Yum! Brands · Earnings release

NEWS

Yum! Brands Reports Third-Quarter Results

Taco Bell U.S. Same-Store Sales Growth +4%; KFC International Unit Growth +9%

Digital Sales Mix Exceeding 50%

Louisville, KY (November 5, 2024) - Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2024. Worldwide system sales, excluding foreign currency translation, grew 1% reflecting 5% unit growth. Third-quarter GAAP operating profit grew 1% and third-quarter core operating profit grew 3%. Third-quarter GAAP EPS was $1.35 and third-quarter EPS excluding Special Items was $1.37. Third-quarter EPS excluding Special Items reflects a $0.14 negative impact from a higher current year tax rate and lower investment income year-over-year.

DAVID GIBBS COMMENTS

David Gibbs, CEO, said “I'm incredibly proud of how our teams have navigated such a complex consumer environment to deliver 3% Core Operating Profit growth this quarter. The strengths of our twin growth engines were evident: Taco Bell U.S. significantly outperformed QSR competition with 4% same-store sales growth, and KFC International grew units an impressive 9% year-over-year. KFC International's unit openings spanned 64 countries this quarter, and year-to-date gross openings are up nearly 150 units year-over-year. While sales have been impacted by pressures relating to geopolitical conflicts and challenged consumer sentiment, our iconic brands which are led by our world-class talent and enabled by Yum!'s unmatched scale and cutting-edge, proprietary tech, are positioned for unstoppable growth."

THIRD-QUARTER HIGHLIGHTS

•Worldwide system sales grew 1%, excluding foreign currency translation, with KFC at 1%, Taco Bell at 5%, and Pizza Hut (1)%.

•Unit count increased 5% including 1,029 gross new units in the quarter.

•Robust digital system sales exceeding $8 billion, with digital mix over 50%.

•GAAP operating profit grew 1% and core operating profit grew 3%.

•Foreign currency translation unfavorably impacted divisional operating profit by $3 million.

Reported Results

% Change

System Sales

Ex F/X

Same-Store Sales

Units

GAAP Operating Profit

Core

Operating Profit1

KFC Division

+1

(4)

+7

(2)

(1)

Taco Bell Division

+5

+4

+2

Pizza Hut Division

(1)

(4)

+2

(6)

(5)

Worldwide

+1

(2)

+5

+1

+3

Third-Quarter

Year-to-Date

% Change

% Change

GAAP EPS

(8)

(6)

Less Special Items EPS1

NM

NM

EPS Excluding Special Items

(5)

(1)

1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.

All comparisons are versus the same period a year ago.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.

Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology.

Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 • P: 502 874-8300 • investors.yum.com

KFC DIVISION

Third-Quarter

Year-to-Date

%/ppts Change

%/ppts Change

Reported

Ex F/X

Reported

Ex F/X

Restaurants

+7

N/A

+7

N/A

System Sales ($MM)

+1

+1

Even

+2

Same-Store Sales Growth (%)

(4)

+6

NM

NM

(3)

+9

NM

NM

Franchise and Property Revenues ($MM)

(2)

(2)

(3)

(1)

Operating Profit ($MM)

(2)

(1)

+1

+3

Operating Margin (%)

Third-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+2

(7)

+4

(7)

Same-Store Sales Growth

(3)

(5)

(3)

(6)

•KFC Division opened 685 gross new restaurants across 65 countries.

•Company-owned restaurant margins were 12.5%, including the newly acquired U.K. stores for the full quarter.

•Foreign currency translation unfavorably impacted operating profit by $1 million.

KFC Markets1

Percent of KFC System Sales2

System Sales Growth Ex F/X

Third-Quarter

(% Change)

Year-to-Date

(% Change)

China

+5

+6

United States

(7)

(7)

Europe

+6

+8

Asia

(6)

(7)

Australia

7%

+2

+3

Latin America

7%

+8

United Kingdom

6%

(6)

(3)

Middle East / Turkey / North Africa

6%

(9)

Africa

5%

Thailand

2%

+6

+7

Canada

2%

+3

+3

India

2%

+7

+9

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 • P: 502 874-8300 • investors.yum.com

TACO BELL DIVISION

Third-Quarter

Year-to-Date

%/ppts Change

%/ppts Change

Reported

Ex F/X

Reported

Ex F/X

Restaurants

+2

N/A

+2

N/A

System Sales ($MM)

+5

+5

+5

+5

Same-Store Sales Growth (%)

+4

+8

NM

NM

+3

+7

NM

NM

Franchise and Property Revenues ($MM)

+7

+7

+6

+6

Operating Profit ($MM)

+8

+8

Operating Margin (%)

•Taco Bell Division opened 49 gross new restaurants across 15 countries.

•Taco Bell U.S. system sales grew 5% and Taco Bell International system sales excluding foreign currency translation, grew 6%.

