Items Affecting Comparability of Net Income, Financial Position and Cash Flows (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2018

Items Affecting Comparability of Net Income and Cash Flows [Abstract]

Revenue Recognition adjustments made to Condensed Consolidated Balance Sheet [Table Text Block]



CONDENSED CONSOLIDATED BALANCE SHEET
	As Reported 9/30/2018			Impact			Balances under Legacy GAAP 9/30/2018
ASSETS
Current Assets
Cash and cash equivalents	$	198		$	(22	)	$	176
Accounts and notes receivable, net	528			(101		)	427
Prepaid expenses and other current assets	443			(71		)	372
Advertising cooperative assets, restricted	—			197			197
Total Current Assets	1,169			3			1,172

Property, plant and equipment, net	1,378			(19		)	1,359
Goodwill	489			—			489
Intangible assets, net	84			—			84
Other assets	886			(117		)	769
Deferred income taxes	149			(25		)	124
Total Assets	$	4,155		$	(158	)	$	3,997

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	885		$	(239	)	$	646
Income taxes payable	14			—			14
Short-term borrowings	295			—			295
Advertising cooperative liabilities	—			197			197
Total Current Liabilities	1,194			(42		)	1,152

Long-term debt	9,405			—			9,405
Other liabilities and deferred credits	1,014			(337		)	677
Total Liabilities	11,613			(379		)	11,234

Shareholders’ Deficit
Accumulated deficit	(7,141		)	241			(6,900		)
Accumulated other comprehensive loss	(317		)	(20		)	(337		)
Total Shareholders’ Deficit	(7,458		)	221			(7,237		)
Total Liabilities and Shareholders’ Deficit	$	4,155		$	(158	)	$	3,997

As a result, the following adjustments were made to the Condensed Consolidated Balance Sheet as of January 1, 2018:



CONDENSED CONSOLIDATED BALANCE SHEET
	As Reported 12/31/2017			Adjustments				Balances with Adoption of Topic 606 1/1/2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,522		$	11			$	1,533
Accounts and notes receivable, net	400			112				512
Prepaid expenses and other current assets	384			76			^(a)	460
Advertising cooperative assets, restricted	201			(201		)		—
Total Current Assets	2,507			(2		)		2,505

Property, plant and equipment, net	1,697			11				1,708
Goodwill	512			—				512
Intangible assets, net	110			—				110
Other assets	346			118				464
Deferred income taxes	139			26				165
Total Assets	$	5,311		$	153			$	5,464

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	813		$	220			$	1,033
Income taxes payable	123			—				123
Short-term borrowings	375			—				375
Advertising cooperative liabilities	201			(201		)		—
Total Current Liabilities	1,512			19				1,531

Long-term debt	9,429			—				9,429
Other liabilities and deferred credits	704			353				1,057
Total Liabilities	11,645			372				12,017

Shareholders’ Deficit
Accumulated deficit	(6,063		)	(240		)		(6,303		)
Accumulated other comprehensive loss	(271		)	21				(250		)
Total Shareholders’ Deficit	(6,334		)	(219		)		(6,553		)
Total Liabilities and Shareholders’ Deficit	$	5,311		$	153			$	5,464

(a)

Includes $58 million of restricted cash related to advertising cooperatives. These balances can only be used to settle obligations of the respective cooperatives.

Impact of adopting Topic 606 on our Condensed Consolidated Statements of Income [Table Text Block]

The following tables reflect the impact of the adoption of Topic 606 on our Condensed Consolidated Statement of Income for the quarter and year to date ended September 30, 2018 and our Condensed Consolidated Balance Sheet as of September 30, 2018.



CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Quarter ended 9/30/2018
Revenues	As Reported			Impact				Balances under Legacy GAAP
Company sales	$	499		$	—			$	499
Franchise and property revenues	605			11				616
Franchise contributions for advertising and other services	287			(287		)		—
Total revenues	1,391			(276		)		1,115
Costs and Expenses, Net
Company restaurant expenses	399			—				399
General and administrative expenses	204			—				204
Franchise and property expenses	40			10				50
Franchise advertising and other services expense	288			(288		)		—
Refranchising (gain) loss	(100		)	—				(100		)
Other (income) expense	7			—				7
Total costs and expenses, net	838			(278		)		560
Operating Profit	553			2			^(a)	555
Investment (income) expense, net	(96		)	—				(96		)
Other pension (income) expense	4			—				4
Interest expense, net	111			—				111
Income before income taxes	534			2				536
Income tax provision (benefit)	80			(2		)		78
Net Income	$	454		$	4			$	458

Basic Earnings Per Common Share	$	1.43		$	0.01			$	1.44

Diluted Earnings Per Common Share	$	1.40		$	0.01			$	1.41



	Year to date ended 9/30/2018
Revenues	As Reported			Impact				Balances under Legacy GAAP
Company sales	$	1,523		$	—			$	1,523
Franchise and property revenues	1,773			23				1,796
Franchise contributions for advertising and other services	834			(834		)		—
Total revenues	4,130			(811		)		3,319
Costs and Expenses, Net
Company restaurant expenses	1,258			—				1,258
General and administrative expenses	631			—				631
Franchise and property expenses	127			21				148
Franchise advertising and other services expense	834			(834		)		—
Refranchising (gain) loss	(285		)	4				(281		)
Other (income) expense	10			—				10
Total costs and expenses, net	2,575			(809		)		1,766
Operating Profit	1,555			(2		)	^(a)	1,553
Investment (income) expense, net	(185		)	—				(185		)
Other pension (income) expense	10			—				10
Interest expense, net	330			—				330
Income before income taxes	1,400			(2		)		1,398
Income tax provision (benefit)	192			(3		)		189
Net Income	$	1,208		$	1			$	1,209

Basic Earnings Per Common Share	$	3.72		$	0.01			$	3.73

Diluted Earnings Per Common Share	$	3.64		$	—			$	3.64

(a)

Includes $2 million and $11 million of franchise incentive payments related to the KFC U.S. Acceleration Agreement or the Pizza Hut U.S. Transformation Agreement that would have been expensed immediately and that we would not have allocated to the KFC Division or the Pizza Hut Division under Legacy GAAP for the quarter and year to date ended September 30, 2018, respectively. Upon the adoption of Topic 606, these payments have been capitalized as assets.