Yum China Reports Full Year Operating Profit

HANGHAI, Feb. 8, 2017 (hospitalitybusinessnews.com) — Yum China Holdings, Inc.  today reported unaudited results for the full year and fourth quarter ended December 31, 2016. Reported GAAP results include Special Items, which are excluded from non-GAAP measures. Special Items are not allocated to any segment and therefore only impact reported results of Yum China. See Reconciliation of Reported Results to Non-GAAP Measures within this release.

The Board of Directors authorized Yum China to repurchase up to $300 million of shares of common stock.

Full-Year Highlights

  • Total system sales grew 5%, including growth of 6% at KFC and 3% at Pizza Hut Casual Dining, excluding foreign currency translation (“F/X”).
  • Opened 575 new restaurants for the full year, or 5% net growth, surpassing 7,500 restaurants in China.
  • Same-store sales were flat, with an increase of 3% at KFC, offset by a decline of 7% at Pizza Hut Casual Dining.
  • Total restaurant margin increased 2.7 percentage points to 15.3%, primarily aided by the impact of retail tax structure reform implemented on May 1, 2016.
  • Reported operating profit grew 31%, primarily aided by the impact of retail tax structure reform. Foreign currency translation negatively impacted operating profit by $36 million. Excluding F/X and Special Items, operating profit grew 37%.

Fourth-Quarter Highlights

  • Total system sales grew 4%, including growth of 4% at KFC and 6% at Pizza Hut Casual Dining, excluding F/X.
  • Opened 302 new restaurants during the quarter.
  • Same-store sales were flat, with an increase of 1% at KFC, offset by a decline of 3% at Pizza Hut Casual Dining.
  • Foreign currency translation negatively impacted operating profit by $5 million.

Key Financial Results

Fourth Quarter

Full Year

(in US$ million, except

% Change

% Change

for per share data and percentages)

2016

2015

Reported

Ex F/X

2016

2015

Reported

Ex F/X

Reported Operating Profit

$

58

$

5

922%

1,010%

$

640

$

488

31%

38%

Operating Profit Before Special Items1

$

75

$

20

265%

288%

$

655

$

503

30%

37%

Diluted EPS

$

0.23

$

(0.08)

NM

NM

$

1.36

$

0.89

53%

62%

Diluted EPS Before Special Items1

$

0.17

$

(0.05)

NM

NM

$

1.28

$

0.92

39%

48%

1 See Reconciliation of Reported Results to Non-GAAP Measures included in the accompanying tables of this release for further details.

Note: All comparisons are versus the same period a year ago.

Consistent with prior years, Yum China’s fiscal fourth quarter includes September, October, November and December results.

CEO Comments

“This was a momentous year for Yum China. We successfully became an independent, publicly traded company while simultaneously improving our business performance and investing for future growth. At year end 2016 with over 7,500 restaurants nationwide, we extended our market-leading position in China,” said Micky Pant, CEO.

“For our shareholders, we exceeded our 2016 financial targets* in operating profit, restaurant margin and adjusted EBITDA. We continue to focus on our long-term growth formula: new unit development, same-store sales growth, and continued restaurant margin improvement. Right now, our top priority is consistently delivering positive same-store sales growth. During 2016, we continued to build a foundation for long-term growth with emphasis on product innovation, investments in refurbishing our restaurants, and focus on digital engagement with our customers.

2016 was a ground breaking year for Yum China in Digital and Delivery. Our loyalty programs have over 80 million members between KFC and Pizza Hut and are ranked #1 in the restaurant industry worldwide in terms of number of members. Total delivery sales reached approximately US$700 million, and in 2016, we were #1 among restaurant operators in terms of online sales in China. Cashless payment accounted for about 30% of our company sales.

Yum China has a long and successful track record of doing business in China, and 2017 marks the 30th anniversary of the launch of KFC in China. While we have achieved a lot in the past three decades, our growth plans give us confidence that we are well-positioned to drive strong operating performance and generate high returns for our shareholders over the long run. We believe the majority of our restaurants in China are yet to be built.”

*

As detailed in our October 2016 investor conference.

