Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
			Quarter ended
Revenues			3/31/2025						3/31/2024
Company sales			$	607					$	474
Franchise and property revenues			785						757
Franchise contributions for advertising and other services			395						367
Total revenues			1,787						1,598
Costs and Expenses, Net
Company restaurant expenses			520						400
General and administrative expenses			302						286
Franchise and property expenses			34						31
Franchise advertising and other services expense			396						367
Refranchising (gain) loss			(5)						(5)
Other (income) expense			(8)						(1)
Total costs and expenses, net			1,239						1,078
Operating Profit			548						520
Investment (income) expense, net			(1)						22
Other pension (income) expense			—						(2)
Interest expense, net			120						117
Income Before Income Taxes			429						383
Income tax provision			176						69
Net Income			$	253					$	314
Basic Earnings Per Common Share			$	0.91					$	1.11
Diluted Earnings Per Common Share			$	0.90					$	1.10
Dividends Declared Per Common Share			$	0.71					$	0.67
See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
			Quarter ended
			3/31/2025						3/31/2024
Net Income			$	253					$	314
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			25						(10)
Reclassification of adjustments and (gains) losses into Net Income			—						—
			25						(10)
Tax (expense) benefit			—						—
			25						(10)
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period			—						—
Reclassification of (gains) losses into Net Income			2						—
			2						—
Tax (expense) benefit			—						—
			2						—
Changes in derivative instruments
Unrealized gains (losses) arising during the period			1						12
Reclassification of (gains) losses into Net Income			(8)						(8)
			(7)						4
Tax (expense) benefit			2						(1)
			(5)						3
Other comprehensive income (loss), net of tax			22						(7)
Comprehensive Income			$	275					$	307
See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
			Quarter ended
			3/31/2025						3/31/2024
Cash Flows – Operating Activities
Net Income			$	253					$	314
Depreciation and amortization			45						35
Refranchising (gain) loss			(5)						(5)
Investment (income) expense, net			(1)						22
Deferred income taxes			8						21
Share-based compensation expense			21						23
Changes in accounts and notes receivable			71						44
Changes in prepaid expenses and other current assets			(57)						(32)
Changes in accounts payable and other current liabilities			(32)						(66)
Changes in income taxes payable			3						(26)
Other, net			98						33
Net Cash Provided by Operating Activities			404						363
Cash Flows – Investing Activities
Capital spending			(71)						(49)
Proceeds from sale of Devyani Investment			—						104
Proceeds from refranchising of restaurants			15						11
Maturities (purchases) of Short term investments, net			90						—
Other, net			(32)						(21)
Net Cash Provided By Investing Activities			2						45
Cash Flows – Financing Activities
Repayments of long-term debt			(5)						(10)
Revolving credit facility, three months or less, net			24						—
Repurchase shares of Common Stock			(229)						—
Dividends paid on Common Stock			(198)						(189)
Other, net			(35)						(48)
Net Cash Used in Financing Activities			(443)						(247)
Effect of Exchange Rates on Cash and Cash Equivalents			10						(7)
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents			(25)						154
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period			807						724
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period			$	782					$	878
See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
			3/31/2025						12/31/2024
ASSETS
Current Assets
Cash and cash equivalents			$	607					$	616
Accounts and notes receivable, net			712						775
Prepaid expenses and other current assets			408						480
Total Current Assets			1,727						1,871
Property, plant and equipment, net			1,338						1,304
Goodwill			746						736
Intangible assets, net			418						416
Other assets			1,366						1,329
Deferred income taxes			1,065						1,071
Total Assets			$	6,659					$	6,727
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities			$	1,179					$	1,211
Income taxes payable			21						31
Short-term borrowings			30						27
Total Current Liabilities			1,231						1,269
Long-term debt			11,327						11,306
Other liabilities and deferred credits			1,906						1,800
Total Liabilities			14,463						14,375
Shareholders’ Deficit
Common Stock, no par value, 750 shares authorized; 278 shares issued in 2025 and 279 shares issued in 2024			—						—
Accumulated deficit			(7,434)						(7,256)
Accumulated other comprehensive loss			(371)						(392)
Total Shareholders’ Deficit			(7,804)						(7,648)
Total Liabilities and Shareholders’ Deficit			$	6,659					$	6,727
See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
Quarters ended March 31, 2025 and 2024
(in millions)
						Yum! Brands, Inc.
						Issued Common Stock												Accumulated Deficit						Accumulated Other Comprehensive Loss						Total Shareholders' Deficit
						Shares						Amount
Balance at December 31, 2024						279						$	—					$	(7,256)					$	(392)					$	(7,648)
Net Income																		253												253
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature																								25						25
Pension and post-retirement benefit plans (net of tax impact of less than $1 million)																								2						2
Derivative instruments (net of tax impact of $2 million)																								(5)						(5)
Comprehensive Income																														275
Dividends declared																		(199)												(199)
Repurchase of shares of Common Stock(1)						(2)						—						(229)												(229)
Employee share-based award exercises						1						(26)						(3)												(29)
Share-based compensation events												26																		26
Balance at March 31, 2025						278						$	—					$	(7,434)					$	(371)					$	(7,804)
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																								—						—
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)
(1)Includes excise tax on share repurchases
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, 2024 (“2024 Form 10-K”).

