number of shares used in these calculations. $ $... LJS and A&W brands. Other Special Items Income (Expense) includes the depreciation reductions from Pizza Hut UK and KFC U.S. restaurants impaired upon our ...
  • Page 110
    ..., we recorded pre-tax refranchising gains of $122 million in the U.S., primarily due to gains on sales of Taco Bells. In the years...result of settlement payments exceeding the sum of service and interest costs within the Plan in 2012, pursuant to our policy, we recorded a pre-tax settlement charge of ...
  • Page 111
    ... the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom. The newly signed franchise agreement for ... of our decision to refranchise or close all of our remaining company-owned Pizza Hut UK dine-in restaurants, ...
  • Page 112
    ... we choose to continue investing capital. In the U.S., we are targeting Company ownership of KFC, Pizza Hut and Taco Bell restaurants of about 10%, down .... Additionally, in December 2012 we refranchised 331 remaining Company-owned dine-in restaurants in the Pizza Hut UK business and during 2010, we ...
  • Page 113
    ... II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations... revenues as described above: 2012 Decreased Company sales Increased Franchise and license ... received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS") relating to its examination...
  • Page 114
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Restaurant Unit Activity Worldwide... Builds Refranchising Closures Balance at end of 2011 New Builds Acquisitions(c) Refranchising Closures BALANCE AT END OF 2012 % of Total Franchisees 153 4 47...
  • Page 115
    ... units excluded offer limited menus and operate in nontraditional locations like malls, airports, gasoline service stations, train stations,... respectively during 2011 represent the number of LJS and A&W units as of the beginning of 2011. Therefore, 2011 New Builds and Closures ...
  • Page 116
    ... ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations System Sales ... drivers of system sales growth for each reportable segment by year. Net unit growth represents ... Worldwide system sales for the year to date ended December 29, 2012. Company-Operated Store ...
  • Page 117
    ... Discussion and Analysis of Financial Condition and Results of Operations In 2012, the increase in China Company sales associated with store portfolio actions was ... Restaurant profit were Company same-store sales growth of 4%, which was partially offset by wage rate inï¬,...
  • Page 118
    ... driven by refranchising, new unit development and positive franchise same-store sales. YRI Franchise... increase was driven by new unit development and positive franchise same-store sales. YRI Franchise... increase was driven by refranchising, positive franchise same-store sales and new unit development,...
  • Page 119
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations The increase in YRI G&A expenses ...as a result of refranchising and 2011 bi-annual franchise convention costs. U.S. Franchise and license expenses for 2012 were positively impacted by 15% due to the...
  • Page 120
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Profit Amount 2011 $ 908 ... decrease was driven by higher restaurant operating costs, higher franchise and license expenses and same-store sales declines, partially offset by lower G&A ...
  • Page 121
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Income Taxes The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below: 2012 751 4 (165) (47) - 14 (20) 537 2011 580 2 (...
  • Page 122
    ... have historically experienced. We currently have investment-grade ratings from Standard & Poor's Rating Services (BBB) and Moody's Investors Service (... 1, 2013 to shareholders of record at the close of business on January 11, 2013. The Company targets an ongoing annual dividend payout ...
  • Page 123
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results ... benefit pension plans covering certain salaried and hourly employees, the most signin.. are paid by the Company as incurred. Our funding policy for the Plan is to contribute annually amounts that will at least...
  • Page 124
    ...we would receive under a franchise agreement with terms substantially at market entered into simultaneously with the refranchising transaction. The discount rate used in the fair value calculations is our estimate of the required rate...
  • Page 125
    ...KFC U.S. operating segments and our Pizza Hut United Kingdom ("U.K.") business unit. Within our Taco Bell U.S. operating segment, 181 restaurants ... beginning-of-year goodwill). Within our Pizza Hut U.K. business unit, 359 dine-in and delivery restaurants were refranchised (...
  • Page 126
    ... for each asset category, adjusted for an assessment of current market conditions. Our expected long-term rate of return on U.S. plan assets, for ... 7.25%. We believe this rate is appropriate given the composition of our plan assets and historical market returns thereon. A one...
  • Page 127
    ... in place to monitor and control their use. Interest Rate Risk We have a market risk exposure to changes in interest ... billion as of December 29, 2012. Operating in international markets exposes the Company to movements in foreign currency exchange rates. The Company's primary exposures result from ...
  • Page 128
    ... Information Page Reference Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Statements of Income for the fiscal years ended ... financial statements or notes thereto. Form 10-K 36 YUM! BRANDS, INC. - 2012 Form 10-K
  • Page 129
    PART II ITEM 8 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders YUM! Brands, Inc. We have audited the accompanying consolidated balance sheets of YUM! Brands, Inc. and Subsidiaries (YUM) as of ...
  • Page 130
    ... 12,626 $ 2010 9,783 1,560 11,343 Revenues Company sales Franchise and license fees and income Total revenues Costs and Expenses, Net Company ... Food and paper Payroll and employee benefits Occupancy and other operating expenses Company restaurant expenses General and ...
  • Page 131
    PART II ITEM 8 Financial Statements and Supplementary Data Consolidated Statements of Comprehensive ...during the year on pension and post-retirement plans Tax (expense) benefit Reclassification.... See accompanying Notes to Consolidated Financial Statements. $ 2012 1,608 $ 2010 1,178 $ 27...
  • Page 132
    ... compensation Employee stock option proceeds Dividends paid on Common Stock Other, net NET CASH USED IN FINANCING ACTIVITIES EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND ...
  • Page 133
    ...liates Restricted cash Other assets Deferred income taxes TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and other current liabilities Income taxes payable Short-term borrowings Advertising cooperative liabilities Total...
  • Page 134
    ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ...
  • Page 135
    ... Inc. and Subsidiaries (collectively referred to herein as "YUM" or the "Company") comprises primarily the worldwide operations of KFC, Pizza Hut and Taco Bell (collectively the "Concepts"). YUM is the world's largest quick service restaurant company based on...
  • Page 136
    ... operations of these foreign entities are then translated into U.S. dollars at the average exchange rates... U.S. dollars at exchange rates in effect at the balance sheet date. As of December 29, 2012, net... incremental franchise and license support costs. Revenue Recognition. Revenues from Company-owned...
  • Page 137
    ... reasonable assumptions we believe a franchisee would make such as sales growth and margin improvement. The discount rate used in the fair value calculation is our estimate of the required rate of return that a franchisee would expect to receive when ...
  • Page 138
    ... and liabilities are measured using enacted tax rates expected to apply to taxable income ... an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants.... that are held for sale. Leases and Leasehold Improvements. The Company leases land, buildings or both...
  • Page 139
    ... value is the price a willing buyer would pay for a reporting unit, and is generally estimated using... after-tax cash ï¬,ows from Company operations and franchise royalties. The discount rate... is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise...
  • Page 140
    ... of our Common Stock under share repurchase programs authorized by our Board of Directors. Shares repurchased constitute ... restaurants we continued to own being recorded in the U.S. segment at the rate at which it was prior to the impairment charge being recorded. U.S. Business Transformation As ...
  • Page 141
    ... Little Sheep that would require us to purchase their remaining shares owned upon exercise, which may occur any time after the third anniversary of... additional interest. Under the equity method of accounting, we previously reported our 27% share of the net income of Little Sheep ...
  • Page 142
    ... the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom. The newly signed franchise agreement for ... of our decision to refranchise or close all of our remaining company-owned Pizza Hut UK dine-in restaurants, ...
  • Page 143
    PART II ITEM 8 Financial Statements and Supplementary Data The following table summarizes the 2012 and 2011 activity related to ... 150 24 164 338 Prepaid Expenses and Other Current Assets Income tax receivable Assets held for sale(a) Other prepaid expenses and current assets (a) Primarily reflects ...
  • Page 144
    ...million and $565 million in 2012, 2011 and 2010, respectively. Accounts Payable and Other Current Liabilities Accounts payable... 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 LJS and A&W ...
