Total Revenues and
Total System Sales* Grew 4%
year over year
Share Repurchase Authorization Increased
by $850
million to an Aggregate of $1.4
billion
SHANGHAI,
Oct. 30, 2018
/PRNewswire/ -- Yum China Holdings, Inc.
(the "Company" or "Yum China")
(NYSE: YUMC) today reported unaudited results for the
third quarter ended September 30,
2018. Reported
GAAP results include Special Items,
which are excluded from adjusted
measures. Special Items are not allocated to any
segment and therefore only impact reported GAAP results of
Yum China. See "Reconciliation
of Reported GAAP Results to
Adjusted Measures" within this
release.
Third Quarter
Highlights
- Total revenues increased 4% year over year to
$2.2 billion from $2.1 billion (6% year over
year increase excluding foreign
currency translation ("F/X")).
- Total system sales grew 4% year over year, with
6% growth at KFC partially offset by 2% decline at Pizza Hut,
excluding F/X.
- Same-store sales declined 1% year over year, with a 1%
increase at KFC and a 5% decrease at Pizza Hut, excluding F/X.
- Restaurant margin was 17.6%, as compared with
18.0% in the prior year period.
- Operating Profit increased 2% year over
year to $269 million from
$264 million (4% year over year
increase excluding F/X).
- Net Income increased 15% to $203 million from $176
million in the prior year period (17% year over year
increase excluding F/X).
- Effective tax rate was 24.2%.
- Diluted EPS increased 16% to $0.51 from $0.44 in
the prior year period (18% year over year increase excluding
F/X).
- Opened 195 new restaurants during the quarter, bringing total
store count to 8,313 across more than 1,200 cities.
Dividend and Share Repurchase
- The Board of Directors declared a cash dividend of
$0.12 per share on
Yum China's common
stock, payable as of the close of
business on December 18, 2018
to stockholders of record as of the close of business on
November 27, 2018.
- During the third quarter, we repurchased approximately
2.7 million shares of Yum China
common stock for $93.7 million at an
average price of $35.14 per
share.
- In October 2018, the Board
of Directors increased Yum China's
existing share repurchase authorization from $550 million to an aggregate of $1.4 billion.
Recent
Development
- As of today, the Company has repurchased
approximately 11.3 million
shares for $406
million, including 3.4
million shares for $110 million in October 2018. There is approximately $1 billion remaining under the new share
repurchase authorization.
*System sales growth
rate excludes the impact of F/X.
|
Key Financial Results
|
Third Quarter
2018
|
|
Year to Date Ended
9/30/2018
|
|
%
Change
|
%
Change
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Yum China
|
+4
|
(1)
|
+6
|
+2
|
+4
|
|
-
|
+6
|
|
+17
|
KFC
|
+6
|
+1
|
+8
|
+3
|
+6
|
|
+2
|
+8
|
|
+11
|
Pizza Hut
|
(2)
|
(5)
|
+3
|
-
|
(1)
|
|
(5)
|
+3
|
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
Year to Date Ended
9/30
|
(in US$ million,
except
|
|
|
|
|
%
Change
|
|
|
|
|
%
Change
|
for per share data
and percentages)
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
Operating
Profit
|
$
269
|
$
264
|
2
|
4
|
$ 857
|
|
$ 731
|
|
17
|
|
12
|
Adjusted Operating
Profit1
|
$
269
|
$
261
|
3
|
4
|
$ 759
|
|
$ 728
|
|
4
|
|
(1)
|
Net Income
|
$
203
|
$
176
|
15
|
17
|
$ 634
|
|
$ 505
|
|
26
|
|
19
|
Basic Earnings Per
Common Share
|
$ 0.53
|
$ 0.46
|
15
|
15
|
$ 1.64
|
|
$ 1.30
|
|
26
|
|
20
|
Adjusted Basic
Earnings Per Common Share1
|
$ 0.53
|
$ 0.45
|
18
|
18
|
$ 1.45
|
|
$ 1.30
|
|
12
|
|
6
|
Diluted Earnings Per
Common Share
|
$ 0.51
|
$ 0.44
|
16
|
18
|
$ 1.59
|
|
$ 1.27
|
|
25
|
|
19
|
Adjusted Diluted
Earnings Per Common Share1
|
$ 0.51
|
$ 0.43
|
19
|
21
|
$ 1.41
|
|
$ 1.26
|
|
12
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 See
"Reconciliation of Reported GAAP Results to Adjusted Measures"
included in the accompanying tables of this release for further
details.
|
Note:
All comparisons are versus the same period a year
ago.
|
NM refers to changes
over 100%, from negative to positive amounts or from zero to an
amount.
|
Yum China's fiscal
third quarter 2018 includes July, August and September
results.
|
Percentages may not
recompute due to rounding.
|
System sales and
same-store sales percentages exclude the impact of F/X.
|
Prior period results
have been recast for the change of fiscal quarter, same-store sales
growth definition and adoption of the new revenue accounting
standard.
|
CEO and CFO
Comments
"We recorded 4% system sales growth during the third quarter,
excluding foreign exchange impact, as we expanded our portfolio and
delivered more value-oriented offerings to address growing
competition and softer trading conditions," said Joey Wat, CEO of Yum
China. "KFC continued to perform well, posting 1% same-store
sales growth during the quarter, on top of a 10% growth in the same
period last year. Pizza Hut recorded a 5%
decline in same-store sales during the quarter, as healthy growth
in delivery was offset by lower dine-in traffic. We made
further progress on the revitalization program as we launched a
refreshed brand identity, improved our value proposition, expanded
our digital capabilities to include
tableside ordering via mobile, and generated greater
delivery traffic through our own channels."
"Looking ahead, we are excited by the opportunity to grow
our portfolio in China's western quick service restaurant and
casual dining markets. We will continue to add a range of store
formats across the spectrum of low and high tier cities to drive
growth. We will also build out our digital and delivery eco-system
so that we can better serve our customers and create a seamless
online to offline experience," said Ms. Wat.