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 60,000 restaurants in more than 155 countries and territories. As of March 31, 2025, 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-inspired and pizza categories, respectively. The Habit Burger & Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

As of March 31, 2025, YUM consisted of 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 Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept

YUM's fiscal year begins on January 1 and ends December 31 of each year, with each quarter comprised of three months. The majority of our U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. For subsidiaries that operate on this periodic weekly calendar, 2024 included a 53rd week. Our remaining international subsidiaries operate on a monthly calendar similar to that on 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 2024 Form 10-K, the results of the interim periods presented. Our results of operations, comprehensive income, 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.

In the first quarter of 2025, the Company prospectively changed its basis of presentation to round financial figures in the Financial Statements and as presented in the tabular presentations in these Notes to the nearest whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within the Financial Statements and these Notes. Previously, amounts were presented to ensure that all numbers herein recomputed, resulting in the presentation of certain figures inconsistent with their underlying rounding.

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

We have reclassified certain items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended March 31, 2025. These reclassifications had no effect on previously reported Net Income.

Note 2 - KFC United Kingdom ("U.K.") and Ireland Restaurant Acquisition

On April 29, 2024, we completed the acquisition of all of the issued shares of two franchisee entities that owned 216 KFC restaurants in the U.K. and Ireland. The acquisition created a significant opportunity to accelerate KFC's growth strategy in the large and growing U.K. and Ireland chicken market. The purchase price to be allocated for accounting purposes of $177 million consisted of cash, net of cash acquired, in the amount of $180 million, which included $174 million paid in 2024 and $6 million

paid in 2025, offset by the settlement of a liability of $3 million related to our preexisting contractual relationship with the franchisee.

The acquisition was accounted for as a business combination using the acquisition method of accounting. The preliminary allocation of the purchase price is based on management's analysis, including preliminary work performed by third party valuation specialists, as of April 29, 2024.

During the quarter ended March 31, 2025, we adjusted our preliminary estimate of the fair value of net assets acquired. The components of the preliminary purchase price allocation, subsequent to the adjustments to the allocation in the quarter ended March 31, 2025 and prior quarters were as follows:

Total Current Assets						$	2
Property, plant and equipment, net						99
Reacquired franchise rights (included in Intangible assets, net)						48
Operating lease right-of-use assets (included in Other assets)						124
Total Identifiable Assets						273
Total Current Liabilities						(30)
Operating lease liabilities (included in Other liabilities and deferred credits)						(115)
Other liabilities						(39)
Total Liabilities Assumed						(184)
Total identifiable net assets						89
Goodwill						88
Purchase price to be allocated						$	177

The cumulative adjustments to the preliminary estimate of identifiable net assets acquired (as recorded in the June 30, 2024 quarter of acquisition) resulted in a corresponding $12 million increase in estimated goodwill due to the following changes to the preliminary purchase price allocation.

						Increase (Decrease) in Goodwill
Increase in Property, plant and equipment, net						$	(11)
Increase in Required franchise rights						(1)
Increase in Operating lease right-of-use assets						(15)
Increase in Total Current Liabilities						12
Increase in Operating lease liabilities						13
Increase in Other liabilities						8
Increase in consideration						6
Total increase in Goodwill						$	12

We will continue to obtain information to assist in determining the fair value of net assets acquired during the remaining measurement period.