New-Unit Development and Asset Upgrades

We believe development opportunities across China will provide us with new restaurant growth for all of our brands. Increasing urban population, continued development of city clusters and new transportation hubs provide growth opportunities for our nationwide development team.

  • Opened 575 new restaurants for the year and 302 for the fourth quarter, driven by development of the KFC brand.
  • 96 of the new restaurants were opened in 56 new cities.
  • Remodeled 791 restaurants, focused on KFC. Over 75% of Yum China’s current store portfolio has been remodeled or built in the past five years.
  • Opened first Taco Bell restaurant in Shanghai, China.

New Units

Restaurant Count

Fourth

Quarter

Full Year

Full Year

% Change1

Yum China

302

575

7,562

5%

KFC

179

323

5,224

4%

Pizza Hut Casual Dining

87

178

1,714

9%

Pizza Hut Home Service, Little Sheep, East Dawning and Taco Bell

36

74

624

4%

1 Represents year-over-year change

Digital and Delivery Annual Update

Digital and delivery provide us with new growth opportunities. We are aggressively embracing leading technologies such as location-based service and mobile payment. Our delivery business has continued to grow with our own network and with the help of aggregators.

  • Members in the loyalty programs increased to over 60 million for KFC and over 20 million for Pizza Hut Casual Dining at year end.
  • Mobile payments reached about 17% of company sales in 2016, with over $2 billion in company sales paid using cashless payment methods.
  • Delivery represented about 10% of company sales for 2016.

Restaurant Margin

  • For the year, Yum China restaurant margin increased 2.7 percentage points to 15.3%, primarily aided by the impact of retail tax structure reform. This is reflected primarily in lower food and paper cost. Wage inflation of 8% partially offset these effects.
  • For the quarter, Yum China restaurant margin increased 3.0 percentage points to 11.0%, primarily aided by the impact of retail tax structure reform. Wage inflation companywide and commodity inflation at KFC partially offset these effects.

Fourth Quarter

Full Year

2016

2015

% ppts

change

2016

2015

% ppts

change

Yum China

11.0%

8.0%

3.0

15.3%

12.6%

2.7

KFC

11.7%

9.5%

2.2

16.3%

13.3%

3.0

Pizza Hut Casual Dining

10.4%

5.6%

4.8

14.0%

12.3%

1.7

Diluted Share Count

Pursuant to the strategic investment agreement between Yum China, Primavera Capital Group (“Primavera”), and Zhejiang Ant Small and Micro Financial Services Group Co., Ltd. (“Ant Financial”), collectively referred to as strategic investors, Yum China issued approximately 19 million shares of common stock to Primavera and Ant Financial on November 1, 2016. The reported full year 2016 diluted share count of 369 million is based on the weighted average number of days for the period that the shares or dilutive equity awards were outstanding, and includes only two months of impact from the shares issued to our two strategic investors on November 1, 2016 and public company stock compensation programs. On a pro forma basis, assuming all shares and dilutive equity awards were issued and outstanding on January 1, 2016, the total diluted share count would be 395 million. This would have reduced diluted EPS to $1.27 from $1.36.

(in US$ million, except for per share data)

Reported

Pro Forma

Adjustments

Pro Forma

Net Income – Yum China

$

502

$

502

Weighted average diluted shares outstanding

369,143,838

26,208,256

395,352,094

Diluted Earnings Per Share

$

1.36

$

1.27

Share Repurchase Program

The Board of Directors authorized Yum China to repurchase up to $300 million of shares of common stock. These shares may be repurchased from time to time in the open market, through privately negotiated transactions or other programs, subject to market conditions and other factors.

Yum China Holdings, Inc.

