

UNITED STATES


~~UNITED STATES~~
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

~~___________~~

FORM 10-Q

~~FORM 10-Q~~

(Mark One)


☒
[Ÿ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934 for the quarterly period ended ~~September 30, 2017~~	March 31, 2024

OR

~~[ ]~~☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _________________

Commission file number 1-13163

________________________

YUM! BRANDS, INC.

(Exact name of registrant as specified in its charter)

North Carolina

13-3951308

~~North Carolina~~

~~13-3951308~~

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1441 Gardiner Lane, ~~Louisville, Kentucky~~

Louisville,

Kentucky

40213

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

(502)

874-8300


Securities registered pursuant to Section 12(b) of the Act

	Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
	Common Stock, no par value	YUM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ü☒] No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes [ü]☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated filer”, “smaller reporting ~~company,”~~company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

~~Large accelerated filer:~~

[ü]

~~Accelerated filer:~~

~~[ ]~~

Emerging Growth Company

☐

~~Non-accelerated filer:~~

~~[ ]~~

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company:~~

~~[ ]~~

~~Emerging growth company:~~

~~[ ]~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No [ü]x

The number of shares outstanding of the ~~Registrant’s~~registrant’s Common Stock as of ~~November~~May 1, ~~2017~~2024, was ~~336,993,674~~281,632,212 shares.

YUM! BRANDS, INC.

INDEX


			Page
			No.
Part I.		Financial Information	~~Page~~
			~~No.~~
~~Part I.~~		~~Financial Information~~

	Item 1 - Financial Statements

		Condensed Consolidated Statements of Income	4

		Condensed Consolidated Statements of Comprehensive Income	5

		Condensed Consolidated Statements of Cash Flows	6

		Condensed Consolidated Balance Sheets	7

		Condensed Consolidated Statements of Shareholders' Deficit		8

		Notes to Condensed Consolidated Financial Statements	89

		Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420

		Item 3 - Quantitative and Qualitative Disclosures ~~about~~About Market Risk	4034

		Item 4 –- Controls and Procedures	4034

		Report of Independent Registered Public Accounting Firm	4135

Part II.		Other Information and Signatures

		Item 1 –- Legal Proceedings	4236

		Item 1A –- Risk Factors	4236

		Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	4236

		Item ~~6 – Exhibits~~5 - Other Information	4336

		Item 6 - Exhibits	37

		Signatures	4438

PART I - FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1.Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
	Quarter ended
Revenues	3/31/2024		3/31/2023
Company sales	$	474	$	474
Franchise and property revenues	757		770
Franchise contributions for advertising and other services	367		401
Total revenues	1,598		1,645
Costs and Expenses, Net
Company restaurant expenses	400		403
General and administrative expenses	286		282
Franchise and property expenses	31		36
Franchise advertising and other services expense	367		395
Refranchising (gain) loss	(5)		(4)
Other (income) expense	(1)		10
Total costs and expenses, net	1,078		1,122
Operating Profit	520		523
Investment (income) expense, net	22		24
Other pension (income) expense	(2)		(2)
Interest expense, net	117		130
Income Before Income Taxes	383		371
Income tax provision	69		71
Net Income	$	314	$	300

Basic Earnings Per Common Share	$	1.11	$	1.07

Diluted Earnings Per Common Share	$	1.10	$	1.05

Dividends Declared Per Common Share	$	0.67	$	0.605

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Quarter ended
	3/31/2024		3/31/2023

Net Income	$	314	$	300
Other comprehensive income, net of tax
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature
Adjustments and gains (losses) arising during the period	(10)		8
Reclassification of adjustments and (gains) losses into Net Income	—		—
	(10)		8
Tax (expense) benefit	—		—
	(10)		8
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period	—		—
Reclassification of (gains) losses into Net Income	—		—
	—		—
Tax (expense) benefit	—		(2)
	—		(2)
Changes in derivative instruments
Unrealized gains (losses) arising during the period	12		(8)
Reclassification of (gains) losses into Net Income	(8)		(3)
	4		(11)
Tax (expense) benefit	(1)		3
	3		(8)

Other comprehensive income (loss), net of tax	(7)		(2)
Comprehensive Income	$	307	$	298

See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
Quarter ended Year to date
Revenues 9/30/2017
9/30/2016
(As Restated)
9/30/2017
9/30/2016
(As Restated)
Company sales $ 871

$ 992

$ 2,682

$ 2,951
Franchise and license fees and income 565

526

1,619

1,519
Total revenues 1,436
1,518

4,301

4,470
Costs and Expenses, Net
Company restaurant expenses
Food and paper 275
303
831
897
Payroll and employee benefits 224
260
707
780
Occupancy and other operating expenses 218
268
685
798
Company restaurant expenses 717
831

2,223

2,475
General and administrative expenses 215

270

699

767
Franchise and license expenses 61

40

161

145
Closures and impairment (income) expenses 1

1

3

10
Refranchising (gain) loss (201 )
(21 )
(331 )
(75 )
Other (income) expense —

(1 )
—

(14 )
Total costs and expenses, net 793

1,120

2,755

3,308
Operating Profit 643

398

1,546

1,162
Other pension (income) expense 10
(1 ) 42
(2 )
Interest expense, net 109

98

322

191
Income from continuing operations before income taxes 524
301

1,182

973
Income tax provision 106

83

278

263
Income from continuing operations 418
218

904

710
Income from discontinued operations, net of tax —
422

—
630
Net Income $ 418
$ 640

$ 904

$ 1,340

Basic Earnings per Common Share from continuing operations $ 1.21
$ 0.56
$ 2.58
$ 1.76
Basic Earnings per Common Share from discontinued operations N/A
$ 1.09
N/A
$ 1.56
Basic Earnings Per Common Share $ 1.21

$ 1.65

$ 2.58

$ 3.32

Diluted Earnings per Common Share from continuing operations $ 1.18
$ 0.55
$ 2.52
$ 1.73
Diluted Earnings per Common Share from discontinued operations N/A
$ 1.07
N/A
$ 1.54
Diluted Earnings Per Common Share $ 1.18

$ 1.62

$ 2.52

$ 3.27

Dividends Declared Per Common Share $ —
$ 0.51
$ 0.60
$ 1.43

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Quarter ended
	3/31/2024		3/31/2023
Cash Flows – Operating Activities
Net Income	$	314	$	300
Depreciation and amortization	35		29

Refranchising (gain) loss	(5)		(4)
Investment (income) expense, net	22		24

Deferred income taxes	21		(4)
Share-based compensation expense	23		25
Changes in accounts and notes receivable	44		23
Changes in prepaid expenses and other current assets	(32)		(7)
Changes in accounts payable and other current liabilities	(66)		(101)
Changes in income taxes payable	(26)		28
Other, net	33		36
Net Cash Provided by Operating Activities	363		349

Cash Flows – Investing Activities
Capital spending	(49)		(62)
Proceeds from the sale of Devyani International Limited common stock	104		—
Proceeds from refranchising of restaurants	11		5
Other, net	(21)		1
Net Cash Provided by (Used in) Investing Activities	45		(56)

Cash Flows – Financing Activities

Repayments of long-term debt	(10)		(20)
Revolving credit facility, three months or less, net	—		(85)




Repurchase shares of Common Stock	—		(50)
Dividends paid on Common Stock	(189)		(169)

Other, net	(48)		(10)
Net Cash Used in Financing Activities	(247)		(334)
Effect of Exchange Rates on Cash and Cash Equivalents	(7)		3
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	154		(38)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period	724		647
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period	$	878	$	609





See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED BALANCE SHEETS
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	(Unaudited) 3/31/2024		12/31/2023
ASSETS
Current Assets
Cash and cash equivalents	$	652	$	512
Accounts and notes receivable, net	686		737
Prepaid expenses and other current assets	436		360
Total Current Assets	1,774		1,609

Property, plant and equipment, net	1,190		1,197
Goodwill	641		642
Intangible assets, net	370		377
Other assets	1,228		1,361
Deferred income taxes	1,021		1,045
Total Assets	$	6,224	$	6,231

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	1,095	$	1,169
Income taxes payable	35		55
Short-term borrowings	58		53
Total Current Liabilities	1,188		1,277

Long-term debt	11,130		11,142
Other liabilities and deferred credits	1,662		1,670
Total Liabilities	13,980		14,089

Shareholders’ Deficit
Common Stock, no par value, 750 shares authorized; 281 shares issued in 2024 and 2023	45		60
Accumulated deficit	(7,492)		(7,616)
Accumulated other comprehensive loss	(309)		(302)
Total Shareholders’ Deficit	(7,756)		(7,858)
Total Liabilities and Shareholders’ Deficit	$	6,224	$	6,231

See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
Quarter ended Year to date
9/30/2017 9/30/2016 (As Restated) 9/30/2017
9/30/2016 (As Restated)

Net Income - YUM! Brands, Inc. $ 418
$ 640
$ 904
$ 1,340
Other comprehensive income (loss), net of tax

Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature
Adjustments and gains (losses) arising during the period 38
(46 ) 95
(70 )
Reclassification of adjustments and (gains) losses into Net Income 42
—
37
—
80
(46 ) 132
(70 )
Tax (expense) benefit (1 ) —
(5 ) 4
79
(46 ) 127
(66 )
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period 8
(1 ) (5 ) —
Reclassification of (gains) losses into Net Income 10
3
46
8
18
2
41
8
Tax (expense) benefit (7 ) (1 ) (15 ) (3 )
11
1
26
5
Changes in derivative instruments
Unrealized gains (losses) arising during the period (17 ) (14 ) (57 ) (20 )
Reclassification of (gains) losses into Net Income 15
5
52
11
(2 ) (9 ) (5 ) (9 )
Tax (expense) benefit —
1
2
1
(2 ) (8 ) (3 ) (8 )

Other comprehensive income (loss), net of tax 88
(53 ) 150
(69 )
Comprehensive Income $ 506
$ 587
$ 1,054
$ 1,271

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
Quarters ended March 31, 2024 and 2023
(in millions)
	Yum! Brands, Inc.
	Issued Common Stock			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders' Deficit
	Shares	Amount
Balance at December 31, 2023	281	$	60	$	(7,616)	$	(302)	$	(7,858)
Net Income				314				314
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						(10)		(10)

Pension and post-retirement benefit plans						—		—
Net gain on derivative instruments (net of tax impact of $1 million)						3		3
Comprehensive Income								307
Dividends declared				(190)				(190)
Repurchase of shares of Common Stock	—	—		—				—
Employee share-based award exercises	—	(47)						(47)
Share-based compensation events		32						32
Balance at March 31, 2024	281	$	45	$	(7,492)	$	(309)	$	(7,756)















Balance at December 31, 2022	280	$	—	$	(8,507)	$	(369)	$	(8,876)
Net Income				300				300
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						8		8
Pension and post-retirement benefit plans (net of tax impact of $2 million)						(2)		(2)
Net loss on derivative instruments (net of tax impact of $3 million)						(8)		(8)
Comprehensive Income								298
Dividends declared				(170)				(170)
Repurchase of shares of Common Stock	—	(24)		(26)				(50)
Employee share-based award exercises	—	(10)						(10)
Share-based compensation events		34						34

Balance at March 31, 2023	280	$	—	$	(8,403)	$	(371)	$	(8,774)















See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
Year to date
9/30/2017
9/30/2016
(As Restated)
Cash Flows – Operating Activities from Continuing Operations
Net Income $ 904
$ 1,340
Income from discontinued operations, net of tax —
(630 )
Depreciation and amortization 195
224
Closures and impairment (income) expenses 3

10
Refranchising (gain) loss (331 )
(75 )
Contributions to defined benefit pension plans (47 ) (7 )
Deferred income taxes 122
29
Share-based compensation expense 35
42
Changes in accounts and notes receivable 17
31
Changes in inventories 7
6
Changes in prepaid expenses and other current assets (14 ) 19
Changes in accounts payable and other current liabilities (168 ) (54 )
Changes in income taxes payable (125 ) 8
Other, net 120
(7 )
Net Cash Provided by Operating Activities from Continuing Operations 718
936

Cash Flows – Investing Activities from Continuing Operations
Capital spending (228 ) (292 )
Proceeds from refranchising of restaurants 716
147
Other, net 1
18
Net Cash Provided by (Used in) Investing Activities from Continuing Operations 489
(127 )

Cash Flows – Financing Activities from Continuing Operations
Proceeds from long-term debt 1,088
6,900
Repayments of long-term debt (372 ) (310 )
Revolving credit facilities, three months or less, net 35
(685 )
Short-term borrowings by original maturity
More than three months - proceeds —
1,400
More than three months - payments —
(2,000 )
Three months or less, net —
—
Repurchase shares of Common Stock (1,348 ) (4,316 )
Dividends paid on Common Stock (315 ) (559 )
Debt issuance costs (32 ) (86 )
Net transfers from discontinued operations —
180
Other, net (85 ) (82 )
Net Cash Provided by (Used in) Financing Activities from Continuing Operations (1,029 ) 442
Effect of Exchange Rates on Cash and Cash Equivalents 42
(8 )
Net Increase in Cash and Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Continuing Operations 220
1,243
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period 831
351
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period $ 1,051
$ 1,594

Cash Provided by Operating Activities from Discontinued Operations $ —
$ 761
Cash Used in Investing Activities from Discontinued Operations —
(231 )
Cash Used in Financing Activities from Discontinued Operations —
(186 )

See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
9/30/2017 12/31/2016 (As Restated)
ASSETS
Current Assets
Cash and cash equivalents $ 980

$ 725
Accounts and notes receivable, net 358
370
Inventories 15
37
Prepaid expenses and other current assets 465
236
Advertising cooperative assets, restricted 181
137
Total Current Assets 1,999
1,505

Property, plant and equipment, net 1,861

2,113
Goodwill 525
536
Intangible assets, net 116
151
Other assets 304
376
Deferred income taxes 649
772
Total Assets $ 5,454
$ 5,453

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities $ 823
$ 1,067
Income taxes payable 27
32
Short-term borrowings 372
66
Advertising cooperative liabilities 181
137
Total Current Liabilities 1,403
1,302

Long-term debt 9,479
9,059
Other liabilities and deferred credits 693
704
Total Liabilities 11,575
11,065

Shareholders’ Deficit
Common Stock, no par value, 750 shares authorized; 339 and 355 shares issued in 2017 and 2016, respectively —
—
Accumulated deficit (5,817 ) (5,158 )
Accumulated other comprehensive loss (304 )
(454 )
Total Shareholders’ Deficit (6,121 ) (5,612 )
Total Liabilities and Shareholders’ Deficit $ 5,454
$ 5,453

See accompanying Notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Tabular amounts in millions, except per share data)

Note 1 - Financial Statement Presentation

We have prepared our accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by Generally Accepted Accounting Principles in the United States (“GAAP”) for complete financial statements. Therefore, we suggest that the accompanying Financial Statements be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2023 (“~~2016~~2023 Form 10-K”).

~~YUM!~~Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as ~~“YUM”~~the “Company,” “YUM,” “we,” “us” or ~~the “Company”~~“our”) ~~comprise the worldwide operations~~franchise or operate a system of ~~KFC, Pizza Hut and Taco Bell (collectively the “Concepts”). YUM has~~ over ~~44,000 units, of which 59% are located outside the U.S.,~~59,000 restaurants in ~~137~~more than 155 countries and territories. ~~YUM was created as an independent, publicly-owned company on October 6, 1997 via~~As of March 31, 2024, 98% of these restaurants were owned and operated by franchisees. The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style and pizza categories, respectively. The Habit Burger Grill is a tax-free distribution by our former parent, PepsiCo, Inc., of our Common Stock to its shareholders. References to YUM throughout these Financial Statements are made using the first person notations of “we,” “us” or “our.”fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

As of ~~September 30, 2017,~~March 31, 2024, YUM consisted of ~~three~~four operating segments:

•The KFC Division which includes our worldwide operations of the KFC concept

•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept

•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept

•The ~~Taco Bell~~Habit Burger Grill Division which includes our worldwide operations of the ~~Taco Bell~~Habit Burger Grill concept

On
~~October~~

YUM's fiscal year begins on January 1 and ends December 31 ~~2016~~ ~~(the “Distribution Date”), we completed the spin-off~~of each year, with each quarter comprised of three months. The majority of our ~~China business (the "Separation") into an independent, publicly-traded company under~~U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the name of Yum China Holdings, Inc. (“Yum China”). Concurrent with the Separation, a subsidiary of the Company entered into a Master License Agreement with a subsidiary of Yum China for the exclusive right to use and sublicense the use of intellectual property owned by YUM and its affiliates for the development and operation of KFC, Pizza Hut and Taco Bell restaurants in China. Prior to the Separation, our operations in mainland China were reported in our former China Division segment results. As a result of the Separation, the results of operations and cash flows of the separated business are presented as discontinued operations in our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows for periods presented prior to the Separation. See additional information related to the impact of the Separation in Note 4.

~~Our fiscal year has historically ended on the last Saturday in December and, as a result, a 53rd week was added every five or six years. The~~ first three quarters of each fiscal year ~~consisted~~consist of 12 weeks and the fourth quarter ~~consisted~~consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. ~~Our U.S.~~For subsidiaries ~~and certain international subsidiaries operated~~that operate on ~~similar fiscal calendars.~~this weekly periodic calendar, 2024 will include a 53rd week. Our remaining international subsidiaries ~~operated~~operate on a monthly calendar and thus never had a 53rd week, with two months in the first quarter, three months in the second and third quarters and four months in the fourth quarter. Certain international subsidiaries within our KFC, Pizza Hut and Taco Bell divisions have historically closed approximately one month or one period earlier to facilitate consolidated reporting.

On January 27, 2017, YUM’s Board of Directors approved a change in the Company's fiscal year from a year ending on the last Saturday of December to a year beginning on January 1 and ending December 31 of each year, commencing with the year ending December 31, 2017. In connection with this change, the Company moved from a 52-week periodic fiscal calendar with three 12-week interim quarters and a 16-week fourth quarter to a monthly reporting calendar with each quarter comprised of three months. Our U.S. subsidiaries continue to report on a period calendar as described above.

Concurrent with the change in the Company's fiscal year, we also eliminated the one month or one period reporting lags of our international subsidiaries. As a result of removing these reporting lags, each international subsidiary operates either on a monthly calendar consistent with the Company’s new calendar or on a periodic calendar consistent with our U.S. subsidiaries. We believe this change in our international subsidiary reporting calendars and the resulting elimination of reporting lags is preferable because a more current reporting calendar allows the Financial Statements to more consistently and more timely reflect the impact of current events, economic conditions and global trends.

The change to the Company’s fiscal year and removal of the international reporting lags is effective in 2017. We have applied this change in accounting principle retrospectively to all prior financial periods presented and the impact of this change is summarized in Note 5. The impact of the change in accounting principle on the current period financial statements is similar to ~~the impact~~that on ~~the prior period results discussed in Note 5.~~which YUM operates.

Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our ~~2016~~2023 Form 10-K, ~~our financial position as of September 30, 2017, our cash flows for the years to date ended September 30, 2017 and 2016, and~~ the results of ~~our operations and comprehensive income for~~ the ~~quarters and years to date ended September 30, 2017 and 2016.~~interim periods presented. Our results of operations, comprehensive income, ~~and~~ cash flows and changes in shareholders' deficit for these interim periods are not necessarily indicative of the results to be expected for the full year.