Reacquired franchise rights, which were valued based on after-royalty cash flows expected to be earned by the acquired restaurants over the remaining term of their then-existing franchise agreements, have an estimated weighted average useful life of 5 years. The excess of the purchase price over the preliminary estimated fair value of the net, identifiable assets acquired was recorded as goodwill. The goodwill recognized represents expected benefits of the acquisition that do not qualify for recognition as intangible assets. This includes value arising from cash flows expected to be earned in years subsequent to the expiration of the terms of franchise agreements existing upon acquisition. The goodwill is expected to be partially deductible for income tax purposes and has been allocated to our KFC U.K. reporting unit.

The financial results of the acquired restaurants have been included in our Condensed Consolidated Financial Statements since the date of the acquisition but did not significantly impact our results for the quarter ended March 31, 2025. Pro forma financial information of the combined entities for the periods prior to acquisition is not presented due to the immaterial impact of the acquisition on our Condensed Consolidated Financial Statements. The direct transaction costs associated with the acquisition were also not material and were expensed as incurred.

Note 3 - Earnings Per Common Share (“EPS”)

						Quarter ended
						2025						2024
Net Income						$	253					$	314
Weighted-average common shares outstanding (for basic calculation)						280						282
Effect of dilutive share-based employee compensation						2						4
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)						282						286
Basic EPS						$	0.91					$	1.11
Diluted EPS						$	0.90					$	1.10
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)						1.5						1.7

(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.

Note 4 - Shareholders' Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the quarters ended March 31, 2025 and 2024 as indicated below. All amounts exclude applicable transaction fees and excise taxes on share repurchases.

						Shares Repurchased (thousands)																					Dollar Value of Shares Repurchased																					Remaining Dollar Value of Shares that may be Repurchased
Authorization Date						2025									2024												2025									2024												2025
May 2024						1,556									—												$	228								$	—											$	1,382
Total						1,556									—												$	228								$	—											$	1,382

In May 2024, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. As of March 31, 2025, we have remaining capacity to repurchase up to $1.4 billion of Common Stock under the May 2024 authorization.

Changes in Accumulated other comprehensive 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, 2024, net of tax						$	(238)					$	(143)					$	(11)					$	(392)
OCI, net of tax
Gains (losses) arising during the period classified into AOCI, net of tax						25						—						1						26
(Gains) losses reclassified from AOCI, net of tax						—						2						(6)						(4)
						25						2						(5)						22
Balance at March 31, 2025, net of tax						$	(213)					$	(141)					$	(16)					$	(371)

Note 5 - Other (Income) Expense

						Quarter ended
						3/31/2025						3/31/2024
Foreign exchange net (gain) loss						$	(3)					$	5
Impairment and closure expense						1						—
Other						(5)						(6)
Other (income) expense						$	(8)					$	(1)

Note 6 - Supplemental Balance Sheet Information

Accounts and Notes Receivable, net

The Company’s receivables are primarily generated 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, net in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate.

			3/31/2025						12/31/2024
Accounts and notes receivable, gross			$	786					$	849
Allowance for doubtful accounts			(74)						(74)
Accounts and notes receivable, net			$	712					$	775

Prepaid Expenses and Other Current Assets

			3/31/2025						12/31/2024
Income tax receivable			$	49					$	55
Restricted cash			141						155
Short term investments			—						91
Assets held for sale			8						21
Prepaid expenses			155						100
Other current assets			55						58
Prepaid expenses and other current assets			$	408					$	480

Property, Plant and Equipment, net

			3/31/2025						12/31/2024
Property, plant and equipment, gross			$	2,757					$	2,688
Accumulated depreciation and amortization			(1,419)						(1,384)
Property, plant and equipment, net			$	1,338					$	1,304

Other Assets			3/31/2025						12/31/2024
Operating lease right-of-use assets(a)			$	889					$	881
Franchise incentives			161						144
Other			316						304
Other assets			$	1,366					$	1,329

(a) Non-current operating lease liabilities of $869 million and $862 million as of March 31, 2025 and December 31, 2024, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets.