Consolidated and Combined Summary of Results

(amounts in US$ million, except for number of shares and per share amounts)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/31/16

12/31/15

B/(W)

12/31/16

12/31/15

B/(W)

Revenues

Company sales

$

1,938

$

2,011

(4)

$

6,622

$

6,789

(2)

Franchise fees and income

40

37

8

130

120

8

Total revenues

1,978

2,048

(3)

6,752

6,909

(2)

Costs and Expenses, Net

Company restaurants

Food and paper

558

641

13

1,919

2,159

11

Payroll and employee benefits

469

453

(3)

1,432

1,386

(3)

Occupancy and other operating expenses

697

754

8

2,259

2,386

5

Company restaurant expenses

1,724

1,848

7

5,610

5,931

5

General and administrative expenses

153

137

(12)

424

395

(7)

Franchise expenses

20

21

3

71

70

(1)

Closures and impairment expenses, net

42

42

78

64

(22)

Refranchising gain, net

(7)

(6)

(15)

(13)

9

Other (income) expense, net

(12)

1

NM

(56)

(26)

113

Total costs and expenses, net

1,920

2,043

6

6,112

6,421

5

Operating Profit

58

5

922

640

488

31

Interest income, net

4

4

19

11

8

50

Changes in fair value of financial instruments

21

NM

21

NM

Income Before Income Taxes

83

9

830

672

496

36

Income tax benefit (provision)

7

(38)

NM

(158)

(168)

6

Net income (loss) – including noncontrolling interests

90

(29)

NM

514

328

57

Net income – noncontrolling interests

2

NM

12

5

154

Net Income (Loss) – Yum China Holdings, Inc.

$

88

$

(29)

NM

$

502

$

323

55

Effective tax rate

(8.4)%

437.4%

NM

23.5%

33.9%

10.4

ppts.

Basic Earnings (Loss) Per Share

$

0.23

$

(0.08)

NM

$

1.36

$

0.89

54

Weighted average shares outstanding

375,718,539

363,758,219

NM

367,744,992

363,758,219

NM

Diluted Earnings (Loss) Per Share

$

0.23

$

(0.08)

NM

$

1.36

$

0.89

53

Weighted average shares outstanding

379,915,075

363,758,219

NM

369,143,838

363,758,219

NM

Percentages may not recompute due to rounding.

Yum China Holdings, Inc.

KFC Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/31/16

12/31/15

B/(W)

12/31/16

12/31/15

B/(W)

Revenues

Company sales

$

1,334

$

1,395

(4)

$

4,572

$

4,652

(2)

Franchise fees and income

37

35

6

124

116

7

Total revenues

1,371

1,430

(4)

4,696

4,768

(2)

Costs and Expenses, Net

Company restaurants

Food and paper

401

454

12

1,368

1,512

10

Payroll and employee benefits

308

298

(3)

933

903

(3)

Occupancy and other operating expenses

469

509

8

1,525

1,617

6

Company restaurant expenses

1,178

1,261

7

3,826

4,032

5

General and administrative expenses

60

54

(11)

161

150

(7)

Franchise expenses

18

21

14

68

70

2

Closures and impairment expenses, net

16

33

51

41

50

18

Other income, net

(7)

(7)

(1)

(45)

(33)

37

Total costs and expenses, net

1,265

1,362

7

4,051

4,269

5

Operating Profit

$

106

$

68

60

$

645

$

499

29

Company sales

100.0%

100.0%

100.0%

100.0%

Food and paper

30.1

32.5

2.4

ppts.

29.9

32.5

2.6

ppts.

Payroll and employee benefits

23.1

21.3

(1.8)

ppts.

20.4

19.4

(1.0)

ppts.

Occupancy and other operating expenses

35.1

36.7

1.6

ppts.

33.4

34.8

1.4

ppts.

Restaurant margin

11.7%

9.5%

2.2

ppts.

16.3%

13.3%

3.0

ppts.

Operating margin

7.9%

4.7%

3.2

ppts.

14.1%

10.7%

3.4

ppts.

Percentages may not recompute due to rounding.

Yum China Holdings, Inc.