Our significant interim accounting policies include the recognition of ~~certain~~ advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective tax rate.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued guidance related to stock-based compensation which is intended to simplify several aspects of the accounting for employee share-based payment transactions, including their income tax consequences, classification of awards as either equity or liabilities and~~classification on the statement of cash flows. We adopted this standard beginning with the quarter ended March 31, 2017.~~

The impact of adoption included the recognition of excess tax benefits within our income tax provision for share-based payments made of approximately $40 million and $100 million during the quarter and year to date ended September 30, 2017, respectively. Additionally, the standard requires these excess tax benefits be reported as operating activities in the Condensed Consolidated Statements of Cash Flows as opposed to within financing activities as they have been historically reported. We elected retrospective presentation of excess tax benefits as operating cash flows for prior years. As a result, approximately $70 million of excess tax benefits previously presented as a financing activity have been reclassified to operating activities for the year to date ended September 30, 2016, in our Condensed Consolidated Statements of Cash Flows. No other provisions of this standard had a material impact on the Company's Financial Statements or disclosures.

In March 2017, the FASB issued guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, "Benefit Costs"). The standard does not change the requirement that an employer report the service cost component of these Benefit Costs in the same line item or items as other compensation costs arising from services rendered by employees during the period. However, the standard requires that the non-service components of these Benefit Costs be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. We early adopted the standard beginning with the quarter ended March 31, 2017, on a retrospective basis. As a result, we have reclassified amounts related to non-service components of Benefit Costs from their prior Financial Statement captions (Payroll and employee benefits and General and administrative "G&A" expenses) into a new Financial Statement caption titled Other pension (income) expense in our Condensed Consolidated Statements of Income. The adoption of this standard does not impact Net Income.

We have reclassified certain ~~other~~ items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended ~~September 30, 2017.~~March 31, 2024. These reclassifications had no effect on previously reported Net Income.

Note 2 - Earnings Per Common Share (“EPS”)


	Quarter ended
	2024		2023
Net Income	$	314	$	300

Weighted-average common shares outstanding (for basic calculation)	282		281
Effect of dilutive share-based employee compensation	4		4
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)	286		285

Basic EPS	$	1.11	$	1.07

Diluted EPS	$	1.10	$	1.05
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)	1.7		1.5

(a)These unexercised employee stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance share units (“PSUs”) and stock options were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.

Quarter ended Year to date
2017 2016 2017 2016
Income from continuing operations $ 418
$ 218
$ 904
$ 710
Income from discontinued operations —
422
—
630
Net Income $ 418
$ 640
$ 904
$ 1,340

Weighted-average common shares outstanding (for basic calculation) 345

388
351
404
Effect of dilutive share-based employee compensation 8
7
7
6
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) 353

395
358

410

Basic EPS from continuing operations $ 1.21
$ 0.56
$ 2.58
$ 1.76
Basic EPS from discontinued operations N/A
1.09
N/A
1.56
Basic EPS $ 1.21
$ 1.65
$ 2.58
$ 3.32

Diluted EPS from continuing operations $ 1.18
$ 0.55
$ 2.52
$ 1.73
Diluted EPS from discontinued operations N/A
1.07
N/A
1.54
Diluted EPS $ 1.18
$ 1.62
$ 2.52
$ 3.27
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation^(a)
1.9
1.7
2.3
6.0


~~(a)~~	~~These unexercised employee stock options and stock appreciation rights were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.~~

Note 3 - ~~Shareholders’~~Shareholders' Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the ~~years to date~~quarters ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 as indicated below. All amounts exclude applicable transaction fees.

Shares Repurchased (thousands) Dollar Value of Shares Repurchased Remaining Dollar Value of Shares that may be Repurchased
Authorization Date 2017 2016 2017 2016 2017
December 2015 —
13,369
$ —
$ 933
$ —

March 2016 —
2,823
—
228
—

May 2016 —
37,576
—
3,260
—

November 2016 19,110
—
1,327
—
588

Total 19,110
^(a)
53,768
^(b)
$ 1,327
^(a)
$ 4,421
^(b)
$ 588


~~(a)~~	Includes the effect of $24 million in share repurchases (0.3 million shares) with trade dates on, or prior to, September 30, 2017, but cash settlement dates subsequent to September 30, 2017, and excludes the effect of $45 million in share repurchases (0.7 million shares) with trade dates on, or prior to, December 31, 2016, but cash settlement dates subsequent to December 31, 2016.


	Shares Repurchased (thousands)		Dollar Value of Shares Repurchased				Remaining Dollar Value of Shares that may be Repurchased
Authorization Date	2024	2023	2024		2023		2024
September 2022	—	387	—		50		1,700
Total	—	387	$	—	$	50	$	1,700


~~(b)~~	~~Includes the effect of $105 million in share repurchases (1.2 million shares) with trade dates on, or prior to, September 30, 2016, but cash settlement dates subsequent to September 30, 2016.~~

In September 2022, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024. As of March 31, 2024, we have remaining capacity to repurchase up to $1.7 billion of Common Stock under the September 2022 authorization.

Changes in ~~accumulated~~Accumulated other comprehensive ~~income (loss) ("OCI"~~loss (“AOCI”) are presented below.

Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature Pension and Post-Retirement Benefits Derivative Instruments Total
Balance at December 31, 2016, net of tax $ (332 ) $ (127 ) $ 5
$ (454 )

Gains (losses) arising during the period classified into accumulated OCI, net of tax 90
(3 ) (52 ) 35

(Gains) losses reclassified from accumulated OCI, net of tax 37
29
49
115

OCI, net of tax 127
26
(3 ) 150

Balance at September 30, 2017, net of tax $ (205 ) $ (101 ) $ 2
$ (304 )


	Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature		Pension and Post-Retirement Benefits		Derivative Instruments		Total
Balance at December 31, 2023, net of tax	$	(201)	$	(104)	$	3	$	(302)

OCI, net of tax

Gains (losses) arising during the period classified into AOCI, net of tax	(10)		—		9		(1)

(Gains) losses reclassified from AOCI, net of tax	—		—		(6)		(6)
	(10)		—		3		(7)
Balance at March 31, 2024, net of tax	$	(211)	$	(104)	$	6	$	(309)

Note 4 ~~- Discontinued Operations~~

~~As discussed in Note 1, on October 31, 2016, the Company completed the separation of our China business.~~

As a result of the Separation, all royalty revenues earned by us under the Master License Agreement with Yum China that were previously eliminated in consolidation are now reflected as Franchise and license fees and income in our Condensed Consolidated Statements of Income. For the quarter and year to date ended September 30, 2016, the combined KFC and Pizza Hut Divisions' Franchise and license fees and income, as a result of the Separation, increased by $64 million and $189 million, respectively. The value added tax associated with this royalty revenue increased Franchise and license expenses for the combined KFC and Pizza Hut Divisions by $4 million and $12 million for the quarter and year to date ended September 30, 2016, respectively. The net increases in the KFC and Pizza Hut Divisions' Operating Profit were offset with a corresponding reduction in Income from discontinued operations such that there was no impact from the Separation on total Net income.

The financial results of Yum China presented in discontinued operations reflect the results of the former China Division, which was an operating segment of the Company until the Separation, adjusted for the transactions discussed above and the inclusion of certain G&A expenses, non-cash impairment charges, refranchising gains, interest and taxes that were previously not allocated to but were related to the former China Division's historical results of operations. The following table presents the financial results of the Company’s discontinued operations:

Quarter ended Year to date

2016^(a)

2016^(b)

Company sales $ 1,848
$ 4,684

Franchise and license fees and income 35
90

Company restaurant expenses (1,488 ) (3,896 )
G&A expenses (111 ) (297 )
Franchise and license expenses (15 ) (40 )
Closure and impairment expenses (5 ) (36 )
Refranchising gain 3
8

Other income 18
44

Interest income, net 4
7

Income from discontinued operations before income taxes^(c)
289
564

Income tax benefit (provision)^(d)
143
76

Income from discontinued operations - including noncontrolling interests 432
640

(Income) loss from discontinued operations - noncontrolling interests (10 ) (10 )
Income from discontinued operations - YUM! Brands, Inc. $ 422
$ 630


~~(a)~~	~~Includes historical Yum China financial results from June 1, 2016 to August 31, 2016.~~


~~(b)~~	Includes historical Yum China financial results from January 1, 2016 to August 31, 2016, plus an additional month of expense associated with the license fee paid to YUM to conform to the new YUM reporting calendar.


~~(c)~~	Includes costs incurred to execute the Separation of $7 million and $25 million for the quarter and year to date ended September 30, 2016. Such costs primarily related to transaction advisors, legal and other consulting fees.


~~(d)~~	~~Includes a tax benefit of~~ ~~$233 million~~ recognized in the third quarter of 2016 related to previously recorded losses associated with our former Little Sheep business. The tax benefit associated with these losses was able to be recognized as a result of legal entity restructuring in anticipation of the Separation.

Cash inflows from Yum China to the Company during the quarter and year to date ended September 30, 2017, related to the Master License Agreement were $63 million and $167 million, respectively, net of taxes paid, and primarily related to royalty revenues.

~~Note 5 - Items Affecting Comparability of Net Income and Cash Flows~~

~~Refranchising (Gain) Loss~~

The Refranchising (gain) loss by reportable segment is presented below. Given the size and volatility of refranchising initiatives, our chief operating decision maker ("CODM") does not consider the impact of Refranchising (gain) loss when assessing segment performance. As such, we do not allocate such gains and losses to our segments for performance reporting purposes.

During the quarter ended September 30, 2017, we refranchised 209 restaurants. We received $395 million in gross proceeds and recorded $201 million of net, pre-tax refranchising gains related to these transactions. During the year to date ended September 30, 2017, we refranchised 574 restaurants. We received $716 million in gross proceeds and recorded $331 million of net, pre-tax refranchising gains related to these transactions.

~~A summary of refranchising (gains) losses is as follows:~~

Quarter ended Year to date
2017 2016 2017 2016
KFC Division^(a)
$ (50 ) $ 2
(8 ) 3
Pizza Hut Division^(b)
27
(9 ) 40
(63 )
Taco Bell Division^(c)
(178 ) (14 ) (363 ) (15 )
Worldwide $ (201 ) $ (21 ) $ (331 ) $ (75 )

~~(a)~~

During the quarter ended September 30, 2017, KFC refranchising gains related primarily to the sale of restaurants in the Netherlands and Australia. These gains were partially offset by a loss recorded related to our planned refranchising of KFC Turkey, which was classified as held-for-sale during the quarter ended September 30, 2017. While the sales price we expect to receive for KFC Turkey exceeds the carrying value of the restaurants being sold, this pending transaction would represent a substantially complete liquidation of our KFC Turkey foreign entity. Accordingly, we are required to include accumulated translation losses associated with our KFC Turkey business within our held-for-sale impairment evaluations. As such, we recorded a $51 million non-cash charge within Refranchising (gain) loss that represents the excess of the book value of our KFC Turkey business, which included the accumulated translation losses and a proportionate amount of the KFC Turkey goodwill balance, over the expected sales price.

~~(b)~~

During the quarter ended September 30, 2017, we recorded a $25 million Refranchising loss related to executing a master franchising agreement that consolidated our existing Pizza Hut Korea franchise base under a single master franchisee. This loss included writing off $12 million of accumulated translation losses as this transaction resulted in a substantially complete liquidation of our Pizza Hut Korea foreign entity.


~~(c)~~	~~Net refranchising gains for Taco Bell Division for both the quarter and year to date ended September 30, 2017, relate to refranchising Taco Bell restaurants in the U.S.~~

In connection with our refranchising initiatives, approximately 520 KFC restaurants in Thailand, Turkey, the U.S. and France have met the criteria and were classified as held-for-sale at the end of the third quarter. As a result of classifying these assets as held-for-sale and recording any related write-downs to fair value, depreciation expense was reduced versus what would have otherwise been recorded by $5 million during the quarter ended September 30, 2017. These depreciation reductions were not allocated to the division segments resulting in depreciation expense continuing to be recorded within our Divisional results at the rate at which it was prior to the held-for-sale classification. Our CODM does not consider the impact of these depreciation reductions when assessing segment performance.

~~KFC U.S. Acceleration Agreement~~

During 2015, we reached an agreement with our KFC U.S. franchisees that gave us brand marketing control as well as an accelerated path to expanded menu offerings, improved assets and enhanced customer experience. In connection with this agreement we are investing approximately $120 million from 2015 through 2018 primarily to fund new back-of-house equipment for franchisees and to provide incentives to accelerate franchisee store remodels. We recorded pre-tax charges of $4 million and less than $1 million for the quarters ended September 30, 2017 and 2016, respectively, for these investments. We recorded pre-tax charges of

$12 million and $17 million for the years to date ended September 30, 2017 and 2016, respectively. These amounts were recorded primarily as Franchise and license expenses. We recorded total pre-tax charges of $98 million during the two year period ended December 31, 2016, and we currently expect a total pre-tax charge of approximately $15 million in 2017 for these investments. Due to their size and unique and long-term brand building nature, our CODM does not consider the impact of these investments when assessing segment performance. As such, these charges are not being allocated to the KFC Division segment operating results.

In addition to the investments above, we agreed to fund $60 million of incremental system advertising from 2015 through 2018. During both of the quarters ended September 30, 2017 and 2016, we incurred $5 million in incremental system advertising expense. During both the years to date ended September 30, 2017 and 2016, we incurred $14 million in incremental system advertising expense. We funded approximately $30 million of such advertising during the two year period ended December 31, 2016. We currently expect to fund approximately $20 million of such advertising in 2017 and $10 million in 2018. All of these advertising amounts were recorded primarily in Franchise and license expenses and are included in the KFC Division segment operating results.

~~YUM's Strategic Transformation Initiatives~~

In October 2016, we announced our strategic transformation plans to drive global expansion of the KFC, Pizza Hut and Taco Bell brands ("YUM's Strategic Transformation Initiatives") following the then anticipated separation of our China business on October 31, 2016. Major features of the Company’s growth and transformation strategy involve being more focused on the development of our three brands, increasing our franchise ownership and creating a leaner, more efficient cost structure. During the quarters ended September 30, 2017 and 2016, we recognized pre-tax charges of $4 million and $30 million, respectively, related to these initiatives. During the years to date ended September 30, 2017 and 2016, we recognized pre-tax charges of $15 million and $34 million, respectively. These costs primarily related to severance and relocation costs that were recorded within G&A expenses. Due to the scope of the initiatives as well as their significance, our CODM does not consider the impact of these initiatives when assessing segment performance. As such, costs associated with the initiatives are not being allocated to any segment for performance reporting purposes.

~~Pizza Hut U.S. Transformation Agreement~~

In May 2017, we reached an agreement with Pizza Hut U.S. franchisees that will improve brand marketing alignment, accelerate enhancements in operations and technology and includes a permanent commitment to incremental advertising and digital and technology contributions by franchisees. In connection with this agreement, we anticipate investing approximately $90 million to upgrade restaurant equipment to improve operations, fund improvements in restaurant technology and enhance digital and e-commerce capabilities. We currently expect the majority of this investment will be split between 2017 and 2018. During the quarter and year to date ended September 30, 2017, we recorded pre-tax charges of $8 million and $20 million, respectively, within Franchise and license expenses or G&A expenses and capitalized $4 million of costs primarily related to digital and e-commerce initiatives. Due to their unique and long-term brand-building nature, our CODM does not consider the impact of these investments when assessing segment performance. As such, these investments are not being allocated to the Pizza Hut Division segment operating results.

In addition to the investments above, we have agreed to fund incremental system advertising dollars of approximately $25 million in the second half of 2017 and $12.5 million in 2018. During the quarter ended September 30, 2017, we incurred $10 million in related incremental system advertising expense. These advertising amounts were recorded primarily in Franchise and license expenses and are included in Pizza Hut's segment operating results.

~~Modifications of Share-based Compensation Awards~~

In connection with the Separation, we modified certain share-based compensation awards held as part of our Executive Income Deferral ("EID") Plan in phantom shares of YUM Common Stock to provide one phantom Yum China share-based award for each outstanding phantom YUM share-based award. These Yum China awards may now be settled in cash, as opposed to stock, which requires recognition of the fair value of these awards each quarter within G&A expenses in our Condensed Consolidated Income Statement. During the quarter and year to date ended September 30, 2017, we recorded pre-tax charges related to these awards of less than $1 million and $18 million, respectively, due to appreciation in the market price of Yum China's stock. Given these charges were a direct result of the Separation, our CODM does not consider their impact when assessing segment performance. As such, these costs are not being allocated to any of our segment operating results.

~~Impact of Change in Reporting Calendar~~

As discussed in Note 1, we have changed our fiscal year from a year ending on the last Saturday of December to a year beginning on January 1 and ending on December 31 of each year commencing with the year ending December 31, 2017. We also removed the monthly or period reporting lags certain of our international subsidiaries historically used to report results. The impacts on our Financial Statements of retrospectively applying these changes are included below:

Quarter ended September 30, 2016
As Previously Reported Adjustments After Change in Reporting Calendar
Total Revenues $ 1,501
$ 17
$ 1,518

Operating profit 372
25
397
^(a)
Net Income from continuing operations 204
14
218

Income from discontinued operations, net of tax 418
4
422

Net Income $ 622
$ 18
$ 640

Diluted EPS from continuing operations $ 0.51
$ 0.04
$ 0.55

Diluted EPS from discontinued operations 1.05
0.02
1.07

Diluted EPS $ 1.56
$ 0.06
$ 1.62

Year to date ended September 30, 2016
As Previously Reported Adjustments After Change in Reporting Calendar
Total Revenues $ 4,342
$ 128
$ 4,470

Operating profit 1,136
24
1,160
^(a)
Net Income from continuing operations 709
1
710

Income from discontinued operations, net of tax 643
(13 ) 630

Net Income $ 1,352
$ (12 ) $ 1,340

Diluted EPS from continuing operations $ 1.72
$ 0.01
$ 1.73

Diluted EPS from discontinued operations 1.56
(0.02 ) 1.54

Diluted EPS $ 3.28
$ (0.01 ) $ 3.27


~~(a)~~	Amount does not reconcile to our Condensed Consolidated Statements of Income for the quarter and year to date ended September 30, 2016 due to the impact of retrospectively adopting a new accounting standard on Benefit Costs of $1 million and $2 million, respectively. See Note 1.

Except for a decrease in cash provided by financing activities of $674 million primarily attributable to the repurchase of Common Stock, the impacts to the Condensed Consolidated Statement of Cash Flows and Condensed Consolidated Balance Sheet as a result of the change in reporting calendar were not significant.

~~Non-cash Pension Adjustment~~

During the first quarter of 2017, as a result of the completion of a pension data review and reconciliation, we recorded a non-cash, out-of-year charge of $22 million to Other pension (income) expense to adjust our historical U.S. pension liability related to our deferred vested participants. Our CODM does not consider the impact of this charge when assessing segment performance given the number of years over which it accumulated. As such, this cost is not being allocated to any of our segment operating results.

~~Note 6~~ - Other (Income) Expense


	Quarter ended
	3/31/2024		3/31/2023
Foreign exchange net (gain) loss	$	5	$	3
Impairment and closure expense	—		1
Other	(6)		6
Other (income) expense	$	(1)	$	10

~~Other (income) expense primarily includes net foreign exchange (gains) losses.~~

Note 75 - Supplemental Balance Sheet Information

Accounts and Notes Receivable, net

The Company’s receivables are primarily generated ~~as a result of~~from ongoing business relationships with our franchisees as a result of franchise and lease agreements. Trade receivables consisting of royalties from franchisees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable, onnet in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate.


