YUM! Brands DCF Financial Model

8/9/2019 YUM! Brands DCF Financial Model

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Actual

2009A 2010A 2011A

Revenues

Company sales 9,413 9,783 10,893% revenue 86.9% 86.2% 86.3%

Franchise and license ees and income 1,423 1,!60 1,733% revenue 13.1% 13.8% 13.7%

Total revenues ### ### ###% "ro#$h 4.7% 11.3%

Company res$auran$s

Food and paper 3,003 3,091 3,633% company sales 31.9% 31.6% 33.4%

ayroll and employee &ene'$s 2,1!4 2,172 2,418% company sales 22.9% 22.2% 22.2%

(ccupancy and o$her opera$in" e)penses 2,777 2,8!7 3,089% company sales

29.!% 29.2% 8.1%Company restaurant expenses 7,934 8,120 9,140% revenue

*eneral and adminis$ra$ive e)penses 1,221 1,277 1,372% revenue 11.3% 11.3% 10.9%

Franchise and license e)penses 118 110 14!% ranchise and license income 8.3% 7.1% 8.4%

Closures and impairmen$ +income e)penses 103 47 13!% revenue 1.0% 0.4% 1.1%

-eranchisin" +"ain loss +26 63 72% revenue 0.2% 0.6% 0.6%

($her +income e)pense +104 +43 +!3% revenue 1.0% 0.4% 0.4%

/o$al cos$s and e)penses, ne$ 9,246 9,!74 10,811% revenue 8!.3% 84.4% 8!.6%

Operatn! "rot 1,$90 1,7%9 1,81$% "ro#$h 11.3% 2.6%

n$eres$ e)pense, ne$ 194 17! 1!6% revenue 1.!% 1.2%

&ncome 'e(ore &ncome Taxes 1,39% 1,$94 1,%$9% "ro#$h 14.2% 4.1%

ncome $a) provision 313 416 324

% revenue 32.9% 22.1%e$ ncome includin" noncon$rollin" in$eres$ 1,083 1,178 1,33!% "ro#$h 8.8% 13.3%

e$ ncome noncon$rollin" in$eres$ 12 20 16% "ro#$h 66.7% 20.0%

)et &ncome * +-. 'ran/s, &nc 1,071 1,1$8 1,319% "ro#$h

'asc arnn!s "er Common are 2.28 2.44 2.81% "ro#$h 7% 1!%


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'alance eet

AT

Current Assets

Cash and cash euivalen$s 3!3 1,426 1,198% o revenue 3% 13% 9%

5ccoun$s and no$es receiva&le, ne$ 239 2!6 286% o revenue 2% 2% 3%

nven$ories 122 189 273% o company res$auran$ e)pense 2% 2% 3%

repaid e)penses and o$her curren$ asse$s 314 269 338% o revenue 3% 2% 3%

eerred income $a)es 81 61 112% o revenue 1% 1% 1%

5dver$isin" coopera$ive asse$s, res$ric$ed 99 112 114% o revenue 1% 1% 1%

Total Current Assets 1,208 2,313 2,321roper$y, plan$ and euipmen$, ne$ 3,899 3,830 4,042% o revenue 36% 3!% 37%

*ood#ill 640 6!9 681% o revenue 6% 6% 6%

n$an"i&le asse$s, ne$ 462 47! 299% o revenue 4% 4% 3%

nves$men$s in unconsolida$ed alia$es 144 1!4 167% o revenue 1% 1% 2%

-es$ric$ed Cash 300% o revenue 0% 0% 3%

($her asse$s !44 !19 47!% o revenue !% !% 4%

eerred income $a)es 2!1 366 !49% o revenue 2% 3% !%

Total Assets 7,148 8,31% 8,834% "ro#$h 16% 6%

&A'&&T& A)5 6AR6O5R &T+ 5:&C&T;