"We are pleased to report that we effectively managed
restaurant margins at both brands during the quarter,
despite an increase in promotional activities," said
Jacky Lo, CFO of Yum China. "Pizza Hut maintained
operating profit at the same level as the year ago period due to
more targeted investments in new products and better labor
efficiencies."
"With a solid balance sheet and strong cash generation, we
returned over $132 million of capital to our
shareholders through a combination of share buybacks and dividends
in the third quarter. We are pleased to announce that we increased
our quarterly cash dividend by 20% to $0.12 per share, and expanded our share
repurchase authorization by $850
million to a total of $1.4
billion. We are committed
to continuing to create long-term value for
our shareholders," added Mr.
Lo.
Digital and Delivery
- As of September 30, 2018,
the KFC loyalty program had over 145 million
members and the Pizza Hut loyalty program had over 50 million
members, an increase of 45 million and 20 million, respectively,
year over year.
- Mobile payments accounted for 64% of Company sales in the
quarter, an increase of 17 percentage points year over year.
Digital payments accounted for 82% of Company sales in the quarter,
an increase of 18 percentage points year over year.
- Delivery contributed to 17% of Company sales in the third
quarter of 2018, an increase of 3 percentage points year
over year. Delivery services are now available in 1,063 cities, up
from 864 cities in the prior year period.
New-Unit Development and Asset Upgrade
- The Company opened 195 new restaurants and remodeled
209 restaurants in the third quarter of 2018.
|
New
Units
|
|
Restaurant
Count
|
|
Third
Quarter
|
|
Year to
Date
|
|
As of
9/30
|
|
2018
|
|
Ended
9/30/2018
|
|
2018
|
|
2017
|
Yum China
|
195
|
|
562
|
|
8,313
|
|
7,813
|
KFC
|
139
|
|
411
|
|
5,800
|
|
5,393
|
Pizza Hut
|
38
|
|
106
|
|
2,215
|
|
2,157
|
Others2
|
18
|
|
45
|
|
298
|
|
263
|
|
2 Others
include Little Sheep, East Dawning, Taco Bell and COFFii & JOY,
a coffee concept recently developed by Yum China.
|
Restaurant Margin
- In the third quarter of 2018, Yum China restaurant margin was 17.6%,
as compared with 18.0% in the prior year period, primarily
attributable to same-store sales deleverage at Pizza Hut and
investment in product upgrades and promotions at both KFC and
Pizza Hut.
|
|
Third
Quarter
|
|
Year to Date Ended 9/30
|
|
|
2018
|
|
2017
|
|
%
pts
change
|
|
2018
|
|
2017
|
|
%
pts
change
|
Yum China
|
|
17.6%
|
|
18.0 %
|
|
(0.4)
|
|
16.9%
|
|
18.3%
|
|
(1.4)
|
KFC
|
|
19.2%
|
|
19.6%
|
|
(0.4)
|
|
19.0%
|
|
19.3%
|
|
(0.3)
|
Pizza Hut
|
|
13.8%
|
|
14.4%
|
|
(0.6)
|
|
11.8%
|
|
16.3%
|
|
(4.5)
|
Conference Call
Yum China's management will hold
an earnings conference call at 8:00pm
U.S. Eastern Time on Tuesday, October 30,
2018 (8:00am Beijing/Hong Kong Time on Wednesday, October 31, 2018). A copy of the
presentation will be available on the Yum China Holdings, Inc.
website,
http://ir.yumchina.com
US:
|
+1 845 675
0437
|
Hong Kong:
|
+852 3018
6771
|
Mainland
China:
|
400 620 8038 or 800
819 0121
|
UK:
|
+44 20
36214779
|
International:
|
+65 6713
5090
|
Passcode:
|
Yum China
|
A replay of the conference call will be available two
hours after the call ends until 8:00am U.S. Eastern Time on Wednesday, November 7, 2018 (9:00pm Beijing/Hong Kong Time on Wednesday, November 7, 2018) and may be accessed
by phone at the following numbers:
US:
|
+1 855 452
5696
|
International:
|
+61 2 8199
0299
|
Passcode:
|
8893952
|
Additionally, a live webcast and an archived webcast of this
conference call will be available at
http://ir.yumchina.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as "expect,"
"expectation," "believe," "anticipate," "may," "could," "intend,"
"belief," "plan," "estimate," "target," "predict," "project,"
"likely," "will," "continue," "should," "forecast," "outlook" or
similar terminology. These statements are based on current
estimates and assumptions made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that we believe are
appropriate and reasonable under the circumstances, but there can
be no assurance that such estimates and assumptions will prove to
be correct. Forward-looking statements include, without limitation,
statements regarding the future business plans, earnings and
performance of Yum China, statements
regarding the revitalization of Pizza Hut, anticipated effects of
population and macroeconomic trends, statements regarding the
capital structure of Yum China, and
beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements
are not guarantees of performance and are inherently subject to
known and unknown risks and uncertainties that are difficult to
predict and could cause our actual results or events to differ
materially from those indicated by those statements. We cannot
assure you that any of our expectations, estimates or assumptions
will be achieved. The forward-looking statements included in this
press release are only made as of the date of this press release,
and we disclaim any obligation to publicly update any
forward-looking statement to reflect subsequent events or
circumstances, except as required by law. Numerous factors could
cause our actual results or events to differ materially from those
expressed or implied by forward-looking statements, including,
without limitation: whether we are able to achieve development
goals at the times and in the amounts currently anticipated, if at
all, the success of our marketing campaigns and product innovation,
our ability to maintain food safety and quality control systems,
our ability to control costs and expenses, including tax costs, as
well as changes in political, economic and regulatory conditions in
China. In addition, other risks
and uncertainties not presently known to us or that we currently
believe to be immaterial could affect the accuracy of any such
forward-looking statements. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.