Reconciliation of Cash and Cash Equivalents for Condensed Consolidated Statements of Cash Flows

			3/31/2025						12/31/2024
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets			$	607					$	616
Restricted cash included in Prepaid expenses and other current assets(a)			141						155
Restricted cash and restricted cash equivalents included in Other assets(b)			34						36
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows			$	782					$	807

(a) Restricted cash within Prepaid expenses and other current assets 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 7 - Income Taxes

			Quarter ended
			2025						2024
Income tax provision			$	176					$	69
Effective tax rate			41.0		%				18.0		%

Our estimated effective tax rate for the full fiscal year is expected to be higher than the U.S. federal statutory rate of 21%, due to state income taxes and U.S. taxes on foreign earnings partially offset by taxes on income earned in foreign jurisdictions with statutory tax rates below 21%. Additionally, in the quarter ended March 31, 2025, we have recorded the reserve as discussed below.

Our first quarter effective tax rate was higher than the prior year primarily due to the unfavorable impact of recording a $92 million reserve. The reserve was the result of a change in management's judgment around a Mexican subsidiary's ability to utilize certain losses to offset recapture gains triggered by a tax deconsolidation in Mexico in 2009. During the quarter ended March 31, 2025, a Mexican court ruled that such losses could not be utilized to offset the recapture gain. The Company is appealing the decision and does not expect resolution of this matter within twelve months.

Note 8 - 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 extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are impacted by economic factors.

			Quarter ended 3/31/2025
						KFC Division						Taco Bell Division						Pizza Hut Division						Habit Burger & Grill Division						Total
U.S.
Company sales						$	23					$	261					$	3					$	125					$	412
Franchise revenues						42						211						63						2						318
Property revenues						3						9						1						1						14
Franchise contributions for advertising and other services						9						157						69						1						236
China
Franchise revenues						69						—						17						—						86
Other
Company sales						193						2						—						—						195
Franchise revenues						283						14						61						—						358
Property revenues						10						—						—						—						10
Franchise contributions for advertising and other services						140						3						16						—						159
						$	773					$	657					$	231					$	128					$	1,788		(a)

(a) Does not include a charge of $1 million to Unallocated Franchise revenues during the quarter ended March 31, 2025.

						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

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 2025 is presented below.

						Deferred Franchise Fees
Balance at December 31, 2024						$	438
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						22
Other(a)						2
Balance at March 31, 2025						$	442

(a) Primarily includes the impact of foreign currency translation.

We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:

Less than 1 year			$	70
1 - 2 years			66
2 - 3 years			59
3 - 4 years			51
4 - 5 years			44
Thereafter			151
Total			$	442

Note 9 - Reportable Operating Segments

The Company's operating segments maintain separate financial information, and our Chief Operating Decision Maker (“CODM”), the Company's Chief Executive Officer, evaluates the operating segments' operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company's segments based on Divisional Operating Profit and is involved in determining and reviewing forecasted Divisional Operating Profit as part of the annual plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the segments' operations. The CODM also considers this information in determining how to prioritize capital allocation, including investments in restaurant development, technology and human capital, maintaining a strong and flexible balance sheet, offering a competitive dividend and returning excess cash to shareholders. Our CODM manages assets on a consolidated basis. Accordingly, segment assets are not reported to our CODM or used in his decisions to allocate resources or assess performance of the segments. Therefore, total segment assets and long-lived assets have not been disclosed. The significant expense categories and amounts presented in the tables below align with the segment-level information that is regularly provided to the CODM.

						Quarter ended 3/31/2025
						KFC Division						Taco Bell Division						Pizza Hut Division						Habit Burger & Grill Division						Total
Company Sales(a)						$	216					$	263					$	3					$	125					$	607
Franchise and property revenues(a)						407						234						143						2						786
Franchise contributions for advertising and other services(a)						149						160						85						1						395
						773						657						231						128						1,788
Less:
Company restaurant expenses						196						204						4						114						518
General and administrative expenses						80						49						55						13						197
Franchise and property expenses						16						6						11						1						34
Franchise advertising and other services expense						149						157						89						1						396
Other (income) expense						—						—						(2)						—						(2)
Division Operating Profit						$	331					$	241					$	74					$	(1)					$	646
Unallocated amounts:(b)
Corporate and unallocated G&A expenses(c)																														$	(105)
Unallocated Company restaurant expenses(d)																														(3)
Unallocated Franchise and property revenues																														(1)
Unallocated Refranchising gain (loss)																														5
Unallocated Other income (expense)																														6
Consolidated Operating Profit																														548
Investment income (expense), net																														1
Other pension income (expense)																														—
Interest expense, net																														(120)
Income before income taxes																														$	429

