Item 1. Financial Statements

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Item 1. Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions, except per share data)
	Quarter ended
Revenues	3/31/2026		3/31/2025
Company sales	$	785	$	607
Franchise and property revenues	856		785
Franchise contributions for advertising and other services	418		395
Total revenues	2,059		1,787
Costs and Expenses, Net
Company restaurant expenses	677		520
General and administrative expenses	322		302
Franchise and property expenses	43		34
Franchise advertising and other services expense	419		396
Refranchising (gain) loss	(1)		(5)
Other (income) expense	(45)		(8)
Total costs and expenses, net	1,415		1,239
Operating Profit	644		548
Investment (income) expense, net	—		(1)
Other pension (income) expense	—		—
Interest expense, net	128		120
Income Before Income Taxes	516		429
Income tax provision	84		176
Net Income	$	432	$	253

Basic Earnings Per Common Share	$	1.56	$	0.91

Diluted Earnings Per Common Share	$	1.55	$	0.90

Dividends Declared Per Common Share	$	0.75	$	0.71

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Quarter ended
	3/31/2026		3/31/2025

Net Income	$	432	$	253
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	(4)		25
Reclassification of adjustments and (gains) losses into Net Income	—		—
	(4)		25
Tax (expense) benefit	—		—
	(4)		25
Changes in pension and post-retirement benefits
Unrealized gains (losses) arising during the period	—		—
Reclassification of (gains) losses into Net Income	1		2
	1		2
Tax (expense) benefit	(1)		—
	—		2
Changes in derivative instruments
Unrealized gains (losses) arising during the period	11		1
Reclassification of (gains) losses into Net Income	(6)		(8)
	5		(7)
Tax (expense) benefit	(1)		2
	4		(5)

Other comprehensive income (loss), net of tax	—		22
Comprehensive Income	$	432	$	275

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	Quarter ended
	3/31/2026		3/31/2025
Cash Flows – Operating Activities
Net Income	$	432	$	253
Depreciation and amortization	60		45

Refranchising (gain) loss	(1)		(5)


Deferred income taxes	13		8
Share-based compensation expense	24		21
Changes in accounts and notes receivable	28		71
Changes in prepaid expenses and other current assets	(24)		(57)
Changes in accounts payable and other current liabilities	(75)		(32)
Changes in income taxes payable	(19)		3
Other, net	(22)		97
Net Cash Provided by Operating Activities	416		404

Cash Flows – Investing Activities
Capital spending	(75)		(71)

Acquisitions of franchise restaurants	(5)		(16)
Proceeds from refranchising of restaurants	—		15
Maturities (purchases) of Short term investments, net	—		90
Other, net	—		(16)
Net Cash (Used in) Provided by Investing Activities	(80)		2

Cash Flows – Financing Activities

Repayments of long-term debt	(8)		(5)
Revolving credit facility, three months or less, net	50		24




Repurchase shares of Common Stock	(185)		(229)
Dividends paid on Common Stock	(207)		(198)

Other, net	(25)		(35)
Net Cash Used in Financing Activities	(375)		(443)
Effect of Exchange Rates on Cash and Cash Equivalents	5		10
Net Decrease in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(34)		(25)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period	923		807
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period	$	889	$	782





See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	3/31/2026		12/31/2025
ASSETS
Current Assets
Cash and cash equivalents	$	689	$	709
Accounts and notes receivable, net	828		841
Prepaid expenses and other current assets	513		490
Total Current Assets	2,030		2,040

Property, plant and equipment, net	1,622		1,605
Goodwill	971		969
Intangible assets, net	899		909
Other assets	1,738		1,708
Deferred income taxes	952		965
Total Assets	$	8,211	$	8,197

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	1,342	$	1,433
Income taxes payable	35		46
Short-term borrowings	1,741		38
Total Current Liabilities	3,118		1,516

Long-term debt	10,213		11,872
Other liabilities and deferred credits	2,164		2,133
Total Liabilities	15,494		15,521