You should consult our filings with the Securities and Exchange
Commission (including the information set forth under the captions
"Risk Factors" and "Forward-Looking Statements" in our Annual
Report on Form 10-K) for additional detail about factors that could
affect our financial and other results.
About Yum China Holdings, Inc.
Yum China Holdings, Inc. is a licensee of Yum! Brands in
mainland China. It has exclusive rights in mainland China to KFC,
China's leading quick-service restaurant brand, Pizza Hut, the
leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving
innovative Mexican-inspired food. Yum
China also owns the Little
Sheep and East Dawning concepts outright.
The Company had more than 8,300 restaurants in over
1,200 cities at the end of September 2018. For more information, please
visit
http://ir.yumchina.com
Investor Relations
Contact:
|
|
|
Tel: +86 21 2407
7556
IR@YumChina.com
|
|
|
|
Media
Contact:
|
|
|
Tel: +86 21 2407
7510
Media@YumChina.com
|
Yum China
Holdings, Inc.
|
Consolidated
Statements of Income
|
(amounts in US$
million, except for per share amounts)
|
(unaudited)
|
|
|
Quarter
Ended
|
|
% Change
|
|
Year to Date
Ended
|
|
% Change
|
|
9/30/2018
|
|
9/30/2017
|
|
B/(W)
|
|
9/30/2018
|
|
9/30/2017
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
2,008
|
|
$
|
1,924
|
|
4
|
|
$
|
5,912
|
|
$
|
5,326
|
|
11
|
Franchise fees and
income
|
|
36
|
|
|
38
|
|
(5)
|
|
|
110
|
|
|
107
|
|
3
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
159
|
|
|
160
|
|
(1)
|
|
|
461
|
|
|
448
|
|
3
|
Other
revenues
|
|
9
|
|
|
8
|
|
8
|
|
|
18
|
|
|
16
|
|
12
|
Total
revenues
|
|
2,212
|
|
|
2,130
|
|
4
|
|
|
6,501
|
|
|
5,897
|
|
10
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
610
|
|
|
560
|
|
(9)
|
|
|
1,775
|
|
|
1,529
|
|
(16)
|
Payroll and employee
benefits
|
|
430
|
|
|
403
|
|
(7)
|
|
|
1,296
|
|
|
1,137
|
|
(14)
|
Occupancy and other
operating expenses
|
|
615
|
|
|
614
|
|
—
|
|
|
1,841
|
|
|
1,683
|
|
(9)
|
Company restaurant
expenses
|
|
1,655
|
|
|
1,577
|
|
(5)
|
|
|
4,912
|
|
|
4,349
|
|
(13)
|
General and
administrative expenses
|
|
119
|
|
|
123
|
|
3
|
|
|
334
|
|
|
339
|
|
2
|
Franchise
expenses
|
|
18
|
|
|
19
|
|
8
|
|
|
55
|
|
|
54
|
|
(1)
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
156
|
|
|
159
|
|
2
|
|
|
454
|
|
|
443
|
|
(2)
|
Other operating costs
and expenses
|
|
6
|
|
|
8
|
|
19
|
|
|
17
|
|
|
14
|
|
(21)
|
Closures and
impairment (income) expenses, net
|
|
(1)
|
|
|
2
|
|
NM
|
|
|
15
|
|
|
20
|
|
25
|
Other income,
net
|
|
(10)
|
|
|
(22)
|
|
(53)
|
|
|
(143)
|
|
|
(53)
|
|
NM
|
Total costs and
expenses, net
|
|
1,943
|
|
|
1,866
|
|
(4)
|
|
|
5,644
|
|
|
5,166
|
|
(9)
|
Operating
Profit
|
|
269
|
|
|
264
|
|
2
|
|
|
857
|
|
|
731
|
|
17
|
Interest and other
income, net
|
|
10
|
|
|
8
|
|
34
|
|
|
28
|
|
|
16
|
|
76
|
Income Before
Income Taxes
|
|
279
|
|
|
272
|
|
3
|
|
|
885
|
|
|
747
|
|
19
|
Income tax
provision
|
|
(67)
|
|
|
(87)
|
|
22
|
|
|
(227)
|
|
|
(220)
|
|
(4)
|
Net income –
including noncontrolling interests
|
|
212
|
|
|
185
|
|
15
|
|
|
658
|
|
|
527
|
|
25
|
Net income –
noncontrolling interests
|
|
9
|
|
|
9
|
|
(5)
|
|
|
24
|
|
|
22
|
|
(8)
|
Net Income – Yum
China Holdings, Inc.
|
$
|
203
|
|
$
|
176
|
|
15
|
|
$
|
634
|
|
$
|
505
|
|
26
|
Effective tax
rate
|
|
24.2%
|
|
|
31.9%
|
|
7.7
ppts.
|
|
|
25.7%
|
|
|
29.4%
|
|
3.7 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
$
|
0.53
|
|
$
|
0.46
|
|
|
|
$
|
1.64
|
|
|
1.30
|
|
|
Weighted average
shares outstanding (in millions)
|
|
384
|
|
|
386
|
|
|
|
|
386
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Common Share
|
$
|
0.51
|
|
$
|
0.44
|
|
|
|
$
|
1.59
|
|
|
1.27
|
|
|
Weighted average
shares outstanding (in millions)
|
|
394
|
|
|
398
|
|
|
|
|
398
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
$
|
0.10
|
|
$
|
—
|
|
|
|
$
|
0.30
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
Food and
paper
|
|
30.4
|
|
|
29.1
|
|
(1.3)
ppts.
|
|
|
30.0
|
|
|
28.7
|
|
(1.3)
ppts.
|
Payroll and employee
benefits
|
|
21.4
|
|
|
20.9
|
|
(0.5)
ppts.