Pizza Hut Casual Dining Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/31/16

12/31/15

B/(W)

12/31/16

12/31/15

B/(W)

Revenues

Company sales

$

520

523

$

1,772

1,824

(3)

Franchise fees and income

1

1

57

2

1

142

Total revenues

521

524

1,774

1,825

(3)

Costs and Expenses, Net

Company restaurants

Food and paper

131

156

16

464

543

14

Payroll and employee benefits

135

126

(7)

415

391

(6)

Occupancy and other operating expenses

200

212

5

645

665

3

Company restaurant expenses

466

494

5

1,524

1,599

5

General and administrative expenses

26

24

(10)

80

73

(10)

Franchise expenses

2

NM

3

NM

Closures and impairment expenses, net

7

7

15

17

8

(112)

Total costs and expenses, net

501

525

5

1,624

1,680

3

Operating Profit

$

20

$

(1)

NM

$

150

$

145

4

Company sales

100.0%

100.0%

100.0%

100.0%

Food and paper

25.2

29.8

4.6

ppts.

26.2

29.8

3.6

ppts.

Payroll and employee benefits

25.9

24.1

(1.8)

ppts.

23.4

21.5

(1.9)

ppts.

Occupancy and other operating expenses

38.5

40.5

2.0

ppts.

36.4

36.4

ppts.

Restaurant margin

10.4%

5.6%

4.8

ppts.

14.0%

12.3%

1.7

ppts.

Operating margin

4.1%

(0.1)%

4.2

ppts.

8.5%

7.9%

0.5

ppts.

Percentages may not recompute due to rounding.

Yum China Holdings, Inc.

Consolidated and Combined Balance Sheets

(amounts in US$ million, except for number of shares)

(unaudited)

12/31/16

12/31/15

ASSETS

Current Assets

Cash and cash equivalents

$

885

$

425

Short-term investments

79

Accounts receivable, net

74

33

Inventories, net

268

189

Prepaid expenses and other current assets

120

152

Total Current Assets

1,426

799

Property, plant and equipment, net

1,647

1,841

Goodwill

79

85

Intangible assets, net

88

107

Investments in unconsolidated affiliates

71

61

Other assets

254

192

Deferred income taxes

162

116

Total Assets

3,727

3,201

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable and other current liabilities

971

926

Income taxes payable

33

22

Total Current Liabilities

1,004

948

Capital lease obligations

28

34

Other liabilities and deferred credits

252

234

Total Liabilities

1,284

1,216

Redeemable Noncontrolling Interest

6

Equity

Common stock, $0.01 par value; 1,000,000,000 shares authorized; 383,344,835.42 shares

and nil shares issued and outstanding at December 31, 2016 and 2015, respectively

4

Treasury stock

(20)

Additional paid-in capital

2,352

Retained earnings(a)

40

Parent Company Investment(b)

1,791

Accumulated other comprehensive income

1

130

Total Equity – Yum China Holdings, Inc.

2,377

1,921

Noncontrolling interests

66

58

Total Equity

2,443

1,979

Total Liabilities, Redeemable Noncontrolling Interest and Equity

$

3,727

$

3,201

(a) Retained earnings represent the Company’s earnings after taxes generated from November 1, 2016 to December 31, 2016.

(b) Parent Company Investment represents Yum! Brands, Inc.’s (“YUM”) historical investment in the Company, the Company’s accumulated net earnings after taxes, and the net effect of transactions with and allocations from YUM. Upon the spin-off, Parent Company Investment was reclassified into the Company’s common stock and additional paid-in capital.

Yum China Holdings, Inc.

Consolidated and Combined Statements of Cash Flows

(amounts in US$ million)

(unaudited)

Year ended

12/31/16

12/31/15

Cash Flows – Operating Activities

Net income – including noncontrolling interests

$

514

$

328

Depreciation and amortization

402

425

Closures and impairment expenses

78

64

Refranchising gain

(15)

(13)

Deferred income taxes

(40)

29

Equity income from investments in unconsolidated affiliates

(54)

(41)

Distributions of income received from unconsolidated affiliates

35

21

Excess tax benefit from share-based compensation

(2)

(3)

Share-based compensation expense

16

14

Gain from changes in fair value of financial instruments

(21)

Changes in accounts receivable

(54)

(5)

Changes in inventories

(96)

61

Changes in prepaid expenses and other current assets

7

(8)

Changes in accounts payable and other current liabilities

123

31

Changes in income taxes payable

6

(14)

Other, net

(35)

