Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

YUM! Brands Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Reacquired franchise rights	168)	186)	188)	163)	167)
Franchise contract rights	123)	126)	130)	131)	130)
Lease tenancy rights	57)	67)	71)	57)	58)
Favorable operating leases	11)	15)	20)	21)	29)
Other	54)	52)	52)	51)	33)
Definite-lived intangible assets, gross carrying amount	413)	446)	461)	423)	417)
Accumulated amortization	(229)	(219)	(202)	(173)	(149)
Definite-lived intangible assets, net	184)	227)	259)	250)	268)
KFC trademark	31)	31)	31)	31)	31)
Little Sheep trademark	56)	60)	348)	409)	—)
Indefinite-lived intangible assets	87)	91)	379)	440)	31)
Intangible assets, net	271)	318)	638)	690)	299)
Goodwill, net	656)	700)	889)	1,034)	681)
Goodwill and intangible assets	927)	1,018)	1,527)	1,724)	980)

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

Download chart

Item	Description	The company
Intangible assets, net	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	YUM! Brands Inc. intangible assets, net decreased from 2013 to 2014 and from 2014 to 2015.
Goodwill, net	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	YUM! Brands Inc. goodwill, net decreased from 2013 to 2014 and from 2014 to 2015.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	YUM! Brands Inc. goodwill and intangible assets decreased from 2013 to 2014 and from 2014 to 2015.

YUM! Brands Inc., adjustments to financial statements

US$ in millions

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Adjustment to Total Assets
Total assets (as reported)	8,075)	8,345)	8,695)	9,011)	8,834)
Less: Goodwill, net	656)	700)	889)	1,034)	681)
Total assets (adjusted)	7,419)	7,645)	7,806)	7,977)	8,153)
Adjustment to Shareholders’ Equity, YUM! Brands, Inc.
Shareholders’ equity, YUM! Brands, Inc. (as reported)	911)	1,547)	2,166)	2,154)	1,823)
Less: Goodwill, net	656)	700)	889)	1,034)	681)
Shareholders’ equity, YUM! Brands, Inc. (adjusted)	255)	847)	1,277)	1,120)	1,142)
Adjustment to Net Income, YUM! Brands, Inc.
Net income, YUM! Brands, Inc. (as reported)	1,293)	1,051)	1,091)	1,597)	1,319)
Add: Goodwill impairment losses	—)	160)	222)	—)	—)
Net income, YUM! Brands, Inc. (adjusted)	1,293)	1,211)	1,313)	1,597)	1,319)

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

YUM! Brands Inc., Financial Data: Reported vs. Adjusted

Download chart

YUM! Brands Inc., adjusted financial ratios

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Net Profit Margin
Reported net profit margin	9.87%	7.91%	8.34%	11.71%	10.45%
Adjusted net profit margin	9.87%	9.12%	10.04%	11.71%	10.45%
Total Asset Turnover
Reported total asset turnover	1.62	1.59	1.50	1.51	1.43
Adjusted total asset turnover	1.77	1.74	1.68	1.71	1.55
Financial Leverage
Reported financial leverage	8.86	5.39	4.01	4.18	4.85
Adjusted financial leverage	29.09	9.03	6.11	7.12	7.14
Return on Equity (ROE)
Reported ROE	141.93%	67.94%	50.37%	74.14%	72.35%
Adjusted ROE	507.06%	142.98%	102.82%	142.59%	115.50%
Return on Assets (ROA)
Reported ROA	16.01%	12.59%	12.55%	17.72%	14.93%
Adjusted ROA	17.43%	15.84%	16.82%	20.02%	16.18%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	YUM! Brands Inc. adjusted net profit margin ratio deteriorated from 2013 to 2014 but then improved from 2014 to 2015 not reaching 2013 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	YUM! Brands Inc. adjusted total asset turnover ratio improved from 2013 to 2014 and from 2014 to 2015.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	YUM! Brands Inc. adjusted financial leverage ratio increased from 2013 to 2014 and from 2014 to 2015.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	YUM! Brands Inc. adjusted ROE improved from 2013 to 2014 and from 2014 to 2015.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	YUM! Brands Inc. adjusted ROA deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