|
|
|
21.9
|
|
|
21.3
|
|
(0.6)
ppts.
|
Occupancy and other
operating expenses
|
|
30.6
|
|
|
32.0
|
|
1.4
ppts.
|
|
|
31.2
|
|
|
31.7
|
|
0.5 ppts.
|
Restaurant
margin
|
|
17.6%
|
|
|
18.0%
|
|
(0.4)
ppts.
|
|
|
16.9%
|
|
|
18.3%
|
|
(1.4)
ppts.
|
Operating
margin
|
|
13.4%
|
|
|
13.7%
|
|
(0.3)
ppts.
|
|
|
14.5%
|
|
|
13.7%
|
|
0.8 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
Quarter
Ended
|
|
% Change
B/(W)
|
|
Year to Date
Ended
|
|
% Change
B/(W)
|
|
9/30/2018
|
|
|
9/30/2017
|
|
|
9/30/2018
|
|
|
9/30/2017
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
1,452
|
|
$
|
1,347
|
|
8
|
|
$
|
4,248
|
|
$
|
3,705
|
|
15
|
Franchise fees and
income
|
|
34
|
|
|
36
|
|
(7)
|
|
|
104
|
|
|
102
|
|
1
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
16
|
|
|
19
|
|
(17)
|
|
|
48
|
|
|
51
|
|
(7)
|
Total
revenues
|
|
1,502
|
|
|
1,402
|
|
7
|
|
|
4,400
|
|
|
3,858
|
|
14
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
444
|
|
|
400
|
|
(11)
|
|
|
1,281
|
|
|
1,101
|
|
(16)
|
Payroll and employee
benefits
|
|
297
|
|
|
266
|
|
(12)
|
|
|
879
|
|
|
748
|
|
(18)
|
Occupancy and other
operating expenses
|
|
432
|
|
|
416
|
|
(4)
|
|
|
1,281
|
|
|
1,139
|
|
(12)
|
Company restaurant
expenses
|
|
1,173
|
|
|
1,082
|
|
(8)
|
|
|
3,441
|
|
|
2,988
|
|
(15)
|
General and
administrative expenses
|
|
44
|
|
|
44
|
|
(2)
|
|
|
135
|
|
|
121
|
|
(11)
|
Franchise
expenses
|
|
17
|
|
|
19
|
|
8
|
|
|
53
|
|
|
53
|
|
—
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
16
|
|
|
19
|
|
15
|
|
|
48
|
|
|
51
|
|
6
|
Closures and
impairment expenses, net
|
|
—
|
|
|
—
|
|
31
|
|
|
6
|
|
|
10
|
|
43
|
Other income,
net
|
|
(12)
|
|
|
(18)
|
|
(30)
|
|
|
(42)
|
|
|
(48)
|
|
(12)
|
Total costs and
expenses, net
|
|
1,238
|
|
|
1,146
|
|
(8)
|
|
|
3,641
|
|
|
3,175
|
|
(15)
|
Operating
Profit
|
$
|
264
|
|
$
|
256
|
|
3
|
|
$
|
759
|
|
$
|
683
|
|
11
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
Food and
paper
|
|
30.6
|
|
|
29.7
|
|
(0.9)
ppts.
|
|
|
30.2
|
|
|
29.7
|
|
(0.5)
ppts.
|
Payroll and employee
benefits
|
|
20.4
|
|
|
19.7
|
|
(0.7)
ppts.
|
|
|
20.7
|
|
|
20.2
|
|
(0.5)
ppts.
|
Occupancy and other
operating expenses
|
|
29.8
|
|
|
31.0
|
|
1.2 ppts.
|
|
|
30.1
|
|
|
30.8
|
|
0.7 ppts.
|
Restaurant
margin
|
|
19.2%
|
|
|
19.6%
|
|
(0.4)
ppts.
|
|
|
19.0%
|
|
|
19.3%
|
|
(0.3)
ppts.
|
Operating
margin
|
|
18.1%
|
|
|
19.0%
|
|
(0.9)
ppts.
|
|
|
17.8%
|
|
|
18.4%
|
|
(0.6)
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Pizza Hut
Operating Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
% Change
B/(W)
|
|
Year to Date
Ended
|
|
% Change
B/(W)
|
|
9/30/2018
|
|
9/30/2017
|
|
|
9/30/2018
|
|
9/30/2017
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
548
|
|
$
|
568
|
|
(4)
|
|
$
|
1,640
|
|
$
|
1,592
|
|
3
|
Franchise fees and
income
|
|
1
|
|
|
1
|
|
4
|
|
|
2
|
|
|
2
|
|
17
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
1
|
|
|
—
|
|
(7)
|
|
|
1
|
|
|
1
|
|
(3)
|
Total
revenues
|
|
550
|
|
|
569
|
|
(3)
|
|
|
1,643
|
|
|
1,595
|
|
3
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
163
|
|
|
157
|
|
(4)
|
|
|
486
|
|
|
418
|
|
(16)
|
Payroll and employee
benefits
|
|
130
|
|
|
135
|
|
3
|
|
|
410
|
|
|
381
|
|
(8)
|
Occupancy and other
operating expenses
|
|
179
|
|
|
195
|
|
8
|
|
|
550
|
|
|
534
|
|
(3)
|
Company restaurant
expenses
|
|
472
|
|
|
487
|
|
3
|
|
|
1,446
|
|
|
1,333
|
|
(9)
|
General and
administrative expenses
|
|
24
|
|
|
27
|
|
15
|
|
|
80
|
|
|
78
|
|
(1)
|
Franchise
expenses
|
|
1
|
|
|
—
|
|
13
|
|
|
2
|
|
|
1
|
|
(23)
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
1
|
|
|
—
|
|
5
|
|
|
1
|
|
|
1
|
|
2
|
Closures and
impairment (income) expenses, net
|
|
(1)
|
|
|
1
|
|
NM
|
|
|
9
|
|
|
9
|
|
—
|
Other income,
net
|
|
—
|
|
|
—
|
|
NM
|
|
|
(2)
|
|
|
—
|
|
NM
|
Total costs and
expenses, net
|
|
497
|
|
|
515
|
|
4
|
|
|
1,536
|
|
|
1,422
|
|
(8)
|
Operating
Profit
|
$
|
53
|
|
$
|
54
|
|
—
|
|
$
|
107
|
|
$
|
173
|
|
(38)
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
Food and
paper
|
|
29.7
|
|
|
27.6
|
|
(2.1)
ppts.