21

Net Cash Provided by Operating Activities

864

910

Cash Flows – Investing Activities

Capital spending

(436)

(512)

Changes in short-term investments, net

(83)

Proceeds from refranchising of restaurants

32

27

Proceeds from disposal of aircraft

19

Other, net

(3)

(8)

Net Cash Used in Investing Activities

(471)

(493)

Cash Flows – Financing Activities

Net transfers to Parent

(357)

(214)

Payment of capital lease obligations

(3)

(2)

Excess tax benefit from share-based compensation

2

3

Proceeds from issuance of common stock and warrants

460

Other, net

(7)

Net Cash Provided by (Used in) Financing Activities

95

(213)

Effect of Exchange Rate on Cash and Cash Equivalents

(28)

(17)

Net Increase in Cash and Cash Equivalents

460

187

Cash and Cash Equivalents – Beginning of Year

425

238

Cash and Cash Equivalents – End of Year

$

885

$

425

Reconciliation of Reported Results to Non-GAAP Measures (amounts in US$ million, except for number of shares and per share amounts) (unaudited)

In this press release:

  • The Company provides certain percentage changes excluding the impact of foreign currency translation (“F/X”). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
  • System sales growth includes the results of all restaurants regardless of ownership, including Company-owned, franchise and unconsolidated affiliate restaurants that operate our concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the Company at a rate of approximately 6% of system sales. Franchise and unconsolidated affiliate restaurant sales are not included in Company sales on the Consolidated and Combined Statements of Income; however, the franchise fees are included in the Company’s revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth.
  • Same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the Company system one year or more.
  • Company Restaurant profit (“Restaurant profit”) is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin as a percentage of sales is defined as Restaurant profit divided by Company sales.

In addition to the results provided in accordance with US Generally Accepted Accounting Principles (“GAAP”) in this press release, the Company provides non-GAAP measures which present Operating Profit before Special Items, Diluted Earnings (Loss) Per Common Share before Special Items, effective tax rate before Special Items and Adjusted EBITDA. Included in Special Items are reversal of (provision for) losses associated with planned sales of aircraft, incremental restaurant-level impairment upon spin-off, changes in fair value of financial instruments and impact of the redemption of the Little Sheep noncontrolling interest. These amounts are described in (b), (c), (d), (e) and (f) in the accompanying notes. The Company excludes impact from Special Items for the purpose of evaluating performance internally. Special Items are not included in any of our segment results. These non-GAAP 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 non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our ongoing operations due to their size and/or nature. These non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial results, but should be read in conjunction with the unaudited Consolidated and Combined Summary of Results and other information presented herein. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures follows.

Quarter ended

Year ended

12/31/16

12/31/15

12/31/16

12/31/15

Detail of Special Items

Reversal of (provision for) losses associated with sales of aircraft(b)

(15)

2

(15)

Incremental restaurant-level impairment upon spin-off(c)

(17)

(17)

Special Items Expense – Operating Profit

(17)

(15)

(15)

(15)

Changes in fair value of financial instruments(d)

21

21

Tax benefit on Special Items(e)

17

4

16

4

Special items income (expense), net of tax – including

noncontrolling interests

21

(11)

22

(11)

Special items income (expense), net of tax –

noncontrolling interests(f)

(8)

Special Items Income (Expense), net of tax –

Yum China Holdings, Inc.

21

(11)

30

(11)

Weighted average diluted shares outstanding

379,915,075

363,758,219

369,143,838

363,758,219

Special Items Diluted Earnings (Loss) Per Common Share

0.06

(0.03)

0.08

(0.03)

Reconciliation of Reported Operating Profit

to Operating Profit Before Special Items

Reported Operating Profit

58

5

640

488

Special Items Expense – Operating Profit

(17)

(15)

(15)

(15)

Operating Profit before Special Items

75

20

655

503

Reconciliation of Reported EPS to EPS Before Special Items

Reported Diluted Earnings (Loss) Per Common Share

$

0.23

$

(0.08)

$

1.36

$

0.89

Special Items Diluted Earnings (Loss) Per Common Share

0.06

(0.03)

0.08

(0.03)

