2018 Q4 Form 10-K Financial Statement

#000156459020007403 Filed on February 27, 2020

View on sec.gov

Income Statement

Concept 2018 Q4 2018 Q3 2018 Q2
Revenue $1.914B $2.212B $2.068B
YoY Change 3.85% 12.33%
Cost Of Revenue $1.110B $1.196B $1.133B
YoY Change 22.29% 150.11%
Gross Profit $804.0M $1.016B $935.0M
YoY Change -4.15% -32.64%
Gross Profit Margin 42.01% 45.93% 45.21%
Selling, General & Admin $675.0M $734.0M $708.0M
YoY Change -1.08% 14.19%
% of Gross Profit 83.96% 72.24% 75.72%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $102.0M $108.0M $117.0M
YoY Change -29.17% 2.86% 21.88%
% of Gross Profit 12.69% 10.63% 12.51%
Operating Expenses $703.0M $758.0M $732.0M
YoY Change -0.52% 15.28%
Operating Profit $84.00M $269.0M $193.0M
YoY Change 1.89% 12.87%
Interest Expense -$10.00M $20.00M $17.00M
YoY Change -28.57% 6.25%
% of Operating Profit -11.9% 7.43% 8.81%
Other Income/Expense, Net $0.00
YoY Change
Pretax Income $65.00M $279.0M $203.0M
YoY Change 2.57% 16.0%
Income Tax $23.00M $67.00M $53.00M
% Of Pretax Income 35.38% 24.01% 26.11%
Net Earnings $74.00M $203.0M $143.0M
YoY Change 15.34% 14.4%
Net Earnings / Revenue 3.87% 9.18% 6.91%
Basic Earnings Per Share $0.19 $0.53 $0.37
Diluted Earnings Per Share $0.19 $0.51 $0.36
COMMON SHARES
Basic Shares Outstanding 384.0M 386.0M
Diluted Shares Outstanding 394.0M 398.0M

Balance Sheet

Concept 2018 Q4 2018 Q3 2018 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.388B $1.532B $1.539B
YoY Change 9.81% -2.3% 28.04%
Cash & Equivalents $1.266B $1.334B $1.261B
Short-Term Investments $122.0M $198.0M $278.0M
Other Short-Term Assets $128.0M $154.0M $171.0M
YoY Change 4.92% -3.14% 14.0%
Inventory $307.0M $270.0M $276.0M
Prepaid Expenses
Receivables $80.00M $65.00M $73.00M
Other Receivables $49.00M $25.00M $34.00M
Total Short-Term Assets $1.952B $2.046B $2.093B
YoY Change 8.32% -0.39% 23.7%
LONG-TERM ASSETS
Property, Plant & Equipment $1.615B $1.605B $1.657B
YoY Change -4.49% -2.85% 2.47%
Goodwill $266.0M $266.0M $276.0M
YoY Change 146.3% 148.6% 167.96%
Intangibles $116.0M $133.0M $145.0M
YoY Change 14.85% 27.88% 38.1%
Long-Term Investments $81.00M $68.00M $53.00M
YoY Change -14.74% -8.11% 3.92%
Other Assets $491.0M $498.0M $421.0M
YoY Change 27.53% 65.45% 46.69%
Total Long-Term Assets $2.658B $2.645B $2.637B
YoY Change 6.96% 9.93% 13.22%
TOTAL ASSETS
Total Short-Term Assets $1.952B $2.046B $2.093B
Total Long-Term Assets $2.658B $2.645B $2.637B
Total Assets $4.610B $4.691B $4.730B
YoY Change 7.53% 5.18% 17.63%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $619.0M $551.0M $584.0M
YoY Change 47.38% -4.17% 18.7%
Accrued Expenses $369.0M $376.0M $405.0M
YoY Change -5.14% 20.13% 49.45%
Deferred Revenue $96.00M $74.00M $80.00M
YoY Change 33.33%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $1.253B $1.192B $1.206B
YoY Change 22.36% -1.65% 20.36%
LONG-TERM LIABILITIES
Long-Term Debt $25.00M $26.00M $27.00M
YoY Change -10.71% -7.14% 0.0%
Other Long-Term Liabilities $355.0M $385.0M $396.0M
YoY Change -8.51% 40.51% 52.31%
Total Long-Term Liabilities $355.0M $385.0M $396.0M
YoY Change -8.51% 40.51% 52.31%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.253B $1.192B $1.206B
Total Long-Term Liabilities $355.0M $385.0M $396.0M
Total Liabilities $1.633B $1.603B $1.629B
YoY Change 13.4% 5.88% 26.38%
SHAREHOLDERS EQUITY
Retained Earnings $944.0M $916.0M $751.0M
YoY Change 137.78% 71.86% 133.23%
Common Stock $2.402B $2.393B $2.388B
YoY Change 1.14% 0.84% 0.89%
Preferred Stock
YoY Change
Treasury Stock (at cost) $315.0M $221.0M
YoY Change 112.84% 274.58%
Treasury Stock Shares
Shareholders Equity $2.873B $2.984B $3.003B
YoY Change
Total Liabilities & Shareholders Equity $4.610B $4.691B $4.730B
YoY Change 7.53% 5.18% 17.63%