Current a


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% o asse$s 16% 18% 21%

Total a


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:orcaste/

2012A 2013A 2014

11,833 11,184 12,324

86.8% 8!.!% 86.0%

1,800 1,900 2,006

13.2% 14.!% 14.0%

### ### ###

8.0% 4.0% 9.!%

3,874 3,669 4,042

32.7% 32.8% 32.8%

2,620 2,499 2,!88

22.1% 22.3% 21.0%

3,3!8 3,333 3,673

8.7% 0.7% 10.2% 9,8$2 9,$01 ###

1,!10 1,412 1,!76

11.1% 10.8% 11.0%

133 1!8 142

7.4% 8.3% 7.1%

37 331 143

0.3% 2.!% 1.0%

+78 +100 +!7

0.6% 0.8% 0.4%

+11! +16 +140.8% 0.1% 0.1%

11,339 11,286 12,093

83.2% 86.3% 84.4%

2,294 1,798 2,237

26.4% 21.6% 24%

149 247 149

1.1% 1.9% 1.0%

2,14$ 1,$$1 2,087

29.3% 27.7% 34.6%

!37 487 !64

6!.7% 9.3% 1!.7% 1,608 1,064 1,!24

20.4% 33.8% 43.2%

11 +27 1!

31.3% 34!.!% 1!6.4%

1,$97 1,091 1,$09

3.46 2.41 3.41

23% 30% 41%


5/54

776 !73 64!

6% 4% !%

301 319 373

3% 3% 3%

313 294 393

3% 3% 4%

272 286 287

3% 3% 3%

111 123 143

1% 1% 1%

136 96 100

1% 1% 1%

1,909 1,%91 1,9414,2!0 4,4!9 4,918

39% 41% 4!%

1,034 889 917

10% 8% 8%

690 638 716

6% 6% 7%

72 !3 !7

1% 0% 1%

0% 0% 0%

!7! !66 631!% !% 6%

467 399 401

4% 4% 4%

9,013 8,%9$ 9,$81

2% 4% 10%

2,036 1,929 2,166

28% 27% 30%

97 169 143

1% 2% 2% 10 71 78

0% 1% 1%

136 96 100

2% 1% 1%

2,279 2,2%$ 2,487

2,932 2,918 2,918

41% 41% 41%

1,490 1,244 1,109


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21% 17% 16%

%,701 %,427 %,$1$

3% 4% 1%

!9 39 39

1% 1% 1%

0% 0% 0%

2,286 2,102 2,900

32% 29% 41%

+132 64 64

2% 1% 1%

2,1$4 2,1%% 2,9%4

99 63 63

1% 1% 1%

2,2$3 2,229 3,027

9,013 8,%9$ 9,$81

2% 4% 10%


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o$es


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on opera$in"

o $his is no$ a $ypo. =>?@ spli$s $heir curren$ por$ion o deerred income $a)es and i$s more

on (pera$in"

5c$uarial *ainsAossses in pension plans assumin" i$ is opera$in"


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*ainsAlosses on pension plans and on deriva$ive ins$rumen$s


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lon" $erm por$ion o deerred income $a)es


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num


14/54

tores


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% *ro#$h !0.!%

ndia

Company (pera$ed 0.93 0.70

% *ro#$h 24.!%

Franshise 0.04 0.04

% *ro#$h 14.0%

BFC


% *ro#$h 13.6%

Franshise 0.06 0.06

% *ro#$h 0.9%

i;;a u$


% *ro#$h 70.8%

Franshise 0.06 0.06

% *ro#$h 0.8%

/aco Dell


% *ro#$h 3.3%

Franshise 0.06 0.06

% *ro#$h 3.3%

Operatn! xpenses

Company -es$auran$ E)penses +% o Company ales

Food and paper 32% 33% 33%

ayroll and employee &ene'$s 22% 22% 22%

(ccupancy and o$her opera$in" e)penses29% 28% 28%

*eneral and 5dminis$ra$ive E)penses +% o /o$al -evenue 11% 11% 11%

Franchise and icense E)penses +% o Franchise and icen 8% 7% 8%

Closures and mpairmen$ +ncome E)penses +% /o$al -eve 1% 0% 1%

-eranchisin" +*ain oss +% /o$al -evenue 1% 1% 1%

($her +ncome E)pense +% /o$al -evenue 0% 0% 1%

Operatn! Assets an/ a


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eerred ncome /a)es + % o $o$al revenue 1% 1% 1%