Shareholders’ Deficit
Common Stock, no par value, 750 shares authorized; 276 shares issued in 2026 and 277 shares issued in 2025	—		—
Accumulated deficit	(6,971)		(7,014)
Accumulated other comprehensive loss	(312)		(311)
Total Shareholders’ Deficit	(7,283)		(7,325)
Total Liabilities and Shareholders’ Deficit	$	8,211	$	8,197

See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
Quarters ended March 31, 2026 and 2025
(in millions)
	Yum! Brands, Inc.
	Issued Common Stock			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders' Deficit
	Shares	Amount
Balance at December 31, 2025	277	$	—	$	(7,014)	$	(311)	$	(7,325)
Net Income				432				432
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature						(4)		(4)

Pension and post-retirement benefit plans (net of tax impact of $1 million)						—		—
Derivative instruments (net of tax impact of $1 million)						4		4
Comprehensive Income								432
Dividends declared				(208)				(208)
Repurchase of shares of Common Stock(1)	(1)	(5)		(181)				(186)
Employee share-based award exercises	1	(23)						(23)
Share-based compensation events		28						28
Balance at March 31, 2026	276	$	—	$	(6,971)	$	(312)	$	(7,283)















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						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)















(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, 2025 (“2025 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 63,000 restaurants in 155 countries and territories. As of March 31, 2026, 97% 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, 2026, 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

In 2025, we began a review of strategic options for the Pizza Hut brand. The objective of the review is to create value for YUM, Pizza Hut and its franchise partners by determining the optimal approach to best capitalize on Pizza Hut's structural advantages — strong brand equity, experienced franchise partners and meaningful scale — in the highly fragmented pizza market. We currently intend to complete this strategic options review in 2026, and there can be no assurance this review will result in any specific outcome or transaction.

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. 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 2025 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.

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, 2026. These reclassifications had no effect on previously reported Net Income.

Note 2 - Restaurant Acquisitions

During the first quarter of 2026 and throughout 2025, we completed various restaurant acquisitions from franchisees, the most significant of which was the Taco Bell Southeast U.S. restaurant acquisition referenced below. In each transaction, the acquisition was accounted for as a business combination using the acquisition method of accounting. The allocation of the purchase price for each acquisition is based on management's analysis, which may include analysis performed by third party valuation specialists, as of the respective acquisition dates. In completing our purchase price allocations, we continue to obtain information to assist in determining the fair value of assets acquired and liabilities assumed during a one-year measurement period subsequent to the acquisition.

The financial results of all acquired restaurants have been included in our Condensed Consolidated Financial Statements since the respective dates of the acquisitions, which individually and in the aggregate, did not materially impact our results for the quarters ended March 31, 2026 and 2025, respectively. Pro forma financial information for the periods prior to acquisition is not presented due to the immaterial impact of the restaurant acquisitions on our Condensed Consolidated Financial Statements for both the 2026 and 2025 reporting periods.

Taco Bell Southeast U.S. Restaurant Acquisition

During the fourth quarter of 2025, we completed the acquisition of 128 Taco Bell restaurants across the Southeast U.S. from a franchisee. The acquisition provided YUM with an opportunity to improve and accelerate Taco Bell profitability, expand strategic leadership within the Taco Bell system and unlock significant unit development in the region. The purchase price to be allocated for accounting purposes was $666 million, which consisted of cash in the amount of $667 million, offset by the settlement of a net liability of $1 million related to our preexisting contractual relationship with the franchisee.

During the quarter ended March 31, 2026, we adjusted the preliminary estimate of identifiable net assets acquired (as recorded in the December 31, 2025 quarter of acquisition). The adjustments were not significant and we will continue to obtain information to assist in determining the fair value of net assets acquired during the remaining measurement period.

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


	Quarter ended
	2026		2025
Net Income	$	432	$	253

Weighted-average common shares outstanding (for basic calculation)	277		280
Effect of dilutive share-based employee compensation	2		2
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)	279		282

Basic EPS	$	1.56	$	0.91

Diluted EPS	$	1.55	$	0.90
Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)	1.1		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.