|
|
|
29.6
|
|
|
26.2
|
|
(3.4)
ppts.
|
Payroll and employee
benefits
|
|
23.8
|
|
|
23.7
|
|
(0.1)
ppts.
|
|
|
25.0
|
|
|
23.9
|
|
(1.1)
ppts.
|
Occupancy and other
operating expenses
|
|
32.7
|
|
|
34.3
|
|
1.6 ppts.
|
|
|
33.6
|
|
|
33.6
|
|
— ppts.
|
Restaurant
margin
|
|
13.8%
|
|
|
14.4%
|
|
(0.6)
ppts.
|
|
|
11.8%
|
|
|
16.3%
|
|
(4.5)
ppts.
|
Operating
margin
|
|
9.8%
|
|
|
9.4%
|
|
0.4 ppts.
|
|
|
6.6%
|
|
|
10.9%
|
|
(4.3)
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Consolidated
Balance Sheets
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
|
|
9/30/2018
|
|
12/31/2017
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,334
|
|
$
|
1,059
|
Short-term
investments
|
|
198
|
|
|
205
|
Accounts receivable,
net
|
|
65
|
|
|
79
|
Inventories,
net
|
|
270
|
|
|
297
|
Prepaid expenses and
other current assets
|
|
179
|
|
|
162
|
Total Current
Assets
|
|
2,046
|
|
|
1,802
|
Property, plant and
equipment, net
|
|
1,605
|
|
|
1,691
|
Goodwill
|
|
266
|
|
|
108
|
Intangible assets,
net
|
|
133
|
|
|
101
|
Investments in
unconsolidated affiliates
|
|
68
|
|
|
95
|
Other
assets
|
|
498
|
|
|
385
|
Deferred income
taxes
|
|
75
|
|
|
105
|
Total
Assets
|
|
4,691
|
|
|
4,287
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
1,116
|
|
|
985
|
Income taxes
payable
|
|
76
|
|
|
39
|
Total Current
Liabilities
|
|
1,192
|
|
|
1,024
|
Capital lease
obligations
|
|
26
|
|
|
28
|
Other
liabilities
|
|
385
|
|
|
388
|
Total
Liabilities
|
|
1,603
|
|
|
1,440
|
Redeemable
Noncontrolling Interest
|
|
5
|
|
|
5
|
Equity
|
|
|
|
|
|
Common stock, $0.01
par value; 1,000 million shares authorized;
391
million shares and 389 million shares issued at September 30,
2018
and
December 31, 2017, respectively; 382 million shares and 385 million
shares
outstanding at September 30, 2018 and December 31, 2017,
respectively
|
|
4
|
|
|
4
|
Treasury
stock
|
|
(315)
|
|
|
(148)
|
Additional paid-in
capital
|
|
2,393
|
|
|
2,375
|
Retained
earnings
|
|
916
|
|
|
397
|
Accumulated other
comprehensive (loss) income
|
|
(14)
|
|
|
137
|
Total Equity – Yum
China Holdings, Inc.
|
|
2,984
|
|
|
2,765
|
Noncontrolling
interests
|
|
99
|
|
|
77
|
Total
Equity
|
|
3,083
|
|
|
2,842
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
$
|
4,691
|
|
$
|
4,287
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Consolidated
Statements of Cash Flows
|
(amounts in US$
million)
|
(unaudited)
|
|
|
Year to Date
Ended
|
|
9/30/2018
|
|
9/30/2017
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
$
|
658
|
|
$
|
527
|
Depreciation and
amortization
|
|
343
|
|
|
301
|
Closures and
impairment expenses
|
|
15
|
|
|
20
|
Gain from
re-measurement of equity interest upon acquisition
|
|
(98)
|
|
|
—
|
Deferred income
taxes
|
|
46
|
|
|
(3)
|
Equity income from
investments in unconsolidated affiliates
|
|
(52)
|
|
|
(54)
|
Distributions
received from unconsolidated affiliates
|
|
51
|
|
|
39
|
Share-based
compensation
|
|
18
|
|
|
18
|
Changes in accounts
receivable
|
|
2
|
|
|
12
|
Changes in
inventories
|
|
14
|
|
|
18
|
Changes in prepaid
expenses and other current assets
|
|
(13)
|
|
|
(5)
|
Changes in accounts
payable and other current liabilities
|
|
184
|
|
|
89
|
Changes in income
taxes payable
|
|
41
|
|
|
51
|
Other, net
|
|
(36)
|
|
|
(28)
|
Net Cash Provided
by Operating Activities
|
|
1,173
|
|
|
985
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
Capital
spending
|
|
(359)
|
|
|
(295)
|
Purchases of
short-term investments
|
|
(513)
|
|
|
(394)
|
Maturities of
short-term investments
|
|
513
|
|
|
387
|
Investment in equity
securities
|
|
(74)
|
|
|
—
|
Acquisition of
business, net of cash acquired
|
|
(91)
|
|
|
(25)
|
Other, net
|
|
(3)
|
|
|
—
|
Net Cash Used in
Investing Activities
|
|
(527)
|
|
|
(327)
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
Payment of capital
lease obligation
|
|
(2)
|
|
|
(2)
|
Repayment of
short-term borrowings assumed from acquisition
|
|
(10)
|
|
|
—
|
Repurchase of shares
of common stock
|
|
(161)
|
|
|
(128)
|
Proceeds from
exercise of stock options
|
|
—
|
|
|
5
|
Cash dividends paid
on common stock
|
|
(115)
|
|
|
—
|
Dividends paid to
noncontrolling interests
|
|
(29)
|
|
|
(22)
|
Other, net
|
|
(1)
|
|
|
—
|
Net Cash Used in
Financing Activities
|
|
(318)
|
|
|
(147)
|
Effect of Exchange
Rates on Cash and Cash Equivalents
|
|
(53)
|
|
|
27
|
Net Increase in
Cash and Cash Equivalents
|
|
275
|
|
|
538
|
Cash and Cash
Equivalents - Beginning of Period
|
|
1,059
|
|
|
885
|
Cash and Cash
Equivalents - End of Period
|
$
|
1,334
|
|
$
|
1,423
|
In this press release:
- The Company provides certain percentage changes excluding
the impact of foreign currency translation ("F/X"). These amounts
are derived by translating current year results at prior year
average exchange rates. We believe the elimination of the F/X
impact provides better year-to-year comparability without the
distortion of foreign currency fluctuations.