5dver$isin" coopera$ive asse$s, res$ric$ed 1% 1% 1%

"" Bross 7,103 7,267 7,389

5ccumula$ed eprecia$ion 3,273 3,22! 3,139

E ne$ 3,830 4,042 4,2!0

C5EG 796 940 1,099

eprecia$ion 5mmor$i;a$ion e)pense !60 !99 629

5mor$i;a$ion E)pense 29 31 28

eprecia$ion E)pense !31 !68 601

Es$ima$ed >seul ie 12.7 12.1 11.7

eprecia$ion E)pense on e)is$in" E

eprecia$ion E)pense on ne# E

/o$al eprecia$ion E)pense

Forcas$ed E *ross

5ccumula$ed eprecia$ion

Forcas$ed E ne$

*ood Hill +% o /o$al -evenue 6% !% 8%

n$an"i&le 5sse$s +% o revenue 4% 2% !%

nves$men$s in unconsolida$ed alia$es +% $o$al revenue 1% 1% 1%

($her asse$s +% $o$al revenue !% 4% 4%

eerred income $a)es +% $o$al revenue 3% 4% 3%

Accounts "aya


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-eedema&le on Con$rollin" n$eres$

Common $oc: 86 18

5ccumula$ed Comprehensive ncome+ oss +227 +247 +132

hares (u$s$andin" 469 460 4!1

on Con$rollin" n$eres$ 93 93 99

)on Operatn! &ncome an/ xpenses&nterest &ncome 20 28 20

5sse$ Dase 1426 1198 776

mplied n$eres$ -a$e 1% 2% 3%

&nterest xpense 19! 184 169

on" /erm e&$ 291! 2997 2932

mplied n$eres$ -a$e 7% 6% 6%

&nterest xpense )et 17! 1!6 149

Tax an/ 5v/en/sEIec$ive /a) -a$e 26% 20% 2!%

Earnin"s a$$ri&u$a&le $o non con$rollin" in$eres$ 2% 1% 1%

Retane/ arnn!s

ividend ayou$s 412 481 !44

ividend ayou$ -a$io 36% 36% 34%

De"innin" -e$ained Earnin"s 996 1717 20!2

ividends 412 481 !44

e$ ncome 5$$ri&u$a&le $o =um@ 11!8 1319 1!97

Endin" -e$ained Earnin"s 1717 20!2 2286


18/54

2013

6800 0.! 7771

0.0% 12.0% 14.3%

10! 0.! 113

4.0% 1!.9% 7.6%

%90$ 7884

109 0.! 120

29.8% 20.1% 10.0%

18 0.! 21

0.0% 2.9% 17.0%

127 141

204! 0.! 2109

10.2% 8.3% 3.1%

81! 0.! 847

6.1% 3.4% 3.9%

28%1 29$%

104! 0.! 1114

16.2% !.8% 6.6%

692 0.! 737

!.7% !.6% 6.6%

1737 18$1

118! 0.! 1209

17.0% 16.6% 2.1%

270 0.! 287

4.!% 3.3% 6.!%

14$$ 1497

11184 12324

$$@ 1.6% 102@

1900 200%

$%@ 4.7% $%@

13084 14330

40@ 9$@

Avera!

e2014

A//tons

"artal +ear)eD toreA/Eustment

2014BroDt

Rate

2014Common?e @

2014:orcaste/

Falue


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!026 !8! !611

10.!% 16%

90.9% 92% 90%

!01 6! !66

3.!% 62%

9.1% 8% 10%

191 48 239

!9.2% !2%

26.1% 21% 30%

!42 112 6!4

14.6% 22%

73.9% 79% 70%

1291 36 1327

7.6% 7%

9.3% 10% 10%

12!72 324 12896

1.7% 2%

90.7% 90% 90%

732 23 7!!