Diluted Earnings (Loss) Per Common Share before Special Items

$

0.17

$

(0.05)

$

1.28

$

0.92

Reconciliation of Reported Effective Tax Rate

to Effective Tax Rate Before Special Items

Reported effective tax rate

(8.4)%

437.4%

23.5%

33.9%

Impact on tax rate as a result of Special Items

(20.6)%

257.1%

(2.7)%

0.2%

Effective tax rate before Special Items

12.2%

180.3%

26.2%

33.7%

Reconciliation of Reported Net Income (Loss) to Adjusted EBITDA

(amounts in US$ million, except per share amounts)

(unaudited)

Reported net income (loss), along with the reconciliation to Adjusted EBITDA, is presented below.

Quarter ended

Year ended

12/31/16

12/31/15

12/31/16

12/31/15

Reconciliation of Reported Net Income (Loss) to Adjusted

EBITDA

Net Income (Loss) – Yum China Holdings, Inc.

$

88

$

(29)

$

502

$

323

Net income – noncontrolling interests

2

12

5

Income tax (benefit) provision

(7)

38

158

168

Interest income, net

(4)

(4)

(11)

(8)

Change in fair value of financial instruments

(21)

(21)

Reported Operating Profit

58

5

640

488

Depreciation and amortization

130

140

402

425

Store impairment charges

27

43

70

70

Special Items Expense – Operating Profit

17

15

15

15

Adjusted EBITDA

$

232

$

203

$

1,127

$

998

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Quarter Ended 12/31/16

KFC

Pizza Hut

Casual Dining

Others

Corporate

and

Unallocated

Total

Total revenues

$

1,371

$

521

$

86

$

$

1,978

Company restaurant expenses

1,178

466

80

1,724

General and administrative expenses

60

26

10

57

153

Franchise expenses

18

2

20

Closures and impairment expenses, net

16

7

2

17

42

Refranchising gain, net

(7)

(7)

Other income, net

(7)

(5)

(12)

1,265

501

87

67

1,920

Operating Profit (Loss)

$

106

$

20

$

(1)

$

(67)

$

58

Quarter Ended 12/31/15

KFC

Pizza Hut

Casual Dining

Others

Corporate

and

Unallocated

Total

Total revenues

$

1,430

$

524

$

94

$

$

2,048

Company restaurant expenses

1,261

494

93

1,848

General and administrative expenses

54

24

9

50

137

Franchise expenses

21

21

Closures and impairment expenses, net

33

7

2

42

Refranchising gain, net

(6)

(6)

Other income, net

(7)

(3)

11

1

1,362

525

101

55

2,043

Operating Profit (Loss)

$

68

$

(1)

$

(7)

$

(55)

$

5

The above tables reconcile segment information, which is based on management responsibility, with our Consolidated and Combined Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Reported Results to Non-GAAP Measures.

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Year ended 12/31/16

KFC

Pizza Hut

Casual Dining

Others

Corporate

and

Unallocated

Total

Total revenues

$

4,696

$

1,774

$

282

$

$

6,752

Company restaurant expenses

3,826

1,524

261

(1)

5,610

General and administrative expenses

161

80

30

153

424

Franchise expenses

68

3

71

Closures and impairment expenses, net

41

17

3

17

78

Refranchising gain, net

(15)

(15)

Other income, net

(45)

(6)

(5)

(56)

4,051

1,624

288

149

6,112

Operating Profit (Loss)

$

645

$

150

$

(6)

$

(149)

$

640

Year ended 12/31/15

KFC

Pizza Hut

Casual Dining

Others

Corporate

and

Unallocated

Total

Total revenues

$

4,768

$

1,825

$

316

$

$

6,909

Company restaurant expenses

4,032

1,599

300

5,931

General and administrative expenses

150

73

28

144

395

Franchise expenses

70

70

Closures and impairment expenses, net

50

8

6

64

Refranchising gain, net

(13)

(13)

Other income, net

(33)

(4)

11

(26)

4,269

1,680

330

142

6,421

Operating Profit (Loss)

$

499

$

145

$

(14)

$

(142)

$

488

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