An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

YUM! Brands Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Total undiscounted future operating lease payments	4,957)	5,479)	5,697)	5,674)	5,337)
Discount rate¹	7.63%	7.11%	6.33%	6.66%	6.84%

Total present value of future operating lease payments	3,515)	3,933)	4,209)	4,077)	3,764)

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

¹ Internal rate of return on capital leases

2015 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 7.63%
2016	672)	2016	672)	624)
2017	620)	2017	620)	535)
2018	569)	2018	569)	456)
2019	516)	2019	516)	385)
2020	457)	2020	457)	316)
2021 and thereafter	2,123)	2021	457)	294)
		2022	457)	273)
		2023	457)	254)
		2024	457)	236)
		2025	295)	141)
Total:	4,957)		4,957)	3,515)

Based on: 10-K (reporting date: 2015-12-26).

2014 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 7.11%
2015	709)	2015	709)	662)
2016	661)	2016	661)	576)
2017	609)	2017	609)	496)
2018	555)	2018	555)	422)
2019	501)	2019	501)	355)
2020 and thereafter	2,444)	2020	501)	332)
		2021	501)	310)
		2022	501)	289)
		2023	501)	270)
		2024	440)	221)
Total:	5,479)		5,479)	3,933)

Based on: 10-K (reporting date: 2014-12-27).

2013 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 6.33%
2014	721)	2014	721)	678)
2015	672)	2015	672)	594)
2016	627)	2016	627)	522)
2017	569)	2017	569)	445)
2018	515)	2018	515)	379)
2019 and thereafter	2,593)	2019	515)	356)
		2020	515)	335)
		2021	515)	315)
		2022	515)	296)
		2023	515)	279)
		2024	18)	9)
Total:	5,697)		5,697)	4,209)

Based on: 10-K (reporting date: 2013-12-28).

2012 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 6.66%
2013	678)	2013	678)	636)
2014	634)	2014	634)	557)
2015	592)	2015	592)	488)
2016	556)	2016	556)	430)
2017	500)	2017	500)	362)
2018 and thereafter	2,714)	2018	500)	340)
		2019	500)	318)
		2020	500)	299)
		2021	500)	280)
		2022	500)	262)
		2023	214)	105)
Total:	5,674)		5,674)	4,077)

Based on: 10-K (reporting date: 2012-12-29).

2011 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 6.84%
2012	612)	2012	612)	573)
2013	578)	2013	578)	506)
2014	538)	2014	538)	441)
2015	494)	2015	494)	379)
2016	462)	2016	462)	332)
2017 and thereafter	2,653)	2017	462)	311)
		2018	462)	291)
		2019	462)	272)
		2020	462)	255)
		2021	462)	238)
		2022	343)	166)
Total:	5,337)		5,337)	3,764)

Based on: 10-K (reporting date: 2011-12-31).

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YUM! Brands Inc., adjustments to financial statements

US$ in millions

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Adjustment to Total Assets
Total assets (as reported)	8,075)	8,345)	8,695)	9,011)	8,834)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	3,515)	3,933)	4,209)	4,077)	3,764)
Total assets (adjusted)	11,590)	12,278)	12,904)	13,088)	12,598)
Adjustment to Total Debt
Total debt (as reported)	3,977)	3,344)	2,989)	2,942)	3,317)
Add: Operating lease liability (before adoption of FASB Topic 842)²	3,515)	3,933)	4,209)	4,077)	3,764)
Total debt (adjusted)	7,492)	7,277)	7,198)	7,019)	7,081)

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

^{1, 2} Equal to total present value of future operating lease payments.

YUM! Brands Inc., Financial Data: Reported vs. Adjusted

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YUM! Brands Inc., adjusted financial ratios

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Total Asset Turnover¹
Reported total asset turnover	1.62	1.59	1.50	1.51	1.43
Adjusted total asset turnover	1.13	1.08	1.01	1.04	1.00
Debt to Equity²
Reported debt to equity	4.37	2.16	1.38	1.37	1.82
Adjusted debt to equity	8.22	4.70	3.32	3.26	3.88
Return on Assets³ (ROA)
Reported ROA	16.01%	12.59%	12.55%	17.72%	14.93%
Adjusted ROA	11.16%	8.56%	8.45%	12.20%	10.47%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

¹ See details »

² See details »

³ See details »

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	YUM! Brands Inc. adjusted total asset turnover ratio improved from 2013 to 2014 and from 2014 to 2015.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	YUM! Brands Inc. adjusted debt to equity ratio deteriorated from 2013 to 2014 and from 2014 to 2015.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	YUM! Brands Inc. adjusted ROA improved from 2013 to 2014 and from 2014 to 2015.

YUM! Brands Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Total assets	8,075)	8,345)	8,695)	9,011)	8,834)
Activity Ratio
Total asset turnover¹	1.62	1.59	1.50	1.51	1.43
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenues	13,105)	13,279)	13,084)	13,633)	12,626)
Adjusted total assets	11,590)	12,278)	12,904)	13,088)	12,598)
Activity Ratio
Adjusted total asset turnover²	1.13	1.08	1.01	1.04	1.00

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 13,105 ÷ 8,075 = 1.62

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 13,105 ÷ 11,590 = 1.13

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	YUM! Brands Inc. adjusted total asset turnover ratio improved from 2013 to 2014 and from 2014 to 2015.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Total debt	3,977)	3,344)	2,989)	2,942)	3,317)
Shareholders’ equity, YUM! Brands, Inc.	911)	1,547)	2,166)	2,154)	1,823)
Solvency Ratio
Debt to equity¹	4.37	2.16	1.38	1.37	1.82
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	7,492)	7,277)	7,198)	7,019)	7,081)
Shareholders’ equity, YUM! Brands, Inc.	911)	1,547)	2,166)	2,154)	1,823)
Solvency Ratio
Adjusted debt to equity²	8.22	4.70	3.32	3.26	3.88

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Debt to equity = Total debt ÷ Shareholders’ equity, YUM! Brands, Inc.
= 3,977 ÷ 911 = 4.37

² Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity, YUM! Brands, Inc.
= 7,492 ÷ 911 = 8.22

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	YUM! Brands Inc. adjusted debt-to-equity ratio deteriorated from 2013 to 2014 and from 2014 to 2015.

	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income, YUM! Brands, Inc.	1,293)	1,051)	1,091)	1,597)	1,319)
Total assets	8,075)	8,345)	8,695)	9,011)	8,834)
Profitability Ratio
ROA¹	16.01%	12.59%	12.55%	17.72%	14.93%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income, YUM! Brands, Inc.	1,293)	1,051)	1,091)	1,597)	1,319)
Adjusted total assets	11,590)	12,278)	12,904)	13,088)	12,598)
Profitability Ratio
Adjusted ROA²	11.16%	8.56%	8.45%	12.20%	10.47%

Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ ROA = 100 × Net income, YUM! Brands, Inc. ÷ Total assets
= 100 × 1,293 ÷ 8,075 = 16.01%

² Adjusted ROA = 100 × Net income, YUM! Brands, Inc. ÷ Adjusted total assets
= 100 × 1,293 ÷ 11,590 = 11.16%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	YUM! Brands Inc. adjusted ROA improved from 2013 to 2014 and from 2014 to 2015.

YUM! Brands Inc. (NYSE:YUM)

Analysis of Operating Leases

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Adjustments to Financial Statements for Operating Leases

YUM! Brands Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

YUM! Brands Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)