- System sales growth reflects the results of all
restaurants regardless of ownership, including Company-owned,
franchise and unconsolidated affiliate restaurants that operate our
restaurant concepts, except for non-Company-owned restaurants for
which we do not receive a sales-based royalty. Sales of franchise
and unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at a rate of approximately 6% of
system sales. Franchise and unconsolidated affiliate restaurant
sales are not included in Company sales on the Consolidated
Statements of Income; however, the franchise fees are included in
the Company's revenues. We believe system sales growth is useful to
investors as a significant indicator of the overall strength of our
business as it incorporates all of our revenue drivers, Company and
franchise same-store sales as well as net unit growth.
- Effective January 1, 2018, the
Company revised its definition of same-store sales growth to
represent the estimated percentage change in sales of food of all
restaurants in the Company system that have been open prior to the
first day of our prior fiscal year. We refer to these as our "base"
stores. Previously, same-store sales growth represented the
estimated percentage change in sales of all restaurants in the
Company system that have been open for one year or more, and the
base stores changed on a rolling basis from month to month. This
revision was made to align with how management measures performance
internally and focuses on trends of a more stable base of
stores. Prior period results have been adjusted
accordingly.
- Company Restaurant profit ("Restaurant profit") is
defined as Company sales less expenses incurred directly by our
Company-owned restaurants in generating Company sales. Company
restaurant margin percentage is defined as Restaurant profit
divided by Company sales.
Reconciliation of Reported GAAP
Results to Adjusted Measures
|
(amounts in US$ million,
except for per share amounts)
|
(unaudited)
|
In addition to the results provided in accordance with US
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides measures adjusted for Special Items,
which include Adjusted Operating Profit, Adjusted Diluted Earnings
Per Common Share, Adjusted Effective Tax Rate and Adjusted EBITDA,
which we define as net income including noncontrolling interests
adjusted for income tax, interest and other income, net,
depreciation, amortization and other items, including store
impairment charges. The Special Item for the year to date ended
September 30, 2018 represents a gain
recognized from the re-measurement of our previously held equity
interest in Wuxi KFC at fair value upon acquisition, as described
in the accompanying notes. The Special Item for the quarter and
year to date ended September 30, 2017
represents income from the reversal of contingent consideration.
The Company excludes impact from Special Items for the purpose of
evaluating performance internally. Special Items are not included
in any of our segment results. In addition, the Company provides
Adjusted EBITDA because we believe that investors and analysts may
find it useful in measuring operating performance without regard to
items such as income tax, interest and other income, net,
depreciation, amortization and other items, including store
impairment charges. These adjusted measures are not intended to
replace the presentation of our financial results in accordance
with GAAP. Rather, the Company believes that the presentation
of these adjusted measures provide additional information to
investors to facilitate the comparison of past and present results,
excluding those items that the Company does not believe are
indicative of our ongoing operations due to their nature.
These adjusted measures should not be considered in isolation or as
a substitute for GAAP financial results, but should be read in
conjunction with the unaudited Consolidated Statements of Income
and other information presented herein. A reconciliation of the
most directly comparable GAAP measures to adjusted measures
follows.
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
9/30/2018
|
|
9/30/2017
|
|
9/30/2018
|
|
9/30/2017
|
Detail of Special
Items
|
|
|
|
|
|
|
|
|
|
|
|
Gain from
re-measurement of equity interest upon
acquisition(b)
|
$
|
—
|
|
$
|
—
|
|
$
|
98
|
|
$
|
—
|
Income from the
reversal of contingent consideration(c)
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
Special Items Income
- Operating Profit
|
|
—
|
|
|
3
|
|
|
98
|
|
|
3
|
Tax Expenses on
Special Items(d)
|
|
—
|
|
|
—
|
|
|
(24)
|
|
|
—
|
Special Items Income,
net of tax – including noncontrolling interests
|
|
—
|
|
|
3
|
|
|
74
|
|
|
3
|
Special Items Income,
net of tax – noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Special Items Income,
net of tax –Yum China Holdings, Inc.