	3/31/2024		12/31/2023
Accounts and notes receivable, gross	$	741	$	776
Allowance for doubtful accounts	(55)		(39)
Accounts and notes receivable, net	$	686	$	737

9/30/2017 12/31/2016
Accounts and notes receivable, gross $ 378
$ 384
Allowance for doubtful accounts (20 ) (14 )
Accounts and notes receivable, net $ 358
$ 370

Property, Plant and Equipment, net


	3/31/2024		12/31/2023
Property, plant and equipment, gross	$	2,536	$	2,529
Accumulated depreciation and amortization	(1,346)		(1,332)
Property, plant and equipment, net	$	1,190	$	1,197

9/30/2017 12/31/2016
Property, plant and equipment, gross $ 3,622
$ 4,108
Accumulated depreciation and amortization (1,761 ) (1,995 )
Property, plant and equipment, net $ 1,861
$ 2,113

~~Assets held-for-sale at September 30, 2017~~


Other Assets	3/31/2024		12/31/2023
Operating lease right-of-use assets(a)	$	755	$	764

Franchise incentives	180		175
Investment in Devyani International Limited (See Note 12)	—		124
Other	293		298
Other assets	$	1,228	$	1,361

(a) Non-current operating lease liabilities of $748 million and $757 million as of March 31, 2024 and December 31, ~~2016 total $160 million and $57 million,~~2023, respectively, ~~and~~ are included in ~~Prepaid expenses~~Other liabilities and ~~other current assets on~~deferred credits in our Condensed Consolidated Balance Sheets. ~~2017 amounts include approximately 520 KFC restaurants in Thailand, Turkey, the U.S. and France. See Note 5.~~

Reconciliation of Cash and ~~cash equivalents~~Cash Equivalents for Condensed Consolidated Statements of Cash Flows


	3/31/2024		12/31/2023
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets	$	652	$	512
Restricted cash included in Prepaid expenses and other current assets(a)	191		177
Restricted cash and restricted cash equivalents included in Other assets(b)	35		35

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows	$	878	$	724

9/30/2017 12/31/2016
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets $ 980
$ 725
Restricted cash included in Prepaid expenses and other current assets^(a)
54
55
Restricted cash included in Other assets^(b)
17
51
Cash, Cash Equivalents and Restricted Cash as presented in Condensed Consolidated Statements of Cash Flows $ 1,051
$ 831


~~(a)~~	~~Restricted cash within Prepaid expenses and other current assets primarily relates to the Taco Bell Securitization interest reserves.~~


~~(b)~~	Primarily trust accounts related to our self-insurance program and cash balances required, to the extent necessary, to meet statutory minimum net worth requirements for legal entities which enter into U.S. franchise agreements.

(a) Restricted cash within Prepaid expenses and other current assets primarily reflects the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments.

(b) Primarily trust accounts related to our self-insurance program.

Note 86 - Income Taxes


	Quarter ended
	2024			2023
Income tax provision	$	69		$	71
Effective tax rate	18.0		%	19.1		%

Quarter ended Year to date
2017 2016 2017 2016
Income tax provision $ 106

$ 83
$ 278

$ 263
Effective tax rate 20.2 % 27.5 % 23.5 % 27.0 %

Our estimated effective tax rate for the full fiscal year is ~~lower~~expected to be higher than the U.S. federal statutory rate of ~~35%~~21%, primarily due to ~~the majority of our~~state income ~~being~~taxes and U.S. taxes on foreign earnings partially offset by taxes on income earned ~~outside the U.S. where~~in foreign jurisdictions with statutory tax rates ~~are generally lower than the U.S. rate.~~below 21%.

~~Our third~~The first quarter ~~and year to date~~ effective tax ~~rates were~~rate was lower than the prior year primarily due to favorable developments in the ~~inclusion of approximately $40 million and $100 million of excess tax benefits on share-based payments for the~~current quarter ~~and year to date ended September 30, 2017, respectively. See Note 1 for discussion~~ related to ~~the adoption of a new accounting standard on share-based payments in the quarter ended March 31, 2017. These excess benefits were largely~~uncertain tax positions as well as favorability associated with ~~the deferred~~higher tax deductions for share-based compensation, payouts to recently retired employees. Our effective tax rates were also favorably impacted by previously recorded pre-tax losses for which we were able to recognize a tax benefit in the quarter ended September 30, 2017 as a result of an international refranchising transaction. These favorable impacts were partially offset by higher taxes paid in foreign jurisdictions where our intellectual property rights are domiciled.

Note 7 - Revenue Recognition

Disaggregation of Total Revenues

The following tables disaggregate revenue by Concept, for our two most significant markets based on Operating Profit and for all other markets. We believe this disaggregation best reflects the ~~unfavorable impacts~~extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are impacted by economic factors.


	Quarter ended 3/31/2024
		KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger Grill Division		Total
U.S.
Company sales		$	14	$	240	$	2	$	127	$	383
Franchise revenues		43		188		68		1		300
Property revenues		3		9		1		1		14
Franchise contributions for advertising and other services		10		146		73		1		230

China
Franchise revenues		68		—		17		—		85

Other
Company sales		91		—		—		—		91
Franchise revenues		272		13		62		—		347
Property revenues		11		—		—		—		11
Franchise contributions for advertising and other services		120		2		15		—		137
		$	632	$	598	$	238	$	130	$	1,598


	Quarter ended 3/31/2023
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger Grill Division		Total
U.S.
Company sales	$	16	$	229	$	5	$	130	$	380
Franchise revenues	46		178		70		1		295
Property revenues	3		10		1		1		15
Franchise contributions for advertising and other services	8		140		78		—		226

China
Franchise revenues	66		—		18		—		84

Other
Company sales	94		—		—		—		94
Franchise revenues	284		13		66		—		363
Property revenues	13		—		—		—		13
Franchise contributions for advertising and other services	157		2		16		—		175
	$	687	$	572	$	254	$	132	$	1,645

Contract Liabilities

Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and other current liabilities and Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. A summary of significant changes to the contract liability balance during 2024 is presented below.


	Deferred Franchise Fees
Balance at December 31, 2023	$	444
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period	(20)
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period	19
Other(a)	(3)
Balance at March 31, 2024	$	440

(a) Primarily includes impact of foreign currency translation.

We expect to recognize contract liabilities as revenue over the remaining term of the ~~repatriation of foreign earnings and our planned, full year 2017 refranchising gains, which will largely be taxed at the U.S. rate.~~associated franchise agreement as follows:


Less than 1 year	$	72
1 - 2 years	65
2 - 3 years	59
3 - 4 years	53
4 - 5 years	44
Thereafter	147
Total	$	440

Note 98 - Reportable Operating Segments

We identify our operating segments based on management responsibility. The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:


	Quarter ended
Revenues	2024		2023
KFC Division	$	632	$	687
Taco Bell Division	598		572
Pizza Hut Division	238		254
Habit Burger Grill Division	130		132
	$	1,598	$	1,645

Quarter ended Year to date
Revenues 2017 2016 2017 2016
KFC Division $ 794
$ 787
$ 2,296
$ 2,302
Pizza Hut Division 203
251
659
799
Taco Bell Division 442

481
1,349

1,371
Unallocated (3 ) (1 ) (3 ) (2 )
$ 1,436

$ 1,518

$ 4,301

$ 4,470

Quarter ended Year to date
Operating Profit 2017 2016 2017 2016
KFC Division $ 260

$ 230

$ 710

$ 618
Pizza Hut Division 82

84

250

256
Taco Bell Division 147

143
440

400
Unallocated restaurant costs^(a)
5
—
5
—
Unallocated Franchise and license fees and income^(b)
(3 ) (1 ) (3 ) (2 )
Unallocated Franchise and license expenses^(b)
(5 ) 1
(21 ) (15 )
Unallocated and General and administrative expenses^(c)
(45 ) (78 ) (167 ) (180 )
Unallocated Refranchising gain (loss) (See Note 5) 201
21
331
75
Unallocated Other income (expense) 1

(2 )
1

10
Operating Profit $ 643

$ 398

$ 1,546

$ 1,162
Other pension income (expense) (See Note 10) (10 ) 1
(42 ) 2
Interest expense, net (109 )
(98 )
(322 )
(191 )
Income from continuing operations before income taxes $ 524

$ 301

$ 1,182

$ 973


	Quarter ended
Operating Profit	2024		2023
KFC Division	$	313	$	305
Taco Bell Division	208		204
Pizza Hut Division	93		104
Habit Burger Grill Division	(5)		(5)
Corporate and unallocated G&A expenses	(89)		(84)

Unallocated Franchise and property income (expenses)	—		(1)
Unallocated Refranchising gain (loss)	5		4
Unallocated Other income (expense)	(5)		(4)
Operating Profit	$	520	$	523
Investment income (expense), net(a)	(22)		(24)
Other pension income (expense)	2		2
Interest expense, net	(117)		(130)
Income before income taxes	$	383	$	371


~~(a)~~	~~Represents depreciation reductions arising from KFC restaurants we offered to sell. See Note 5.~~


~~(b)~~	~~Represents costs associated with the KFC U.S. Acceleration Agreement and the Pizza Hut U.S. Transformation Agreement. See Note 5.~~

~~(c)~~

Amounts include charges associated with YUM's Strategic Transformation Initiatives of $4 million and $15 million for the quarter and year to date ended September 30, 2017, respectively, and $30 million and $34 million, respectively, for the quarter and year to date ended September 30, 2016. Year to date 2017 amounts also include non-cash charges associated with share-based compensation of $18 million. See Note 5.

Our chief operating decision maker (“CODM”) does not consider the impact of Corporate and unallocated amounts when assessing Divisional segment performance. As such, we do not allocate such amounts to our Divisional segments for performance reporting purposes.

(a)Includes changes in the value of our investment in Devyani International Limited (see Note 12).

Note 109 - Pension Benefits

We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit pension plans covering certain full-time salaried and hourly U.S. employees. The most significant of these plans, the YUM Retirement Plan (the ~~"Plan"~~“Plan”), is qualified and funded. We fund our other U.S. plans as benefits are paid. ~~The~~Our two significant U.S. plans, including the Plan and ~~our most significant non-qualified~~a supplemental plan, were previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those plans. Additionally, these two plans in the U.S. are currently closed to new ~~salaried~~hourly participants.

The components of net periodic benefit cost associated with our ~~significant~~ U.S. pension plans are as follows:

Quarter ended Year to date
2017 2016 2017 2016
Service cost $ 2
$ 4
$ 8
$ 12
Interest cost 9
12
29
37
Expected return on plan assets (10 ) (15 ) (33 ) (45 )
Amortization of net loss 1
1
4
4
Amortization of prior service cost 2
2
4
4
Net periodic benefit cost $ 4
$ 4
$ 12
$ 12

Additional loss recognized due to settlements^(a)
$ 8
$ 1
$ 16
$ 1
Pension data adjustment^(b)
$ —
$ —
$ 22
$ —
Special termination benefits $ 2
$ —
$ 2
$ —


~~(a)~~	Losses are a result of settlement transactions in each of our U.S. plans which exceeded the sum of annual service and interest costs for each plan. These losses were recorded in Other pension (income) expense.


~~(b)~~	Reflects a non-cash, out-of-year charge related to the adjustment of certain historical deferred vested liability balances in the Plan during the first quarter of 2017 recorded in Other pension (income) expense. See Note 5.


	Quarter ended
	2024		2023
Service cost	$	1	$	1
Interest cost	11		10
Expected return on plan assets	(13)		(12)


Net periodic benefit cost (income)	$	(1)	$	(1)

Note 1110 - Short-term Borrowings and Long-term Debt

Short-term Borrowings 9/30/2017 12/31/2016
Current maturities of long-term debt $ 383
$ 66
Other —
8
$ 383
$ 74
Less current portion of debt issuance costs and discounts (11 ) (8 )
Short-term borrowings $ 372
$ 66

Long-term Debt
Securitization Notes $ 2,277
$ 2,294
Subsidiary Senior Unsecured Notes 2,850
2,100
Revolving Facility 35
—
Term Loan A Facility 500
500
Term Loan B Facility 1,980
1,990
YUM Senior Unsecured Notes 2,200
2,200
Capital lease obligations 119
120
$ 9,961
$ 9,204
Less debt issuance costs and discounts (99 ) (79 )
Less current maturities of long-term debt (383 ) (66 )
Long-term debt $ 9,479
$ 9,059


Short-term Borrowings	3/31/2024		12/31/2023
Current maturities of long-term debt	$	61	$	56
Less current portion of debt issuance costs and discounts	(3)		(3)
Short-term borrowings	$	58	$	53

Long-term Debt
Securitization Notes	$	3,743	$	3,743
Subsidiary Senior Unsecured Notes	750		750
Revolving Facility	—		—
Term Loan A Facility	713		717
Term Loan B Facility	1,455		1,459
YUM Senior Unsecured Notes	4,550		4,550
Finance lease obligations	49		50
	$	11,260	$	11,269
Less long-term portion of debt issuance costs and discounts	(69)		(71)
Less current maturities of long-term debt	(61)		(56)
Long-term debt	$	11,130	$	11,142

~~On March 21, 2017,~~

Details of our Short-term borrowings and Long-term debt as of December 31, 2023 can be found within our 2023 Form 10-K.

Subsequent to the first quarter, on April 26, 2024, KFC Holding Co., Pizza Hut Holdings, LLC ~~a limited liability company,~~ and Taco Bell of America, LLC ~~a limited liability company,~~(collectively, the "Borrowers"), each of which is a wholly-owned subsidiary of the Company, ~~as co-borrowers (the “Borrowers”)~~ completed the ~~repricing~~refinancing of the then ~~existing $1.99 billion~~outstanding $713 million under the Term Loan BA Facility and $1.25 billion capacity under the Revolving Facility through the issuance of a $500 million term loan A facility and a $1.5 billion revolving facility pursuant to an amendment to the Credit Agreement (as defined in our ~~2016~~2023 Form 10-K). The ~~amendment reduces~~transaction did not add any additional net new debt to the ~~interest rate applicable~~Company's Balance Sheet. The new term loan A facility and the revolving facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the Borrowers’ existing Term Loan B Facility ~~by 75 basis points to LIBOR plus 2.00%, with an additional rate stepdown to LIBOR plus 1.75% in the event the secured net leverage ratio (as defined in the Credit Agreement) is less~~if more than ~~1 to 1. As a result~~$250

million of ~~repricing the~~such Term Loan B ~~Facility, $192 million in principal was assigned to new lenders or existing lenders electing to increase their holdings in the loan. The maturity~~remains outstanding as of such date and ~~all other material provisions under~~(iii) the ~~Credit Agreement remained unchanged as a result of this amendment.~~

Ondate that is 91 days prior to the June ~~7, 2017, the Borrowers completed the repricing~~1, 2027 maturity of the Borrowers’ existing ~~$500~~Subsidiary Senior Unsecured Notes if more than $250 million ~~under~~of such Subsidiary Senior Unsecured Notes remains outstanding as of such date. Further, the ~~Term Loan A Facility and $1 billion under~~Amendment removes the ~~Revolving Facility pursuant to an amendment~~excess cash flow mandatory prepayment requirement with respect to the ~~Credit Agreement. The amendment reduced the interest rate applicable to the Term Loan~~new term loan A Facility and for borrowings under the Revolving Facility by 75 basis points. Subsequent to the repricing the interest rate ranges from 1.25% to 1.75% plus LIBOR or from 0.25% to 0.75% plus the Base Rate, at the Borrower’s election, based upon the total net leverage ratio of the Borrowers and the Specified Guarantors (as defined in the Credit Agreement). As a result of repricing the Term Loan A Facility, $146 million in principal was assigned to new lenders or existing lenders electing to increase their holdings in the loan. There was no change in lender participation in the Revolving Facility. The maturity date for the Term Loan A Facility and the Revolving Facility has been extended to June 7, 2022. Amortization payments on the Term Loan A Facility will begin one full fiscal quarter after the first anniversary of the amendment effective date, which delays the original amortization schedule by approximately one year.facility. All other material provisions ~~under~~of the Credit Agreement ~~remained~~remain unchanged.

As a result of these repricing transactions, $23 million of fees were capitalized as debt issuance costs and are included primarily within Long-term debt on our Condensed Consolidated Balance Sheet as of September 30, 2017. During the year to date ended September 30, 2017, $8 million of fees and unamortized debt issuance costs were recognized within Interest expense, net due to these repricings.

On June 15, 2017, the Borrowers issued $750 million aggregate principal amount of 4.75% Senior Notes due June 1, 2027 (the “2027 Notes”). Interest on the 2027 Notes is payable semi-annually in arrears on June 1 and December 1, beginning on December 1, 2017. The 2027 Notes are guaranteed on a senior unsecured basis by (i) the Company, (ii) the Specified Guarantors and (iii) by each of the Borrower’s and the Specified Guarantors’ domestic subsidiaries that guarantee the Borrower’s obligations under the Credit Agreement, except for any of the Company’s foreign subsidiaries. The indenture governing the Notes contains covenants and events of default that are customary for debt securities of this type. In connection with the issuance of the 2027 Notes, the Company paid debt issuance costs of $9 million. These issuance costs are primarily recorded as a reduction in Long-term debt

~~on our Condensed Consolidated Balance Sheet.~~

Subsequent to the quarter end, on October 16, 2017 Taco Bell Funding, LLC terminated the revolving financing facility of Series 2016-1 Senior Notes, Class A-1, which allowed for the borrowing of up to $100 million including the issuance of up to $50 million in letters of credit.

~~Details of our short-term borrowings and long-term debt as of December 31, 2016 can be found within our 2016 Form 10-K.~~ Cash paid for interest during the ~~years to date~~quarter ended ~~September 30, 2017 and 2016~~March 31, 2024, was ~~$275 million and $150 million, respectively.~~$101 million. Cash paid for interest during the quarter ended March 31, 2023 was $104 million.

Note 1211 - Derivative Instruments

We use derivative instruments to manage certain of our market risks related to fluctuations in interest rates and foreign currency exchange rates. Our use of foreign currency contracts to manage foreign currency exchange rates associated with certain foreign currency denominated intercompany receivables and payables is currently not significant.

Interest Rate Swaps

We ~~enter~~have entered into interest rate swaps, with the objective of reducing our exposure to interest rate risk for a portion of our variable-rate debt interest ~~payments.~~payments primarily under our Term Loan B Facility. At ~~September 30, 2017~~both March 31, 2024 and December 31, ~~2016, our~~2023, we had interest rate swaps ~~outstanding had~~expiring in March 2025 with notional amounts of ~~$1.55~~$1.5 billion. These interest rate swaps ~~will expire in July 2021 and are~~have been designated cash flow hedges as the changes in the future cash flows of the swaps are expected to offset changes in expected future interest payments on the related variable-rate debt. There were no other interest rate swaps outstanding as of ~~September 30, 2017.~~March 31, 2024 or December 31, 2023.

~~The effective portion of gains~~Gains or losses on the interest rate swaps isare reported as a component of ~~Accumulated OCI ("AOCI")~~AOCI and reclassified into Interest expense, net in our Condensed Consolidated Statements of Income in the same period or periods during which the related hedged interest payments affect earnings. ~~Gains or losses on the swaps representing hedge ineffectiveness are recognized in current earnings.~~ Through ~~September 30, 2017,~~March 31, 2024, the swaps were highly effective cash flow hedges.

Gains and losses on these interest rate swaps recognized in OCI and reclassifications from AOCI into Net Income were as follows:


	Quarter ended
	Gains/(Losses) Recognized in OCI				(Gains)/Losses Reclassified from AOCI into Net Income
	2024		2023		2024		2023

Interest rate swaps	$	11	$	(7)	$	(9)	$	(5)

Income tax benefit/(expense)	(3)		2		2		1

As of March 31, 2024, the estimated net gain included in AOCI related to our cash flow hedges ~~and no ineffectiveness has been recorded.~~that will be reclassified into earnings in the next 12 months is $28 million, based on current Secured Overnight Financing Rate ("SOFR") interest rates.