  • Page 145
    PART II ITEM 8 Financial Statements and Supplementary Data Intangible assets, net for the ... in 2013, $24 million in 2014, $23 million annually in 2015 and 2016 and $21 million in ...12) LONG-TERM DEBT INCLUDING HEDGE ACCOUNTING ADJUSTMENT In 2012, the Company executed a five-year syndicated senior...
  • Page 146
    ...Interest payments commenced approximately six months after issuance date and are payable semi-annually thereafter. (b) Includes the effects of the amortization of any... December 29, 2012 we operated nearly 7,600 restaurants, leasing the underlying land and/or building in nearly...
  • Page 147
    ... exposed to certain market risks relating to its ongoing business operations. The primary market risks managed by using derivative instruments are interest rate risk and cash ï¬,ow volatility arising from foreign currency ï¬,uctuations...
  • Page 148
    ... not a restaurant or restaurant group would be refranchised. 2012 Pizza Hut UK refranchising impairment (Level 3)(a) $ Little ... based on market rates. (a) See Note 4 for further discussions of Refranchising (gain) loss, including the Pizza Hut UK dine-in refranchising and the acquisition of Little ...
  • Page 149
    ... Pension Plans 2012 Change in benefit obligation Benefit obligation at beginning of year Service cost Interest ... Benefits paid Exchange rate changes Administrative expenses Fair value of plan assets at...Actuarial net loss Prior service cost $ $ U.S. Pension Plans 2012 421 $ 7 428 $ 2011 ...
  • Page 150
    ...¬t cost: Net periodic benefit cost Service cost Interest cost Amortization of prior service cost(a) Expected return on plan assets Amortization of... of prior service cost Prior service cost PBO reduction in excess of settlement payment Settlement charges Exchange rate changes END OF YEAR $ $...
  • Page 151
    ...Weighted-average assumptions used to determine benefit obligations at the measurement dates: U.S. Pension Plans 2012 2011 4.40... 3.75% International Pension Plans 2012 2011 4.70% 4.75% 3.70% 3.85% Discount rate Rate ... Pension Plans 2012 2011 4.75% 5.40% 5.55% 6.64% 3.85% 4.41% Discount rate Long-...
  • Page 152
    ... of 2011. The net periodic benefit cost recorded in 2012, 2011 and 2010 was $6 million... Revenue Code (the "401(k) Plan") for eligible U.S. salaried and hourly employees. Participants are able... or the ending market price of the Company's stock on the date of grant. Potential awards to employees and...
  • Page 153
    ...to defer incentive compensation to purchase phantom shares of our Common Stock and receive a 33% Company match on the amount... over the requisite service period which includes the vesting period. Historically, the Company has repurchased shares on the open market in excess of the amount necessary to ...
  • Page 154
    ... 16 Shareholders' Equity Under the authority of our Board of Directors, we repurchased shares of our Common Stock during 2012, 2011 and 2010. All ...2010 fiscal year. Form 10-K On November 16, 2012, our Board of Directors authorized share repurchases through May 2014 of up...
  • Page 155
    ...rate to our effective tax rate is set forth below: 2012 751 4 (165) (47)...reï¬,ected in the 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably... to current year earnings as well as U.S. tax credits and deductions. In 2012, this item was positively...
  • Page 156
    ... (336) 600 Operating losses and tax credit carryforwards Employee benefits Share-based... Deferred income taxes - current Deferred income taxes - long-term Accounts payable and ... investments in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have ...
  • Page 157
    ... 2011 5,566 $ 3,192 3,786 82 12,626 $ We are principally engaged in developing, operating, franchising and licensing the worldwide KFC, Pizza Hut and Taco Bell concepts. KFC, Pizza Hut and Taco Bell operate in 120, 97, and 27 ...
  • Page 158
    PART II ITEM 8 Financial Statements and Supplementary Data China(b) YRI U.S. India Unallocated Occupancy and other(a)(c) Unallocated and corporate ..., net INCOME BEFORE INCOME TAXES Operating Profit; Interest Expense, Net; and Income Before Income Taxes 2012 2011 2010 $ 1,015 $ 908...
  • Page 159
    PART II ITEM 8 Financial Statements and Supplementary Data China YRI U.S. India Corporate $ $ Long-Lived Assets(j) ..., $10 million and $9 million, respectively. 2012 and 2011 include depreciation reductions arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $13 ...
  • Page 160
    ...-wide class of hourly employees. On May 19, 2009 the court granted Taco Bell's motion to... Bell crew member, alleges that Taco Bell failed to timely pay her final wages upon... awaiting the court's approval of this request. Taco Bell was named as a defendant in a number of putative class action suits...
  • Page 161
    ...alleged that Pizza Hut did not properly reimburse its delivery drivers for various automobile costs,...cation of a nationwide class of current and former Pizza Hut, Inc. delivery drivers. However,...opt-ins. The final number has yet to be determined but is expected to be approximately 6,000. Pizza Hut...
  • Page 162
    ..., refranchising losses associated with the Pizza Hut UK dine-in business of $24 million and ... a refranchising loss associated with the Pizza Hut UK dine-in business of $76 million in the third... of the Consolidated Financial Statements, related notes and other information included in this annual report...
  • Page 163
    ... an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and ... has issued their report, included herein. Form 10-K Changes in Internal Control There were no changes with respect...
  • Page 164
    ... under the captions "Stock Ownership Information," "Governance of the Company," "Executive Compensation" and "Item 1: Election of Directors and Director biographies"... 120 days after December 29, 2012. ITEM 14 Principal Accountant Fees and Services Information regarding principal accountant fees and ...
  • 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 Statement Schedules: No schedules are required because ...
  • Page 166
    ...registrant has duly caused this Form 10-K annual report to be signed on its behalf by the undersigned, thereunto ... Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed ...-Chairman of the Board Director Date February 19, 2013 February 19, 2013 February ...
  • Page 167
    ...incorporated herein by reference from Exhibit 10.7 to YUM's Annual Report on Form 10-K for the fiscal year... herein by reference from Exhibit 10.8 to YUM's Annual Report on Form 10-K for the fiscal year... by reference from Exhibit 10.17 to YUM's Annual Report on Form 10-K for the fiscal year...
  • Page 168
    ...herein by reference from Exhibit 10.22 to YUM's Annual Report on Form 10-K for the fiscal year ...incorporated by reference from Exhibit 10.21.1 to YUM's Annual Report on Form 10-K for the fiscal year ...24, 2008, which is incorporated herein by reference from Exhibit 10.33 to YUM's Annual Report ...
  • Page 169
    ...YUM Holdings REGISTERED SHAREHOLDERS (those who hold YUM shares in their own names) should address communications concerning statements, address changes, lost certin.. of YUM through the Company's Direct Stock Purchase Plan • Sell shares held by AST Access accounts online at the ...
  • Page 170
    ... TRADING SYMBOL-YUM The New York Stock Exchange is the principal market for YUM Common Stock, which trades under the symbol YUM. ... franchise opportunities is available at www.yumfranchises.com Yum! Brands' Annual Report contains many of the valuable trademarks owned and used by Yum! Brands and its ...
  • Page 171
    ... and Investment Bank Scott O. Bergren 66 Chief Executive Officer, Pizza Hut U.S. and Chief Innovation Officer, Yum! Brands, Inc....B. Hill Enterprises, LLC Greg Creed 55 Chief Executive Officer, Taco Bell Jonathan S. Linen 69 Advisor to Chairman, American Express Company John Cywinski 50 President,...
  • 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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  • Pizza Hut 2012 Annual Report - Page 1
    Staying the Course China and a Whole Lot More 2012 Yum! Brands Annual Customer Mania Report
  • Pizza Hut 2012 Annual Report - Page 2
    ..., except for per share amounts) Year-end 2012 2011 % B/(W) change Company sales Total revenues ...$ 2.74 2,170 Special Items Earnings Per Common Share (a) $ 0.13 (0.13) Reported Diluted ... our 2012 Form 10-K for further discussion of Special Items. Contents Dear Partners...1 Building ...