|
$
|
—
|
|
$
|
3
|
|
$
|
74
|
|
$
|
3
|
Weighted Average
Diluted Shares Outstanding
|
|
394
|
|
|
398
|
|
|
398
|
|
|
397
|
Special Items Diluted
Earnings Per Common Share
|
$
|
—
|
|
$
|
0.01
|
|
$
|
0.18
|
|
$
|
0.01
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
|
269
|
|
$
|
264
|
|
$
|
857
|
|
$
|
731
|
Special Items Income
- Operating Profit
|
|
—
|
|
|
3
|
|
|
98
|
|
|
3
|
Adjusted Operating
Profit
|
$
|
269
|
|
$
|
261
|
|
$
|
759
|
|
$
|
728
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
$
|
0.51
|
|
$
|
0.44
|
|
$
|
1.59
|
|
$
|
1.27
|
Special Items Diluted
Earnings Per Common Share
|
|
—
|
|
|
0.01
|
|
|
0.18
|
|
|
0.01
|
Adjusted Diluted
Earnings Per Common Share
|
$
|
0.51
|
|
$
|
0.43
|
|
$
|
1.41
|
|
$
|
1.26
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
24.2%
|
|
|
31.9%
|
|
|
25.7%
|
|
|
29.4%
|
Impact on Effective
Tax Rate as a result of Special Items
|
|
—%
|
|
|
(0.5)%
|
|
|
(0.1)%
|
|
|
(0.1)%
|
Adjusted Effective
Tax Rate
|
|
24.2%
|
|
|
32.4%
|
|
|
25.8%
|
|
|
29.5%
|
Reconciliation
of Net Income to Adjusted EBITDA
|
(amounts in US$
million)
|
(unaudited)
|
|
Net income, along
with the reconciliation to Adjusted EBITDA, is presented
below.
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
9/30/2018
|
|
9/30/2017
|
|
9/30/2018
|
|
9/30/2017
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
$
|
203
|
|
$
|
176
|
|
$
|
634
|
|
$
|
505
|
Net income –
noncontrolling interests
|
|
9
|
|
|
9
|
|
|
24
|
|
|
22
|
Income tax
provision
|
|
67
|
|
|
87
|
|
|
227
|
|
|
220
|
Interest and other
income, net
|
|
(10)
|
|
|
(8)
|
|
|
(28)
|
|
|
(16)
|
Operating
Profit
|
|
269
|
|
|
264
|
|
|
857
|
|
|
731
|
Depreciation and
amortization
|
|
108
|
|
|
105
|
|
|
343
|
|
|
301
|
Store impairment
charges
|
|
2
|
|
|
5
|
|
|
23
|
|
|
28
|
Special Items Income
- Operating Profit
|
|
—
|
|
|
(3)
|
|
|
(98)
|
|
|
(3)
|
Adjusted
EBITDA
|
$
|
379
|
|
$
|
371
|
|
$
|
1,125
|
|
$
|
1,057
|
Unit Count by
Brand
|
|
KFC
|
|
12/31/2017
|
|
New Builds
|
|
Acquired
|
|
Closures
|
|
Refranchised
|
|
Others
|
|
9/30/2018
|
Company-owned
|
4,112
|
|
313
|
|
2
|
|
(75)
|
|
(9)
|
|
157
|
|
4,500
|
Unconsolidated
affiliates
|
891
|
|
82
|
|
—
|
|
(14)
|
|
—
|
|
(157)
|
|
802
|
Franchisees
|
485
|
|
16
|
|
(2)
|
|
(10)
|
|
9
|
|
—
|
|
498
|
Total
|
5,488
|
|
411
|
|
—
|
|
(99)
|
|
—
|
|
—
|
|
5,800
|
Pizza
Hut
|
|
12/31/2017
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
9/30/2018
|
Company-owned
|
2,166
|
|
100
|
|
(85)
|
|
(1)
|
|
2,180
|
Franchisees
|
29
|
|
6
|
|
(1)
|
|
1
|
|
35
|
Total
|
2,195
|
|
106
|
|
(86)
|
|
—
|
|
2,215
|
All
Other
|
|
12/31/2017
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
9/30/2018
|
Company-owned
|
29
|
|
7
|
|
(3)
|
|
(2)
|
|
31
|
Franchisees
|
271
|
|
38
|
|
(44)
|
|
2
|
|
267
|
Total
|
300
|
|
45
|
|
(47)
|
|
—
|
|
298
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
9/30/2018
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
$
|
1,452
|
|
$
|
548
|
|
$
|
8
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,008
|
Franchise fees and
income
|
|
34
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
36
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
16
|
|
|
1
|
|
|
6
|
|
|
136
|
|
|
—
|
|
|
159
|
Other
revenues
|
|
—
|
|
|
—
|
|
|
10
|
|
|
2
|
|
|
(3)
|
|
|
9
|
Total
revenues
|
$
|
1,502
|
|
$
|
550
|
|
$
|
25
|
|
$
|
138
|
|
$
|
(3)
|
|
$
|
2,212
|
Company restaurant
expenses
|
|
1,173
|
|
|
472
|
|
|
9
|
|
|
—
|
|
|
1
|
|
|
1,655
|
General and
administrative expenses
|
|
44
|
|
|
24
|
|
|
9
|
|
|
42
|
|
|
—
|
|
|
119
|
Franchise
expenses
|
|
17
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
16
|
|
|
1
|
|
|
4
|
|
|
135
|
|
|
—
|
|
|
156
|
Other operating costs
and expenses
|
|
—
|
|
|
—
|
|
|
9
|
|
|
1
|
|
|
(4)
|
|
|
6
|
Closures and
impairment income, net
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
Other (income)
expense, net
|
|
(12)
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(10)
|
|
|
1,238
|
|
|
497
|
|
|
31
|
|
|
180
|
|
|
(3)
|
|
|
1,943
|
Operating Profit
(Loss)
|
$
|
264
|
|
$
|
53
|
|
$
|
(6)
|
|
$
|
(42)
|
|
$
|
—
|
|
$
|
269
|
Quarter Ended
9/30/2017
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Total
|
Company
sales
|
$
|
1,347
|
|
$
|
568
|
|
$
|
9
|
|
$
|
—
|
|
$
|
1,924
|
Franchise fees and
income
|
|
36
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
38
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
19
|
|
|
—
|
|
|
5
|
|
|
136
|
|
|
160
|
Other
revenues
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
Total
revenues
|
$
|
1,402
|
|
$
|
569
|
|
$
|
23
|
|
$
|
136
|
|
$
|
2,130
|
Company restaurant
expenses
|
|
1,082
|
|
|
487
|
|
|
8
|
|
|
—
|
|
|
1,577
|
General and
administrative expenses
|
|
44
|
|
|
27
|
|
|
9
|
|
|
43
|
|
|
123
|
Franchise
expenses
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