~~Foreign Currency Contracts~~Total Return Swaps

We ~~enter~~have entered into ~~foreign currency forward and~~total return swap derivative contracts, with the objective of reducing our exposure to ~~earnings volatility arising from foreign currency fluctuations~~market-driven changes in certain of the liabilities associated with ~~certain foreign currency denominated intercompany receivables and payables. The notional amount, maturity date, and currency~~compensation deferrals into our Executive Income Deferral (“EID”) plan. While these total return swaps represent economic hedges, we have not designated them as hedges for accounting purposes. As a result, the changes in the fair value of these ~~contracts match those~~derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the ~~underlying intercompany receivables or payables. These foreign currency contracts are designated cash flow hedges as the future cash flows of the contracts are expected to offset~~ changes in ~~intercompany receivables and payables due to foreign currency exchange rate fluctuations.~~

the associated EID liabilities. The ~~effective portion~~fair value associated with the total return swaps as of gains or losses on the foreign currency contracts is reported as a component of AOCI. Amounts are reclassified from AOCI each quarter to offset foreign currency transaction gains or losses recorded within Other (income) expense when the related intercompany receivables and payables affect earnings due to their functional currency remeasurements. Gains or losses on the foreign currency contracts representing hedge ineffectiveness are recognized in current earnings. Through September 30, 2017, all foreign currency forward and swap contracts related to intercompany receivables and payables were highly effective cash flow hedges and no ineffectiveness has been recorded.

~~As of September 30, 2017,~~both March 31, 2024 and December 31, 2016, foreign currency forward and swap contracts outstanding related to intercompany receivables and payables had total notional amounts of $452 million and $437 million, respectively. As of September 30, 2017 these foreign currency forward and swap contracts have durations expiring as early as 2017 and as late as 2020.2023, was not significant.

During the quarter ended September 30, 2017, we entered into foreign currency forward contracts with U.S. dollar notional amounts of $319 million to reduce the volatility of certain expected Thai Baht denominated proceeds related to our refranchising of KFC Thailand. These forward contracts are designated as a net investment hedge of our foreign operations to the extent that we have foreign currency denominated net assets. The mark-to-market adjustments associated with the portion of the forward contracts designated as a net investment hedge are recorded as a cumulative translation adjustment within AOCI. Forward contracts related to expected proceeds that exceed our net foreign investment do not qualify for hedge accounting. The mark-to-market adjustments associated with the portion of the forward contracts which exceeds our net foreign investment are recorded as Refranchising (gain) loss as the objective of the forwards are to provide an economic hedge related to expected foreign currency refranchising proceeds. These foreign currency forward contracts did not have a material impact on our Condensed Consolidated Financial Statements for the quarter ended September 30, 2017, and will mature in December 2017.

As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with ~~carefully selected~~ major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At ~~September 30, 2017,~~March 31, 2024, all of the counterparties to our ~~interest rate swaps and foreign currency contracts~~derivative instruments had investment grade ratings

according to the three major ratings agencies. ~~All~~To date, all counterparties have performed in accordance with their contractual ~~obligations as of September 30, 2017.~~obligations.

~~Gains and losses on derivative instruments designated as cash flow and net investment hedges recognized in OCI and reclassifications from AOCI into Net Income:~~

Quarter ended Year to date
Gains/(Losses) Recognized in OCI (Gains)/Losses Reclassified from AOCI into Net Income Gains/(Losses) Recognized in OCI (Gains)/Losses Reclassified from AOCI into Net Income
2017 2016 2017 2016 2017 2016 2017 2016

Interest rate swaps $ —
$ (9 ) $ —
$ —
$ (8 ) $ (9 ) $ 2
$ —

Foreign currency contracts (17 ) (5 ) 15
5
(49 ) (11 ) 50
11

Income tax benefit/(expense) 2
1
(2 ) —
5
1
(3 ) —

As of September 30, 2017, the estimated net gain included in AOCI related to our cash flow hedges that will be reclassified into earnings in the next 12 months is $5 million, based on current LIBOR interest rates.

See Note 1312 for the fair value of our derivative assets and liabilities.

Note 1312 - Fair Value Disclosures

As of ~~September 30, 2017,~~March 31, 2024, the carrying values of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, short-term borrowings and accounts payable ~~and borrowings under our Revolving Facility~~ approximated their fair values because of the short-term nature of these instruments. The fair value of our notes receivable, net of allowances, and lease guarantees, less ~~subsequent amortization~~reserves for expected losses, approximates their carrying value. The following table presents the carrying value and estimated fair value of the Company’s debt obligations:


	3/31/2024				12/31/2023
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)

Securitization Notes(a)	$	3,743	$	3,423	$	3,743	$	3,391
Subsidiary Senior Unsecured Notes(b)	750		742		750		742
Term Loan A Facility(b)	713		709		717		716
Term Loan B Facility(b)	1,455		1,460		1,459		1,466
YUM Senior Unsecured Notes(b)	4,550		4,361		4,550		4,439

9/30/2017 12/31/2016
Carrying Value Fair Value (Level 2) Carrying Value Fair Value (Level 2)

Securitization Notes^(a)
$ 2,277
$ 2,385
$ 2,294
$ 2,315

Subsidiary Senior Unsecured Notes^(b)
2,850 3,045 2,100 2,175
Term Loan A Facility^(b)
500 502 500 501
Term Loan B Facility^(b)
1,980 1,996 1,990 2,016
YUM Senior Unsecured Notes^(b)
2,200 2,290 2,200 2,216

~~(a)~~

We estimated the fair value of the Securitization Notes by obtaining broker quotes from two separate brokerage firms that are knowledgeable about the Company’s Securitization Notes and, at times, trade these notes.(a) We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are not considered active markets.


~~(b)~~	~~We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility, and Term Loan B Facility using market quotes and calculations based on market rates.~~

(b) We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility and Term Loan B Facility using market quotes and calculations based on market rates.

Recurring Fair Value Measurements

The Company has interest rate swaps ~~foreign currency contracts~~ and other investments, all of which are required to be measured at fair value on a recurring basis ~~(See~~(see Note 1211 for discussion regarding derivative instruments). The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall. ~~No transfers among the levels within the fair value hierarchy occurred during the quarter and year to date ended September 30, 2017.~~


			Fair Value
	Condensed Consolidated Balance Sheet	Level	3/31/2024		12/31/2023
Assets
Investments	Other assets	1	$	1	$	125

Investments	Other assets	3	7		7
Interest Rate Swaps	Prepaid expenses and other current assets	2	28		24
Interest Rate Swaps	Other assets	2	—		2

Fair Value
Level 9/30/2017 12/31/2016 Condensed Consolidated Balance Sheet
Interest Rate Swaps - Liability 2 $ —
$ 3
Accounts payable and other current liabilities
Interest Rate Swaps - Asset 2 4
—
Prepaid expenses and other current assets
Interest Rate Swaps - Asset 2 33
47
Other assets
Foreign Currency Contracts - Liability 2 33
—
Other liabilities and deferred credits
Foreign Currency Contracts - Asset 2 2
6
Prepaid expenses and other current assets
Foreign Currency Contracts - Asset 2 —
10
Other assets
Other Investments 1 27
24
Other assets

The fair value of the Company’s ~~foreign currency contracts and~~ interest rate swaps were determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based ~~upon~~on observable inputs. ~~The other investments include investments~~

Investments as of December 31, 2023, primarily included our approximate 5% minority interest in ~~mutual funds, which are used to offset fluctuations~~Devyani International Limited (“Devyani”), a franchise entity that operates KFC and Pizza Hut restaurants in ~~deferred compensation liabilities that employees have chosen to invest in phantom shares of~~India, with a ~~stock index fund or bond index fund. The other investments'~~ fair value ~~is determined based on the closing market prices~~ of ~~the respective mutual funds as of September 30, 2017 and December 31, 2016.~~

~~Non-Recurring Fair Value Measurements~~

The Company's long-lived assets such as property, plant and equipment, goodwill and intangible assets are measured at fair value on a non-recurring basis if determined to be impaired or if deemed held-for-sale.$124 million. During the quarter ended March 31, 2024, we sold our ownership interest in Devyani for pre-tax proceeds of $104 million and ~~year to date ended September 30, 2017, we recorded~~recognized pre-tax investment losses of $20 million related to ~~our decision to refranchise certain Company-operated stores that were deemed held-for-sale. See Note 5. The carrying value of the restaurant assets measured at~~changes in fair value ~~as based on their expected sales price, are approximately $76 million as~~during the quarter prior to the date of ~~September 30, 2017. See Note 7.~~sale.

Note 1413 - Contingencies

Internal Revenue Service Proposed Adjustment

As a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year. Additionally, interest on the underpayment is estimated to be approximately $1.2 billion through the first quarter of 2024. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion.

We disagree with the IRS’s position as asserted in the RAR and intend to contest that position vigorously. In September 2022, we filed a Protest with the IRS Examination Division disputing on multiple grounds the proposed underpayment of tax and penalties.We have received the IRS Examination Division’s Rebuttal to our Protest and the case has been accepted by the IRS Office of Appeals.

The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter.

An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods.

Lease Guarantees

As a result of having assigned our interest in obligations under real estate leases as a condition to the refranchising of certain ~~Company~~Company-owned restaurants, and guaranteeing certain other leases, we are frequently ~~contingently~~secondarily liable on lease agreements. These leases have varying terms, the latest of which expires in 2065. As of ~~September 30, 2017~~,March 31, 2024, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary ~~lessees~~lessee was approximately ~~$550 million~~.$375 million. The present value of these potential payments discounted at our pre-tax cost of debt at ~~September 30, 2017~~,March 31, 2024, was approximately ~~$470 million~~.$300 million. Our franchisees are the primary lessees under the vast majority of these leases. We generally have cross-default provisions with these franchisees that would put them in default of their franchise ~~agreements~~agreement in the event of non-payment under the ~~leases.~~lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these ~~leases. Accordingly,~~leases, although such risk may not be reduced in the context of a bankruptcy or other similar restructuring of a large franchisee or group of franchisees. The liability recorded for our ~~probable exposure~~expected losses under such leases as of ~~September 30, 2017~~,March 31, 2024, was not material.

~~Franchise Loan Pool and Equipment Guarantees~~

We have agreed to provide financial support, if required, to a variable interest entity that operates a franchisee lending program used primarily to assist franchisees in the development of new restaurants or the upgrade of existing restaurants and, to a lesser extent, in connection with the Company’s refranchising programs in the U.S. We have determined that we are not required to consolidate this entity as we share the power to direct this entity’s lending activity with other parties. We have provided guarantees of 20% of the outstanding loans of the franchisee loan program. As such, at September 30, 2017, our guarantee exposure under this program is approximately $3 million based on total loans outstanding of $17 million.

~~In addition to the guarantees described above, we have provided guarantees of up to approximately~~
~~$43 million~~ on behalf of franchisees for several financing programs related to specific initiatives. At September 30, 2017, our guarantee exposure under these financing programs is approximately $7 million based on total loans outstanding under these financing programs of ~~$13 million~~.

Legal Proceedings

We are subject to various claims and contingencies related to lawsuits, real estate, environmental and other matters arising in the normal course of business. An accrual is recorded with respect to claims or contingencies for which a loss is determined to be probable and reasonably estimable.

India Regulatory Matter

Yum! Restaurants India Private Limited (“YRIPL”), a YUM subsidiary that operates KFC and Pizza Hut restaurants in India, is the subject of a regulatory enforcement action in India (the “Action”). The Action alleges, among other things, that KFC International Holdings, Inc. and Pizza Hut International failed to satisfy certain conditions imposed by the Secretariat for Industrial Approval in 1993 and 1994 when those companies were granted permission for foreign investment and operation in India. The conditions at issue include an alleged minimum investment commitment and store build requirements as well as limitations on the remittance of fees outside of India.

The Action originated with a complaint and show cause notice filed in 2009 against YRIPL by the Deputy Director of the Directorate of Enforcement (“DOE”) of the Indian Ministry of Finance following an income tax audit for the years 2002 and 2003. The matter was argued at various hearings in 2015, but no order was issued. Following a change in the incumbent official holding the position of Special Director of DOE (the “Special Director”), the matter resumed in 2018 and several additional hearings were conducted.

On January 29, 2020, the Special Director issued an order imposing a penalty on YRIPL and certain former directors of approximately Indian Rupee 11 billion, or approximately $135 million. Of this amount, $130 million relates to the alleged failure to invest a total of $80 million in India within an initial seven-year period. We have been advised by external counsel that the order is flawed and have filed a writ petition with the Delhi High Court, which granted an interim stay of the penalty order on March 5, 2020. In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed. A hearing with the administrative tribunal that had been scheduled for March 4, 2024 has been rescheduled to July 30, 2024. A hearing held on March 21, 2024, before the Delhi High Court has been continued to July 4, 2024, and the stay order remains in effect. We deny liability and intend to continue vigorously defending this matter. We do not consider the risk of any significant loss arising from this order to be probable.

Other Matters

We are currently engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.

Note 14 - Subsequent Event

KFC U.K. and Ireland Store Acquisition

On April 29, 2024, we completed the previously announced acquisition of 216 KFC restaurants from a franchisee in the U.K. and Ireland. Consideration for this acquisition consists of approximately $180 million in cash, subject to customary post-closing adjustments.


~~Item 2.~~	Item 2.Management’s ~~Discussion and Analysis of Financial Condition and Results of Operations~~

~~Introduction and Overview~~

Yum! Brands, Inc. (“YUM” or the “Company”) operates or franchises a worldwide system of over 44,000 restaurants in 137 countries and territories, primarily through the concepts of KFC, Pizza Hut and Taco Bell. These three concepts are the global leaders in the chicken, pizza and Mexican-style food categories, respectively. Of the over 44,000 restaurants, 5% are operated by the Company and its subsidiaries and 95% are operated by franchisees.

~~This Management's~~ Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

The following Management's Discussion and Analysis (“MD&A”), should be read in conjunction with the unaudited Condensed Consolidated Financial Statements (“Financial Statements”), the Forward-Looking Statements and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2023, (“~~2016~~2023 Form 10-K”). ~~References~~All Note references herein refer to ~~YUM throughout this discussion~~the Notes to the Financial Statements. Tabular amounts are ~~made~~displayed in ~~first person notations~~millions of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified. Percentages may not recompute due to rounding.

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or ~~“our.”~~“our”) franchise or operate a system of over 59,000 restaurants in more than 155 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger Grill (collectively, the “Concepts”). The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style and pizza categories, respectively. The Habit Burger Grill, is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Of the over 59,000 restaurants, 98% are operated by franchisees.

YUM currently consists of ~~three reporting~~four operating segments:

•The KFC Division which includes our worldwide operations of the KFC concept

•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept

•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept

•The ~~Taco Bell~~Habit Burger Grill Division which includes our worldwide operations of the ~~Taco Bell~~Habit Burger Grill concept

~~On October 31, 2016 (the “Distribution Date”),~~Through our Good Growth Strategy we ~~completed~~intend to unlock the ~~spin-off~~growth potential of our ~~China business (the "Separation") into an independent, publicly-traded company under the name~~Concepts and YUM, drive increased collaboration across our Concepts and geographies and consistently deliver better customer experiences, improved unit economics and higher rates of Yum China Holdings, Inc. (“Yum China”). Concurrent with the Separation, a subsidiary of the Company entered into a Master License Agreement with a subsidiary of Yum China for the exclusive right to use and sublicense thegrowth. Key enablers include accelerated use of ~~intellectual property owned by YUM~~technology and ~~its affiliates for the development~~better leverage of our systemwide scale.

Our global citizenship and ~~operation of KFC, Pizza Hut and Taco Bell restaurants in China. Prior to the Separation, our operations in mainland China were reported~~sustainability strategy is reflected in our ~~former China Division segment results. As a result of the Separation, the results of operations~~Good agenda, which includes our priorities for social responsibility, risk management and cash flows of the separated business are presented as discontinued operations in our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows for periods prior to the Separation. See additional information related to the impact of the Separation in Note 4.

~~On October 11, 2016, we announced our strategic transformation plans to drive global expansion~~sustainable stewardship of our ~~KFC, Pizza Hut~~people, food and Taco Bell brands (“YUM’s Strategic Transformation Initiatives”) following the Separation. Major features of the Company’s transformation and growth strategy involve being more focused, franchised and efficient. YUM’s Strategic Transformation Initiatives below represent the continuation of YUM’s transformation of its operating model and capital structure.planet.

More Focused. Four growth drivers will form the basis of YUM’s strategic plans and repeatable business model to accelerate same-store sales growth and net-new restaurant development at KFC, Pizza Hut and Taco Bell around the world over the long term. The Company will focusOur Growth agenda is based on ~~becoming best-in-class in:~~four key drivers:

~~Building Distinctive, Relevant and Easy Brands~~

~~Developing Unmatched Franchise Operating Capability~~

~~Driving Bold Restaurant Development~~

~~Growing~~ •Unrivaled Culture and ~~Talent~~Talent: Leverage our culture and people capability to fuel brand performance and franchise success

•Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences

~~More Franchised. YUM intends to increase~~•Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion

•Bold Restaurant Development: Drive market and franchise ~~restaurant ownership to at least 98% by the end of 2018.~~unit expansion with strong economics and value

~~More Efficient. The Company intends to revamp its financial profile, improving the efficiency of its organization and cost structure globally, by:~~

~~Reducing annual capital expenditures to approximately $100 million in 2019;~~

~~Reducing 2015 General and administrative ("G&A") expenses by a cumulative ~$300 million by 2019; and~~

~~Maintaining an optimized capital structure of ~5.0x Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) leverage.~~

From 2017 through 2019, we intend to return $6.5 - $7.0 billion to shareholders through share repurchases and cash dividends. We intend to fund these shareholder returns through a combination of refranchising proceeds, free cash flow generation and maintenance of our five times EBITDA leverage. We anticipate generating proceeds in excess of $2 billion, net of tax, through our refranchising initiatives. Refer to the Liquidity and Capital Resources section of this MD&A for additional details.

Beginning in 2017, we have changed our fiscal year from a year ending on the last Saturday of December to a year beginning on January 1 and ending on December 31 of each year. Concurrently, we have removed the reporting lags from the fiscal calendars of our international subsidiaries. See Notes 1 and 5.

We intend for this MD&A to provide the reader with information that will assist in understanding our results of operations, including performance metrics that management uses to assess the Company's performance. Throughout this MD&A, we commonly discuss the following performance metrics:

•Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more, including those temporarily closed. From time-to-time restaurants may be temporarily closed due to remodeling or image enhancement, rebuilding, natural disasters, health epidemic or pandemic, landlord disputes or other issues. The ~~Company provides certain percentage changes~~system sales of restaurants we deem temporarily closed remain in our base for purposes of determining same-store sales growth and the restaurants remain in our unit count (see below). Same-store sales growth excludes, for subsidiaries operating on a monthly calendar, the extra day resulting from a leap year and excludes, for subsidiaries operating on a weekly periodic calendar, the last week of the year in fiscal years with 53 weeks. We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.

•Gross unit openings reflects new openings by us and our franchisees. Net new unit growth reflects gross unit openings offset by permanent store closures, by us and our franchisees. To determine whether a restaurant meets the definition of a unit we consider whether the restaurant has operations that are ongoing and independent from another YUM unit, serves the primary product of one of our Concepts, operates under a separate franchise agreement (if operated by a franchisee) and

has substantial and sustainable sales. We believe gross unit openings and net new unit growth are useful to investors because we depend on new units for a significant portion of our growth. Additionally, gross unit openings and net new unit growth are generally reflective of the economic returns to us and our franchisees from opening and operating our Concept restaurants.