Note 4 - Shareholders' Deficit

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended March 31, 2026 and 2025 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	2026	2025	2026		2025		2026
May 2024	1,174	1,556	$	185	$	228	$	874

Total	1,174	1,556	$	185	$	228	$	874

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, 2026 we have remaining capacity to repurchase up to $0.9 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, 2025, net of tax	$	(161)	$	(132)	$	(18)	$	(311)

OCI, net of tax

Gains (losses) arising during the period classified into AOCI, net of tax	(4)		(1)		8		3

(Gains) losses reclassified from AOCI, net of tax	—		1		(4)		(3)
	(4)		—		4		—
Balance at March 31, 2026, net of tax	$	(166)	$	(132)	$	(14)	$	(312)

Note 5 - Other (Income) Expense


	Quarter ended
	3/31/2026		3/31/2025
Foreign exchange net (gain) loss	$	—	$	(3)
Impairment and closure expense	2		1
Other(a)	(47)		(5)
Other (income) expense	$	(45)	$	(8)

(a) The quarter ended March 31, 2026, includes income of approximately $44 million related to a credit card interchange fee litigation settlement, net of legal expenses, in which we were a plaintiff. This settlement was recorded to Unallocated Other income.

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.


	3/31/2026		12/31/2025
Accounts and notes receivable, gross	$	915	$	901
Allowance for doubtful accounts	(88)		(60)
Accounts and notes receivable, net	$	828	$	841

Prepaid Expenses and Other Current Assets


	3/31/2026		12/31/2025
Income tax receivable	$	118	$	114
Restricted cash	176		192
Prepaid expenses	143		119
Other current assets	75		65
Prepaid expenses and other current assets	$	513	$	490

Property, Plant and Equipment, net


	3/31/2026		12/31/2025
Property, plant and equipment, gross	$	3,139	$	3,091
Accumulated depreciation and amortization	(1,517)		(1,485)
Property, plant and equipment, net	$	1,622	$	1,605


Other Assets	3/31/2026		12/31/2025
Operating lease right-of-use assets(a)	$	1,231	$	1,213
Franchise incentives	216		209

Other	292		286
Other assets	$	1,738	$	1,708

(a) Non-current operating lease liabilities of $1,190 million and $1,174 million as of March 31, 2026 and December 31, 2025, 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


	3/31/2026		12/31/2025
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets	$	689	$	709
Restricted cash included in Prepaid expenses and other current assets(a)	176		192
Restricted cash and restricted cash equivalents included in Other assets(b)	22		23

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows	$	889	$	923

(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
	2026			2025
Income tax provision	$	84		$	176
Effective tax rate	16.2		%	41.0		%

Our first quarter 2026 effective tax rate was impacted by:

Favorable impacts from newly effective provisions of the One Big Beautiful Bill Act;
The continuation of our internal reorganization to consolidate our Pizza Hut legal entities and assets into two isolated ownership structures by aligning the legal ownership, simplifying the organizational footprint and consolidating the Pizza Hut domestic and international businesses. As a result, we recorded a net tax benefit of $22 million primarily resulting from recording a deferred tax asset associated with a step-up in amortizable tax basis in intellectual property rights that were transferred to international subsidiaries;
A $16 million deferred tax benefit associated with releasing valuation allowances against deferred tax assets in certain foreign jurisdictions; and
A $13 million unfavorable adjustment to tax expense associated with our decision to exit Russia in 2022.

Our first quarter 2025 effective tax rate was unfavorably impacted by $92 million in tax expense related to establishing a reserve associated with a Mexican subsidiary's ability to utilize certain losses to offset recapture gains.

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 3/31/2026
		KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
U.S.
Company sales		$	26	$	368	$	13	$	126	$	532
Franchise revenues		42		226		56		2		327
Property revenues		3		8		1		1		13
Franchise contributions for advertising and other services		11		170		65		1		248

China
Franchise revenues		76		—		19		—		96

Other
Company sales		230		3		19		—		252
Franchise revenues		327		17		65		—		409
Property revenues		12		—		—		—		12
Franchise contributions for advertising and other services		151		4		14		—		170
		$	879	$	797	$	253	$	130	$	2,059


	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.