9.7% 11%

6.2% 7% 7%

11033 327 11360

2.2% 3%

93.8% 93% 93%

891 !0 841

14.7% 10%

1!.9% 19% 12%

4701 130 4831

11.!% 4%

84.1% 81% 88%

37480 39080

8131 8773

7.3% 4% 7.9%

29349 30307

3.!% 4% 3.3%

1.3! 1.46

9.!% 4.3% 8%

0.21 0.21


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7.7% 21.4% 1%

0.!7 0.63

18.!% 21.!% 10%

0.03 0.04

12.7% 13.4% 6%

1.!8 1.61

16.!% 1.!% 2%

0.06 0.07

4.3% 1.7% 3%

1.43 1.!0

23.7% 23.6% !%

0.06 0.07

3.4% 2.1% !%

1.33 1.40

2.8% 3.1% !%

0.06 0.06

6.2% 1.!% !%

33% 33% 33%

22% 22% 21%

30% 29% 30%

11% 11% 11%

7% 8% 7%

0% 1% 1%

1% 0% 0%

0% 0% 0%

1,900

319 3736.1 6 !.8

!9.6 !9

294 393

9!01

31 39 30

2% 2% 2%


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1% 1% 1%

1% 1% 1%

7,8!0 9,0!0

3,391

4,4!9

1,049 1,200

686

28

6!8

11.4 11.4

689

0.! !3

741

9,0!0

4,132

4,918

7% 6%

!% 4% !%

0% 1% 0%

4% 4% 4%

3% 4% 3%

313 294

9,482 10,402

9,!01 10,303

294 393

1,929 2,166

4.78 !.1! !.08

1% 1% 1%

1% 2% 1%

1% 1% 1%

11% 13% 9%

0% 1% 0%

4% 8% !%

2918 2941 2,918

39 2! 39


22/54

26

64 +136 64

443 4!6 443

63 87 63

23 2!.79

!73 644.84

4% 4%

270 17!.08

2918 2,918

9% 7% 6%

247 149.29

31% 26% 27%

3% 0% 1%

61!

!6% 47%

2286 2102

61! +710

1091 1,!09

2102 2900


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)otes

ource o a$a or China and ndiaJ =um@ 2013 10B

China Company opera$ed revenue did no$ chan"e much &ecause $he decrease in same s$ore sales #

-evenues or BFC, i;;a u$, and /aco Dell are es$ima$ed &ased in inorma$ion rom $he 10B


24/54


25/54

E)penses Kus$ or company res$auran$s. hould &e lin:ed $o company sales.

Company has implemen$ed employee cos$ reducin" measures

>sin" $o$al revenue ins$ead o Kus$ company sales as =>?@ has recieva&les rom i$s ranchisees as #

=>?Ls recieva&les are primarily "enera$ed &y on"oin" rela$ions #i$h ranchises and licensees. Hill us

ince =>?@ does no$ record C(*, #e are usin" company res$auran$ e)penses or $he numera$or o $

=>?@ seems $o &e holdin" less inven$ory, $hus i$ is sellin" i$ oI as$er

some adver$isin" e)penses are a lar"e por$ion o $his , predic$ an increase due $o increased ads need


26/54

ercen$a"e o unds rom &o$h company o#ned res$auran$s and ranchises $o "o $o#ards adver$isin"

2014 10 B pa"e 43

ecreasin" $rend has &een due $o impairmen$s rom li$$le sheep closures

5ssume accoun$s paya&le are primarily used $o pay oI inven$ories

/here has &een a s$eady do#n#ard $rend o $he $urnover ra$io even#hile inven$ory purchases have

ince $his is mainly ac$urial "ains on pension plans or =>?@ employees #e are ma:in" $his a perce

/he res$ric$ed cash #as due $o $he acuisi$ion o li$$le sheep. o indica$ion $ha$ $his #ill reoccur

Dein" in $he M- indus$ry, =>?@ has "enera$ed a su&s$an$ial amoun$ o cash No# rom opera$ions a

?ana"emen$ provides no "uidance a&ou$ #he$her $he ccompany #ill $a:e on more lon" $erm de&$

?ana"emen$ provides no "uidance a&ou$ $his


27/54

Oery dicul$ $o predic$ "ains in inves$men$ and pension plans

o "uidance on chan"in" noncon$rollin" in$eres$

10B indica$es $ha$ lon" $erm in$eres$ ra$es ran"e rom 2.38% $o 6.88%. /his is $he #i"h$ed avera"e


28/54

s &alanced ou$ &y s$ore por$olio acuisi$ions


29/54


30/54

ll

e ranchise income or $urnover ra$io.

he inven$ory $urnover ra$io

ed or &rea:as$ menu


31/54

coopera$ives. /here is no indica$ion $ha$ $his percen$a"e #ill chan"e

een varied or $he pas$ e# years. ?us$ &e payin" oI accoun$s paya&le as$er.

n$a"e o company sales

d uses $his cash mainly $o run i$s res$auran$s and purchase landAranchised res$auran$s. /hus #e are


32/54

$he in$eres$ on lon" $erm de&$


33/54


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usin" cash as a percen$a"e o revenue. 5ssume a sli"h$ increase in cash &ecause o e)pec$a$ions o


37/54


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increased opera$in" cash No# rom increased sales in China.