•System sales and System sales excluding the ~~impact~~impacts of foreign currency translation (“FX” ~~or “Forex”~~). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

~~System sales and system sales growth include~~ reflect the results of all restaurants regardless of ownership, including ~~company-owned~~Company-owned and franchise ~~restaurants that operate our Concepts.~~restaurants. Sales ofat franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts' products. We also include in System sales any portion of the amount customers pay these third parties for which the third party is obligated to pay us a license fee as a percentage of such amount. Franchise restaurant sales and fees paid by customers to third parties to deliver or facilitate the ordering of our Concepts' products are not included in Company sales on the Condensed Consolidated Statements of Income; however, ~~the~~any resulting franchise and license fees we receive are included in the ~~Company’s~~Company's revenues. We believe ~~system sales and system~~System sales growth ~~are~~is useful to investors as a significant ~~indicators~~indicator of the overall strength of our business as ~~they incorporate all of~~it incorporates our primary revenue drivers, Company and franchise same-store sales as well as net unit growth.

~~Same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the YUM system one year or more.~~

~~Net new units represents new unit openings, offset by store closures.~~

Company restaurant profit ("Restaurant profit") is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin as a percentage of sales is defined as Restaurant profit divided by Company sales. Within the Company Sales and Restaurant Profit sections of this MD&A, Store Portfolio Actions represent the net impact of new unit openings, acquisitions, refranchising and store closures, and Other primarily represents the impact of same-store sales as well as the impact of changes in costs such as inflation/deflation.

~~Operating margin is Operating Profit divided by Total revenues.~~

In addition to the results provided in accordance with ~~U.S.~~ Generally Accepted Accounting Principles ~~("GAAP"~~in the United States of America (“GAAP”), the Company ~~has provided~~provides the following non-GAAP ~~measurements which present~~ measurements:

•Diluted Earnings Per Share ~~from Continuing Operations~~ excluding Special Items ~~our~~ (as defined below);

•Effective Tax Rate excluding Special ~~Items, System Sales and~~ Items;

•Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance ~~internally. Special Items are not included in any~~internally;

•Company restaurant profit and Company restaurant margin as a percentage of our Division segment results, and we believe the elimination of the FX impact from Core Operating Profit provides better year-to-year comparability without the distortion of foreign currency fluctuations. 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 ~~Diluted Earnings Per Share from Continuing Operations excluding Special Items, our Effective Tax Rate excluding Special Items, System Sales and Core Operating Profit,~~these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present ~~operations, excluding items that~~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.

~~All Note references herein refer~~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 ~~Notes~~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 ~~Financial Statements. Tabular~~industry.

Certain performance metrics and non-GAAP measurements are presented excluding the impact of FX. These amounts are ~~displayed in millions of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified. Unless otherwise stated, financial~~derived by translating current year results ~~herein reflect continuing operations~~at prior year average exchange rates. We believe the elimination of the ~~Company. Percentages may not recompute due to rounding.~~FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

Results of Operations

Summary

All comparisons within this summary are versus the same period a year ago.

~~For~~Quarterly Financial Highlights:

% Change

System Sales, ex FX

Same-Store Sales

Units

GAAP Operating Profit

Core Operating Profit

KFC Division

(2)

Taco Bell Division

Pizza Hut Division

(4)

(7)

(11)

(10)

YUM

(3)

(1)

Additionally:

•Foreign currency translation unfavorably impacted Divisional Operating Profit by $11 million for the quarter ended ~~September 30, 2017, GAAP~~March 31, 2024.


	First Quarter
	2024	2023	% Change
GAAP Diluted EPS	$1.10	$1.05	+5
Less Special Items EPS	$(0.05)	$(0.01)	NM
Diluted EPS Excluding Special Items	$1.15	$1.06	+9

•In addition to the aforementioned factors impacting Operating Profit, our diluted EPS was negatively impacted by $0.08 for the quarter ended March 31, 2024 and $0.07 for the quarter ended March 31, 2023, from ~~continuing operations increased 115% to $1.18 per share, and~~after-tax investment losses. Foreign currency translation negatively impacted our diluted EPS by approximately $0.03 for the quarter ended March 31, 2024.

•Gross unit openings for the quarter were 808 units resulting in 421 net new units.

Worldwide

GAAP Results


	Quarter ended
	2024			2023			% B/(W)
Company sales	$	474		$	474		Even
Franchise and property revenues	757			770			(2)
Franchise contributions for advertising and other services	367			401			(8)
Total revenues	1,598			1,645			(3)

Company restaurant expenses	400			403			1
G&A expenses	286			282			(2)
Franchise and property expenses	31			36			14
Franchise advertising and other services expense	367			395			7
Refranchising (gain) loss	(5)			(4)			NM
Other (income) expense	(1)			10			NM
Total costs and expenses, net	1,078			1,122			4
Operating Profit	520			523			(1)

Investment (income) expense, net	22			24			NM
Other pension (income) expense	(2)			(2)			NM
Interest expense, net	117			130			10
Income before income taxes	383			371			3
Income tax provision	69			71			3
Net Income	$	314		$	300		5

Diluted EPS(a)	$	1.10		$	1.05		5
Effective tax rate	18.0		%	19.1		%	1.1	ppts.

(a)See Note 2 for the number of shares used in this calculation.

Performance Metrics


Unit Count	3/31/2024	3/31/2023	% Increase (Decrease)
Franchise	58,106	54,681	6
Company-owned	1,023	1,002	2
Total	59,129	55,683	6


	Quarter ended
	2024	2023
Same-Store Sales Growth (Decline) %	(3)	8
System Sales Growth %, reported	—	6
System Sales Growth %, excluding FX	2	11

Our system sales breakdown by Company and franchise sales was as follows:


	Quarter ended
	2024		2023

Consolidated
Company sales(a)	$	474	$	474
Franchise sales	14,572		14,541
System sales	15,046		15,015
Negative (Positive) Foreign Currency Impact(b)	279		N/A
System sales, excluding FX	$	15,325	$	15,015

KFC Division
Company sales(a)	$	105	$	110
Franchise sales	8,023		7,947
System sales	8,128		8,057
Negative (Positive) Foreign Currency Impact(b)	237		N/A
System sales, excluding FX	$	8,365	$	8,057

Taco Bell Division
Company sales(a)	$	240	$	229
Franchise sales	3,357		3,235
System sales	3,597		3,464
Negative (Positive) Foreign Currency Impact(b)	(2)		N/A
System sales, excluding FX	$	3,595	$	3,464

Pizza Hut Division
Company sales(a)	$	2	$	5
Franchise sales	3,165		3,331
System sales	3,167		3,336
Negative (Positive) Foreign Currency Impact(b)	44		N/A
System sales, excluding FX	$	3,211	$	3,336

Habit Burger Grill Division
Company sales(a)	$	127	$	130
Franchise sales	27		28
System sales	154		158
Negative (Positive) Foreign Currency Impact(b)	—		N/A
System sales, excluding FX	$	154	$	158

(a)Company sales represents sales from ~~continuing operations,~~our Company-operated stores as presented on our Condensed Consolidated Statements of Income.

(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales.


Non-GAAP Items

Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below.

	Quarter ended
	2024		2023
Core Operating Profit Growth %	6		11
Diluted EPS Growth %, excluding Special Items	9		Even
Effective Tax Rate excluding Special Items	19.4	%	19.3	%



	Quarter ended
	2024			2023
Company restaurant profit	$	74		$	71
Company restaurant margin %	15.6		%	14.9		%


Reconciliation of GAAP Operating Profit to Core Operating Profit	Quarter ended
	2024		2023
Consolidated
GAAP Operating Profit	$	520	$	523
Detail of Special Items:
(Gain) loss associated with market-wide refranchisings(a)	3		(3)
Operating loss impact from decision to exit Russia(b)	—		3
Charges associated with Resource Optimization(c)	21		3

Special Items Expense - Operating Profit	24		3
Negative Foreign Currency Impact on Operating Profit	11		N/A
Core Operating Profit	$	555	$	526

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

Condensed Consolidated Statements of Income Line Item
General and administrative expenses	$	21	$	4
Franchise and property expenses	—		1
Refranchising (gain) loss	3		(3)
Other (income) expense	—		1
Special Items Expense - Operating Profit	$	24	$	3

KFC Division
GAAP Operating Profit	$	313	$	305
Negative (Positive) Foreign Currency Impact	10		N/A
Core Operating Profit	$	323	$	305

Taco Bell Division
GAAP Operating Profit	$	208	$	204
Negative (Positive) Foreign Currency Impact	—		N/A
Core Operating Profit	$	208	$	204

Pizza Hut Division
GAAP Operating Profit	$	93	$	104
Negative (Positive) Foreign Currency Impact	1		N/A
Core Operating Profit	$	94	$	104

Habit Burger Grill Division
GAAP Operating Loss	$	(5)	$	(5)
Negative (Positive) Foreign Currency Impact	—		N/A
Core Operating Profit (Loss)	$	(5)	$	(5)

Reconciliation of GAAP Net Income to Net Income excluding Special Items
GAAP Net Income	$	314	$	300
Special Items Expense - Operating Profit	24		3

Special Items Tax (Benefit)(d)	(10)		(2)
Net Income excluding Special Items	$	328	$	301


Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS	$	1.10		$	1.05
Less Special Items Diluted EPS	(0.05)			(0.01)
Diluted EPS excluding Special Items	$	1.15		$	1.06

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate	18.0		%	19.1		%
Impact on Tax Rate as a result of Special Items	(1.4)		%	(0.2)		%
Effective Tax Rate excluding Special Items	19.4		%	19.3		%

(a) Due to their size and volatility, we have reflected as Special Items ~~increased 22%~~those refranchising gains and losses that were recorded in connection with market-wide refranchisings. During the quarters ended March 31, 2024 and 2023, we recorded net refranchising losses of $3 million and net refranchising gains of $3 million, respectively, that have been reflected as Special Items.

Additionally, we recorded net refranchising gains of $8 million and $1 million during the quarters ended March 31, 2024 and 2023, respectively, that have not been reflected as Special Items. These net refranchising gains relate to ~~$0.68 per share.~~refranchising of restaurants unrelated to market-wide refranchisings that we believe are indicative of our expected ongoing refranchising activity.

(b)In April 2023, we completed our exit from the Russia market by selling the KFC business in Russia to Smart Service Ltd. Our GAAP operating results for the quarter ended March 31, 2023 presented herein reflect revenues from and expenses to support the Russian operations for KFC prior to the date of sale, within their historical financial statement line items and operating segments. However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion of Ukraine to humanitarian efforts, we reclassed such net operating profits or losses from the KFC Division segment results to Unallocated Other income (expense). Additionally, we incurred certain expenses related to the disposition of the business and other one-time costs related to our exit from Russia which we recorded within Corporate and unallocated G&A and Unallocated Franchise and property expenses. The resulting net Operating Loss of $3 million for the quarter ended March 31, 2023 has been reflected as a Special Item.

~~For~~(c)We recorded charges of $21 million and $3 million during the ~~year~~quarters ended March 31, 2024 and 2023, respectively, to General and administrative expenses related to a resource optimization program. This program has allowed us to reallocate significant resources to accelerate our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. We have recently expanded the program to identify further opportunities to optimize the Company’s spending and identify additional, critical areas in which to potentially reallocate resources, both with a goal to enable the acceleration of the Company’s growth rate. Costs incurred to date ~~ended September 30, 2017, GAAP diluted EPS from continuing operations increased 46%~~related to ~~$2.52 per share,~~the program primarily include severance associated with positions that have been eliminated or relocated and ~~diluted EPS from continuing operations, excluding~~consultant fees. Due to their scope and size, these charges have been reflected as Special Items.

(d)The below table includes the detail of Special Items ~~increased 20%~~Tax (Benefit) Expense:


	Quarter ended
	3/31/2024		3/31/2023
Tax (Benefit) Expense on Special Items Operating Profit and Interest Expense	$	(6)	$	—
Tax (Benefit) Expense - Income tax impacts from decision to exit Russia	—		(2)
Tax (Benefit) - Other Income tax impacts recorded as Special	(4)		—
Special Items Tax (Benefit) Expense	$	(10)	$	(2)

Tax (Benefit) Expense on Special Items Operating Profit and Interest Expense was determined by assessing the tax impact of each individual component within Special Items based upon the nature of the item and jurisdictional tax law.

Other Income Tax impacts recorded as Special in the quarter ended March 31, 2024 include benefits related to ~~$2.01 per share.~~

~~Quarterly Financial highlights:~~

the reversal of a reserve due to the favorable resolution of a tax audit in a foreign jurisdiction. Such reserve was established in prior years related to income tax liabilities originally recorded as a Special Item as part of an intercompany restructuring of intellectual property.


Reconciliation of GAAP Operating Profit to Company Restaurant Profit
	Quarter ended 3/31/2024
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	313		$	208		$	93		$	(5)		$	(89)	$	520
Less:
Franchise and property revenues	397			210			148			2			—		757
Franchise contributions for advertising and other services	130			148			88			1			—		367
Add:
General and administrative expenses	83			49			52			13			89		286
Franchise and property expenses	17			8			5			1			—		31
Franchise advertising and other services expense	129			147			90			1			—		367
Refranchising (gain) loss	—			—			—			—			(5)		(5)
Other (income) expense	(2)			—			(4)			—			5		(1)
Company restaurant profit	$	13		$	54		$	—		$	7		$	—	$	74
Company sales	$	105		$	240		$	2		$	127		$	—	$	474
Company restaurant margin %	12.2		%	22.5		%	1.9		%	5.5		%	N/A		15.6		%


	Quarter ended 3/31/2023
	KFC Division			Taco Bell Division			Pizza Hut Division			Habit Burger Grill Division			Corporate and Unallocated		Consolidated
GAAP Operating Profit (Loss)	$	305		$	204		$	104		$	(5)		$	(85)	$	523
Less:
Franchise and property revenues	412			201			155			2			—		770
Franchise contributions for advertising and other services	165			142			94			—			—		401
Add:
General and administrative expenses	89			45			51			13			84		282
Franchise and property expenses	26			5			3			1			1		36
Franchise advertising and other services expense	164			138			93			—			—		395
Refranchising (gain) loss	—			—			—			—			(4)		(4)
Other (income) expense	7			1			(2)			—			4		10
Company restaurant profit	$	14		$	50		$	—		$	7		$	—	$	71
Company sales	$	110		$	229		$	5		$	130		$	—	$	474
Company restaurant margin %	12.0		%	22.2		%	3.9		%	4.9		%	N/A		14.9		%

~~% Change~~

~~System Sales, ex FX~~

~~Same-Store Sales~~

~~Net New Units~~

~~GAAP Operating Profit~~

~~Core Operating Profit~~

~~KFC Division~~

~~+14~~

~~+13~~

~~Pizza Hut Division~~

~~(1)~~

~~Even~~

~~Taco Bell Division~~

~~Worldwide~~

~~+61~~

~~+11~~

Items Impacting Reported Results and Reasonably Likely to Impact Future Results

~~Year~~The following items impacted reported results in 2024 and/or 2023 and/or are reasonably likely to ~~date Financial highlights:~~impact future results. See also the Detail of Special Items in this MD&A for other items similarly impacting results.

% Change
System Sales, ex FX Same-Store Sales Net New Units GAAP Operating Profit Core Operating Profit
KFC Division +6 +3 +4 +15 +16
Pizza Hut Division +2 (1) +2 (2) Even
Taco Bell Division +8 +5 +3 +10 +10
Worldwide +5 +2 +3 +33 +13
Middle East Conflict

~~Additionally:~~During the fourth quarter of 2023, certain of our markets, principally in our KFC and Pizza Hut Divisions, began being impacted by a military conflict in the Middle East region. While the impacts from the Middle East conflict have been scattered and difficult to measure, we believe the markets most impacted by the conflict, which include markets in the Middle East, Indonesia and Malaysia, collectively created a low single-digit headwind to YUM's overall same-store sales growth during the quarter ended March 31, 2024. We continue to expect this impact to decrease with sales improving in the most impacted markets over the balance of 2024.

Impact of Foreign Currency Translation on Operating Profit

Changes in foreign currency exchange rates negatively impacted the translation of our foreign currency denominated Divisional Operating Profit by $11 million for the quarter ended March 31, 2024. This included a negative impact to our KFC Division Operating Profit of $10 million for the quarter ended March 31, 2024. We currently expect changes in foreign currency to negatively impact Divisional Operating Profit by approximately $20 to $30 million on a full-year basis.

Investment in Devyani

During the quarter ended March 31, 2024, we ~~opened 362 net new units~~sold our approximate 5% minority investment in Devyani International Limited ("Devyani"), a franchise entity that operates KFC and ~~year to date, we opened 677 net new units for 3% net new unit growth.~~

~~During the quarter, we refranchised 209 restaurants, including 72 KFC, 46~~ Pizza Hut ~~and 91 Taco Bell units,~~restaurants in India, for pre-tax proceeds of ~~$395~~$104 million. ~~We recorded refranchising gains~~Changes in the fair value of ~~$201~~our ownership interest in Devyani prior to the date of sale resulted in pre-tax investment losses of $20 million and $23 million in ~~Special Items. During~~ the ~~year to date, we refranchised 574 restaurants, including 143 KFC, 245 Pizza Hut~~quarters ended March 31, 2024 and ~~186 Taco Bell units, for proceeds of $716 million. We recorded refranchising gains of $331 million in Special Items.~~2023, respectively.

During the quarter, we repurchased 6.6 million shares totaling $501 million at an average price of $75. During the year to date we repurchased 19.1 million shares totaling $1.3 billion at an average share price of $69. As of quarter end, there was $588 million remaining in share repurchase authorization through year end 2017.

~~Foreign currency translation impacted divisional operating profit favorably for the quarter by $2 million and negatively year to date by $9 million.~~

~~Worldwide~~

~~GAAP Results~~

Quarter ended Year to date
2017 2016 % B/(W) 2017 2016 % B/(W)
Company sales $ 871
$ 992
(12 ) $ 2,682

$ 2,951
(9 )
Franchise and license fees and income 565
526
7
1,619

1,519
7

Total revenues $ 1,436
$ 1,518
(5 ) $ 4,301

$ 4,470
(4 )

Restaurant profit $ 154

$ 161
(4 ) $ 459

$ 476
(4 )
Restaurant margin % 17.7 % 16.2 % 1.5
ppts. 17.1 % 16.1 % 1.0
ppts.

G&A expenses $ 215
$ 270
20
$ 699

$ 767
9

Franchise and license expenses 61

40
(53 ) 161

145
(12 )
Closures and impairment (income) expenses 1

1
74
3

10
77

Refranchising (gain) loss (201 )
(21 ) NM
(331 )
(75 ) NM

Other (income) expense —

(1 ) NM
—

(14 ) NM

Operating Profit $ 643

$ 398
61
$ 1,546

$ 1,162
33

Other pension (income) expense $ 10
$ (1 ) NM
$ 42
$ (2 ) NM

Interest expense, net 109
98
(11 ) 322
191
(69 )
Income tax provision 106

83
(28 ) 278
263
(6 )
Income from continuing operations $ 418
$ 218
92
$ 904
$ 710
27

Income from discontinued operations, net of tax —
422
NM
—
630
NM

Net Income $ 418
$ 640
(35 ) $ 904
$ 1,340
(33 )

Diluted EPS^(a) from continuing operations
$ 1.18
$ 0.55
115
$ 2.52
$ 1.73
46

Diluted EPS^(a) from discontinued operations
N/A
1.07
NM
N/A
1.54
NM

Diluted EPS^(a)
$ 1.18
$ 1.62
(27 ) $ 2.52
$ 3.27
(23 )
Effective tax rate - continuing operations 20.2 %
27.5 % 7.3
ppts. 23.5 %
27.0 % 3.5
ppts.