•Taco Bell U.S. and Taco Bell International same-store sales grew 4% and 1%, respectively.

•Company-owned restaurant margins were 23.4%, down slightly year-over-year.

PIZZA HUT DIVISION

Third-Quarter

Year-to-Date

%/ppts Change

%/ppts Change

Reported

Ex F/X

Reported

Ex F/X

Restaurants

+2

N/A

+2

N/A

System Sales ($MM)

(2)

(1)

(3)

(2)

Same-Store Sales Growth (%)

(4)

+1

NM

NM

(5)

+4

NM

NM

Franchise and Property Revenues ($MM)

Even

+1

(2)

(1)

Operating Profit ($MM)

(6)

(5)

(5)

(3)

Operating Margin (%)

Third-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

(3)

(1)

(2)

(2)

Same-Store Sales Growth

(6)

(1)

(6)

(3)

•Pizza Hut Division opened 292 gross new restaurants across 36 countries.

•Foreign currency translation unfavorably impacted operating profit by $2 million.

3

Pizza Hut Markets1

Percent of Pizza Hut System Sales2

System Sales Growth Ex F/X

Third-Quarter

(% Change)

Year-to-Date

(% Change)

United States

(1)

(2)

China

(2)

+2

Asia

(3)

(4)

Europe

(7)

(6)

Latin America

6%

Even

+1

Middle East / Africa

5%

(4)

(6)

Canada

3%

+2

+4

India

2%

+3

+2

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

HABIT BURGER & GRILL DIVISION

•Habit Burger & Grill Division opened 3 gross new restaurants.

•Habit Burger & Grill Division system sales declined 1% with same-store sales declining 5%.

OTHER ITEMS

•See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Special Items by financial statement line item including the impact of Special Items on General and administrative expenses.

•Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.

4

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 7:45 a.m. Eastern Time November 5, 2024. The number is 404/975-4839 for U.S. callers, 833/950-0062 for Canada callers, and +1/929-526-1599 for international callers, conference ID 611638.

The call will be available for playback beginning at 10:00 a.m. Eastern Time November 5, 2024 through November 12, 2024. To access the playback, dial 866/813-9403 in the U.S., 226/828-7578 in Canada, and +1/929-458-6194 internationally, conference ID 196705.

The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q3 2024 Yum! Brands, Inc. Earnings Call.”

ADDITIONAL INFORMATION ONLINE

Quarter-end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included in our Condensed Consolidated Summary of Results.

FORWARD-LOOKING STATEMENTS

This announcement may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances.

Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns; adverse impacts of health epidemics, deterioration in public health conditions or the occurrence of other catastrophic or unforeseen events; the success and financial stability of our concepts’ franchisees, particularly in light of challenging macroeconomic conditions; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments, other strategic transactions or initiatives, or our portfolio business model; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability, including the Middle East conflict as well as potential expansion of trade policies; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy and data protection legal requirements; our ability to successfully implement technology initiatives, including utilization of artificial intelligence; our increasing dependence on digital commerce platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences and wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of severe weather and climate change; pending or future litigation and legal claims or proceedings; changes in, or noncompliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and elevated interest rates; competition within the retail food industry; risks relating to our level of indebtedness.

In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 60,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and Habit Burger & Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. Habit Burger & Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2024, Yum! was named to the Dow Jones Sustainability Index North America, and the company was recognized among TIME Magazine’s list of Best Companies for Future Leaders, Newsweek’s list of America’s Most Responsible Companies and USA Today’s America’s Climate Leaders.

Yum! also received widespread recognition in 2023, including being listed on the Bloomberg Gender-Equality Index; and Forbes’ list of America’s Best Employers for Diversity. In addition, KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking for 2023.

Analysts are invited to contact:

Members of the media are invited to contact:

Virginia Ferguson, Vice President, Public Relations, at 502/874-8200

5

YUM! Brands, Inc.

Condensed Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)

Quarter ended

% Change

Year to date

% Change

B/(W)

B/(W)

Revenues

Company sales

$

$

$

$

Franchise and property revenues

1

Even

Franchise contributions for advertising and other services

Even

(2)

Total revenues

7

3

Costs and Expenses, Net

Company restaurant expenses

General and administrative expenses

2

1

Franchise and property expenses

5

Franchise advertising and other services expense

Even

1

Refranchising (gain) loss

NM

NM

Other (income) expense

(4)

(1)

NM

NM

Total costs and expenses, net

(3)

Operating Profit

1

2

Investment (income) expense, net

(1)

NM

NM

Other pension (income) expense

(2)

(2)

NM

(5)

(5)

NM

Interest expense, net

5

6

Income before income taxes

(1)

1

Income tax provision

Net Income

$

$

(8)

$

$

(6)

Basic EPS

EPS

$

$

(8)

$

$

(7)

Average shares outstanding

—

—

Diluted EPS

EPS

$

$

(8)

$

$

(6)

Average shares outstanding

—

—

Dividends declared per common share

$

$

$

$

See accompanying notes.

