Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

YUM! Brands Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 26, 2015	Dec 27, 2014	Dec 28, 2013	Dec 29, 2012	Dec 31, 2011
Net income, including noncontrolling interests	1,298)	1,021)	1,064)	1,608)	1,335)
Depreciation and amortization	747)	739)	721)	645)	628)
Closures and impairment (income) expenses	79)	535)	331)	37)	135)
Refranchising (gain) loss	10)	(33)	(100)	(78)	72)
Contributions to defined benefit pension plans	(98)	(18)	(23)	—)	—)
Losses and other costs related to the extinguishment of debt	—)	—)	120)	—)	—)
Gain upon acquisition of Little Sheep	—)	—)	—)	(74)	—)
Deferred income taxes	(89)	(172)	(24)	28)	(137)
Equity income from investments in unconsolidated affiliates	(41)	(30)	(26)	(47)	(47)
Distributions of income received from unconsolidated affiliates	21)	28)	43)	41)	39)
Excess tax benefit from share-based compensation	(50)	(42)	(44)	(98)	(66)
Share-based compensation expense	57)	55)	49)	50)	59)
Changes in accounts and notes receivable	(54)	(21)	(12)	(18)	(39)
Changes in inventories	58)	(22)	18)	9)	(75)
Changes in prepaid expenses and other current assets	(22)	(10)	(21)	(14)	(25)
Changes in accounts payable and other current liabilities	128)	60)	(102)	9)	144)
Changes in income taxes payable	20)	(143)	14)	126)	109)
Changes in operating capital	130)	(136)	(103)	112)	114)
Other, net	75)	102)	131)	70)	38)
Net cash provided by operating activities	2,139)	2,049)	2,139)	2,294)	2,170)
Capital spending	(973)	(1,033)	(1,049)	(1,099)	(940)
Proceeds from refranchising of restaurants	246)	114)	260)	364)	246)
Acquisitions	(9)	(28)	(99)	(543)	(81)
Changes in restricted cash	—)	—)	—)	300)	(300)
Other, net	54)	11)	2)	(27)	69)
Net cash used in investing activities	(682)	(936)	(886)	(1,005)	(1,006)
Proceeds from long-term debt	—)	—)	599)	—)	404)
Repayments of long-term debt	(263)	(66)	(666)	(282)	(666)
Revolving credit facilities, three months or less, net	285)	416)	—)	—)	—)
Short-term borrowings, original maturity more than three months, proceeds	609)	2)	56)	—)	—)
Short-term borrowings, original maturity more than three months, payments	—)	(2)	(56)	—)	—)
Short-term borrowings, original maturity three months or less, net	—)	—)	—)	—)	—)
Repurchase shares of Common Stock	(1,200)	(820)	(770)	(965)	(752)
Excess tax benefit from share-based compensation	50)	42)	44)	98)	66)
Employee stock option proceeds	12)	29)	37)	62)	59)
Dividends paid on Common Stock	(730)	(669)	(615)	(544)	(481)
Other, net	(55)	(46)	(80)	(85)	(43)
Net cash used in financing activities	(1,292)	(1,114)	(1,451)	(1,716)	(1,413)
Effect of exchange rates on cash and cash equivalents	(6)	6)	(5)	5)	21)
Net increase (decrease) in cash and cash equivalents	159)	5)	(203)	(422)	(228)
Cash and cash equivalents, beginning of year	578)	573)	776)	1,198)	1,426)
Cash and cash equivalents, end of year	737)	578)	573)	776)	1,198)

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).