~~(a)~~	~~See Note 2 for the number of shares used in this calculation.~~

~~Performance Metrics~~

Unit Count 9/30/2017
9/30/2016
% Increase (Decrease)
Franchise 42,017
39,970
5
Company-owned 2,335
3,044
(23 )
44,352
43,014
3

Quarter ended Year to date
2017 2016 2017 2016
System Sales Growth, reported 6 % 2 % 5 % 1 %
System Sales Growth, excluding FX 6 % 4 % 5 % 4 %
Same-store Sales Growth 3 % 1 % 2 % 1 %

Non-GAAP Items
Core Operating Profit Growth 11 % 13 %
Diluted EPS Growth from Continuing Operations, excluding Special Items 22 % 20 %

~~Non-GAAP Items~~

~~Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below.~~

Quarter ended Year to date
Detail of Special Items 2017 2016 2017 2016
Refranchising gain (loss)(See Note 5)
$ 201
$ 21
$ 331
$ 75
YUM's Strategic Transformation Initiatives (See Note 5) (4 ) (30 ) (15 ) (34 )
Costs associated with Pizza Hut U.S. Transformation Agreement (See Note 5) (8 ) —
(20 ) —
Costs associated with KFC U.S. Acceleration Agreement (See Note 5) (4 ) —
(12 ) (17 )
Non-cash charges associated with share-based compensation (See Note 5) —
—
(18 ) —
Other Special Items Income (Expense)^(b)
5
(1 ) 3
(3 )
Special Items Income (Expense) - Operating Profit 190
(10 ) 269
21
Special Items - Other Pension Income (Expense) (See Note 5) (1 ) —
(23 ) —
Special Items Income (Expense) from Continuing Operations before Income Taxes 189
(10 ) 246
21
Tax Benefit (Expense) on Special Items^{( c)}
(13 ) 5
(64 ) —
Special Items Income (Expense), net of tax $ 176
$ (5 ) $ 182
$ 21
Average diluted shares outstanding 353

395
358
410
Special Items diluted EPS $ 0.50
$ (0.01 ) $ 0.51
$ 0.05

Reconciliation of GAAP Operating Profit to Core Operating Profit

Consolidated
GAAP Operating Profit $ 643
$ 398
$ 1,546
$ 1,162
Special Items Income (Expense) 190
(10 ) 269
21
Foreign Currency Impact on GAAP Operating Profit^(a)
2
N/A
(9 ) N/A
Core Operating Profit $ 451

$ 408

$ 1,286

$ 1,141

KFC Division
GAAP Operating Profit $ 260
$ 230
$ 710
$ 618
Foreign Currency Impact on GAAP Operating Profit^(a)
2
N/A
(5 ) N/A
Core Operating Profit $ 258
$ 230
$ 715
$ 618

Pizza Hut Division
GAAP Operating Profit $ 82
$ 84
$ 250
$ 256
Foreign Currency Impact on GAAP Operating Profit^(a)
—
N/A
(4 ) N/A
Core Operating Profit $ 82
$ 84
$ 254
$ 256

Taco Bell Division
GAAP Operating Profit $ 147
$ 143
$ 440
$ 400
Foreign Currency Impact on GAAP Operating Profit^(a)
—
N/A
—
N/A
Core Operating Profit $ 147
$ 143
$ 440
$ 400

Reconciliation of Diluted EPS from Continuing Operations to Diluted EPS from Continuing Operations excluding Special Items
Diluted EPS from Continuing Operations $ 1.18
$ 0.55
$ 2.52
$ 1.73
Special Items Diluted EPS 0.50
(0.01 ) 0.51
0.05
Diluted EPS from Continuing Operations excluding Special Items $ 0.68

$ 0.56

$ 2.01

$ 1.68

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate 20.2 % 27.5 % 23.5 % 27.0 %
Impact on Tax Rate as a result of Special Items^(c)
(7.6 )% (0.5 )% 0.7 % (0.6 )%
Effective Tax Rate excluding Special Items 27.8 %
28.0 %
22.8 %
27.6 %

Reconciliation of Company Sales to System Sales

Consolidated
Company Sales^(d)
$ 871
$ 992
$ 2,682
$ 2,951
Franchise sales 10,800
10,018
30,729
29,019
System sales $ 11,671
$ 11,010
$ 33,411
$ 31,970

KFC Division
Company Sales^(d)
$ 498
$ 520
$ 1,465
$ 1,541
Franchise sales 5,784
5,313
16,223
15,277
System sales $ 6,282
$ 5,833
$ 17,688
$ 16,818

Pizza Hut Division
Company Sales^(d)
$ 55
$ 106
$ 226
$ 366
Franchise sales 2,911
2,778
8,439
8,263
System sales $ 2,966
$ 2,884
$ 8,665
$ 8,629

Taco Bell Division
Company Sales^(d)
$ 318
$ 366
$ 991
$ 1,044
Franchise sales 2,105
1,927
6,067
5,479
System sales $ 2,423
$ 2,293
$ 7,058
$ 6,523


~~(a)~~	The foreign currency impact on reported Operating Profit is presented in relation only to the immediately preceding year presented. When determining applicable Core Operating Profit growth percentages, the Core Operating Profit for the current year should be compared to the prior GAAP Operating Profit adjusted only for the prior year Special Items Income (Expense).


~~(b)~~	~~In 2017, Other Special Items Income (Expense) primarily includes depreciation reductions arising from KFC restaurants classified as held-for-sale. See Note 5.~~


~~(c)~~	The tax benefit (expense) was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items. We are utilizing an approach in which we recompute our estimated annual Effective Tax Rate and year to date income tax expense excluding Special Items, which allows us to determine the incremental tax impact of Special Items.


~~(d)~~	~~Company Sales represents sales from our Company-operated stores as presented on our Condensed Consolidated Statements of Income.~~

KFC Division

The KFC Division has ~~21,063~~30,251 units, ~~80%~~87% of which are located outside the U.S. ~~The KFC Division has experienced significant unit growth in emerging markets, which comprised approximately 55% of both the Division’s units and profits as of the end of 2016.~~ Additionally, ~~93%~~99% of the KFC Division units were operated by franchisees as of ~~the end of 2016.~~March 31, 2024.


	Quarter ended												Year to date
							% B/(W)												% B/(W)
	2017			2016			Reported			Ex FX			2017			2016			Reported			Ex FX
				Quarter ended
				Quarter ended
				Quarter ended
													% B/(W)
													% B/(W)
													% B/(W)
				2024
				2024
				2024
System Sales	$	6,282		$	5,833		8			7			$	17,688		$	16,818		5			6
Same-Store Sales Growth							4			N/A									3			N/A
System Sales
System Sales
Same-Store Sales Growth (Decline) %
Same-Store Sales Growth (Decline) %
Same-Store Sales Growth (Decline) %

Company sales	$	498		$	520		(4	)		(6	)		$	1,465		$	1,541		(5	)		(5	)
Franchise and license fees and income	296			267			11			11			831			761			9			10

Company sales

Company sales
Franchise and property revenues
Franchise and property revenues
Franchise and property revenues
Franchise contributions for advertising and other services
Franchise contributions for advertising and other services
Franchise contributions for advertising and other services
Total revenues
Total revenues
Total revenues	$	794		$	787		1			(1	)		$	2,296		$	2,302		—			—

Restaurant profit	$	79		$	78		2			(1	)		$	221		$	221		—			—
Restaurant margin %	15.9		%	15.0		%	0.9		ppts.	0.8		ppts.	15.1		%	14.4		%	0.7		ppts.	0.7		ppts.
Company restaurant profit

Company restaurant profit

Company restaurant profit
Company restaurant margin %
Company restaurant margin %
Company restaurant margin %

G&A expenses	$	85		$	89		5			6			$	259		$	276		6			6

G&A expenses

G&A expenses
Franchise and property expenses
Franchise and property expenses
Franchise and property expenses
Franchise advertising and other services expense
Franchise advertising and other services expense
Franchise advertising and other services expense
Operating Profit	$	260		$	230		14			13			$	710		$	618		15			16
Operating Profit
Operating Profit


			% Increase (Decrease)
Unit Count	3/31/2024	3/31/2023
Franchise	30,029	27,785	8
Company-owned	222	218	2
Total	30,251	28,003	8

% Increase (Decrease)
Unit Count 9/30/2017
9/30/2016

Franchise 19,745
18,778
5
Company-owned 1,318
1,506
(12 )
21,063
20,284
4

Company ~~Sales~~sales and ~~Restaurant Profit~~Company restaurant margin %

The ~~changes~~quarterly decrease in Company sales, ~~and Restaurant profit were as follows:~~excluding the impact of foreign currency translation, was driven by a Company same-store sales decline of 4%.

Quarter ended
Income / (Expense) 2016 Store Portfolio Actions Other FX 2017
Company sales $ 520
$ (48 ) $ 16
$ 10
$ 498
Cost of sales (178 ) 17
(7 ) (4 ) (172 )
Cost of labor (120 ) 13
(5 ) (2 ) (114 )
Occupancy and other (144 ) 14
(1 ) (2 ) (133 )
Company restaurant expenses $ (442 ) $ 44
$ (13 ) $ (8 ) $ (419 )
Restaurant profit $ 78
$ (4 ) $ 3
$ 2
$ 79

Year to date
Income / (Expense) 2016 Store Portfolio Actions Other FX 2017
Company sales $ 1,541
$ (124 ) $ 42
$ 6
$ 1,465
Cost of sales (526 ) 42
(15 ) (5 ) (504 )
Cost of labor (362 ) 29
(13 ) 1
(345 )
Occupancy and other (432 ) 41
(3 ) (1 ) (395 )
Company restaurant expenses $ (1,320 ) $ 112
$ (31 ) $ (5 ) $ (1,244 )
Restaurant profit $ 221
$ (12 ) $ 11
$ 1
$ 221

The quarterly ~~and year to date decreases~~increase in Company ~~sales and Restaurant profit associated with store portfolio actions were~~restaurant margin percentage was driven by ~~refranchising,~~the impact of closing units with low restaurant margin percentages, partially offset by ~~international net new unit growth. Significant other factors impacting~~a Company ~~sales and/or Restaurant profit were company~~ same-store sales ~~growth of 4% and 3% for the quarter and year to date, respectively, partially offset by higher labor and commodity costs.~~decline.

Franchise and ~~License Fees and Income~~property revenues

The quarterly ~~and year to date increases~~decrease in Franchise and ~~license fees and income,~~property revenues, excluding the impacts of foreign currency translation, ~~were~~was driven by ~~international net new unit growth,~~a 3% negative impact from the sale of our KFC Russia business and a franchise same-store sales ~~growth~~decline of ~~4% and 3% for the quarter and year to date, respectively, refranchising and higher renewal and transfer fees.~~2%, partially offset by unit growth.

G&A ~~Expenses~~

The quarterly ~~and year to date decreases~~decrease in G&A, ~~expenses,~~ excluding the impact of foreign currency translation, ~~were~~was driven by the ~~positive~~ impact of ~~YUM’s Strategic Transformation Initiatives, including reductions in G&A directly attributable to refranchising.~~the sale of the KFC Russia business.

Operating Profit

The quarterly ~~and year to date increases~~increase in Operating Profit, excluding the impact of foreign currency translation, ~~were~~was driven by unit growth and lower Franchise and property expenses, primarily due to lapping global franchise convention expenses in the prior year, partially offset by a same-store sales decline.

Taco Bell Division

The Taco Bell Division has 8,555 units, 87% of which are in the U.S. The Company owned 7% of the Taco Bell units in the U.S. as of March 31, 2024.


	Quarter ended
							% B/(W)
	2024			2023			Reported		Ex FX

System Sales	$	3,597		$	3,464		4		4
Same-Store Sales Growth %	1			8			N/A		N/A

Company sales	$	240		$	229		5		5
Franchise and property revenues	210			201			5		5
Franchise contributions for advertising and other services	148			142			4		4
Total revenues	$	598		$	572		5		5

Company restaurant profit	$	54		$	50		6		6
Company restaurant margin %	22.5		%	22.2		%	0.3	ppts.	0.3	ppts.

G&A expenses	$	49		$	45		(8)		(8)
Franchise and property expenses	8			5			(39)		(39)
Franchise advertising and other services expense	147			138			(7)		(7)
Operating Profit	$	208		$	204		2		2


			% Increase (Decrease)
Unit Count	3/31/2024	3/31/2023
Franchise	8,071	7,806	3
Company-owned	484	470	3
Total	8,555	8,276	3

Company sales and Company restaurant margin %

The quarterly increase in Company sales was driven by unit growth and Company same-store sales growth of 2%.

The quarterly increase in Company restaurant margin percentage was driven by same-store sales growth ~~international net new~~partially offset by higher labor and other restaurant operating costs.

Franchise and property revenues

The quarterly increase in Franchise and property revenues was driven by unit growth ~~lower~~ and franchise same-store sales growth of 1%.

G&A

The quarterly increase in G&A was driven by increased legal costs, higher digital and technology expenses and higher ~~renewal~~headcount and ~~transfer fees,~~salaries partially offset by lower share-based compensation.

Operating Profit

The quarterly increase in Operating Profit was driven by unit growth and same-store sales growth partially offset by higher restaurant operating costs, higher Franchise advertising and ~~refranchising.~~other service expense primarily related to digital and technology expenses, higher bad debt expense lapping prior year net bad debt recoveries for past due franchise receivables and increased G&A.

Pizza Hut Division

The Pizza Hut Division has ~~16,551~~19,942 units, ~~46%~~67% of which are located inoutside the U.S. The Pizza Hut Division ~~operates as one brand that~~ uses multiple distribution channels including delivery, dine-in and express (e.g. airports)~~. Emerging markets comprised approximately one-third of~~ and includes units operating under both ~~units~~the Pizza Hut and ~~profits for the Division as of the end of 2016.~~Telepizza brands. Additionally, ~~97%~~over 99% of the Pizza Hut Division units were operated by franchisees as of ~~the end of 2016.~~March 31, 2024.


	Quarter ended
							% B/(W)
	2024			2023			Reported		Ex FX

System Sales	$	3,167		$	3,336		(5)		(4)
Same-Store Sales Growth (Decline) %	(7)			7			N/A		N/A

Company sales	$	2		$	5		(64)		(64)
Franchise and property revenues	148			155			(5)		(4)
Franchise contributions for advertising and other services	88			94			(6)		(6)
Total revenues	$	238		$	254		(6)		(6)

Company restaurant profit	$	—		$	—		(82)		(82)
Company restaurant margin %	1.9		%	3.9		%	(2.0)	ppts.	(2.0)	ppts.

G&A expenses	$	52		$	51		(2)		(2)
Franchise and property expenses	5			3			(113)		(114)
Franchise advertising and other services expense	90			93			3		4
Operating Profit	$	93		$	104		(11)		(10)

Quarter ended Year to date
% B/(W) % B/(W)
2017 2016 Reported Ex FX 2017 2016 Reported Ex FX

System Sales $ 2,966
$ 2,884
3
3
$ 8,665
$ 8,629
—
2

Same-Store Sales Growth (Decline) 1
N/A
(1 ) N/A

Company sales $ 55
$ 106
(47 ) (47 ) $ 226
$ 366
(38 ) (38 )
Franchise and license fees and income 148
145
2
2
433
433
—
1

Total revenues $ 203
$ 251
(19 ) (18 ) $ 659
$ 799
(17 ) (17 )

Restaurant profit $ 1
$ 4
(71 ) (71 ) $ 14
$ 29
(53 ) (52 )
Restaurant margin % 1.9 % 3.5 % (1.6 ) ppts. (1.6 ) ppts. 6.0 % 7.9 % (1.9 ) ppts. (1.9 ) ppts.

G&A expenses $ 44
$ 55
21
21
$ 151
$ 170
12
11

Operating Profit $ 82
$ 84
(1 ) —
$ 250
$ 256
(2 ) —


			% Increase (Decrease)
Unit Count	3/31/2024	3/31/2023
Franchise	19,935	19,025	5
Company-owned	7	21	(67)
Total	19,942	19,046	5

% Increase (Decrease)
Unit Count 9/30/2017
9/30/2016

Franchise 16,245
15,578
4
Company-owned 306
637
(52 )
16,551
16,215
2
Franchise and property revenues

~~Company Sales and Restaurant Profit~~

~~The changes in Company sales and Restaurant profit were as follows:~~

Quarter ended
Income / (Expense) 2016 Store Portfolio Actions Other FX 2017
Company sales $ 106
$ (50 ) $ (1 ) $ —
$ 55
Cost of sales (29 ) 14
(1 ) —
(16 )
Cost of labor (35 ) 15
1
—
(19 )
Occupancy and other (38 ) 17
2
—
(19 )
Company restaurant expenses $ (102 ) $ 46
$ 2
$ —
$ (54 )
Restaurant profit $ 4
$ (4 ) $ 1
$ —
$ 1

Year to date
Income / (Expense) 2016 Store Portfolio Actions Other FX 2017
Company sales $ 366
$ (135 ) $ (3 ) $ (2 ) $ 226
Cost of sales (101 ) 38
(2 ) —
(65 )
Cost of labor (116 ) 43
(2 ) 1
(74 )
Occupancy and other (120 ) 42
5
—
(73 )
Company restaurant expenses $ (337 ) $ 123
$ 1
$ 1
$ (212 )
Restaurant profit $ 29
$ (12 ) $ (2 ) $ (1 ) $ 14

The quarterly decrease in Company sales and Restaurant profit associated with store portfolio actions was driven by refranchising. Significant other factors impacting Company sales and/or Restaurant profit were company same-store sales declines of 2% and higher commodity costs, partially offset by lower property and casualty losses.

The year to date decrease in Company sales and Restaurant profit associated with store portfolio actions was driven by refranchising. Significant other factors impacting Company sales and/or Restaurant profit were company same-store sales declines of 2% and higher commodity and labor costs, partially offset by lower property and casualty losses.

Franchise and ~~License Fees and Income~~

~~The quarterly increase in Franchise and license fees and income,~~property revenues, excluding the ~~impact~~impacts of foreign currency translation, was driven by ~~refranchising,~~a franchise same-store sales ~~growth~~decline of 1%7%, ~~and net new~~partially offset by unit growth.

G&A

G&A, excluding the impacts of foreign currency translation, was largely flat.

Operating Profit

The ~~year to date increase~~quarterly decrease in ~~Franchise and license fees and income,~~Operating Profit, excluding the ~~impact~~impacts of foreign currency translation, was driven by ~~the favorable impact of refranchising~~same-store sales declines and current year bad debt expense lapping prior year net ~~new unit growth,~~bad debt recoveries for past due franchise receivables, partially offset by ~~the impact of franchise same-store sales declines of 1%.~~unit growth.

~~G&A Expenses~~

Habit Burger Grill Division

The quarterly decrease in G&A expenses, excluding the impact of foreign currency translation, was driven by the positive impact of YUM's Strategic Transformation Initiatives, including reductions in G&A directly attributable to refranchising.

The year to date decrease in G&A expenses, excluding the impact of foreign currency translation, was driven by the positive impact of YUM's Strategic Transformation Initiatives, including reductions in G&A directly attributable to refranchising, partially offset by increased litigation costs.

~~Operating Profit~~

Operating Profit, excluding the impact of foreign currency translation, for the quarter and year to date was even with prior year as lower G&A expenses were offset by increased advertising costs associated with the Pizza Hut U.S. Transformation Agreement.

~~Taco Bell Division~~

~~The Taco Bell~~Habit Burger Grill Division has ~~6,738~~381 units, the vast majority of which are in the U.S. The Company owned ~~14%~~84% of the ~~Taco Bell~~Habit Burger Grill units in the U.S. as of ~~the end of 2016.~~

March 31, 2024.