Cashflow Statement

Concept 2018 Q4 2018 Q3 2018 Q2
OPERATING ACTIVITIES
Net Income $74.00M $203.0M $143.0M
YoY Change 15.34% 14.4%
Depreciation, Depletion And Amortization $102.0M $108.0M $117.0M
YoY Change -29.17% 2.86% 21.88%
Cash From Operating Activities $160.0M $354.0M $268.0M
YoY Change -255.34% -31.13% 131.03%
INVESTING ACTIVITIES
Capital Expenditures -$111.0M -$129.0M -$119.0M
YoY Change -27.45% 51.76% 15.53%
Acquisitions
YoY Change
Other Investing Activities $86.00M $8.000M -$20.00M
YoY Change -178.18% -96.41% -87.18%
Cash From Investing Activities -$25.00M -$121.0M -$139.0M
YoY Change -90.49% -187.68% -46.33%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -200.0M -132.0M -135.0M
YoY Change 365.12% 33.33% 221.43%
NET CHANGE
Cash From Operating Activities 160.0M 354.0M 268.0M
Cash From Investing Activities -25.00M -121.0M -139.0M
Cash From Financing Activities -200.0M -132.0M -135.0M
Net Change In Cash -65.00M 101.0M -6.000M
YoY Change -84.11% -81.74% -96.76%
FREE CASH FLOW
Cash From Operating Activities $160.0M $354.0M $268.0M
Capital Expenditures -$111.0M -$129.0M -$119.0M
Free Cash Flow $271.0M $483.0M $387.0M
YoY Change 442.0% -19.37% 76.71%

