Business Wire | Jul 29, 2021 07:00AM EDT

Yum! Brands Reports Second-Quarter Results; Record 603 Net-New Units; Digital System Sales of Over $5 Billion; Same-Store Sales Growth of 23%; Reinstates Long-Term Growth Algorithm with Raised Unit Guidance

Jul. 29, 2021

LOUISVILLE, Ky.--(BUSINESS WIRE)--Jul. 29, 2021--Yum! Brands, Inc. (NYSE: YUM) today reported results for the second-quarter ended June 30, 2021. Worldwide system sales excluding foreign currency translation grew 26%, with 23% same-store sales and 2% unit growth. Second-quarter GAAP EPS was $1.29, an increase of 91% over the prior year quarter. Second-quarter EPS excluding Special Items was $1.16, an increase of 41% over the prior year quarter.

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DAVID GIBBS COMMENTS

David Gibbs, CEO, said "Our strong second-quarter results, led by record unit development and 23% same-store sales growth are a testament to our iconic brands, world-class talent, and best-in-class franchisees. I'm proud that each of our divisions reported positive same-store sales growth on a 2-year basis, a step up from first-quarter trends. This sustained momentum was underpinned by our investments in digital and off-premise and the agility of our brands to meet the needs of consumers in an ever-changing environment. I'm thrilled to say that unit development has accelerated driven by strong unit-level economics. On the basis of these strong results, we're reinstating our long-term growth algorithm and revising the unit growth component of this algorithm from 4% unit growth to between 4% and 5% unit growth. The resilience of our diversified global business positions us perfectly to drive growth and maximize value creation for all our stakeholders for years to come."

SECOND-QUARTER HIGHLIGHTS

* Worldwide system sales excluding foreign currency translation grew 26%, with KFC at 35%, Taco Bell at 24% and Pizza Hut at 10%. * We reported 2% unit growth year-over-year and record second-quarter net new unit growth of 603. * Foreign currency translation favorably impacted divisional operating profit by $27 million.

% Change

System Same-Store GAAP Core Sales Sales Units Operating Operating Profit Ex F/X Profit ^1

KFC Division +35 +30 +5 +108 +93

Pizza Hut +10 +10 (3) +18 +14Division

Taco Bell +24 +21 +2 +29 +29Division

Worldwide +26 +23 +2 +89 +53

Second-Quarter

Year-to-Date

2021

2020

% Change

2021

2020

% Change

GAAP EPS

$1.29

$0.67

+91

$2.35

$0.94

+150

Special Items EPS1

$0.13

$(0.15)

NM

$0.13

$(0.52)

NM

EPS Excluding Special Items

$1.16

$0.82

+41

$2.22

$1.46

+52

Second-Quarter Year-to-Date

2021 2020 % Change 2021 2020 % Change

GAAP EPS $1.29 $0.67 +91 $2.35 $0.94 +150

Special Items EPS^1 $0.13 $(0.15) NM $0.13 $(0.52) NM

EPS Excluding Special Items $1.16 $0.82 +41 $2.22 $1.46 +52

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

All comparisons are versus the same period a year ago.

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

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

KFC DIVISION

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



All comparisons are versus the same period a year ago.

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

Digital system sales includes all transactions where consumers at systemrestaurants utilize ordering interaction that is primarily facilitated byautomated technology.

KFC DIVISION

Second-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F 2021 2020 Reported Ex F /X /X

Restaurants 25,720 24,390 +5 N/A 25,720 24,390 +5 N/A

System Sales ($MM) 7,638 5,288 +44 +35 14,911 11,575 +29 +22

Same-Store Sales Growth +30 (21) NM NM +18 (15) NM NM(%)

Franchise and Property 379 251 +52 +42 733 566 +30 +23Revenues ($MM)

Operating Profit ($MM) 318 153 +108 +93 618 377 +64 +54

Operating Margin (%) 46.5 37.4 9.1 9.4 47.3 38.7 8.6 8.8

Second-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+42

+10

+24

+11

Same-Store Sales Growth

+36

+11

+20

+12

* KFC Division opened 522 gross new restaurants in 62 countries. * Operating margin increased 9.1 percentage points driven by same-store sales growth, lower bad debt expense, and unit growth. * Foreign currency translation favorably impacted operating profit by $23 million. * For the division, same-store sales grew 2% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the second-quarter 2021. For KFC International, same-store sales declined 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For KFC U.S., same-store sales grew 19% on a 2-year basis.