  • Pizza Hut 2012 Annual Report - Page 3
    ... Return on Invested Capital of 22%. Our strong cash flow generation allowed us to increase our dividend rate 18%, to an annual rate of $1.34 per share. Our share price increased 13% for the full year, on top of 20% in 2011. Looking back, we ...
  • Pizza Hut 2012 Annual Report - Page 4
    ... our Investor and Analyst Day in New York. This meeting gives us the opportunity to "go public" with our goals and commitments as well as showcase our management talent from around ... around the world. Over 39,000 Building sales layers and expanding day parts. As a matter of fact, ...
  • Pizza Hut 2012 Annual Report - Page 5
    ...we crossed the billion dollar profit mark in 2012, opened our 4,000th KFC, our 800th Pizza Hut Casual Dining Restaurant, and opened 889 ... to expand into new cities and increase its penetration levels in existing markets. At 826 units, Pizza Hut Casual Dining is the leader in its category. Both KFC 3
  • Pizza Hut 2012 Annual Report - Page 6
    ... our two big brands KFC and Pizza Hut Casual Dining. We will also continue to invest behind Pizza Hut Home Service, Little Sheep and East Dawning. Our new unit target of at least 700 remains unchanged for 2013. Pizza Hut Casual Dining restaurants in China. 826 ...
  • Pizza Hut 2012 Annual Report - Page 7
    ... row we have built more than 100 new units, and we expect that number to grow as we build even more capability in India. Our concepts appeal to a... before foreign currency translation, and developed a record 949 new units, with 65% of them in emerging markets. It's clear we are a ...
  • Pizza Hut 2012 Annual Report - Page 8
    innovative experiences with KFC, Pizza Hut Casual Dining, Pizza Hut Home Service and Taco Bell. We will invest behind building each of these brands in India and expect all of them to drive tremendous future growth. We are on our way to making this business ...
  • Pizza Hut 2012 Annual Report - Page 9
    ... major headway building each of our brands. Operating profit grew 13%, and same-store sales increased 5% for the 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 media ...
  • Pizza Hut 2012 Annual Report - Page 10
    ...our development and were net-unit positive for the year. We added 150 net new units at Pizza Hut and over 30 net new units at Taco Bell. With improved unit-level...past 4 years of negative same-store sales growth. go from about 5,000 to 8,000 units and Pizza Hut to expand from over ...
  • Pizza Hut 2012 Annual Report - Page 11
    ...-leading, long-term shareholder and franchisee value. penetrated markets like Pizza Hut UK and increasing our exposure in emerging and under-penetrated markets. We also... partner in Turkey, a highgrowth emerging market that has over 100 KFC and Pizza Hut restaurants. Our success ...
  • Pizza Hut 2012 Annual Report - Page 12
    ...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 ... all our team members, restaurant general managers, franchisees, community partners and restaurant support leaders who are giving their all to win...
  • Pizza Hut 2012 Annual Report - Page 13
    ... back the vision defining global company that feeds the world famous recognition culture where everyone ... Customer Mania come alive for every customer in every restaurant Build dynasties in every country Always connect with customers, always reach, always lead a company with a huge heart Open...
  • Pizza Hut 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 ...
  • Pizza Hut 2012 Annual Report - Page 15
    ... for the Shareholders Meeting to Be Held on May 15, 2013-this Notice and the proxy statement are available at www.yum.com/investors/investor_materials. asp. The Annual Report on Form 10-K is available at www.yum.com/annualreport.
  • Pizza Hut 2012 Annual Report - Page 16
  • Pizza Hut 2012 Annual Report - Page 17
    ... come before the meeting. WHO CAN VOTE: You can vote if you were a shareholder of record as of the close of business on March 18, 2013. ANNUAL REPORT: A copy of our 2012 Annual Report on Form 10-K is included with this proxy statement. WEBSITE: ...
  • Pizza Hut 2012 Annual Report - Page 18
    ...ITEM 5 1 1 6 13 Election of Directors (Item 1 on the Proxy Card)...13 Ratification of Independent Auditors ... and Analysis ...30 Management Planning and Development Committee Report ...43 Summary ... ...55 DIRECTOR COMPENSATION EQUITY COMPENSATION PLAN INFORMATION AUDIT COMMITTEE REPORT ADDITIONAL...
  • Pizza Hut 2012 Annual Report - Page 19
    ...rules, we are making this proxy statement and our Annual Report available to our shareholders ...containing instructions on how to access this proxy statement and our Annual Report and vote online... of the important information contained in the proxy statement and Annual Report. The Notice also instructs...
  • Pizza Hut 2012 Annual Report - Page 20
    ... admission ticket. If you received the proxy statement and Annual Report by mail, you will find an admission ticket attached to the proxy card sent ...of general interest following the Annual Meeting. In order to give a greater number of shareholders an opportunity to ask questions,...
  • Pizza Hut 2012 Annual Report - Page 21
    ...11:59 p.m., Eastern Daylight Saving Time, on May 14, 2013. Proxy Statement Can I vote at the Annual Meeting? Shares registered directly in your name as the shareholder of record may be voted in person at the Annual Meeting. Shares held in street name may be voted in ...
  • Pizza Hut 2012 Annual Report - Page 22
    ...firms have the authority under the New York Stock Exchange rules to vote shares for which their customers do not provide voting...proxy by Internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of the outstanding shares of YUM common stock, as of March 18, 2013, must...
  • Pizza Hut 2012 Annual Report - Page 23
    ... announce 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 of the Annual Meeting. What if other matters are presented for consideration at the ...
  • Pizza Hut 2012 Annual Report - Page 24
    ...elected? Our Board of Directors presently consists of 12 directors whose terms expire at this Annual Meeting. As discussed in more detail later in this section... that 9 of the 12 current and continuing directors are independent under the rules of the New York Stock Exchange ("NYSE"). 6 YUM! BRANDS, ...
  • Pizza Hut 2012 Annual Report - Page 25
    ...Meeting of Shareholders? The Board of Director's policy is that all directors should attend the Annual Meeting and 8 of the Company's 11 then directors attended the 2012 Annual Meeting. How does the Board select nominees for the Board? The Nominating and ...
  • Pizza Hut 2012 Annual Report - Page 26
    GOVERNANCE OF THE COMPANY its annual review which included engaging in dialogue and receiving input from a number of... management. The lead director position has no term limit and is subject only to annual approval...management. The lead director position has no term limit and is subject only to annual ...
  • Pizza Hut 2012 Annual Report - Page 27
    ...top level employees is associated with the long term performance of the Company. • The annual incentive target setting process is closely linked to the annual financial planning process and supports the Company's overall strategic plan. • ...
  • Pizza Hut 2012 Annual Report - Page 28
    ... and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and... addition to our policy on communicating with our non-management directors. Any person, whether or not an employee, who has a concern about the conduct of the Company or any ...
  • Pizza Hut 2012 Annual Report - Page 29
    ...and financial control • Reviews the annual audited financial statements and results of the audit with management and the independent... Corporate Governance Principles • Receives comments from all directors and reports annually to the Board with assessment of the Board's performance...
  • Pizza Hut 2012 Annual Report - Page 30
    ..., the Company requires stock ownership by directors. The Board of Directors expects non-management directors to hold a meaningful number of shares of Company common stock and expects non-management directors to retain shares acquired as compensation as a ...
  • Pizza Hut 2012 Annual Report - Page 31
    ... below contains information regarding the person's service as a director, business experience, director positions held currently or at any time during the ... sound judgment, as well as a commitment of service to YUM and our Board. Finally, we value their significant ...
  • Pizza Hut 2012 Annual Report - Page 32
    ....'s Treasury & Securities Services business, one of the world's largest cash management providers and... • Expertise in branding, marketing, sales and international business development • Public company directorship... M. Graddick-Weir Age 58 Director Since 2012 Executive Vice President, Human...
