Jacob SchmellHeekyoung KoTaylor Schenk

Yum Brands:KFC Taco Bell Pizza

Hut

Where are they located?

37,000 locations in 120 countries 50% outside U.S. Majority of profit outside U.S.

Background

Franchised year KFC : 1952 Taco Bell : 1962 Pizza Hut : 1958 Spin-off company of PepsiCo from

1997 Changed its name from TRICON

Global Restaurants, Inc in 2002

Trend Analysis

Net sales Gross margin Net Income

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2009 2010 2011

$10,836

$7,833

$1,083

$11,343

$8,252

$1,333

$12,626

$8,993

$1,475

200920102011

(in millions)

2009 2010 2011$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$10,836$11,343

$12,626

$7,833$8,252

$8,993

$1,083 $1,333 $1,475

$35.38

$49.05

$59.01

Net sales

Gross margin

Net Income

Series4stock value

Income and stock value

Restaurant Units

2009

2010

2011

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

2,800

2,484

2,139

14,819

14,977

13,867

CompanyFranchise

(units)

16,006

17,461

17,619

Why?

In December 2011, they sold A&W All-American Food Restaurants and Long John Silver’s brands.

Changes in strategy

Global Brands

Being Better, not Bigger

Multibranding approach

Foreign Currency

Income, expense

Assets and liabilities

Gains and losses arising from foreign currency exchange rate

Franchise and License Operations Payment of an initial, non-refundable

fee and continuing fees Internal costs to provide support

services to their franchisees and licensees are charged to General and Administrative expenses.

Intangible Assets

Franchise contract rights Trademarks or brands Lease tenancy rights Favorable operating lease Reacquired franchise rights

Accounting Policies

Franchise income: Initial fees Continuing fees▪ Based on percentage of sale

Renewal fees Rental income▪ If building is leased by them

Accounting Policies

Cash equivalents represent funds we have temporarily invested with original maturities not exceeding

three months

We value our inventories at the lower of cost (FIFO) or market

Depreciation and Amortization YUM! calculates depreciation and

amortization on a straight-line basis : 5-25 years for buildings and

improvements 3-20 years for machinery and

equipment 3-7 years for capitalized software

costs

Accounting Policies

• YUM monitor the franchisees and licensees and record provisions for estimated losses on receivables when we believe it probable that they will be unable to make required payments

• Trade receivables consisting of royalties • due within 30 days of the period in which the

corresponding sales occur

From Audiors (KPMG, LLP) The consolidated financial

statements are in conformity with U.S. generally accepted accounting principles(GAAP).

Also, YUM maintained effective internal control over financial reporting

Compared to Rivals

YUM McDonalds$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$8,834

$32,990

$12,626

$27,006

$1,319

$5,503

$2.74

$5.27

Total AssetsTotal RevenueNet IncomeEarnings Per Share-diluted

(in millions)

Conclusion

Prediction of YUM – Positive Stock China division sales growth