YUM! Brands Inc., Financial Ratios: Reported vs. Adjusted

Download chart

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income, YUM! Brands, Inc.	1,293)	1,051)	1,091)	1,597)	1,319)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Profitability Ratio
Net profit margin¹	9.87%	7.91%	8.34%	11.71%	10.45%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income, YUM! Brands, Inc.	1,293)	1,211)	1,313)	1,597)	1,319)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Profitability Ratio
Adjusted net profit margin²	9.87%	9.12%	10.04%	11.71%	10.45%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Net profit margin = 100 × Net income, YUM! Brands, Inc. ÷ Revenues
= 100 × 1,293 ÷ 13,105 = 9.87%

² Adjusted net profit margin = 100 × Adjusted net income, YUM! Brands, Inc. ÷ Revenues
= 100 × 1,293 ÷ 13,105 = 9.87%

Download chart

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	YUM! Brands Inc. adjusted net profit margin ratio deteriorated from 2013 to 2014 but then improved from 2014 to 2015 not reaching 2013 level.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Total assets	8,075)	8,345)	8,695)	9,011)	8,834)
Activity Ratio
Total asset turnover¹	1.62	1.59	1.50	1.51	1.43
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Adjusted total assets	7,419)	7,645)	7,806)	7,977)	8,153)
Activity Ratio
Adjusted total asset turnover²	1.77	1.74	1.68	1.71	1.55

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 13,105 ÷ 8,075 = 1.62

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 13,105 ÷ 7,419 = 1.77

Download chart

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	YUM! Brands Inc. adjusted total asset turnover ratio improved from 2013 to 2014 and from 2014 to 2015.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Total assets	8,075)	8,345)	8,695)	9,011)	8,834)
Shareholders’ equity, YUM! Brands, Inc.	911)	1,547)	2,166)	2,154)	1,823)
Solvency Ratio
Financial leverage¹	8.86	5.39	4.01	4.18	4.85
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	7,419)	7,645)	7,806)	7,977)	8,153)
Adjusted shareholders’ equity, YUM! Brands, Inc.	255)	847)	1,277)	1,120)	1,142)
Solvency Ratio
Adjusted financial leverage²	29.09	9.03	6.11	7.12	7.14

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity, YUM! Brands, Inc.
= 8,075 ÷ 911 = 8.86

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity, YUM! Brands, Inc.
= 7,419 ÷ 255 = 29.09

Download chart

Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	YUM! Brands Inc. adjusted financial leverage ratio increased from 2013 to 2014 and from 2014 to 2015.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income, YUM! Brands, Inc.	1,293)	1,051)	1,091)	1,597)	1,319)
Shareholders’ equity, YUM! Brands, Inc.	911)	1,547)	2,166)	2,154)	1,823)
Profitability Ratio
ROE¹	141.93%	67.94%	50.37%	74.14%	72.35%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income, YUM! Brands, Inc.	1,293)	1,211)	1,313)	1,597)	1,319)
Adjusted shareholders’ equity, YUM! Brands, Inc.	255)	847)	1,277)	1,120)	1,142)
Profitability Ratio
Adjusted ROE²	507.06%	142.98%	102.82%	142.59%	115.50%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ ROE = 100 × Net income, YUM! Brands, Inc. ÷ Shareholders’ equity, YUM! Brands, Inc.
= 100 × 1,293 ÷ 911 = 141.93%

² Adjusted ROE = 100 × Adjusted net income, YUM! Brands, Inc. ÷ Adjusted shareholders’ equity, YUM! Brands, Inc.
= 100 × 1,293 ÷ 255 = 507.06%

Download chart

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	YUM! Brands Inc. adjusted ROE improved from 2013 to 2014 and from 2014 to 2015.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income, YUM! Brands, Inc.	1,293)	1,051)	1,091)	1,597)	1,319)
Total assets	8,075)	8,345)	8,695)	9,011)	8,834)
Profitability Ratio
ROA¹	16.01%	12.59%	12.55%	17.72%	14.93%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income, YUM! Brands, Inc.	1,293)	1,211)	1,313)	1,597)	1,319)
Adjusted total assets	7,419)	7,645)	7,806)	7,977)	8,153)
Profitability Ratio
Adjusted ROA²	17.43%	15.84%	16.82%	20.02%	16.18%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ ROA = 100 × Net income, YUM! Brands, Inc. ÷ Total assets
= 100 × 1,293 ÷ 8,075 = 16.01%

² Adjusted ROA = 100 × Adjusted net income, YUM! Brands, Inc. ÷ Adjusted total assets
= 100 × 1,293 ÷ 7,419 = 17.43%

Download chart

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	YUM! Brands Inc. adjusted ROA deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level.

YUM! Brands Inc. (NYSE:YUM)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

YUM! Brands Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

YUM! Brands Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)