  • Pizza Hut 2012 Annual Report - Page 33
    ...-related services company • Expertise in finance, marketing and international business development • Public ... Proxy Statement Bonnie G. Hill Age 71 Director since 2003 President, B. Hill ... Executive Officer of National Gypsum Company, a building products manufacturer, since 1999 ...
  • Pizza Hut 2012 Annual Report - Page 34
    ... Officer, KFC and Pizza Hut from August 1996 to July 1997, at which time he became acting ... Division. Prior to this position, he was the Vice President of North Asia for both KFC and Pizza Hut. Specific qualifications, experience, skills and expertise: • Operating and management ...
  • Pizza Hut 2012 Annual Report - Page 35
    ... the aforementioned nominees will serve as directors and hold office until the 2014 Annual Meeting of Shareholders and until their respective ... of Directors. What vote is required to elect directors? A nominee will be elected as a director if the number of "FOR" votes exceeds the ...
  • Pizza Hut 2012 Annual Report - Page 36
    ... following table presents fees for professional services rendered by KPMG for the audit of the Company's annual financial statements for 2012 and 2011, and fees billed for audit-related services, tax services and all other services rendered by KPMG for 2012 and 2011. 2012 ...
  • Pizza Hut 2012 Annual Report - Page 37
    ...marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new restaurants outside the United ... in the highly competitive market for talent, while maximizing shareholder returns. This approach has made our management team a key ...
  • Pizza Hut 2012 Annual Report - Page 38
    ...(from approximately 90% stock appreciation rights and 10% performance share plan units in 2012); ... vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. While this vote is advisory and non-binding on the Company, the Board of Directors and ...
  • Pizza Hut 2012 Annual Report - Page 39
    ... does not seek to increase the number of shares of common stock that may be issued under... than the Chief Financial Officer, to $1 million per year. This limit does not... be the responsibility of the Committee. The Management Planning and Development Committee of the Company's Board currently serves...
  • Pizza Hut 2012 Annual Report - Page 40
    ...or independent of any option grant. A SAR entitles the Participant to receive the amount by which the fair market value of a specified number of shares on the exercise date exceeds an exercise price established by the Committee. The exercise price ...
  • Pizza Hut 2012 Annual Report - Page 41
    ... the LTIP is satisfied by tendering shares of stock to the Company (by either actual delivery or by attestation), only the number of shares of ... of shares of stock available for delivery under the LTIP. For purposes of applying the limit of the number of shares of stock available under the LTIP, ...
  • Pizza Hut 2012 Annual Report - Page 42
    ITEM 4 RE-APPROVAL OF YUM! BRANDS, INC. LONG TERM INCENTIVE PLAN PERFORMANCE ...and the then fair market value of the distributed shares. The Company will be entitled to a corresponding tax deduction.... fair market value of those shares, and the Company will be entitled to a corresponding tax deduction....
  • Pizza Hut 2012 Annual Report - Page 43
    ... shareholder proposal at the Annual Meeting. We will furnish the address and share ownership of the proponent ... that ends up as ocean debris. Proxy Statement YUM! Brands 2010 corporate social .... The report, to be prepared at reasonable cost, may omit confidential information. SUPPORTING STATEMENT ...
  • Pizza Hut 2012 Annual Report - Page 44
    ... PACKAGING RECYCLING Management Statement in Opposition to Shareholder Proposal What is the Company's position regarding this proposal? The Board of Directors recommends that ... food packaging and including greater recycled content: • Pizza Hut U.S.'s, packaging includes 95% fiber sourced ...
  • Pizza Hut 2012 Annual Report - Page 45
    ... within five years following their appointment to their current position. The table shows the number of shares of common stock and common stock equivalents beneficially owned as of December 31, 2012. Included are shares that could have been acquired within 60 ...
  • Pizza Hut 2012 Annual Report - Page 46
    ... 1,622,761 8,165,534 2,030,781 10,196,315 (1) Shares owned outright. These amounts include the following shares held pursuant... options and SARs awarded under our employee or director incentive compensation plans. For stock options, we report shares equal to the number of options exercisable within 60...
  • Pizza Hut 2012 Annual Report - Page 47
    ... our directors, executive officers and persons who own more than 10% of the outstanding shares of YUM common stock to file with the SEC reports of their ownership and changes in their ownership of YUM common stock. Directors, executive officers and greater-...
  • Pizza Hut 2012 Annual Report - Page 48
    ...-year growth in earnings per share (excluding special items) of 13%-marking the eleventh consecutive year that we exceeded our annual target of at least 10% • Opened a record 1,976 new restaurants outside the United States • Grew operating ...
  • Pizza Hut 2012 Annual Report - Page 49
    ... year-over-year EPS growth and the related increase in our stock price and Total Shareholder Return ("TSR") over the... initial impact of expensing stock options in 2005. The special items excluded are the same as those excluded in the Company's annual earnings releases. EPS growth is calculated based ...
  • Pizza Hut 2012 Annual Report - Page 50
    ... comprised of base salary, bonus paid and annual long-term incentive award value has remained relatively ï¬,at from 2009-2012. Since the beginning...(1) in $ 20 000 15 000 10 000 5 000 0 2008(2) 2009 2010 2011 2012 (1) Represents our CEO's base salary, stock options/SARS, ...
  • Pizza Hut 2012 Annual Report - Page 51
    ..., Mr. Novak will receive an allocation to his pension account equal to 9.5% of his salary and target bonus and will receive an annual interest allocation on his account balance equal to 120% of the applicable federal rate. (See footnote (5) to the Summary ...
  • Pizza Hut 2012 Annual Report - Page 52
    ...Long-term equity performance-based incentives Our target pay philosophy for these components as compared to the market is (see page 35 for discussion on ... Named Executive Officers' total compensation target for the current year which includes base salary, annual bonus opportunities and long-term ...
  • Pizza Hut 2012 Annual Report - Page 53
    ... any member of the Management Planning and Development Committee or management • Meridian's partners and employees who provide services to the Committee are prohibited from owning YUM stock per Meridian's firm policy Use of ...
  • Pizza Hut 2012 Annual Report - Page 54
    ... Officer, the Company generally attempts to deliver pay at the 75th percentile of the market if ... and it was used as a frame of reference for establishing compensation targets for base salary, annual bonus ...Paid - Used actual bonus paid rather than target bonus when benchmarking pay opportunities ...
  • Pizza Hut 2012 Annual Report - Page 55
    ... the goals support the Company's overall strategic objectives. The performance targets were developed through the Company's annual financial planning process, which takes into account division growth strategies, historical performance, and the ...
  • Pizza Hut 2012 Annual Report - Page 56
    .... (2) Actual operating profit growth was adjusted for the impact of certain non-recurring costs within our Pizza Hut U.K. market. (3) Actual system sales growth was adjusted for the impact of the 53rd week and the divestiture of LJS/A&W ...
  • Pizza Hut 2012 Annual Report - Page 57
    ... was on target and approved a 115 individual performance factor. This determination was based upon his leadership of the Taco Bell, Pizza Hut and KFC US Divisions and Yum! Restaurants International Division along with the successful transition ...
  • Pizza Hut 2012 Annual Report - Page 58
    ... annual growth rate as set forth in the chart below: EPS Growth Payout as % of Target
  • Pizza Hut 2012 Annual Report - Page 59
    ... 11,090,659 12 Pant 50,000 106,769 $ 7,089,462 9 (1) Calculated as of December 31, 2012 and represents shares owned outright and vested RSUs granted to Mr. Novak in 2008 and all RSUs acquired under the Company's Executive Income Deferral Program. ...
  • Pizza Hut 2012 Annual Report - Page 60
    ...and stock appreciation rights grants annually at the Committee's January meeting. This meeting date is set by the Board of Directors more than six months prior to the actual meeting. The Committee sets the annual grant date as the second business day after our fourth quarter earnings...
  • Pizza Hut 2012 Annual Report - Page 61
    ... review and discussion, recommended that section be incorporated by reference into our Annual Report on Form 10-K and included in this proxy statement. THE MANAGEMENT PLANNING AND DEVELOPMENT COMMITTEE Robert D. Walter, Chair David...