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<p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-weight:bold;font-family:Times New Roman;font-size:10pt;font-style:normal;text-transform:none;font-variant: normal;">Note 1 – Description of Business</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">Yum China Holdings, Inc. (“Yum China” and, together with its subsidiaries, the “Company,” “we,” “us,” and “our”) was incorporated in Delaware on April 1, 2016.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The Company owns, franchises or has ownership in entities that own and operate restaurants (also referred to as “stores” or “units”) under the KFC, Pizza Hut, Little Sheep, COFFii &amp; JOY, East Dawning and Taco Bell concepts (collectively, the “concepts”). In connection with the separation of the Company in 2016 from its former parent company, Yum! Brands, Inc. (“YUM”), Yum! Restaurants Asia Pte. Ltd., a wholly-owned indirect subsidiary of YUM, and Yum Restaurants Consulting (Shanghai) Company Limited (“YCCL”), a wholly-owned indirect subsidiary of the Company, entered into a 50-year master license agreement with automatic renewals for additional consecutive renewal terms of 50 years each, subject only to YCCL being in “good standing” and unless YCCL gives notice of its intent not to renew, for the exclusive right to use and sublicense the use of intellectual property owned by YUM and its subsidiaries for the development and operation of the KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones, Taco Bell brands and their related marks and other intellectual property rights for restaurant services in the People’s Republic of China (the “PRC” or “China”), excluding Hong Kong, Taiwan and Macau. In exchange, we pay a license fee to YUM equal to 3% of net system sales from both our Company and franchise restaurants. We own the intellectual property of Little Sheep, COFFii &amp; JOY and East Dawning, and pay no license fee related to these concepts.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">In 1987, KFC was the first quick-service restaurant brand to enter China. As of December 31, 2019, there are over 6,500 KFCs in China. We maintain a 58% and 70% controlling interest in the entities that own and operate the KFCs in Shanghai and Beijing, respectively. During the first quarter of 2018, the Company completed the acquisition of an additional 36% equity interest in an unconsolidated affiliate that operates KFC stores in Wuxi, China (“Wuxi KFC”), for cash consideration of approximately $98 million, increasing the Company’s equity interest to 83%, allowing the Company to consolidate the entity. The acquisition was considered immaterial. We began consolidating Wuxi KFC upon the completion of acquisition. We have a <span>47%</span> noncontrolling ownership in each of our unconsolidated affiliates that own and operate KFCs in Hangzhou and Suzhou.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The first Pizza Hut in China opened in 1990. As of December 31, 2019, there are over 2,200 Pizza Hut restaurants in China.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">In 2017, the Company completed the acquisition of a controlling interest in the holding company of DAOJIA.com.cn (“Daojia”), an established online food delivery service provider. The Company agreed to pay cash consideration of $36.7 million to the sellers and made a concurrent capital contribution of $25.0 million to Daojia. As of the completion of the acquisition, the Company held 90% of Daojia’s outstanding shares of common stock, or 80% of its equity interests on a fully-diluted basis. Daojia became an operating segment of the Company. The acquisition was considered immaterial. </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The Company has two reportable segments: KFC and Pizza Hut. Our remaining operating segments, including the operations of Little Sheep, East Dawning, Taco Bell, Daojia, newly developed COFFii &amp; JOY and our e-commerce business, with the latter two becoming operating segments starting from the first quarter of 2019, are combined and referred to as All Other Segments, as those operating segments are insignificant both individually and in the aggregate. Segment financial information for prior years has been recast to align with this change in segment reporting. There was no impact to the consolidated financial statements of the Company as a result of this change. Additional details on our segment reporting are included in Note 17.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p>
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InterestIncomeExpenseNet
25000000
CY2018 us-gaap Gain Loss On Investments
GainLossOnInvestments
-27000000
CY2019 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
1003000000
CY2019Q1 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.59
CY2019Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.47
CY2017 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
803000000
CY2018 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
470000000
CY2017 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
415000000
CY2019Q3 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.59
CY2018 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
1.84
CY2019Q4 us-gaap Assets
Assets
6950000000
CY2018Q4 us-gaap Assets
Assets
4610000000
CY2019Q4 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.24
CY2019 us-gaap Income Loss From Equity Method Investments
IncomeLossFromEquityMethodInvestments
69000000
CY2018 us-gaap Income Loss From Equity Method Investments
IncomeLossFromEquityMethodInvestments
65000000
CY2019 us-gaap Depreciation Depletion And Amortization
DepreciationDepletionAndAmortization
428000000
CY2018 us-gaap Depreciation Depletion And Amortization
DepreciationDepletionAndAmortization
445000000
CY2017 us-gaap Depreciation Depletion And Amortization
DepreciationDepletionAndAmortization
409000000
CY2019 us-gaap Asset Impairment Charges
AssetImpairmentCharges
49000000
CY2018 us-gaap Asset Impairment Charges
AssetImpairmentCharges
52000000
CY2017 us-gaap Asset Impairment Charges
AssetImpairmentCharges
58000000
CY2019 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
435000000
CY2015Q1 us-gaap Effective Income Tax Rate Reconciliation Tax Contingencies Foreign
EffectiveIncomeTaxRateReconciliationTaxContingenciesForeign
0.10
CY2015Q1 yumc Percentage Of Tax Assessed On Difference Between Fair Market Value And Tax Basis
PercentageOfTaxAssessedOnDifferenceBetweenFairMarketValueAndTaxBasis
0.10
CY2019Q4 yumc Guarantees Outstanding Of Unconsolidated Affiliates
GuaranteesOutstandingOfUnconsolidatedAffiliates
0
CY2019Q4 yumc Indemnifications Obligations To Officers And Directors
IndemnificationsObligationsToOfficersAndDirectors
0
CY2019Q1 us-gaap Revenues
Revenues
2304000000
CY2019Q2 us-gaap Revenues
Revenues
2124000000
CY2019Q3 us-gaap Revenues
Revenues
2319000000
CY2019Q4 us-gaap Revenues
Revenues
2029000000
CY2019 us-gaap Revenues
Revenues
8776000000
CY2019Q1 yumc Restaurant Profit
RestaurantProfit
386000000
CY2019Q2 yumc Restaurant Profit
RestaurantProfit
283000000
CY2019Q3 yumc Restaurant Profit
RestaurantProfit
372000000
CY2019Q4 yumc Restaurant Profit
RestaurantProfit
225000000
CY2019 yumc Restaurant Profit
RestaurantProfit
1266000000
CY2019Q1 us-gaap Operating Income Loss
OperatingIncomeLoss
303000000
CY2019Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
204000000
CY2019Q3 us-gaap Operating Income Loss
OperatingIncomeLoss
300000000
CY2019Q4 us-gaap Operating Income Loss
OperatingIncomeLoss
94000000
CY2019 us-gaap Operating Income Loss
OperatingIncomeLoss
901000000
CY2019Q1 us-gaap Net Income Loss
NetIncomeLoss
222000000
CY2019Q2 us-gaap Net Income Loss
NetIncomeLoss
178000000
CY2019Q3 us-gaap Net Income Loss
NetIncomeLoss
223000000
CY2019Q4 us-gaap Net Income Loss
NetIncomeLoss
90000000
CY2019 us-gaap Net Income Loss
NetIncomeLoss
713000000
CY2019 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
1.89
CY2019Q1 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.57
CY2019Q2 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.46
CY2019Q3 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.58
CY2019Q4 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.23
CY2019 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
1.84
CY2018Q1 us-gaap Revenues
Revenues
2221000000
CY2018 us-gaap Revenues
Revenues
8415000000
CY2018 yumc Restaurant Profit
RestaurantProfit
1199000000
CY2018 us-gaap Operating Income Loss
OperatingIncomeLoss
941000000
CY2018Q3 us-gaap Net Income Loss
NetIncomeLoss
203000000
CY2018 us-gaap Net Income Loss
NetIncomeLoss
708000000
CY2018Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.37
CY2018 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
1.79

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