XML 57 R24.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Restaurant Information by Ownership Type

The following table presents restaurant information by ownership type:



Restaurants at December 31,	2019	2018	2017
Conventional franchised	21,837	21,685	21,366
Developmental licensed	7,648	7,225	6,945
Foreign affiliated	6,574	6,175	5,797
Total Franchised	36,059	35,085	34,108
Company-operated	2,636	2,770	3,133
Total Systemwide restaurants	38,695	37,855	37,241

Activity in Goodwill by Segment

The following table presents the 2019 activity in goodwill by segment:



In millions	U.S.			International Operated Markets			International Developmental Licensed Markets & Corporate				Consolidated
Balance at December 31, 2018	$	1,276.5			$	1,055.0		$	—			$	2,331.5
Business acquisitions	348.8				—			—				348.8
Net restaurant purchases (sales)	(9.5		)		5.7			99.4				95.6
Impairment losses	—				—			(99.4		)		(99.4		)
Currency translation	—				0.9			—				0.9
Balance at December 31, 2019	$	1,615.8			$	1,061.6		$	—			$	2,677.4

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present financial assets and liabilities measured at fair value on a recurring basis by the valuation hierarchy as defined in the fair value guidance:



12/31/2019
In millions	Level 1 ⁽¹⁾		Level 2			Carrying Value
Derivative assets	$	179.1	$	45.6			$	224.7
Derivative liabilities			$	(11.3	)		$	(11.3	)

12/31/2018
In millions	Level 1 ⁽¹⁾		Level 2			Carrying Value
Derivative assets	$	167.1	$	39.2			$	206.3
Derivative liabilities			$	(16.6	)		$	(16.6	)

(1)

Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans.

Fair Values of Derivative Instruments Included on Consolidated Balance Sheet

The following table presents the fair values of derivative instruments included on the Consolidated Balance Sheet as of December 31, 2019 and 2018:



	Derivative Assets					Derivative Liabilities
In millions	Balance Sheet Classification	2019		2018		Balance Sheet Classification	2019			2018
Derivatives designated as hedging instruments
Foreign currency	Prepaid expenses and other current assets	$	10.0	$	30.9	Accrued payroll and other liabilities	$	(5.2	)	$	(0.7	)
Interest rate	Prepaid expenses and other current assets					Accrued payroll and other liabilities	—			(0.1		)
Foreign currency	Miscellaneous other assets	9.5		3.8		Other long-term liabilities	(1.2		)	(1.3		)
Interest rate	Miscellaneous other assets	12.1		—		Other long-term liabilities	—			(11.8		)
Total derivatives designated as hedging instruments		$	31.6	$	34.7		$	(6.4	)	$	(13.9	)
Derivatives not designated as hedging instruments
Equity	Prepaid expenses and other current assets	$	1.6	$	167.1	Accrued payroll and other liabilities	$	(0.1	)	$	(2.7	)
Foreign currency	Prepaid expenses and other current assets	12.4		4.5		Accrued payroll and other liabilities	(4.8		)	—
Equity	Miscellaneous other assets	179.1		—
Total derivatives not designated as hedging instruments		$	193.1	$	171.6		(4.9		)	$	(2.7	)
Total derivatives		$	224.7	$	206.3		$	(11.3	)	$	(16.6	)

Derivatives Pretax Amounts Affecting Income and Other Comprehensive Income

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the year ended December 31, 2019 and 2018, respectively:



	Location of Gain or Loss Recognized in Income on Derivative	Gain (Loss) Recognized in AOCI				Gain (Loss) Reclassified into Income from AOCI						Gain (Loss) Recognized in Income on Derivative


In millions		2019		2018		2019			2018			2019		2018
Foreign currency	Nonoperating income/expense	$	22.5	$	60.0	$	50.3		$	(2.2	)
Interest rate	Interest expense					(1.3		)	(1.2		)
Cash flow hedges		$	22.5	$	60.0	$	49.0		$	(3.4	)

Foreign currency denominated debt	Nonoperating income/expense	$	317.3	$	682.9
Foreign currency derivatives	Nonoperating income/expense	11.8		1.3
Foreign currency derivatives⁽¹⁾	Interest expense											$	11.7	$	4.0
Net investment hedges		$	329.1	$	684.2							$	11.7	$	4.0

Foreign currency	Nonoperating income/expense											$	14.2	$	22.1
Equity	Selling, general & administrative expenses											71.8		0.4
Undesignated derivatives												$	86.0	$	22.5
⁽¹⁾The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

Share-Based Compensation Expense and Effect on Diluted Earnings Per Common Share

Share-based compensation expense and the effect on diluted earnings per common share were as follows:



In millions, except per share data	2019		2018		2017
Share-based compensation expense	$	109.6	$	125.1	$	117.5
After tax	$	94.2	$	108.1	$	82.0
Earnings per common share-diluted	$	0.12	$	0.14	$	0.10

Weighted-Average Assumptions

The following table presents the weighted-average assumptions used in the option pricing model for the 2019, 2018 and 2017 stock option grants. The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends. Expected stock price volatility is generally based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected dividend yield is based on the Company’s most recent annual dividend rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected life.

Weighted-average assumptions



	2019			2018			2017
Expected dividend yield	2.7		%	2.6		%	3.1		%
Expected stock price volatility	18.9		%	18.7		%	18.4		%
Risk-free interest rate	2.5		%	2.7		%	2.2		%
Expected life of options (in years)	5.8			5.8			5.9
Fair value per option granted	$	25.60		$	23.80		$	16.10