  • Pizza Hut 2012 Annual Report - Page 62
    ... Executive Officers for our 2012 fiscal year. The Company's Named Executive Ofn.. 2,118,973 Proxy Statement Name and Principal Position (a) David C. Novak Chairman,...,038 - 2010 1,400,000 - 2012 500,308 Stock Awards ($)(2) (d) 773,022 ...,880 493,551 - - 1,014,347 2012 1,088,462 2011 1,007,692...
  • Pizza Hut 2012 Annual Report - Page 63
    ... awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." (4) Except as ...
  • Pizza Hut 2012 Annual Report - Page 64
    ... with life insurance coverage up to one times the employee's salary plus target bonus. The amount of income deemed received with ...Mr. Grismer and Mr. Pant, this column also includes Company annual allocations of $91,438 and $300,000 respectively to an unfunded, unsecured account based retirement plan...
  • Pizza Hut 2012 Annual Report - Page 65
    ...stock awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." There can be ...
  • Pizza Hut 2012 Annual Report - Page 66
    ...,134 1,668,898 605,966 - - Stock Awards Equity incentive Equity incentive Market plan awards: plan awards: Number Value of market or Number of of Shares payout value unearned or Units Shares or Units of of unearned shares, units of Stock...
  • Pizza Hut 2012 Annual Report - Page 67
    ...Equity incentive Market plan awards: plan awards: Number Value of market or Number of of Shares payout value unearned or Units Shares or Units of... that vests after five years. (3) The market value of these awards are calculated by multiplying the number of shares covered by the award...
  • Pizza Hut 2012 Annual Report - Page 68
    EXECUTIVE COMPENSATION Option Exercises and Stock Vested The table below shows the number of shares of YUM common stock acquired during 2012 upon exercise of ... and broker commissions. Option Awards Stock Awards Value Number of Value Number of realized on Shares Acquired Realized on ...
  • Pizza Hut 2012 Annual Report - Page 69
    ... value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such ... YUM! Brands Retirement Plan ("Retirement Plan") 2012 FISCAL YEAR PENSION BENEFITS TABLE Number of Years of Present Value of Payments During Credited...
  • Pizza Hut 2012 Annual Report - Page 70
    ... actuarial assumptions for lump sums required by Internal Revenue Code Section 417(e)(3) (currently this is the annual 30-year Treasury rate for the 2nd month preceding the date of distribution and the gender blended 1994 Group Annuity Reserving Table ...
  • Pizza Hut 2012 Annual Report - Page 71
    ... performance of actual investments; that is, they provide market rate returns and do not provide for... their annual incentive into this fund acquire additional phantom shares (called restricted stock ... Returns. The LRP provides an annual earnings credit to each participant's account based on the value ...
  • Pizza Hut 2012 Annual Report - Page 72
    ...in the narrative above this table. The EID Program earnings are market based returns and, therefore, are not reported in the Summary Compensation Table. For... market earnings accruing to each of their accounts under the LRP. For above market earnings on nonqualified deferred compensation, see...
  • Pizza Hut 2012 Annual Report - Page 73
    ... 2012, given the Named Executive Officer's compensation and service levels as of such date and, if applicable, based on the Company's closing stock price on that date. These benefits are in addition to benefits available generally...
  • Pizza Hut 2012 Annual Report - Page 74
    ... Novak, Grismer, Su, Carucci and Pant would have received Company-paid life insurance of $3,360,000; $1,100,000; $2,365,...be entitled to receive the following: Proxy Statement • a proportionate annual incentive assuming achievement of target performance goals under the bonus plan or, if higher, ...
  • Pizza Hut 2012 Annual Report - Page 75
    ... $ 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,... does not exceed the threshold for which excise tax is payable by more than 10%. In accordance with the Company's change in control severance agreements, Mr. Grismer's severance payment would be...
  • Pizza Hut 2012 Annual Report - Page 76
    ... awards and option awards contained in Part II, Item 8, "Financial Statements and Supplementary Data" of the 2012 Annual Report in Notes to Consolidated Financial Statements at Note 15, "Share-based and Deferred Compensation Plans." (3) At December ...
  • Pizza Hut 2012 Annual Report - Page 77
    ...15,000 stock retainer annually. Initial Stock Grant upon Joining Board. Non-employee directors also receive a one-time stock grant with a fair market value of $... not sell any of the Company's common stock received as compensation for service on the Board until the director has ceased being...
  • Pizza Hut 2012 Annual Report - Page 78
    ... SharePower Plan is administered by the Management Planning and Development Committee of the Board of Directors. The exercise price of a stock option ... The RGM Plan provides for the issuance of up to 30,000,000 shares of common stock at a price equal to or greater than the closing price of our stock ...
  • Pizza Hut 2012 Annual Report - Page 79
    ... was amended and restated effective November 16, 2012. The charter is reviewed by management at least annually, and any recommended changes are presented to the Audit Committee for ... effectiveness of internal control over financial reporting. YUM! BRANDS, INC. - 2013 Proxy Statement 61
  • Pizza Hut 2012 Annual Report - Page 80
    ... Committee Charter, the Committee recommended to the Board of Directors that it include the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 for filing with the ...
  • Pizza Hut 2012 Annual Report - Page 81
    ... may elect to receive future annual reports and proxy statements from us and to vote their shares through the Internet instead...single Notice and, if applicable, this proxy statement and Annual Report, to multiple shareholders sharing an address unless contrary instructions have been received from the...
  • Pizza Hut 2012 Annual Report - Page 82
    ... must follow to nominate persons for election as directors or to introduce an item of business at an Annual Meeting of Shareholders that is not included in... procedures provide that nominations for director nominees and/or an item of business to be introduced at an Annual Meeting of Shareholders must ...
  • Pizza Hut 2012 Annual Report - Page 83
    ... (as determined in accordance with subsection 2.5), value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of shares of Stock at the time of exercise; over (b) an Exercise Price established by the ...
  • Pizza Hut 2012 Annual Report - Page 84
    ...than the Fair Market Value of the Stock at the time of such grant; provided, however, that an exercise price ...earnings per share; market value added or economic value added; profits; return ... two years in the case of annual incentive deferrals payable in restricted shares) (subject to acceleration...
  • Pizza Hut 2012 Annual Report - Page 85
    ...ciaries under the Plan shall be 70,600,000 (which number includes all shares ... the maximum number of shares of Stock available for delivery under the Plan. If the exercise price... place, being exchanged for a different number or class of shares or other securities of the Company, or for shares of stock...
  • Pizza Hut 2012 Annual Report - Page 86
    ... the Participant, through the surrender of shares of Stock which the Participant already owns, or through the surrender of shares of Stock to which the Participant is otherwise entitled under the Plan. Subsections 4.5, 4.6 and 4.7 shall be ...
  • Pizza Hut 2012 Annual Report - Page 87
    ... a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). Subject to the overall limitation on the number of shares of Stock that may be delivered under the Plan, the Committee may use available shares of Stock as the form ...
  • Pizza Hut 2012 Annual Report - Page 88
    ..., Restricted Stock Units, and Performance Shares (including any Award payable in Stock which is granted in conjunction with a Company deferral program)...shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the ...
  • Pizza Hut 2012 Annual Report - Page 89
    ... for it to discharge its duties. The records of the Company and Subsidiaries as to an employee's or Participant's employment (or other provision of services), termination of ... Board; (ii) no amendments may increase the limitations on the number of shares set forth in subsections 4.2(b) and 4.2(e) or ...
  • Pizza Hut 2012 Annual Report - Page 90
    ... services. Fair Market Value. For purposes of determining the "Fair Market Value" of a share of Stock ... Market Value shall mean the average between the lowest and highest reported sale...' cease for any reason to constitute a majority of the number of directors then serving; individuals who, on the date...