19
|
|
|
—
|
|
|
4
|
|
|
136
|
|
|
159
|
Other operating costs
and expenses
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
Closures and
impairment expenses, net
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
Other income,
net
|
|
(18)
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
(22)
|
Total costs and
expenses, net
|
|
1,146
|
|
|
515
|
|
|
30
|
|
|
175
|
|
|
1,866
|
Operating Profit
(Loss)
|
$
|
256
|
|
$
|
54
|
|
$
|
(7)
|
|
$
|
(39)
|
|
$
|
264
|
Year to Date Ended
9/30/2018
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
$
|
4,248
|
|
$
|
1,640
|
|
$
|
24
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5,912
|
Franchise fees and
income
|
|
104
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
110
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
48
|
|
|
1
|
|
|
17
|
|
|
395
|
|
|
—
|
|
|
461
|
Other
revenues
|
|
—
|
|
|
—
|
|
|
18
|
|
|
4
|
|
|
(4)
|
|
|
18
|
Total
revenues
|
$
|
4,400
|
|
$
|
1,643
|
|
$
|
63
|
|
$
|
399
|
|
$
|
(4)
|
|
$
|
6,501
|
Company restaurant
expenses
|
|
3,441
|
|
|
1,446
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
4,912
|
General and
administrative expenses
|
|
135
|
|
|
80
|
|
|
25
|
|
|
94
|
|
|
—
|
|
|
334
|
Franchise
expenses
|
|
53
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
48
|
|
|
1
|
|
|
13
|
|
|
392
|
|
|
—
|
|
|
454
|
Other operating costs
and expenses
|
|
—
|
|
|
—
|
|
|
18
|
|
|
3
|
|
|
(4)
|
|
|
17
|
Closures and
impairment expenses, net
|
|
6
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
Other income,
net
|
|
(42)
|
|
|
(2)
|
|
|
(1)
|
|
|
(98)
|
|
|
—
|
|
|
(143)
|
|
|
3,641
|
|
|
1,536
|
|
|
80
|
|
|
391
|
|
|
(4)
|
|
|
5,644
|
Operating Profit
(Loss)
|
$
|
759
|
|
$
|
107
|
|
$
|
(17)
|
|
$
|
8
|
|
$
|
—
|
|
$
|
857
|
Year to Date Ended
9/30/2017
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Total
|
Company
sales
|
$
|
3,705
|
|
$
|
1,592
|
|
$
|
29
|
|
$
|
—
|
|
$
|
5,326
|
Franchise fees and
income
|
|
102
|
|
|
2
|
|
|
3
|
|
|
—
|
|
|
107
|
Revenues from
transactions with franchisees and
unconsolidated affiliates
|
|
51
|
|
|
1
|
|
|
14
|
|
|
382
|
|
|
448
|
Other
revenues
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
Total
revenues
|
$
|
3,858
|
|
$
|
1,595
|
|
$
|
62
|
|
$
|
382
|
|
$
|
5,897
|
Company restaurant
expenses
|
|
2,988
|
|
|
1,333
|
|
|
28
|
|
|
—
|
|
|
4,349
|
General and
administrative expenses
|
|
121
|
|
|
78
|
|
|
16
|
|
|
124
|
|
|
339
|
Franchise
expenses
|
|
53
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
54
|
Expenses for
transactions with franchisees and
unconsolidated affiliates
|
|
51
|
|
|
1
|
|
|
12
|
|
|
379
|
|
|
443
|
Other operating costs
and expenses
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
Closures and
impairment expenses, net
|
|
10
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|
20
|
Other income,
net
|
|
(48)
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
(53)
|
|
|
3,175
|
|
|
1,422
|
|
|
71
|
|
|
498
|
|
|
5,166
|
Operating Profit
(Loss)
|
$
|
683
|
|
$
|
173
|
|
$
|
(9)
|
|
$
|
(116)
|
|
$
|
731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables
reconcile segment information, which is based on management
responsibility, with our Consolidated Statements of
Income.
|
|
(1)
Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes. Amount
includes revenues and expenses associated with transactions with
franchisees and unconsolidated affiliates such as inventory
procurement and other services provided to franchisees and
unconsolidated affiliates. The Corporate and Unallocated column in
the above tables includes, among other amounts, all amounts that we
have deemed Special Items. See "Reconciliation of Reported GAAP
Results to Adjusted Measures".
|
Notes to the
Consolidated Statements of Income, Consolidated Balance
Sheets,
|
Consolidated
Statements of Cash Flows and Reconciliation of Reported GAAP Results to
Adjusted Measures
|
(amounts in US$
million)
|
(unaudited)
|
|
(a) Amounts presented
as of and for the quarter and year to date ended September 30, 2018
are unaudited.
|
(b) As a result of the
acquisition of Wuxi KFC in the first quarter of 2018, the Company
recognized a gain of $98 million from the re-measurement of our
previously held 47% equity interest at fair value, which was not
allocated to any segment for performance reporting
purposes.
|
(c) During the third
quarter of 2017, we recognized income from the reversal of
contingent consideration previously recorded for a business
combination as the likelihood of making payment became
remote.
|
(d) The tax expense was
determined based upon the nature, as well as the jurisdiction, of
each Special Item at the applicable tax rate.
|
View original
content:http://www.prnewswire.com/news-releases/yum-china-reports-third-quarter-2018-results-300740240.html
SOURCE Yum China Holdings, Inc.