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 2026 is presented below.


	Deferred Franchise Fees
Balance at December 31, 2025	$	443
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period	(21)
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period	14
Other(a)	(1)
Balance at March 31, 2026	$	434

(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	$	74
1 - 2 years	65
2 - 3 years	57
3 - 4 years	50
4 - 5 years	44
Thereafter	144
Total	$	434

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, while 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 3/31/2026
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	255	$	372	$	32	$	126	$	785
Franchise and property revenues	461		251		142		3		856
Franchise contributions for advertising and other services	163		175		80		1		418
	879		797		253		130		2,059

Less:
Company restaurant expenses	229		284		31		121		665
General and administrative expenses	87		53		59		13		211
Franchise and property expenses	19		6		17		1		43
Franchise advertising and other services expense	161		173		84		1		419
Other (income) expense	—		1		(3)		1		—
Division Operating Profit (Loss)	$	383	$	281	$	64	$	(7)	$	721

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(111)
Unallocated Company restaurant expenses(c)									(12)
Unallocated Refranchising gain (loss)									1
Unallocated Other income (expense)(d)									45
Consolidated Operating Profit									644
Investment income (expense), net									—
Other pension income (expense)									—
Interest expense, net									(128)
Income before income taxes									$	516

Other Segment Disclosures


	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Corporate and Unallocated		Total
Depreciation and Amortization(e)	$	13	$	28	$	6	$	7	$	6	$	60
Capital Spending	25		22		2		15		12		(75)


	Quarter ended 3/31/2025
	KFC Division		Taco Bell Division		Pizza Hut Division		Habit Burger & Grill Division		Total
Company Sales	$	216	$	263	$	3	$	125	$	607
Franchise and property revenues	407		234		143		2		786
Franchise contributions for advertising and other services	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 (Loss)	$	331	$	241	$	74	$	(1)	$	646

Unallocated amounts:(a)
Corporate and unallocated G&A expenses(b)									$	(105)
Unallocated Company restaurant expenses(c)									(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

Revenues by Country(f)


	Quarter ended
	2026		2025
United States	$	1,120	$	980
United Kingdom	255		206
Other	684		601
	$	2,059	$	1,787

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

(b)Corporate and unallocated G&A expenses include charges of $37 million in the quarter ended March 31, 2026, related to our Pizza Hut strategic options review, a charge of $17 million in the quarter ended March 31, 2025, related to our resource optimization program and charges of $1 million and $7 million in the quarters ended March 31, 2026 and 2025, respectively, related to our brand headquarters consolidation.

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

(d)Unallocated Other income (expense) includes income of $44 million, net of legal expenses, in the quarter ended March 31, 2026, related to a credit card interchange fee litigation settlement in which we were a plaintiff.

(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)The United States and United Kingdom represented 10% or more of our total revenues for all periods presented.

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
	2026		2025
Service cost	$	1	$	1
Interest cost	10		11
Expected return on plan assets	(12)		(13)
Amortization of net (gain) / loss	1		—
Net periodic benefit cost (income)	$	—	$	(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	3/31/2026		12/31/2025
Current maturities of long-term debt	$	1,751	$	39
Other	—		2
	1,751		41
Less current portion of debt issuance costs and discounts	(10)		(3)
Short-term borrowings	$	1,741	$	38

Long-term Debt
Securitization Notes	$	4,306	$	4,306
Subsidiary Senior Unsecured Notes	750		750
Revolving Facility	350		300
Term Loan A Facility	491		494
Term Loan B Facility	1,425		1,429
YUM Senior Unsecured Notes	4,550		4,550
Finance lease obligations	146		148
	$	12,018	$	11,976
Less long-term portion of debt issuance costs and discounts	(56)		(66)
Less current maturities of long-term debt	(1,751)		(39)
Long-term debt	$	10,213	$	11,872

The 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 existing Term Loan B Facility if more than $250 million of such Term Loan B remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remain outstanding as of such date. Given the $750 million in Subsidiary Senior Unsecured Notes outstanding at March 31, 2026, the maturity date of the Term Loan A Facility and Revolving Facility will occur less than 12 months from the balance sheet date of these Condensed Consolidated Financial Statements if the Company has not paid nor refinanced at least $500 million of the Subsidiary Senior Unsecured Notes 91 days prior to June 1, 2027. As such, the outstanding borrowings of the Term Loan A Facility and the Revolving Facility have been classified as Short-term borrowings in the Condensed Consolidated Balance Sheets as of March 31, 2026.