  • Pizza Hut 2012 Annual Report - Page 91
    ... section 409A, options and SARs shall not be granted to employees or directors of Subsidiaries unless the ownership of the Subsidiary satisfies ... Reg. §1.409A-1(b)(5)(iii). (i) Stock. The term "Stock" shall mean shares of common stock of the Company. Proxy Statement YUM! BRANDS, INC. - 2013 ...
  • Pizza Hut 2012 Annual Report - Page 92
    ... SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE... the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). The aggregate market value of the voting stock (which consists solely of shares of Common ...
  • Pizza Hut 2012 Annual Report - Page 93
    ... and Results of Operations...15 Quantitative and Qualitative Disclosures About Market Risk ...35 Financial Statements and ... and Related Transactions, and Director Independence ...72 Principal Accountant Fees and Services ...72 PART IV ITEM 15 73 Exhibits and Financial Statement Schedules...73
  • Pizza Hut 2012 Annual Report - Page 94
    ... Form 10-K, as well as in other written reports and oral statements that we make from time to time, we present "forward-looking statements"... this Form 10-K and (ii) the factors described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item...
  • Pizza Hut 2012 Annual Report - Page 95
    ... three concepts of KFC, Pizza Hut and Taco Bell (the "Concepts"), the Company develops, operates, franchises and ... restaurants, primarily Company-owned KFCs and Pizza Huts. In 2012, the China Division recorded revenues ... basis. Pizza Hut and, on a much more limited basis, KFC offer delivery service. ...
  • Pizza Hut 2012 Annual Report - Page 96
    ... 4 percent of the YRI units, 6 percent of the U.S. units, and 1 percent of the India units are Company-owned. • Pizza Hut operates in the delivery and casual dining segments around the world. Outside of the U.S., Pizza Hut often uses ...
  • Pizza Hut 2012 Annual Report - Page 97
    ..., including U.S.-based suppliers that export to many countries. U.S. Division The Company, along with the representatives of the Company's KFC, Pizza Hut and Taco Bell franchisee groups, are members in the Unified FoodService Purchasing Co-op, LLC (...
  • Pizza Hut 2012 Annual Report - Page 98
    ... of our business. Employees As of year end 2012, the Company and its Concepts employed approximately 523,000 persons, ... makes available through the Investor Relations section of its internet website at www.yum.com its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on ...
  • Pizza Hut 2012 Annual Report - Page 99
    ... our results of operations and the value of our foreign assets are affected by fluctuations in currency exchange rates, which may adversely affect reported earnings. More specin.. and meet construction schedules. Expansion into target markets could also be affected by our franchisees'...
  • Pizza Hut 2012 Annual Report - Page 100
    ... of refranchising restaurants in the U.S., which has reduced and is expected to continue to reduce the percentage of Company ownership of KFCs, Pizza Huts, and Taco Bells in the U.S. Once executed, the success of the refranchising program ...
  • Pizza Hut 2012 Annual Report - Page 101
    ...such as payroll, sales, use, value-added, net worth, property, withholding and franchise ...levels and promotional initiatives, customer service, reputation, restaurant location, and attractiveness and... or current reports from the staff of the Securities and Exchange Commission that were issued 180 days...
  • Pizza Hut 2012 Annual Report - Page 102
    ... U.S. and YRI corporate headquarters and a research facility in Plano, Texas are owned by Pizza Hut. Taco Bell leases its corporate headquarters and research facility ... years and generally have renewal options; however, Pizza Hut delivery/ ITEM 3 Legal Proceedings condition or cash ...
  • Pizza Hut 2012 Annual Report - Page 103
    ... President and Chief Concept Officer of Pizza Hut, a position he held beginning in November 2006. ...2005. Greg Creed, 55, is Chief Executive Officer of Taco Bell. He has served in ...from September 2007 to June 2008; and Chief Financial Officer of Pizza Hut UK from May 2005 to September 2007....
  • Pizza Hut 2012 Annual Report - Page 104
    ...sets forth the high and low NYSE composite closing sale prices by quarter for the Company's Common Stock and dividends per common share. $ ... $0.285 per share of Common Stock, one of which had a distribution date of February 3, 2012. The Company targets an annual dividend payout ratio of 35% to 40% ...
  • Pizza Hut 2012 Annual Report - Page 105
    ... 2012 with respect to shares of Common Stock repurchased by the Company during the quarter then ended: Total number of shares purchased (thousands) 436 1,204... of our outstanding Common Stock. On November 16, 2012, our Board of Directors authorized additional share repurchases through ...
  • Pizza Hut 2012 Annual Report - Page 106
    ... system sales growth(c) Reported Local currency(d) India system sales growth(c) Reported Local currency(d) U.S. same store sales growth(c) Shares outstanding at year end Cash dividends declared per Common Stock Market price per share at year end $ 11,833 1,800 13,...
  • Pizza Hut 2012 Annual Report - Page 107
    ...Fiscal years 2012, 2010, 2009 and 2008 include 52 weeks and fiscal year 2011 includes 53 ...than 125 countries and territories operating primarily under the KFC, Pizza Hut or Taco Bell brands. In ...results for 2011 and 2010. The Company's primary restaurant brands - KFC, Pizza Hut and Taco Bell - are...
  • Pizza Hut 2012 Annual Report - Page 108
    ...Company has developed the KFC and Pizza Hut brands into the leading quick service and casual dining restaurant brands, respectively, ...KFC and Pizza Hut Casual Dining restaurants and testing the additional restaurant concepts of Pizza Hut Home Service (pizza delivery) and East Dawning (Chinese food). ...
  • Pizza Hut 2012 Annual Report - Page 109
    ...(a) REPORTED EFFECTIVE TAX RATE EFFECTIVE TAX RATE BEFORE SPECIAL ITEMS (a) See Note 3 for the number of shares used in these calculations. $ $... LJS and A&W brands. Other Special Items Income (Expense) includes the depreciation reductions from Pizza Hut UK and KFC U.S. restaurants impaired upon our ...
  • Pizza Hut 2012 Annual Report - Page 110
    ..., we recorded pre-tax refranchising gains of $122 million in the U.S., primarily due to gains on sales of Taco Bells. In the years...result of settlement payments exceeding the sum of service and interest costs within the Plan in 2012, pursuant to our policy, we recorded a pre-tax settlement charge of ...
  • Pizza Hut 2012 Annual Report - Page 111
    ... the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom. The newly signed franchise agreement for ... of our decision to refranchise or close all of our remaining company-owned Pizza Hut UK dine-in restaurants, ...
  • Pizza Hut 2012 Annual Report - Page 112
    ... we choose to continue investing capital. In the U.S., we are targeting Company ownership of KFC, Pizza Hut and Taco Bell restaurants of about 10%, down .... Additionally, in December 2012 we refranchised 331 remaining Company-owned dine-in restaurants in the Pizza Hut UK business and during 2010, we ...
  • Pizza Hut 2012 Annual Report - Page 113
    ... II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations... revenues as described above: 2012 Decreased Company sales Increased Franchise and license ... received a Revenue Agent Report (RAR) from the Internal Revenue Service (the "IRS") relating to its examination...
  • Pizza Hut 2012 Annual Report - Page 114
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Restaurant Unit Activity Worldwide... Builds Refranchising Closures Balance at end of 2011 New Builds Acquisitions(c) Refranchising Closures BALANCE AT END OF 2012 % of Total Franchisees 153 4 47...
  • Pizza Hut 2012 Annual Report - Page 115
    ... units excluded offer limited menus and operate in nontraditional locations like malls, airports, gasoline service stations, train stations,... respectively during 2011 represent the number of LJS and A&W units as of the beginning of 2011. Therefore, 2011 New Builds and Closures ...
  • Pizza Hut 2012 Annual Report - Page 116
    ... ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations System Sales ... drivers of system sales growth for each reportable segment by year. Net unit growth represents ... Worldwide system sales for the year to date ended December 29, 2012. Company-Operated Store ...