Percentages may not recompute due to rounding.

6

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

B/(W)

B/(W)

Company sales

$

$

$

$

Franchise and property revenues

(2)

(3)

Franchise contributions for advertising and other services

(5)

Total revenues

3

Company restaurant expenses

General and administrative expenses

(1)

4

Franchise and property expenses

Franchise advertising and other services expense

5

Other (income) expense

—

(1)

NM

(3)

7

NM

Total costs and expenses, net

(5)

Operating Profit

$

$

(2)

$

$

1

Company restaurant margin %1

%

%

%

%

Operating margin

%

%

%

%

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

7

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

B/(W)

B/(W)

Company sales

$

$

4

$

$

5

Franchise and property revenues

7

6

Franchise contributions for advertising and other services

6

7

Total revenues

6

6

Company restaurant expenses

(5)

(5)

General and administrative expenses

3

Franchise and property expenses

6

7

(5)

Franchise advertising and other services expense

(6)

(8)

Other (income) expense

—

1

NM

(1)

2

NM

Total costs and expenses, net

(3)

(5)

Operating Profit

$

$

$

$

8

Company restaurant margin %1

%

%

%

%

Even

Operating margin

%

%

%

%

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

8

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

B/(W)

B/(W)

Company sales

$

1

$

2

$

5

$

Franchise and property revenues

Even

(2)

Franchise contributions for advertising and other services

(3)

(3)

Total revenues

(1)

(3)

Company restaurant expenses

1

2

5

General and administrative expenses

2

1

Franchise and property expenses

9

5

Franchise advertising and other services expense

2

1

Other (income) expense

(3)

(4)

NM

(7)

NM

Total costs and expenses, net

(2)

2

Operating Profit

$

$

(6)

$

$

(5)

Company restaurant margin %1

%

%

%

%

Operating margin

%

%

%

%

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

9

YUM! Brands, Inc.

Condensed Consolidated Balance Sheets

(amounts in millions)

(unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

$

Prepaid expenses and other current assets

Total Current Assets

Property, plant and equipment, net of accumulated depreciation of $1,394 in 2024

Goodwill

Intangible assets, net

Other assets

Deferred income taxes

Total Assets

$

$

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities

Accounts payable and other current liabilities

$

$

Income taxes payable

Short-term borrowings

Total Current Liabilities

Long-term debt

Other liabilities and deferred credits

Total Liabilities

Shareholders' Deficit

Common Stock, no par value, 750 shares authorized; 280 shares issued in 2024 and 281 shares issued in 2023

—

Accumulated deficit

Accumulated other comprehensive loss

Total Shareholders' Deficit

Total Liabilities and Shareholders' Deficit

$

$

See accompanying notes.

YUM! Brands, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

Year to date

Cash Flows - Operating Activities

Net Income

$

$

Depreciation and amortization

Refranchising (gain) loss

Investment (income) expense, net

Deferred income taxes

5

Share-based compensation expense

Changes in accounts and notes receivable

Changes in prepaid expenses and other current assets

Changes in accounts payable and other current liabilities

Changes in income taxes payable

(4)

Other, net

Net Cash Provided by Operating Activities

Cash Flows - Investing Activities

Capital spending

Proceeds from sale of Devyani Investment

—

Proceeds from sale of KFC Russia

—

Acquisition of KFC U.K. and Ireland restaurants

—

Proceeds from refranchising of restaurants

Maturities (purchases) of Short term investments, net

—

Other, net

(3)

Net Cash Used in Investing Activities

(4)

Cash Flows - Financing Activities

Proceeds from long-term debt

—

Repayments of long-term debt

Revolving credit facilities, three months or less, net

Repurchase shares of Common Stock

Dividends paid on Common Stock

Other, net

Net Cash Used in Financing Activities

Effect of Exchange Rate on Cash and Cash Equivalents

(2)

Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash

Equivalents

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period

$

$

See accompanying notes.

Reconciliation of Non-GAAP Measurements to GAAP Results

(amounts in millions, except per share amounts)

(unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.

•Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below);

•Effective Tax Rate excluding Special Items;

•Core Operating Profit. Core Operating Profit excludes Special Items and foreign currency translation (“F/X”) and we use Core Operating Profit for the purposes of evaluating performance internally;

•Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.

Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (d) in the accompanying notes.

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants.