Quarter ended Year to date
% B/(W) % B/(W)
2017 2016 Reported Ex FX 2017 2016 Reported Ex FX

System Sales $ 2,423
$ 2,293
6
6
$ 7,058
$ 6,523
8
8

Same-Store Sales Growth 3
N/A
5
N/A

Company sales $ 318
$ 366
(13 ) (13 ) $ 991
$ 1,044
(5 ) (5 )
Franchise and license fees and income 124
115
7
7
358
327
9
9

Total revenues $ 442
$ 481
(8 ) (8 ) $ 1,349
$ 1,371
(2 ) (2 )

Restaurant profit $ 69
$ 79
(12 ) (12 ) $ 219
$ 226
(3 ) (3 )
Restaurant margin % 21.9 % 21.7 % 0.2
ppts. 0.2
ppts. 22.1 % 21.7 % 0.4
ppts. 0.4
ppts.

G&A expenses $ 41
$ 48
15
15
$ 122
$ 141
14
14

Operating Profit $ 147
$ 143
3
3
$ 440
$ 400
10
10


	Quarter ended
					% B/(W)
	2024		2023		Reported
System Sales	$	154	$	158	(2)
Same-Store Sales Growth %	(8)		—		N/A
Total revenues	$	130	$	132	(2)
Operating Profit (Loss)	$	(5)	$	(5)	(6)


Unit Count	3/31/2024	3/31/2023	% Increase (Decrease)
Franchise	71	65	9
Company-owned	310	293	6
Total	381	358	6

Corporate & Unallocated


	Quarter ended
(Expense) / Income	2024			2023			% B/(W)
Corporate and unallocated G&A	$	(89)		$	(84)		(7)
Unallocated Franchise and property income (expenses)	—			(1)			NM
Unallocated Refranchising gain (loss)	5			4			NM
Unallocated Other income (expense)	(5)			(4)			NM
Investment income (expense), net (See Note 8)	(22)			(24)			NM
Other pension income (expense) (See Note 9)	2			2			NM
Interest expense, net	(117)			(130)			10
Income tax benefit (provision) (See Note 6)	(69)			(71)			3
Effective tax rate (See Note 6)	18.0		%	19.1		%	1.1	ppts.

Corporate and unallocated G&A

% Increase (Decrease)
Unit Count 9/30/2017
9/30/2016

Franchise 6,027
5,614
7
Company-owned 711
901
(21 )
6,738
6,515
3

~~Company Sales and Restaurant Profit~~

~~The changes in Company sales and Restaurant profit were as follows:~~

Quarter ended
Income / (Expense) 2016 Store Portfolio Actions Other 2017
Company sales $ 366
$ (53 ) $ 5
$ 318
Cost of sales (96 ) 13
(4 ) (87 )
Cost of labor (105 ) 14
—
(91 )
Occupancy and other (86 ) 12
3
(71 )
Company restaurant expense $ (287 ) $ 39
$ (1 ) $ (249 )
Restaurant profit $ 79
$ (14 ) $ 4
$ 69

Year to date
Income / (Expense) 2016 Store Portfolio Actions Other 2017
Company sales $ 1,044
$ (91 ) $ 38
$ 991
Cost of sales (270 ) 23
(15 ) (262 )
Cost of labor (302 ) 25
(11 ) (288 )
Occupancy and other (246 ) 21
3
(222 )
Company restaurant expense $ (818 ) $ 69
$ (23 ) $ (772 )
Restaurant profit $ 226
$ (22 ) $ 15
$ 219

The quarterly decrease in Company Sales and Restaurant profit associated with store portfolio actions was driven by refranchising, partially offset by net new unit growth. Significant other factors impacting Company sales and/or Restaurant profit were company same-store sales growth of 2%, partially offset by commodity cost inflation and higher labor costs.

The year to date decrease in Company Sales and Restaurant profit associated with store portfolio actions was driven by refranchising, partially offset by net new unit growth. Significant other factors impacting Company sales and/or Restaurant profit were company same-store sales growth of 4%, partially offset by higher labor costs, commodity cost inflation, and increased cost of sales associated with value offerings.

~~Franchise and License Fees and Income~~

The quarterly increase in ~~Franchise~~Corporate and ~~License fees and income was driven by refranchising, franchise same-store sales growth of 3% and net new unit growth.~~

~~The year to date increase in Franchise and License fees and income was driven by franchise same-store sales growth of 5%, net new unit growth and refranchising.~~

~~G&A Expenses~~

~~The quarterly decrease in G&A expenses was driven by the positive impact of YUM's Strategic Transformation Initiatives, including reductions in G&A directly attributable to refranchising.~~

~~The year to date decrease in~~Unallocated G&A expense was driven by ~~the positive impact of YUM's Strategic Transformation Initiatives, including reductions in G&A directly attributable to refranchising and lower litigation costs.~~

~~Operating Profit~~

~~The quarterly and year to date increases in Operating Profit were driven by same-store sales growth, net new unit growth and lower G&A,~~costs associated with our resource optimization program, partially offset by ~~higher restaurant operating~~lapping costs ~~and refranchising.~~

~~Corporate & Unallocated~~

Quarter ended Year to date
(Expense) / Income 2017 2016 % B/(W) 2017 2016 % B/(W)
Corporate and unallocated G&A expenses $ (45 ) $ (78 ) 42
$ (167 ) $ (180 ) 7

Unallocated restaurant costs 5
—
NM
5
—
NM

Unallocated Franchise and license fees and income (3 ) (1 ) NM
(3 ) (2 ) NM

Unallocated Franchise and license expenses (5 ) 1
NM
(21 ) (15 ) (34 )
Refranchising gain (loss) (See Note 5) 201
21
NM
331
75
NM

Unallocated Other income (expense) 1
(2 ) NM
1
10
(88 )
Other pension income (expense) (See Note 10) (10 ) 1
NM
(42 ) 2
NM

Interest expense, net (109 ) (98 ) (11 ) (322 ) (191 ) (69 )
Income tax provision (See Note 8) (106 ) (83 ) (28 ) (278 ) (263 ) (6 )
Effective tax rate (See Note 8) 20.2 % 27.5 % 7.3
ppts. 23.5 % 27.0 % 3.5
ppts.

~~Corporate and unallocated G&A expenses~~

The decrease in Corporate G&A expenses for the quarter to date was driven by lower year-over-year spending associated with YUM’s Strategic Transformation Initiatives (See Note 5), as well as current year G&A reductions due to the impact of YUM's Strategic Transformation Initiatives.

The year to date decrease in Corporate G&A expenses was driven by lower year-over-year spending associated with YUM’s Strategic Transformation Initiatives (See Note 5), as well as current year G&A reductions due to the impact of YUM's Strategic Transformation Initiatives, offset by non-cash charges associated with the modification of Executive Income Deferral (“EID”) share-based compensation awards (See Note 5).

~~Unallocated restaurant costs~~

~~Represents depreciation reductions that were not allocated to the division segments. See Note 5.~~

~~Unallocated Franchise and license fees and income~~

~~Unallocated Franchise and license fees and income reflects charges~~ related to the ~~KFC U.S. Acceleration Agreement. See Note 5.~~prior year ransomware attack.

~~Unallocated Franchise and license expenses~~

~~Unallocated Franchise and license expenses reflect charges related to the Pizza Hut Transformation Agreement and/or the KFC U.S. Acceleration Agreement. See Note 5.~~

~~Unallocated Other income (expense)~~

~~Unallocated Other income (expense) primarily includes net foreign exchange gains (losses).~~

Interest expense, net

The quarterly ~~and year to date increases~~decrease in Interest expense, net ~~were~~was primarily driven by ~~increased outstanding borrowings. See Note 11.~~

~~Income from Discontinued Operations, Net of Tax~~

~~The following table is a summary of the operating results of the China business which have been reflected in discontinued operations. See Note 4 for additional information.~~

Quarter ended Year to date

2016^(a)

2016^(b)
Total revenues $ 1,883
$ 4,774
Total income from discontinued operations before income taxes^(c)
289
564
Income tax provision (benefit)^(d)
(143 ) (76 )
Income from discontinued operations, net of tax 422
630


~~(a)~~	~~Includes historical Yum China financial results from June 1, 2016 to August 31, 2016.~~


~~(b)~~	Includes historical Yum China financial results from January 1, 2016 to August 31, 2016, plus an additional month of expense associated with the license fee paid to YUM to conform to the new YUM reporting calendar.


~~(c)~~	Includes costs incurred to execute the Separation of $7 million and $25 million for the quarter and year to date ended September 30, 2016, respectively. Such costs primarily related to transaction advisors, legal and other consulting fees.


~~(d)~~	Includes a tax benefit of $233 million recognized in the third quarter of 2016 related to previously recorded losses associated with our former Little Sheep business. The tax benefit associated with these losses was able to be recognized as a result of legal entity restructuring in anticipation of the Separation.

~~Significant Known Events, Trends or Uncertainties Expected to Impact Future Results~~

~~We have refranchised a significant number of restaurants since the announcement of YUM’s Strategic Transformation Initiatives in October 2016,~~lower borrowings and anticipate additional, significant refranchising will occur in the fourth quarter of 2017. The impact on Operating profit due to refranchising includes the loss of restaurant profit, which reflects the decrease in Company sales, and the increase in franchise fees from restaurants that have been refranchised. We expect to reduce G&A, including reductions directly attributable to refranchising, such that, upon completion of YUM’s Strategic Transformation Initiatives in 2019, on an annual basis, the impact of lost Operating profit from refranchising will behigher interest income, partially offset by G&A reductions we are making. However, we expect that Operating profit will be negatively impacted in the quarter ended December 31, 2017 and throughout 2018 as certain G&A reductions lag the loss of Operating profit due to refranchising. Additionally, our fiscal year 2016 included 53 weeks for our U.S businesses and for our international subsidiaries that report on a ~~period calendar. We expect the lapping of the prior year’s 53~~higher weighted-average interest rate.

^rd ~~week and the impact of refranchising, net of G&A reductions, to negatively impact Core Operating Profit growth for the quarter ended December 31, 2017 by 10 to 12 percentage points.~~

Additionally, we anticipate that $15 million of incremental Pizza Hut media investment (see Note 5) will be incurred in the quarter ended December 31, 2017, negatively impacting Core Operating Profit growth by an incremental 3 percentage points.

Consolidated Cash Flows ~~from Continuing Operations~~

Net cash provided by operating activitieswas ~~$718~~$363 million in ~~2017~~2024 versus ~~$936~~$349 million in ~~2016.~~2023. The ~~decrease~~increase was ~~largely~~primarily driven by an increase in ~~interest payments~~Operating Profit before Special Items and ~~retirement and deferred compensation payouts to retirees,~~timing of spending on advertising, partially offset by ~~an increase in operating profit before Special Items.~~higher income tax payments.

Net cash provided by investing activitieswas ~~$489~~$45 million in ~~2017 versus~~2024 compared to net cash used in investing activities of ~~$127~~$56 million in ~~2016.~~2023. The change was primarily driven by ~~higher~~ proceeds from ~~refranchising~~the sale of ~~restaurants.~~our approximate 5% minority investment in Devyani in 2024.

Net cash used in financing activitieswas ~~$1,029~~$247 million in ~~2017~~2024 versus ~~net cash provided by financing activities of $442~~$334 million in ~~2016.~~2023. The change was primarily driven by lower net ~~borrowings, partially offset by lower~~debt repayments and lapping prior year share repurchases.

Liquidity and Capital Resources

In October 2016, we announced YUM’s Strategic Transformation Initiatives to drive global expansion of the KFC, Pizza Hut and Taco Bell brands following the Separation on October 31, 2016. As part of this transformation, we intend to own less than 1,000

stores by the end of 2018 and, by 2019, reduce annual recurring capital expenditures to approximately $100 million, improve our efficiency by lowering G&A expenses to 1.7% of system sales and increase free cash flow conversion to 100%.

From 2017 through 2019, we intend to return $6.5 to $7.0 billion to shareholders through share repurchases and cash dividends. We intend to fund these shareholder returns through a combination of free cash flow generation, refranchising proceeds and maintenance of our five times EBITDA leverage. We anticipate generating proceeds in excess of $2 billion, net of tax, through the refranchising of over 2,000 stores during 2017 and 2018. During the year to date ended September 30, 2017, we repurchased 19 million shares of our Common Stock for $1.3 billion and paid cash dividends of $315 million.

We have historically generated substantial cash flows ~~from the operations of our company-owned stores and~~ from our extensive franchise operations, which require a limited YUM ~~investment.~~investment, and from the operations of our Company-owned stores. Our annual operating cash flows ~~from continuing operations~~ have ~~approximated $1.2~~been in excess of $1.3 billion in each of the past ~~three years. Going forward,~~five years and we ~~anticipate~~expect that ~~any decrease~~to continue to be the case in 2024. It is our intent to use these operating cash flows ~~from the operation of fewer Company-owned stores due~~ to ~~refranchising will be offset~~continue to invest in growing our business and pay a competitive dividend, with ~~savings generated from decreased capital investment and G&A expense required~~any remaining excess then returned to ~~support company operations.~~shareholders through share repurchases. To the extent operating cash flows plus other sources of cash ~~such as refranchising proceeds~~ do not cover our anticipated cash needs, we maintain ~~approximately $1~~a $1.25 billion Revolving Facility under our Credit Agreement that was undrawn as of ~~undrawn~~March 31, 2024. The borrowing capacity under our ~~existing revolving facilities.~~

Our balance sheet often reflects a working capital deficit, which is not uncommon in our industry and is also historically common for YUM. Company sales are paid in cash or by credit card (which is quickly converted into cash) and our royalty receivables from franchisees are generally due within 30 daysRevolving Facility was increased to $1.5 billion as part of the ~~period~~April 2024 refinancing of the Credit Agreement as discussed in which the related sales occur. Substantial amounts of cash received have historically been either invested in new restaurant assets which are non-current in nature or returned to shareholders. As part of our working capital strategy we negotiate favorable credit terms with vendors and, as a result, our on-hand inventory turns faster than the related short-term liabilities. Accordingly, it is not unusual for current liabilities to exceed current assets.Note 10. We believe ~~such a deficit has no significant impact on~~that our ~~liquidity or operations.~~

~~We generate a significant amount of~~ongoing cash from ~~operating activities outside the U.S. that we have used historically~~operations, cash on hand, which was approximately $650 million at March 31, 2024, and availability under our Revolving Facility will be sufficient to fund our ~~international development. To~~cash requirements over the ~~extent~~next twelve months.

There have been no material changes to the disclosures made in Item 7 of the Company's 2023 Form 10-K regarding our material cash requirements. Due to the ongoing significance of our debt obligations, we ~~have needed to repatriate international cash to fund~~are providing the update below.

Debt Instruments

As of March 31, 2024, approximately 94%, including the impact of interest rate swaps, of our ~~U.S. discretionary cash spending, including returns to shareholders~~$11.2 billion of total debt outstanding, excluding finance leases and debt ~~repayments, we have historically been able to do so in a tax-efficient manner. If we experience~~issuance costs and discounts, is fixed with an unforeseen decrease in our cash flows from our U.S. businesses or are unable to refinance future U.S. debt maturities we may be required to repatriate future international earnings at tax rates higher than we have historically experienced.

~~Borrowing Capacity~~

~~Securitization Notes.~~ ~~In May 2016, Taco Bell Funding, LLC, a newly formed special purpose subsidiary~~effective overall interest rate of approximately 4.6%. We ended the Company, issued an aggregate of $2.3 billion of fixed rate senior secured notes (“Class A-2 Notes”). In connection with the issuance of the Class A-2 Notes, Taco Bell Funding, LLC also issued variable rate notes (the “Variable Funding Notes” and, together with the Class A-2 Notes, the “Securitization Notes”) pursuant to a new revolving financing facility, which allowed for the borrowing of up to $100 million including the issuance of letters of credit of up to $50 million. We have no outstanding borrowings related to the Variable Funding Notes and have $11 million in letters of credit outstanding as of September 30, 2017 related to the facility. The Securitization Notes contain cross-default provisions whereby the failure to pay principal on any outstanding Securitization Notes will constitute an event of default under any other Securitization Notes. On October 16, 2017, Taco Bell Funding, LLC terminated the Variable Funding Notes.

~~Credit Agreement.~~ On June 16, 2016, three wholly-owned subsidiaries of the Company, KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, as co-borrowers (the "Borrowers") entered into a new credit agreement (the “Credit Agreement”) providing for the following (each of which may be increased subject to certain conditions): (i) a $500 million Term Loan A facility (the “Term Loan A Facility”), (ii) a $2 billion Term Loan B facility (the “Term Loan B Facility”) and (iii) a $1 billion revolving facility (the “Revolving Facility”), which has outstanding borrowings of $35 million and has $4 million in letters of credit outstanding as of September 30, 2017. Our Term Loan A Facility and Term Loan B Facility contain cross-default provisions whereby the failure to pay principal of or otherwise perform any agreement or condition under indebtedness of certain subsidiariesquarter with a ~~principal amount in excess of $100 million will constitute an event of default under the Credit Agreement.~~

On March 21, 2017, the Borrowers entered in an amendment to the Credit Agreement pursuant to which the Company repriced its existing approximately $2 billion Term Loan B Facility. The amendment reduces the interest rate applicable to the Term Loan B Facility by 75 basis points to LIBOR plus 2.00%, with a rate stepdown to LIBOR plus 1.75% in the event the Secured Leverage Ratio (as defined in the Credit Agreement) is less than 1:1.

On June 7, 2017, the Borrowers entered in an amendment to the Credit Agreement pursuant to which the Company repriced its existing $500 million Term Loan A Facility and $1 billion Revolving Facility. The amendment reduces the interest rate for the

Term Loan A Facility and for borrowings under the Revolving Facility by 75 basis points. Subsequent to the repricing the interest rate ranges from 1.25% to 1.75% plus LIBOR or from 0.25% to 0.75% plus the Base Rate (as defined in the Credit Agreement), at the Borrower’s election, based upon the totalconsolidated net leverage ratio of 4.1x EBITDA. We continually reassess our optimal leverage ratio to maximize shareholder returns. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years.We have credit ratings of BB+ (Standard & Poor's)/Ba2 (Moody's).

The following table summarizes the ~~Borrowers~~future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of March 31, 2024.


	2024		2025		2026		2027		2028		2029		2030		2031		2032		2037		2043		Total
Securitization Notes					$	938	$	884	$	595	$	589			$	737							$	3,743
Credit Agreement	$	40	$	53	661		15		1,399														2,168

Subsidiary Senior Unsecured Notes							750																750
YUM Senior Unsecured Notes													$	800	1,050		$	2,100	$	325	$	275	4,550

Total	$	40	$	53	$	1,599	$	1,649	$	1,994	$	589	$	800	$	1,787	$	2,100	$	325	$	275	$	11,211

See Note 10 for a discussion of the ~~Specified Guarantors. All other material provisions~~refinancing of the Credit Agreement ~~remain unchanged.~~

that took place in April 2024.

~~Subsidiary Senior Unsecured Notes.~~
~~On June 16, 2016, the Borrowers~~issued an aggregate of $1.05 billion Senior Unsecured Notes due 2024 and an aggregate of $1.05 billion Senior Unsecured Notes due 2026. On June 15, 2017, the Borrowers issued an aggregate of $750 million Senior Unsecured Notes due June 1, 2027 (together, the “Subsidiary Senior Unsecured Notes”). Our Subsidiary Senior Unsecured Notes contain cross-default provisions whereby the acceleration of the maturity of the indebtedness of certain subsidiaries with a principal amount in excess of $100 million or the failure to pay principal of such indebtedness will constitute an event of default under the Subsidiary Senior Unsecured Notes.