  • Pizza Hut 2012 Annual Report - Page 117
    ... Discussion and Analysis of Financial Condition and Results of Operations In 2012, the increase in China Company sales associated with store portfolio actions was ... Restaurant profit were Company same-store sales growth of 4%, which was partially offset by wage rate inï¬,...
  • Pizza Hut 2012 Annual Report - Page 118
    ... driven by refranchising, new unit development and positive franchise same-store sales. YRI Franchise... increase was driven by new unit development and positive franchise same-store sales. YRI Franchise... increase was driven by refranchising, positive franchise same-store sales and new unit development,...
  • Pizza Hut 2012 Annual Report - Page 119
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations The increase in YRI G&A expenses ...as a result of refranchising and 2011 bi-annual franchise convention costs. U.S. Franchise and license expenses for 2012 were positively impacted by 15% due to the...
  • Pizza Hut 2012 Annual Report - Page 120
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Profit Amount 2011 $ 908 ... decrease was driven by higher restaurant operating costs, higher franchise and license expenses and same-store sales declines, partially offset by lower G&A ...
  • Pizza Hut 2012 Annual Report - Page 121
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Income Taxes The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below: 2012 751 4 (165) (47) - 14 (20) 537 2011 580 2 (...
  • Pizza Hut 2012 Annual Report - Page 122
    ... have historically experienced. We currently have investment-grade ratings from Standard & Poor's Rating Services (BBB) and Moody's Investors Service (... 1, 2013 to shareholders of record at the close of business on January 11, 2013. The Company targets an ongoing annual dividend payout ...
  • Pizza Hut 2012 Annual Report - Page 123
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results ... benefit pension plans covering certain salaried and hourly employees, the most signin.. are paid by the Company as incurred. Our funding policy for the Plan is to contribute annually amounts that will at least...
  • Pizza Hut 2012 Annual Report - Page 124
    ...we would receive under a franchise agreement with terms substantially at market entered into simultaneously with the refranchising transaction. The discount rate used in the fair value calculations is our estimate of the required rate...
  • Pizza Hut 2012 Annual Report - Page 125
    ...KFC U.S. operating segments and our Pizza Hut United Kingdom ("U.K.") business unit. Within our Taco Bell U.S. operating segment, 181 restaurants ... beginning-of-year goodwill). Within our Pizza Hut U.K. business unit, 359 dine-in and delivery restaurants were refranchised (...
  • Pizza Hut 2012 Annual Report - Page 126
    ... for each asset category, adjusted for an assessment of current market conditions. Our expected long-term rate of return on U.S. plan assets, for ... 7.25%. We believe this rate is appropriate given the composition of our plan assets and historical market returns thereon. A one...
  • Pizza Hut 2012 Annual Report - Page 127
    ... in place to monitor and control their use. Interest Rate Risk We have a market risk exposure to changes in interest ... billion as of December 29, 2012. Operating in international markets exposes the Company to movements in foreign currency exchange rates. The Company's primary exposures result from ...
  • Pizza Hut 2012 Annual Report - Page 128
    ... Information Page Reference Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Statements of Income for the fiscal years ended ... financial statements or notes thereto. Form 10-K 36 YUM! BRANDS, INC. - 2012 Form 10-K
  • Pizza Hut 2012 Annual Report - Page 129
    PART II ITEM 8 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders YUM! Brands, Inc. We have audited the accompanying consolidated balance sheets of YUM! Brands, Inc. and Subsidiaries (YUM) as of ...
  • Pizza Hut 2012 Annual Report - Page 130
    ... 12,626 $ 2010 9,783 1,560 11,343 Revenues Company sales Franchise and license fees and income Total revenues Costs and Expenses, Net Company ... Food and paper Payroll and employee benefits Occupancy and other operating expenses Company restaurant expenses General and ...
  • Pizza Hut 2012 Annual Report - Page 131
    PART II ITEM 8 Financial Statements and Supplementary Data Consolidated Statements of Comprehensive ...during the year on pension and post-retirement plans Tax (expense) benefit Reclassification.... See accompanying Notes to Consolidated Financial Statements. $ 2012 1,608 $ 2010 1,178 $ 27...
  • Pizza Hut 2012 Annual Report - Page 132
    ... compensation Employee stock option proceeds Dividends paid on Common Stock Other, net NET CASH USED IN FINANCING ACTIVITIES EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND ...
  • Pizza Hut 2012 Annual Report - Page 133
    ...liates Restricted cash Other assets Deferred income taxes TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and other current liabilities Income taxes payable Short-term borrowings Advertising cooperative liabilities Total...
  • Pizza Hut 2012 Annual Report - Page 134
    ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ... Repurchase of shares of Common Stock Employee stock option and SARs exercises (includes tax impact ...
  • Pizza Hut 2012 Annual Report - Page 135
    ... Inc. and Subsidiaries (collectively referred to herein as "YUM" or the "Company") comprises primarily the worldwide operations of KFC, Pizza Hut and Taco Bell (collectively the "Concepts"). YUM is the world's largest quick service restaurant company based on...
  • Pizza Hut 2012 Annual Report - Page 136
    ... operations of these foreign entities are then translated into U.S. dollars at the average exchange rates... U.S. dollars at exchange rates in effect at the balance sheet date. As of December 29, 2012, net... incremental franchise and license support costs. Revenue Recognition. Revenues from Company-owned...
  • Pizza Hut 2012 Annual Report - Page 137
    ... reasonable assumptions we believe a franchisee would make such as sales growth and margin improvement. The discount rate used in the fair value calculation is our estimate of the required rate of return that a franchisee would expect to receive when ...
  • Pizza Hut 2012 Annual Report - Page 138
    ... and liabilities are measured using enacted tax rates expected to apply to taxable income ... an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants.... that are held for sale. Leases and Leasehold Improvements. The Company leases land, buildings or both...
  • Pizza Hut 2012 Annual Report - Page 139
    ... value is the price a willing buyer would pay for a reporting unit, and is generally estimated using... after-tax cash ï¬,ows from Company operations and franchise royalties. The discount rate... is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise...
  • Pizza Hut 2012 Annual Report - Page 140
    ... of our Common Stock under share repurchase programs authorized by our Board of Directors. Shares repurchased constitute ... restaurants we continued to own being recorded in the U.S. segment at the rate at which it was prior to the impairment charge being recorded. U.S. Business Transformation As ...
  • Pizza Hut 2012 Annual Report - Page 141
    ... Little Sheep that would require us to purchase their remaining shares owned upon exercise, which may occur any time after the third anniversary of... additional interest. Under the equity method of accounting, we previously reported our 27% share of the net income of Little Sheep ...
  • Pizza Hut 2012 Annual Report - Page 142
    ... the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom. The newly signed franchise agreement for ... of our decision to refranchise or close all of our remaining company-owned Pizza Hut UK dine-in restaurants, ...
  • Pizza Hut 2012 Annual Report - Page 143
    PART II ITEM 8 Financial Statements and Supplementary Data The following table summarizes the 2012 and 2011 activity related to ... 150 24 164 338 Prepaid Expenses and Other Current Assets Income tax receivable Assets held for sale(a) Other prepaid expenses and current assets (a) Primarily reflects ...
  • Pizza Hut 2012 Annual Report - Page 144
    ...million and $565 million in 2012, 2011 and 2010, respectively. Accounts Payable and Other Current Liabilities Accounts payable... 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 LJS and A&W ...
  • Pizza Hut 2012 Annual Report - Page 145
    PART II ITEM 8 Financial Statements and Supplementary Data Intangible assets, net for the ... in 2013, $24 million in 2014, $23 million annually in 2015 and 2016 and $21 million in ...12) LONG-TERM DEBT INCLUDING HEDGE ACCOUNTING ADJUSTMENT In 2012, the Company executed a five-year syndicated senior...
  • Pizza Hut 2012 Annual Report - Page 146
    ...Interest payments commenced approximately six months after issuance date and are payable semi-annually thereafter. (b) Includes the effects of the amortization of any... December 29, 2012 we operated nearly 7,600 restaurants, leasing the underlying land and/or building in nearly...