Other Segment Disclosures

						KFC Division						Taco Bell Division						Pizza Hut Division						Habit Burger & Grill Division						Corporate and Unallocated						Total
Depreciation and Amortization(e)						$	11					$	16					$	4					$	7					$	7					$	45
Capital Spending						18						31						5						6						11						71

						Quarter ended 3/31/2024
						KFC Division						Taco Bell Division						Pizza Hut Division						Habit Burger & Grill Division						Total
Company Sales(a)						$	105					$	240					$	2					$	127					$	474
Franchise and property revenues(a)						397						210						148						2						757
Franchise contributions for advertising and other services(a)						130						148						88						1						367
						632						598						238						130						1,598
Less:
Company restaurant expenses						92						186						2						120						400
General and administrative expenses						83						49						52						13						197
Franchise and property expenses						17						8						5						1						31
Franchise advertising and other services expense						129						147						90						1						367
Other (income) expense						(2)						—						(4)						—						(6)
Division Operating Profit						$	313					$	208					$	93					$	(5)					$	609
Unallocated amounts:(b)
Corporate and unallocated G&A expenses(c)																														$	(89)
Unallocated Refranchising gain (loss)																														5
Unallocated Other income (expense)																														(5)
Consolidated Operating Profit																														520
Investment income (expense), net(f)																														(22)
Other pension income (expense)																														2
Interest expense, net																														(117)
Income before income taxes																														$	383

Other Segment Disclosures

						KFC Division						Taco Bell Division						Pizza Hut Division						Habit Burger & Grill Division						Corporate and Unallocated						Total
Depreciation and Amortization(e)						$	2					$	15					$	3					$	7					$	8					$	35
Capital Spending						8						21						3						9						8						49

(a)U.S. revenues included in the combined KFC, Taco Bell, Pizza Hut and Habit Burger & Grill Divisions totaled $1.0 billion and $0.9 billion in the quarters ended March 31, 2025 and 2024, respectively.

(b)Amounts have not been allocated to any segment for performance reporting purposes.

(c)Corporate and unallocated G&A expenses include charges of $17 million and $21 million in the quarters ended March 31, 2025 and 2024, respectively, related to our resource optimization program and $7 million in the quarter ended March 31, 2025 related to our brand headquarters consolidation.

(d)Unallocated Company restaurant expenses include amortization of reacquired franchise rights.

(e)The amounts of depreciation and amortization disclosed by reportable segment are primarily included within the segment expense captions of Company restaurant expenses and G&A expenses.

(f)Investment income (expense), net includes $20 million of pre-tax investment losses related to the sale of our approximate 5% minority interest in Devyani International Limited during the quarter ended March 31, 2024.

Note 10 - 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”), is funded. We fund our other U.S. plans as benefits are paid. Our two significant U.S. plans, including the Plan and 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 hourly participants.

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

			Quarter ended
			2025						2024
Service cost			$	1					$	1
Interest cost			11						11
Expected return on plan assets			(13)						(13)
Net periodic benefit cost (income)			$	(1)					$	(1)
Additional loss recognized due to settlements(a)			$	1					$	—

(a)Loss is a result of settlement transactions which exceeded the sum of annual service and interest costs for the applicable plan. This loss was recorded in Other pension (income) expense.

Note 11 - Short-term Borrowings and Long-term Debt

Short-term Borrowings						3/31/2025						12/31/2024
Current maturities of long-term debt						$	32					$	29
Less current portion of debt issuance costs and discounts						(2)						(2)
Short-term borrowings						$	30					$	27
Long-term Debt
Securitization Notes						$	3,743					$	3,743
Subsidiary Senior Unsecured Notes						750						750
Revolving Facility						374						350
Term Loan A Facility						500						500
Term Loan B Facility						1,440						1,444
YUM Senior Unsecured Notes						4,550						4,550
Finance lease obligations						67						67
						$	11,424					$	11,404
Less long-term portion of debt issuance costs and discounts						(66)						(69)
Less current maturities of long-term debt						(32)						(29)
Long-term debt						$	11,327					$	11,306

Details of our Short-term borrowings and Long-term debt as of December 31, 2024 can be found within our 2024 Form 10-K.