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Year 2011 2012 2013 Sources:

2013 10 K pg 36 and 37

YRI Revenue 2013 Restaurant Unit Activity Summary

Company 231 202 21!" 2012 Restaurant Unit Activity Summary

Franchise #!1 #7" "0

US Revenue

Company 2"#" 2!!0 2116 Explination

Franchise 7#6 #02 #37

Stores as % of total YRI Stores

YRI $ompany

KFC 0%#1 0%#1 0%#2

Pizza Hut 0%1" 0%1" 0%1#

Taco Bell 0 0 0

YRI &ranc'ise

KFC 0%62 0%6 0%6

Pizza Hut 0%36 0%3# 0%3#

Taco Bell 0%02 0%02 0%02

Stores as % of total US Stores

US $ompanyKFC 0%1# 0%13 0%13

Pizza Hut 0%2! 0%31 0%31

Taco Bell 0%!7 0%!6 0%!6

US &ranc'ise

KFC 0%3 0%3 0%3

Pizza Hut 0% 0% 0%

Taco Bell 0%3 0%3 0%3

Revenue for each segment

$ompanyKFC 23 2277 20!

Pizza Hut 11"2 127 10!

Taco Bell 170 12# 11#!

&ranc'ise

KFC 763 76# #1!

Pizza Hut 621 6!! 6"2

Taco Bell 2!3 2!# 270

ince or#ard "uidance #as "iven in $erms$he ne# se"men$ repor$in" #hich $ransorm

=- +=um@ -es$auran$s n$erna$ional and $h> se"men$s in$o $he BFC, /aco Dell, and iu$ e"men$s #e es$ima$ed #ha$ revenue$he ne#ly de'ned BFC, i;;a u$, and /acoDell e"men$s #ould have &een in 2013,2012, and 2011.