  • Pizza Hut 2012 Annual Report - Page 147
    ... exposed to certain market risks relating to its ongoing business operations. The primary market risks managed by using derivative instruments are interest rate risk and cash ï¬,ow volatility arising from foreign currency ï¬,uctuations...
  • Pizza Hut 2012 Annual Report - Page 148
    ... not a restaurant or restaurant group would be refranchised. 2012 Pizza Hut UK refranchising impairment (Level 3)(a) $ Little ... based on market rates. (a) See Note 4 for further discussions of Refranchising (gain) loss, including the Pizza Hut UK dine-in refranchising and the acquisition of Little ...
  • Pizza Hut 2012 Annual Report - Page 149
    ... Pension Plans 2012 Change in benefit obligation Benefit obligation at beginning of year Service cost Interest ... Benefits paid Exchange rate changes Administrative expenses Fair value of plan assets at...Actuarial net loss Prior service cost $ $ U.S. Pension Plans 2012 421 $ 7 428 $ 2011 ...
  • Pizza Hut 2012 Annual Report - Page 150
    ...¬t cost: Net periodic benefit cost Service cost Interest cost Amortization of prior service cost(a) Expected return on plan assets Amortization of... of prior service cost Prior service cost PBO reduction in excess of settlement payment Settlement charges Exchange rate changes END OF YEAR $ $...
  • Pizza Hut 2012 Annual Report - Page 151
    ...Weighted-average assumptions used to determine benefit obligations at the measurement dates: U.S. Pension Plans 2012 2011 4.40... 3.75% International Pension Plans 2012 2011 4.70% 4.75% 3.70% 3.85% Discount rate Rate ... Pension Plans 2012 2011 4.75% 5.40% 5.55% 6.64% 3.85% 4.41% Discount rate Long-...
  • Pizza Hut 2012 Annual Report - Page 152
    ... of 2011. The net periodic benefit cost recorded in 2012, 2011 and 2010 was $6 million... Revenue Code (the "401(k) Plan") for eligible U.S. salaried and hourly employees. Participants are able... or the ending market price of the Company's stock on the date of grant. Potential awards to employees and...
  • Pizza Hut 2012 Annual Report - Page 153
    ...to defer incentive compensation to purchase phantom shares of our Common Stock and receive a 33% Company match on the amount... over the requisite service period which includes the vesting period. Historically, the Company has repurchased shares on the open market in excess of the amount necessary to ...
  • Pizza Hut 2012 Annual Report - Page 154
    ... 16 Shareholders' Equity Under the authority of our Board of Directors, we repurchased shares of our Common Stock during 2012, 2011 and 2010. All ...2010 fiscal year. Form 10-K On November 16, 2012, our Board of Directors authorized share repurchases through May 2014 of up...
  • Pizza Hut 2012 Annual Report - Page 155
    ...rate to our effective tax rate is set forth below: 2012 751 4 (165) (47)...reï¬,ected in the 'Statutory rate differential attributable to foreign operations' line. In 2012, this item was favorably... to current year earnings as well as U.S. tax credits and deductions. In 2012, this item was positively...
  • Pizza Hut 2012 Annual Report - Page 156
    ... (336) 600 Operating losses and tax credit carryforwards Employee benefits Share-based... Deferred income taxes - current Deferred income taxes - long-term Accounts payable and ... investments in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have ...
  • Pizza Hut 2012 Annual Report - Page 157
    ... 2011 5,566 $ 3,192 3,786 82 12,626 $ We are principally engaged in developing, operating, franchising and licensing the worldwide KFC, Pizza Hut and Taco Bell concepts. KFC, Pizza Hut and Taco Bell operate in 120, 97, and 27 ...
  • Pizza Hut 2012 Annual Report - Page 158
    PART II ITEM 8 Financial Statements and Supplementary Data China(b) YRI U.S. India Unallocated Occupancy and other(a)(c) Unallocated and corporate ..., net INCOME BEFORE INCOME TAXES Operating Profit; Interest Expense, Net; and Income Before Income Taxes 2012 2011 2010 $ 1,015 $ 908...
  • Pizza Hut 2012 Annual Report - Page 159
    PART II ITEM 8 Financial Statements and Supplementary Data China YRI U.S. India Corporate $ $ Long-Lived Assets(j) ..., $10 million and $9 million, respectively. 2012 and 2011 include depreciation reductions arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $13 ...
  • Pizza Hut 2012 Annual Report - Page 160
    ...-wide class of hourly employees. On May 19, 2009 the court granted Taco Bell's motion to... Bell crew member, alleges that Taco Bell failed to timely pay her final wages upon... awaiting the court's approval of this request. Taco Bell was named as a defendant in a number of putative class action suits...
  • Pizza Hut 2012 Annual Report - Page 161
    ...alleged that Pizza Hut did not properly reimburse its delivery drivers for various automobile costs,...cation of a nationwide class of current and former Pizza Hut, Inc. delivery drivers. However,...opt-ins. The final number has yet to be determined but is expected to be approximately 6,000. Pizza Hut...
  • Pizza Hut 2012 Annual Report - Page 162
    ..., refranchising losses associated with the Pizza Hut UK dine-in business of $24 million and ... a refranchising loss associated with the Pizza Hut UK dine-in business of $76 million in the third... of the Consolidated Financial Statements, related notes and other information included in this annual report...
  • Pizza Hut 2012 Annual Report - Page 163
    ... an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and ... has issued their report, included herein. Form 10-K Changes in Internal Control There were no changes with respect...
  • Pizza Hut 2012 Annual Report - Page 164
    ... under the captions "Stock Ownership Information," "Governance of the Company," "Executive Compensation" and "Item 1: Election of Directors and Director biographies"... 120 days after December 29, 2012. ITEM 14 Principal Accountant Fees and Services Information regarding principal accountant fees and ...
  • Pizza Hut 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 Statement Schedules: No schedules are required because ...
  • Pizza Hut 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 ... Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed ...-Chairman of the Board Director Date February 19, 2013 February 19, 2013 February ...
  • Pizza Hut 2012 Annual Report - Page 167
    ...incorporated herein by reference from Exhibit 10.7 to YUM's Annual Report on Form 10-K for the fiscal year... herein by reference from Exhibit 10.8 to YUM's Annual Report on Form 10-K for the fiscal year... by reference from Exhibit 10.17 to YUM's Annual Report on Form 10-K for the fiscal year...
  • Pizza Hut 2012 Annual Report - Page 168
    ...herein by reference from Exhibit 10.22 to YUM's Annual Report on Form 10-K for the fiscal year ...incorporated by reference from Exhibit 10.21.1 to YUM's Annual Report on Form 10-K for the fiscal year ...24, 2008, which is incorporated herein by reference from Exhibit 10.33 to YUM's Annual Report ...
  • Pizza Hut 2012 Annual Report - Page 169
    ...YUM Holdings REGISTERED SHAREHOLDERS (those who hold YUM shares in their own names) should address communications concerning statements, address changes, lost certin.. of YUM through the Company's Direct Stock Purchase Plan • Sell shares held by AST Access accounts online at the ...
  • Pizza Hut 2012 Annual Report - Page 170
    ... TRADING SYMBOL-YUM The New York Stock Exchange is the principal market for YUM Common Stock, which trades under the symbol YUM. ... franchise opportunities is available at www.yumfranchises.com Yum! Brands' Annual Report contains many of the valuable trademarks owned and used by Yum! Brands and its ...
  • Pizza Hut 2012 Annual Report - Page 171
    ... and Investment Bank Scott O. Bergren 66 Chief Executive Officer, Pizza Hut U.S. and Chief Innovation Officer, Yum! Brands, Inc....B. Hill Enterprises, LLC Greg Creed 55 Chief Executive Officer, Taco Bell Jonathan S. Linen 69 Advisor to Chairman, American Express Company John Cywinski 50 President,...
  • Pizza Hut 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.