In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

Certain non-GAAP measurements are presented excluding the impact of F/X. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

Quarter ended

Year to date

Reconciliation of GAAP Operating Profit to Core Operating Profit

Consolidated

GAAP Operating Profit

$

$

$

$

Detail of Special Items:

(Gain) loss associated with market-wide refranchisings(a)

(1)

(2)

3

(7)

Operating (profit) loss impact from decision to exit Russia(b)

—

(2)

—

Charges associated with Resource Optimization(c)

3

Other Special Items Expense

—

2

—

3

Special Items Expense - Operating Profit

1

Negative Foreign Currency Impact on Division Operating Profit

3

N/A

N/A

Core Operating Profit

$

$

$

$

Special Items as shown above were recorded to the financial statement line items identified below.

Condensed Consolidated Summary of Results Line Item

General and administrative expenses

$

$

4

$

$

Franchise and property expenses

—

(1)

—

1

Refranchising (gain) loss

(1)

(2)

3

(7)

Other (income) expense

1

—

1

6

Special Items Expense - Operating Profit

$

$

1

$

$

Quarter ended

Year to date

KFC Division

GAAP Operating Profit

$

$

$

$

Negative (Positive) Foreign Currency Impact

1

N/A

N/A

Core Operating Profit

$

$

$

$

Taco Bell Division

GAAP Operating Profit

$

$

$

$

Negative (Positive) Foreign Currency Impact

—

N/A

—

N/A

Core Operating Profit

$

$

$

$

Pizza Hut Division

GAAP Operating Profit

$

$

$

$

Negative (Positive) Foreign Currency Impact

2

N/A

5

N/A

Core Operating Profit

$

$

$

$

Habit Burger & Grill Division

GAAP Operating Profit (Loss)

$

1

$

(2)

$

(2)

$

(4)

Negative (Positive) Foreign Currency Impact

—

N/A

—

N/A

Core Operating Profit (Loss)

$

1

$

(2)

$

(2)

$

(4)

Reconciliation of GAAP Net Income to Net Income excluding Special Items

GAAP Net Income

$

$

$

$

Special Items Expense - Operating Profit

1

Special Items Tax Benefit(d)

(2)

(4)

Net Income excluding Special Items

$

$

$

$

Reconciliation of Diluted EPS to Diluted EPS excluding Special Items

Diluted EPS

$

$

$

$

Less Special Items Diluted EPS

Diluted EPS excluding Special Items

$

$

$

$

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items

GAAP Effective Tax Rate

%

%

%

%

Impact on Tax Rate as a result of Special Items

%

%

%

%

Effective Tax Rate excluding Special Items

%

%

%

%

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

$

$

$

1

$

$

Less:

Franchise and property revenues

3

—

Franchise contributions for advertising and other services

1

—

Add:

General and administrative expenses

Franchise and property expenses

6

9

1

—

Franchise advertising and other services expense

1

—

Refranchising (gain) loss

—

—

—

—

Other (income) expense

—

—

(3)

1

(2)

(4)

Company restaurant profit (loss)

$

$

$

—

$

$

(3)

$

Company sales

$

$

$

1

$

$

—

$

Company restaurant margin %

%

%

%

%

N/A

%

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

$

$

$

(2)

$

$

Less:

Franchise and property revenues

2

—

Franchise contributions for advertising and other services

—

—

Add:

General and administrative expenses

Franchise and property expenses

7

5

1

(1)

Franchise advertising and other services expense

—

—

Refranchising (gain) loss

—

—

—

—

Other (income) expense

(1)

1

(4)

(1)

4

(1)

Company restaurant profit

$

$

$

—

$

$

—

$

Company sales

$

$

$

2

$

$

—

$

Company restaurant margin %

%

%

%

%

N/A

%

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

$

$

$

(2)

$

$

Less:

Franchise and property revenues

7

—

Franchise contributions for advertising and other services

2

—

Add:

General and administrative expenses

Franchise and property expenses

3

—

Franchise advertising and other services expense

2

—

Refranchising (gain) loss

—

—

—

—

Other (income) expense

(3)

(1)

1

3

Company restaurant profit (loss)

$

$

$

—

$

$

(4)

$

Company sales

$

$

$

5

$

$

—

$

Company restaurant margin %

%

%

%

%

N/A

%

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

$

$

$

(4)

$

$

Less:

Franchise and property revenues

6

—

Franchise contributions for advertising and other services

1

—

Add:

General and administrative expenses

Franchise and property expenses

2

1

Franchise advertising and other services expense

1

—

Refranchising (gain) loss

—

—

—

—

Other (income) expense

7

2

(7)

(1)

Company restaurant profit

$

$

$

—

$

$

—

$

Company sales

$

$

$

$

$

—

$

Company restaurant margin %

%

%

%

%

N/A

%

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Consolidated

Total revenues

$

$

$

$

$

—

$

Company restaurant expenses

1

3

General and administrative expenses

Franchise and property expenses

6

9

1

—