Cash paid for interest during the quarters ended March 31, 2025 and 2024, was $102 million and $101 million, respectively.

Note 12 - Derivative Instruments

We use derivative instruments to manage certain of our market risks related to fluctuations in interest rates, equity prices 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

In March 2025, interest rate swaps which reduced our historical exposure to interest rate risk for $1.5 billion of our variable-rate debt interest payments primarily under our Term Loan B Facility expired. Through their expiration in March 2025, these interest rate swaps were highly effective cash flow hedges.

Subsequent to the end of the first quarter, on April 4, 2025, we entered into new interest rate swaps ("2025 interest rate swaps") to fix the interest rate on $1.5 billion of borrowings, primarily under our Term Loan B Facility, from April 2025 to March 2028. Like the expired interest rate swaps, the 2025 interest rate swaps were 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. The 2025 interest rate swaps will result in a fixed rate of 5.09% on the swapped portion of the Term Loan B Facility (excluding debt issuance costs).

Gains or losses on the interest rate swaps are reported as a component of 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 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
			2025						2024						2025						2024
Interest rate swaps			$	—					$	11					$	(5)					$	(9)
Income tax benefit/(expense)			—						(3)						1						2

Total Return Swaps

We have entered into total return swap derivative contracts, with the objective of reducing our exposure to market-driven changes in certain of the liabilities associated with 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 derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the changes in the associated EID liabilities. The fair value associated with the total return swaps as of both March 31, 2025 and December 31, 2024, was not significant.

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 major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At March 31, 2025, all of the counterparties to our derivative instruments had investment grade ratings according to the three major ratings agencies. To date, all counterparties have performed in accordance with their contractual obligations.

See Note 13 for the fair value of our derivative assets and liabilities.

Note 13 - Fair Value Disclosures

As of March 31, 2025, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, 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 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:

			3/31/2025												12/31/2024
			Carrying Value						Fair Value (Level 2)						Carrying Value						Fair Value (Level 2)
Securitization Notes(a)			$	3,743					$	3,521					$	3,743					$	3,561
Subsidiary Senior Unsecured Notes(b)			750						752						750						739
Term Loan A Facility(b)			500						496						500						496
Term Loan B Facility(b)			1,440						1,450						1,444						1,451
YUM Senior Unsecured Notes(b)			4,550						4,395						4,550						4,368

(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.

Recurring Fair Value Measurements

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.

																		Fair Value
						Condensed Consolidated Balance Sheet						Level						3/31/2025						12/31/2024
Assets
Investments						Other assets						1						$	1					$	1
Investments						Other assets						3						7						7
Interest Rate Swaps						Prepaid expenses and other current assets						2						$	—					5

The fair value of the Company’s 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 on observable inputs.

Note 14 - 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 $1.5 billion through the first quarter of 2025. 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 the proposed underpayment of tax and penalties, and our matter was referred to the IRS Office of Appeals. Upon conclusion of the proceedings with the IRS Office of Appeals without resolution, we received an IRS Notice of Deficiency in March 2025. We expect to file a petition in the United States Tax Court in the second quarter of 2025 disputing the IRS Notice of Deficiency.

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-owned restaurants, and guaranteeing certain other leases, we are frequently secondarily liable on lease agreements. These leases have varying terms, the latest of which expires in 2065. As of March 31, 2025, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $350 million. The present value of these potential payments discounted at our pre-tax cost of debt at March 31, 2025, was approximately $275 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 agreement in the event of non-payment under the lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these 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 expected losses under such leases as of March 31, 2025, was not material.

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 $130 million. Of this amount, $125 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 scheduled for March 18, 2025 has been rescheduled to July 9, 2025. A hearing scheduled for April 29, 2025, before the Delhi High Court has been continued to August 19, 2025, 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.