44/54

ed

;aor


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um&ers in ?illions

2009A

Revenues

Company sales 9,413

% "ro#$h

Franchise and license ees and income 1,423

% "ro#$h

Total revenues 10,83%

% "ro#$h

Company restaurant expenses 7,934

*eneral and adminis$ra$ive e)penses 1,221

Franchise and license e)penses 118

Closures and impairmen$ +income e)penses 103

-eranchisin" +"ain loss +26

($her +income e)pense +104

/o$al cos$s and e)penses, ne$ 9,246

Operatn! &ncome 'e(ore Tax 1,$90

ncome /a)es 313

$a) &ene'$ or in$eres$ 68

$a) on opera$in" income 381

)et Operatn! "rot A(ter Tax )O"AT; 1,209

)et Operatn! "rot -ar!n 112@

n$eres$ E)pense 194

$a$u$ory /a) -a$e 3!%

/a) on n$eres$67.9

)et )on Operatn! xpense 126

nven$ories 122

repaid E)penses 314

eerred ncome /a) 81

5dver$isin" coopera$ive asse$s 99

E ne$ 3,899

*ood#ill 640

n$an"i&le 5sse$s 462

nves$men$s in unconsolida$ed alia$es 144

($her asse$s !44eerred ncome /a) 2!1

5ccoun$s aya&le 1,413

ncome /a) aya&le 82

5dver$isin" Coopera$ive ia&ili$ies 99

)et Operatn! Assets )OA; 4,962

(5/ 2.18

Cash and euivalen$s 3$3


46/54

5ccoun$s and no$es recieva&le 239

-es$ric$ed Cash

hor$ /erm Dorro#in" !9

on" /erm e&$ 3,207

($her ia&ili$ies and eerred Credi$s 1,174

)et )onoperatn! O


47/54

Actual :orcaste/

2010A 2011A 2012A 2013A 2014 201$ 201% 2017 2018

9,783 10,893 11,833 11,184 12,324 13,310 14,108 14,814 1$,40%

3.9% 11.3% 8.6% !.!% 10.2% 8.0% 6.0% !.0% 4.0%

1,!60 1,733 1,800 1,900 2,006 2,04% 2,107 2,192 2,279

9.6% 11.1% 3.9% !.6% !.6% 2.0% 3.0% 4.0% 4.0%

11,343 12,%2% 13,%33 13,084 14,330 1$,3$% 1%,21% 17,00$ 17,%8%

4.7% 11.3% 8.0% 4.0% 9.!% 7.2% !.6% 4.9% 4.0%

8,120 9,140 9,8$2 9,$01 10,303

1,277 1,372 1,!10 1,412 1,!76

110 14! 133 1!8 142

47 13! 37 331 143

63 72 +78 +100 +!7

+43 +!3 +11! +16 +14

9,!74 10,811 11,339 11,286 12,093

1,7%9 1,81$ 2,294 1,798 2,237

416 324 !37 487 !64

61 !! !2 86 !2

477 379 !89 !73 616

1,292 1,436 1,70! 1,22! 1,433 PPP 1,703 1,786 1,8!7

114@ 114@ 12$@ 94@ 100@ 10$@ 10$@ 10$@ 10$@

17! 1!6 149 247 149

3!% 3!% 3!% 3!% 3!%

61.2! !4.6 !2.1! 86.4! !2.2!

114 101 97 161 97

189 273 313 294 393

269 338 272 286 287

61 112 111 123 143

112 114 136 96 100

3,830 4,042 4,2!0 4,4!9 4,918

6!9 681 1,034 889 917

47! 299 690 638 716

1!4 167 72 !3 !7

!19 47! !7! !66 631366 !49 467 399 401

1,602 1,874 2,036 1,929 2,166

61 142 97 169 143

112 114 136 96 100

4,8!9 4,920 !,6!1 !,609 6,1!4 6,!90 6,989 7,330 7,6!6

2.33 2.!7 2.41 2.33 2.33 2.33 2.32 2.32 2.31

1,42% 1,198 77% $73 %4$


48/54

2!6 286 301 319 373

300

673 320 10 71 78

2,91! 2,997 2,932 2,918 2,918

1,284 1,471 1,490 1,244 1,109

+3,190 +3,004 +3,3!! +3,341 +3,087

86 18

1,717 2,0!2 2,286 2,102 2,900

+227 +247 +132 64 64

93 93 1!8 102 102

1,669 1,916 2,312 2,268 3,066


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o$es


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num&ers in millions

Actual

2009A 2010A 2011A

/o$al -evenues 10,836 11,343 12,626

Growth !% 11%

(5/ 1,209 1,292 1,436

Growth 7% 11%

(5 4,962 4,8!9 4,920

Growth 2% 1%

Cost o( =uty )otes

- 2.7%

De$a 0.7

-e$urn on Eui$y 6.2%

-F o( =uty

Dalance hee$ $oc: rice Q73.2

hares (u$s$andin" +?illions 442.9

/o$al Eui$y Q32,438.0

Cost o( 5e


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5C: Faluaton

eriod 1 2 3

ncrease in (5 !4! 437 399(5/ncrease in (5 888 1,176 1,304

iscoun$ Fac$or 0.94 0.89 0.84

O o FCF 837.82 1,046.03 1,093.97

um o O FCF 42,009.66

ess ( +3,087.44

Firm Eui$y Oalue 38,922.23

hares (u$s$andin" 442.9

tocH Falue 8788

5nalys$ Es$ima$es 8$00

Curren$ $oc: rice 7%30

ercen$ >ndervalued 1$@


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:orcaste/

2012A 2013A 2014 201$ 201% 2017 2018

13,633 13,084 14,330 1!,3!6 16,216 17,00! 17,686

8% 4% 10% 7% 6% !% 4%

1,70! 1,22! 1,433 1,612 1,703 1,786 1,8!7

19% 28% 17% 13% 6% !% 4%

!,6!1 !,609 6,1!4 6,!90 6,989 7,330 7,6!6

1!% 1% 10% 7% 6% !% 4%

alue "iven so added up $he principle amoun$ due on each &ond s$ill ou$s$andin"

h ra$e


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Documents

YUM! Brands DCF Financial Model