Details of our Short-term borrowings and Long-term debt as of December 31, 2025 can be found within our 2025 Form 10-K.

Cash paid for interest during the quarters ended March 31, 2026 and 2025, was $107 million and $102 million, respectively.

Note 12 - Derivative Instruments

We use derivative instruments to manage certain of our market risks related to fluctuations in foreign currency exchange rates, interest rates and deferred compensation liabilities. 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, 2026, 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.

Foreign Currency Contracts

We utilized foreign currency forward contracts with a U.S. dollar notional amount of approximately $75 million to reduce the foreign currency exposure relating to our net investment in certain Indian rupee functional currency operations during the quarter ended March 31, 2026. These forward contracts are designated as a net investment hedge and the related mark-to-market adjustments are being recorded as a cumulative translation adjustment within AOCI. These foreign currency forward contracts did not have a material impact on our Condensed Consolidated Financial Statements for the quarter ended March 31, 2026.

Interest Rate Swaps

We have utilized interest rate swaps to fix the interest rate on $1.5 billion of borrowings, primarily under our Term Loan B Facility, through March 2028. The interest rate swaps have been designated as a cash flow hedge and to date have been highly effective. The current rate on the swapped portion of the Term Loan B Facility (excluding debt issuance costs) is 5.09%.

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
	2026		2025		2026		2025

Interest rate swaps	$	10	$	—	$	(1)	$	(5)

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

As of March 31, 2026, the estimated net gain included in AOCI related to our interest rate swaps that will be reclassified into earnings in the next 12 months is $4 million, based on current Secured Overnight Financing (“SOFR”) interest rates.

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, 2026 and December 31, 2025, was not significant.

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

Note 13 - Fair Value Disclosures

As of March 31, 2026, 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:


	3/31/2026				12/31/2025
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)

Securitization Notes(a)	$	4,306	$	4,151	$	4,306	$	4,160
Subsidiary Senior Unsecured Notes(b)	750		762		750		753
Term Loan A Facility(b)	491		489		494		492
Term Loan B Facility(b)	1,425		1,434		1,429		1,440
YUM Senior Unsecured Notes(b)	4,550		4,478		4,550		4,581

(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 fair values of the assets and liabilities of the Company that are required to be measured at fair value on a recurring basis (see Note 12 for discussion regarding derivative instruments) were not significant at March 31, 2026 or December 31, 2025.

Note 14 - Contingencies

Internal Revenue Service Proposed Adjustment

Following an Internal Revenue Service (“IRS”) audit for the 2013 to 2015 fiscal years, we were unable to resolve underpayments of tax that the IRS proposed resulting from that audit using the IRS Appeals process, a pre-litigation, alternative dispute resolution tool. The IRS asserts an underpayment of tax of approximately $2.1 billion plus $418 million in penalties for fiscal year 2014. Both amounts are subject to interest, with interest of approximately $2.2 billion accruing through March 31, 2026. Those amounts relate primarily to a series of reorganizations that we undertook in 2014 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 and are contesting that position vigorously. On June 4, 2025, we filed a petition in the United States Tax Court disputing the IRS's position as set forth in a Notice of Deficiency. The IRS filed its Answer on September 12, 2025. The litigation is ongoing.

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, 2026, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $325 million. The present value of these potential payments discounted at our pre-tax cost of debt at March 31, 2026, 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, 2026, 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 $120 million. Of this amount, $115 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. Hearings before an administrative tribunal as well as the Delhi High Court have been continued and rescheduled, 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.

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