Net Income and Profitability Trends: Net income displayed variability throughout the period, peaking in 2012 at 1608 million USD, before declining to 1064 million USD in 2013 and further to 1021 million USD in 2014, with a partial recovery to 1298 million USD in 2015. This indicates some earnings volatility with a moderate upward trend towards the end of the period.
Depreciation and Amortization: Depreciation and amortization expenses increased steadily from 628 million USD in 2011 to 747 million USD in 2015, reflecting consistent investment in fixed assets or amortizable intangibles over the years.
Closures and Impairment Expenses: These expenses showed significant fluctuation: a low of 37 million USD in 2012, a notable spike to 535 million USD in 2014, then a sharp decline to 79 million USD in 2015. This volatility suggests episodic write-downs or restructuring events, particularly pronounced in 2014.
Refranchising Gain/Loss: Refranchising results fluctuated between gains and losses, with a positive gain in 2011 and 2015 but losses in the three intervening years, indicating an irregular pattern likely influenced by restructuring or strategic shifts.
Pension Plan Contributions: Contributions to defined benefit pension plans appeared first in 2013 and increased in magnitude, reaching -98 million USD by 2015, suggesting increasing obligations or funding requirements toward employee benefits during this period.
Debt and Financing Costs: There were some losses related to debt extinguishment reported in 2013 only, amounting to 120 million USD. Repayments of long-term debt generally exceeded proceeds, evidencing a net reduction in long-term debt over the period. Revolving credit and short-term borrowings increased notably in 2014 and 2015, signaling shifts in short-term financing structures.
Tax and Equity Income Items: Deferred income taxes were relatively volatile, with both positive and negative values, indicating fluctuations in tax timing differences. Equity income from unconsolidated affiliates decreased somewhat over time, and distributions from these affiliates declined steadily, perhaps indicating reduced income from those investments.
Share-based Compensation: Share-based compensation expense was relatively stable, slightly increasing from 59 million USD in 2011 to 57 million USD in 2015. Excess tax benefits associated with share-based compensation reversed in sign and remained negative, demonstrating ongoing tax effects linked to equity compensation.
Working Capital Changes: Changes in operating capital and associated components fluctuated substantially. Notably, changes in inventories moved from negative to positive in 2015, while accounts payable changes were inconsistent, showing large swings between positive and negative values, reflecting variable management of current assets and liabilities.
Operating Cash Flow: Net cash provided by operating activities hovered around 2100 million USD annually, with a peak in 2012 (2294 million USD) and a modest decrease thereafter, signaling relatively stable cash generation from operations despite earnings fluctuations.
Investing Activities: Capital spending remained consistently high, close to or exceeding 1 billion USD yearly, showing sustained investment in property and equipment. Proceeds from refranchising restaurants were a notable source of cash inflow but decreased in 2014 before rising again in 2015. Acquisitions were significant in 2012 but minimal thereafter, and net cash used in investing declined over time, suggesting a moderation in investment levels.
Financing Activities: Repurchases of common stock increased from 752 million USD in 2011 to 1.2 billion USD in 2015, reflecting aggressive share buyback programs. Dividends also rose steadily, indicating a commitment to returning capital to shareholders. Overall, net cash used in financing activities decreased from 1.7 billion USD in 2012 to 1.3 billion USD in 2015, showing a tapering of financing cash outflows.
Liquidity Position: Cash and cash equivalents declined markedly from 2011 through 2013, with a nadir at 573 million USD, but stabilized and rose somewhat in 2015 to 737 million USD. The net increase in cash was negative or minimal in most years until a positive movement in 2015, indicating a slight recovery in liquidity levels.
Currency Effects: The effect of exchange rates on cash and cash equivalents was generally marginal and variable, showing no consistent pattern or major impact on liquidity.
Overall Summary: The data reveal a company managing through periods of earnings volatility and restructuring impacts, particularly apparent in impairment and refranchising expenses. Persistent investments in capital assets and ongoing stock repurchases demonstrate a focus on long-term growth and shareholder returns. Working capital management and cash flows from operations remained robust amidst these dynamics, while financing activities showed a pattern of debt reduction paired with significant shareholder distributions. Liquidity was somewhat constrained in the middle of the period but showed signs of improvement by the end of 2015.

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YUM! Brands Inc. (NYSE:YUM)

Cash Flow Statement