The majority of our remaining long-term debt primarily comprises senior, unsecured obligations ("YUM Senior Unsecured Notes"), which rank equally in right of payment with all of our existing and future unsecured unsubordinated indebtedness. The YUM Senior Unsecured Notes have varying maturity dates from 2018 through 2043 and stated interest rates ranging from 3.75% to 6.88%. Amounts outstanding under YUM Senior Unsecured Notes were $2.2 billion at September 30, 2017. Our YUM Senior Unsecured Notes contain cross-default provisions whereby the acceleration of the maturity of any of our indebtedness in a principal amount in excess of $50 million will constitute a default under the YUM Senior Unsecured Notes unless such indebtedness is discharged, or the acceleration of the maturity of that indebtedness is annulled, within 30 days after notice. We were in compliance with all of our debt covenant requirements at September 30, 2017.

~~See Note 11 for additional detail regarding our Short-term borrowings and Long-term debt.~~

New Accounting Pronouncements Not Yet Adopted

~~The FASB has issued standards to provide principles within a single framework for revenue recognition of transactions~~involving contracts with customers across all industries. These standards allow for either a full retrospective or modified retrospective transition method. We are required to adopt the new standards in the first quarter of 2018 and are evaluating which transition method we will utilize.

~~We do not believe these standards will impact~~In November 2023, the recognition of our two largest sources of revenue, sales in company-owned restaurants and sales-based continuing fees from franchisees. Additionally, we do not expect the new standards will materially impact the recognition of refranchising gains and losses as these transactions are divestitures of businesses and thus outside the scope of the standards. See Note 2 of our 2016 Form 10-K for a description of our current accounting policies relatedFinancial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to ~~revenue recognition.~~

The standards require that the transaction price received from customers be allocated to each separate and distinct performance obligation. The transaction price attributable to each separate and distinct performance obligation is then recognized as the performance obligations are satisfied. We currently believe that the services we provide related to upfront fees we receive from franchisees such as initial or renewal fees do not contain separate and distinct performance obligations from the franchise right and thus those upfront fees will be recognized as revenue over the term of each respective franchise agreement. We currently recognize upfront franchise fees such as initial and renewal fees when the related services have been provided,Reportable Segment Disclosures, which is when a store opens for initial fees and when renewal options become effective for renewal fees. The standards would require any such unamortized portion of fees received to be presented in our Consolidated Balance Sheets as a contract liability.

Similarly, we currently believe the benefits we receive from incentive payments we may make to our franchisees (e.g. equipment funding provided under the KFC U.S. Acceleration Agreement, see Note 5) are not separate and distinct from the benefits we receive from the franchise right and thus those incentive payments will be amortized as a reduction of revenue over the period of expected cash flows from the franchise agreements to which the payment relates.Currently, we recognize any payments made to franchisees within our Consolidated Statements of Income when we are obligated to make the payment. The standards would require any such unamortized portion of payments to be presented in our Consolidated Balance Sheets as an asset.

After completing a comprehensive review of our franchise agreements and incentive payments we are currently in the process of quantifying the financial statement impacts of the above changes. The contract liabilities and the assets associated with upfront fees and incentive payments, respectively, required to be recorded upon the adoption of these standards may be significant.

We also believe the standards will have an impact on transactions currently not included in our revenues and expenses such as franchisee contributions to and subsequent expenditures from advertising cooperatives that we are required to consolidate under current GAAP. We do not currently include these contributions and expenditures in our Consolidated Statements of Income or

Cash Flows in accordance with current GAAP. See Note 2 of our 2016 Form 10-K for details. The new standards will impact the principal/agent determinations in these arrangements by superseding industry-specific guidance included in current GAAP. If we determine that we are the principal in these arrangements we will include contributions to and expenditures from these advertising cooperatives within our Consolidated Statements of Income and Cash Flows. While any such change has the potential to materially impact our gross amount of reported revenues and expenses, such impact is anticipated to be largely offsetting and we would not expect there to be a significant impact on our reported Net Income. We are currently in the process of quantifying the financial statement impacts of these contributions and expenditures.

~~Additionally, the new guidance requires~~updates reportable segment disclosure requirements through enhanced disclosures ~~including the identification of performance obligations and~~about significant ~~judgments in measurement and recognition.~~

In February 2016, the FASB issued a standard on the recognition and measurement of leases, which is intended to increase transparency and comparability among organizations by requiring that substantially all lease assets and liabilities be recognized on the balance sheet and by requiring the disclosure of key information about leasing arrangements. Thissegment expenses. The standard is effective for the ~~Company in our first quarter of~~Company's Annual Report on Form 10-K for fiscal ~~2019~~2024, and subsequent interim periods, with early adoption permitted. The ~~standard must~~amendments should be ~~adopted using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period~~applied retrospectively to all prior periods presented in the financial statements. We currently plan to adopt this standard in the first quarter of 2019 and we are evaluating the impact the adoption of this standard will have on our Financial Statements. Based on our current volume of store leases and subleases to franchisees we expect this adoption will result in a material increase in the assets and liabilities on our Consolidated Balance Sheets; however, we believe the impact will be less material over time as we execute our strategy to be at least 98% franchised by 2019 and thus are a party to fewer leases. Further, we do not anticipate adoption will have a significant impact on our Consolidated Statements of Income or Cash Flows.

~~In June 2016, the FASB issued a standard that requires measurement and recognition of expected versus incurred credit losses for financial assetsheld.The standard is effective for the Company in our first quarter of fiscal 2020 with early adoption permitted beginning in thefirst quarter of fiscal 2019. We are currently evaluating the impact the adoption of this standard will have on our Financial Statements.~~

In October 2016, the FASB issued a standard that requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The guidance will require a modified retrospective application with a cumulative adjustment to opening retained earnings at the beginning of our first quarter of fiscal 2018. We are currently evaluating the impact of ~~adopting~~ the standard on our ~~Financial Statements.~~disclosures.

In ~~August 2017,~~December 2023, the FASB issued ~~a standard that refines~~ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosure requirements related to the income tax rate reconciliation and ~~expands existing hedge accounting guidance.~~requires disclosure of income taxes paid by jurisdiction. The standard is effective for the ~~Company in our first quarter of~~Company's Annual Report on Form 10-K for fiscal ~~2019~~2025 with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is permitted. We ~~do not anticipate~~are currently evaluating the impact of ~~adopting this~~the standard ~~will be material to~~on our ~~Financial Statements.~~

disclosures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~There~~Except as disclosed below, there were no material changes during the quarter ended ~~September 30, 2017~~March 31, 2024, to the disclosures made in Item 7A of the Company’s ~~2016~~2023 Form 10-K.

Equity Investment Risk

During the quarter ended March 31, 2024, the Company sold its equity ownership interest in Devyani International Limited for pre-tax proceeds of $104 million. As a result, we are no longer exposed to material equity investment risk as of March 31, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the report.

Changes in Internal Control

There were no changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended ~~September 30, 2017.~~March 31, 2024.

Forward-Looking Statements

Forward-looking statements 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. Forward-looking statements are based on 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 will be achieved. Factors that could cause actual results and events to differ materially from our expectations and forward-looking statements include (i) the factors described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report, (ii) any risks and uncertainties described in the Risk Factors included in Part II, Item 1A of this report, (iii) the factors described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the year ended December 31, ~~2016~~2023, and (iv) the risks and uncertainties described in the Risk Factors included in Part I, Item 1A of our Form 10-K for the year ended December 31, ~~2016.~~2023. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements.

Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and Board of Directors ~~and Shareholders~~

~~YUM!~~Yum! Brands, Inc.:

Results of Review of Interim Financial Information

We have reviewed the ~~accompanying~~ condensed consolidated balance sheet of ~~YUM!~~Yum! Brands, Inc. and ~~Subsidiaries~~subsidiaries (YUM) as of ~~September 30, 2017, and~~March 31, 2024, the related condensed consolidated statements of income, ~~and condensed consolidated statements of~~ comprehensive income, cash flows and shareholders’ deficit for the ~~quarter and year-to-date~~three-month periods ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, and the ~~condensed~~related notes (collectively, the consolidated ~~statements~~interim financial information). Based on our reviews, we are not aware of ~~cash flows~~any material modifications that should be made to the consolidated interim financial information for ~~the year-to-date periods ended September 30, 2017 and 2016. These condensed consolidated financial statements are the responsibility of YUM’s management.~~it to be in conformity with U.S. generally accepted accounting principles.

We ~~conducted our review~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of YUM as of December 31, 2023, and the related consolidated statements of income, comprehensive income, cash flows and shareholders’ deficit for the year then ended (not presented herein); and in our report dated February 20, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of YUM’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to YUM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of YUM as of December 31, 2016, and the related consolidated statements of income, comprehensive income, cash flows and shareholders’ equity (deficit) for the year then ended (not presented herein), and in our report dated February 21, 2017, we expressed an unqualified opinion on those consolidated financial statements. As more fully discussed in Note 1 to the accompanying condensed consolidated financial statements, the unaudited comparative balance sheet as of December 31, 2016, presented herein, has been derived from the December 31, 2016 balance sheet and has been restated for the effects of the change in accounting principle whereby YUM changed its fiscal year from a 52-53 week fiscal year to a fiscal year ending on December 31 of each year and eliminated any of the one-month or one-period reporting lags of its international subsidiaries. However, we have not audited the adjustments that were applied to restate the balance sheet as of December 31, 2016, and accordingly, we express no opinion thereon.

/s/ KPMG LLP

Louisville, Kentucky

~~November 8, 2017~~

May 7, 2024

PART II – ~~Other Information and Signatures~~OTHER INFORMATION AND SIGNATURES

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 1413 to the Company’s Condensed Consolidated Financial Statements set forth in Part I of this report.

Item 1A. Risk Factors

We face a variety of risks that are inherent in our business and our industry, including operational, legal, regulatory and product risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations and historical trends. There have been no material changes from the risk factors disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~The following table provides information as of~~ ~~September 30, 2017~~ ~~with respect to~~During the quarter ended March 31, 2024, we did not repurchase shares of our Common ~~Stock repurchased by the Company during the quarter then ended:~~

Fiscal Periods

Total number of shares purchased
(thousands)
Average price paid per share
Total number of shares purchased as part of publicly announced plans or programs
(thousands)

Approximate dollar value of shares that may yet be purchased under the plans or programs
(millions)
7/1/17-7/31/17 1,351 $74.04 1,351 $989

8/1/17-8/31/17 2,718 $75.75 2,718 $783

9/1/17-9/30/17 2,579 $75.62 2,579 $588
Total 6,648 $75.35 6,648 $588

~~On November 17, 2016,~~Stock. In September 2022, our Board of Directors authorized share repurchases ~~through December 2017~~ of up to ~~$2.0~~$2 billion (excluding applicable transaction fees) of our outstanding Common ~~Stock. All repurchases were made~~Stock through June 30, 2024. As of March 31, 2024, we have remaining capacity to repurchase up to $1.7 billion of Common Stock under this authorization.

Item 5. Other Information

Securities Trading Plans

During the three months ended March 31, 2024, none of the Company's directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c) of Regulation S-K.

Item 6. Exhibits


(a)	Exhibit Index
~~(a)~~	~~Exhibit Index~~
	Exhibit No.	Exhibit Description						~~Incorporated by Reference~~
	~~Exhibit No.~~	~~Exhibit Description~~				~~Form~~	~~File No.~~		~~Date of Filing~~	~~Exhibit Number~~
	10.1	R efinancing Amendment No. 7, da ted as of April 26 , 202 4, to Credit Agreement dated as of June 16, 20 16 among Pizza Hut Holdings, L LC, KFC Holding Co. and Taco Bell of America, LLC, as bo rrowers, the Lenders from ti me to time party thereto and JPM organ Chase Bank, N.A., as Collateral Agent , Swing Lin e Lender, an L/C Issuer and Administrative Agent for the Lenders , which is incorporated herein by reference from Exhibit 10.1 to YUM's Report on 8-K filed on April 26 , 202 4 .

	10.2†	Yum! Brands, Inc. Long Term Incentive Plan Form of Global Restricted Stock Unit Agreement (2024), as effective February 9, 2024.		15

	10.3†	Yum! Brands, Inc. Long Term Incentive Plan Form of Global YUM! Stock Appreciation Rights Agreement (2024).

	10.4†	Yum! Brands Inc. Long Term Incentive Plan Form of Global Performance Share Unit Agreement (2024).

	15	Letter from KPMG LLP regarding Unaudited Interim Financial Information (Acknowledgement of Independent Registered Public Accounting Firm)				—	—		—	—

	31.1	~~31.1~~	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				—		—	—	—

	31.2	~~31.2~~	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				—		—	—	—

	32.1	~~32.1~~	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				—		—	—	—

	32.2	~~32.2~~	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				—		—	—	—

	101.INS	~~101.INS~~			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.		—		—	—	—

	101.SCH	~~101.SCH~~			XBRL Taxonomy Extension Schema Document		—		—	—	—

	101.CAL	~~101.CAL~~			XBRL Taxonomy Extension Calculation Linkbase Document		—		—	—	—

	101.LAB	~~101.LAB~~			XBRL Taxonomy Extension Label Linkbase Document		—		—	—	—

	101.PRE	~~101.PRE~~			XBRL Taxonomy Extension Presentation Linkbase Document		—		—	—	—

	101.DEF	~~101.DEF~~			XBRL Taxonomy Extension Definition Linkbase Document		—		—	—	—

	†	Indicates a management contract or compensatory plan.

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized officer of the registrant.



	YUM! BRANDS, INC.
			(Registrant)


Date:
~~Date:~~	~~November 8, 2017~~May 7, 2024	/s/ David E. Russell
			Senior Vice President, Finance and Corporate Controller
			(Principal Accounting Officer)

4438



	Shares Repurchased (thousands)				Dollar Value of Shares Repurchased						Remaining Dollar Value of Shares that may be Repurchased
Authorization Date	2017		2016		2017			2016			2017
December 2015	—		13,369		$	—		$	933		$	—
March 2016	—		2,823		—			228			—
May 2016	—		37,576		—			3,260			—
November 2016	19,110		—		1,327			—			588
Total	19,110	^(a)	53,768	^(b)	$	1,327	^(a)	$	4,421	^(b)	$	588



	Quarter ended			Year to date
	2016^(a)			2016^(b)
Company sales	$	1,848		$	4,684
Franchise and license fees and income	35			90
Company restaurant expenses	(1,488		)	(3,896		)
G&A expenses	(111		)	(297		)
Franchise and license expenses	(15		)	(40		)
Closure and impairment expenses	(5		)	(36		)
Refranchising gain	3			8
Other income	18			44
Interest income, net	4			7
Income from discontinued operations before income taxes^(c)	289			564
Income tax benefit (provision)^(d)	143			76
Income from discontinued operations - including noncontrolling interests	432			640
(Income) loss from discontinued operations - noncontrolling interests	(10		)	(10		)
Income from discontinued operations - YUM! Brands, Inc.	$	422		$	630



	Quarter ended September 30, 2016
	As Previously Reported		Adjustments		After Change in Reporting Calendar
Total Revenues	$	1,501	$	17	$	1,518
Operating profit	372		25		397		^(a)
Net Income from continuing operations	204		14		218
Income from discontinued operations, net of tax	418		4		422
Net Income	$	622	$	18	$	640

Diluted EPS from continuing operations	$	0.51	$	0.04	$	0.55
Diluted EPS from discontinued operations	1.05		0.02		1.07
Diluted EPS	$	1.56	$	0.06	$	1.62



	Year to date ended September 30, 2016
	As Previously Reported		Adjustments			After Change in Reporting Calendar
Total Revenues	$	4,342	$	128		$	4,470
Operating profit	1,136		24			1,160		^(a)
Net Income from continuing operations	709		1			710
Income from discontinued operations, net of tax	643		(13		)	630
Net Income	$	1,352	$	(12	)	$	1,340

Diluted EPS from continuing operations	$	1.72	$	0.01		$	1.73
Diluted EPS from discontinued operations	1.56		(0.02		)	1.54
Diluted EPS	$	3.28	$	(0.01	)	$	3.27



	9/30/2017			12/31/2016
Accounts and notes receivable, gross	$	378		$	384
Allowance for doubtful accounts	(20		)	(14		)
Accounts and notes receivable, net	$	358		$	370



Unit Count	9/30/2017	9/30/2016	% Increase (Decrease)
Franchise	42,017	39,970	5
Company-owned	2,335	3,044	(23	)
	44,352	43,014	3



	Quarter ended						Year to date
Detail of Special Items	2017			2016			2017			2016
Refranchising gain (loss)(See Note 5)	$	201		$	21		$	331		$	75
YUM's Strategic Transformation Initiatives (See Note 5)	(4		)	(30		)	(15		)	(34		)
Costs associated with Pizza Hut U.S. Transformation Agreement (See Note 5)	(8		)	—			(20		)	—
Costs associated with KFC U.S. Acceleration Agreement (See Note 5)	(4		)	—			(12		)	(17		)
Non-cash charges associated with share-based compensation (See Note 5)	—			—			(18		)	—
Other Special Items Income (Expense)^(b)	5			(1		)	3			(3		)
Special Items Income (Expense) - Operating Profit	190			(10		)	269			21
Special Items - Other Pension Income (Expense) (See Note 5)	(1		)	—			(23		)	—
Special Items Income (Expense) from Continuing Operations before Income Taxes	189			(10		)	246			21
Tax Benefit (Expense) on Special Items^{( c)}	(13		)	5			(64		)	—
Special Items Income (Expense), net of tax	$	176		$	(5	)	$	182		$	21
Average diluted shares outstanding	353			395			358			410
Special Items diluted EPS	$	0.50		$	(0.01	)	$	0.51		$	0.05

Reconciliation of GAAP Operating Profit to Core Operating Profit

Consolidated
GAAP Operating Profit	$	643		$	398		$	1,546		$	1,162
Special Items Income (Expense)	190			(10		)	269			21
Foreign Currency Impact on GAAP Operating Profit^(a)	2			N/A			(9		)	N/A
Core Operating Profit	$	451		$	408		$	1,286		$	1,141

KFC Division
GAAP Operating Profit	$	260		$	230		$	710		$	618
Foreign Currency Impact on GAAP Operating Profit^(a)	2			N/A			(5		)	N/A
Core Operating Profit	$	258		$	230		$	715		$	618



	Quarter ended
Income / (Expense)	2016			Store Portfolio Actions			Other			FX			2017
Company sales	$	520		$	(48	)	$	16		$	10		$	498
Cost of sales	(178		)	17			(7		)	(4		)	(172		)
Cost of labor	(120		)	13			(5		)	(2		)	(114		)
Occupancy and other	(144		)	14			(1		)	(2		)	(133		)
Company restaurant expenses	$	(442	)	$	44		$	(13	)	$	(8	)	$	(419	)
Restaurant profit	$	78		$	(4	)	$	3		$	2		$	79

	Year to date
Income / (Expense)	2016			Store Portfolio Actions			Other			FX			2017
Company sales	$	1,541		$	(124	)	$	42		$	6		$	1,465
Cost of sales	(526		)	42			(15		)	(5		)	(504		)
Cost of labor	(362		)	29			(13		)	1			(345		)
Occupancy and other	(432		)	41			(3		)	(1		)	(395		)
Company restaurant expenses	$	(1,320	)	$	112		$	(31	)	$	(5	)	$	(1,244	)
Restaurant profit	$	221		$	(12	)	$	11		$	1		$	221



Fiscal Periods	Total number of shares purchased (thousands)	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs (thousands)	Approximate dollar value of shares that may yet be purchased under the plans or programs (millions)
7/1/17-7/31/17	1,351	$74.04	1,351	$989

8/1/17-8/31/17	2,718	$75.75	2,718	$783

9/1/17-9/30/17	2,579	$75.62	2,579	$588
Total	6,648	$75.35	6,648	$588