Second-Quarter (% Change) Year-to-Date (% Change)

International U.S. International U.S.

System Sales Growth Ex F/X +42 +10 +24 +11

Same-Store Sales Growth +36 +11 +20 +12

* KFC Division opened 522 gross new restaurants in 62 countries. * Operating margin increased 9.1 percentage points driven by same-store sales growth, lower bad debt expense, and unit growth. * Foreign currency translation favorably impacted operating profit by $23 million. * For the division, same-store sales grew 2% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the second-quarter 2021. For KFC International, same-store sales declined 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For KFC U.S., same-store sales grew 19% on a 2-year basis.

System Sales Growth Ex F/XKFC Markets^1 Percent of KFC System Sales^2 Second-Quarter Year-to-Date (% Change) (% Change)

China 27% +14 +19

United States 18% +10 +11

Asia 12% +11 +5

Russia, Central & Eastern Europe 7% +101 +40

Australia 7% +23 +17

United Kingdom 6% +248 +80

Western Europe 5% +65 +28

Latin America 5% +81 +29

Africa 4% +186 +55

Middle East / Turkey / North Africa 4% +118 +49

Canada 2% +15 +13

Thailand 2% Even (10)

India 1% +221 +61

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

^2Reflects Full Year 2020.

PIZZA HUT DIVISION

Second-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F 2021 2020 Reported Ex F /X /X

Restaurants 17,809 18,326 (3) N/A 17,809 18,326 (3) N/A

System Sales ($MM) 3,143 2,753 +14 +10 6,239 5,554 +12 +9

Same-Store Sales Growth +10 (9) NM NM +11 (10) NM NM(%)

Franchise and Property 147 126 +16 +12 288 259 +11 +8Revenues ($MM)

Operating Profit ($MM) 103 87 +18 +14 205 163 +25 +21

Operating Margin (%) 41.3 36.8 4.5 4.0 41.0 34.8 6.2 5.8

Second-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+19

Even

+13

+4

Same-Store Sales Growth

+16

+4

+12

+10

* Pizza Hut Division opened 210 gross new restaurants in 36 countries. * Operating margin increased 4.5 percentage points driven by same-store sales growth. * Foreign currency translation favorably impacted operating profit by $4 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For Pizza Hut International, same-store sales declined 6% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For Pizza Hut U.S., same-store sales grew 9% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the second-quarter 2021.

Second-Quarter (% Change) Year-to-Date (% Change)

International U.S. International U.S.

System Sales Growth Ex F/X +19 Even +13 +4

Same-Store Sales Growth +16 +4 +12 +10

* Pizza Hut Division opened 210 gross new restaurants in 36 countries. * Operating margin increased 4.5 percentage points driven by same-store sales growth. * Foreign currency translation favorably impacted operating profit by $4 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For Pizza Hut International, same-store sales declined 6% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of the second-quarter 2021. For Pizza Hut U.S., same-store sales grew 9% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the second-quarter 2021.

Percent of Pizza System Sales Growth Ex F/XPizza Hut Markets^1 Hut System Sales^2 Second-Quarter Year-to-Date (% Change) (% Change)

United States 45% Even +4

China 15% +16 +33

Asia 15% +2 +1

Latin America / Spain / Portugal 10% +36 +11

Europe (excluding Spain & 8% +26 (3)Portugal)

Middle East / Turkey / North 3% +57 +13Africa

Canada 3% +12 +15

India 1% +163 +51

Africa <1% +157 +60

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

^2Reflects Full Year 2020.

TACO BELL DIVISION

Second-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F 2021 2020 Reported Ex F /X /X

Restaurants 7,567 7,400 +2 N/A 7,567 7,400 +2 N/A

System Sales ($MM) 3,189 2,564 +24 +24 6,069 5,160 +18 +17

Same-Store Sales Growth (%) +21 (8) NM NM +15 (4) NM NM

Franchise and Property 179 147 +22 +21 341 295 +16 +15Revenues ($MM)

Operating Profit ($MM) 198 154 +29 +29 376 298 +26 +26

Operating Margin (%) 37.2 34.4 2.8 2.8 36.8 33.0 3.8 3.8

* Taco Bell Division opened 91 gross new restaurants in 18 countries. * Operating margin increased 2.8 percentage points due to same-store sales growth offset by higher restaurant costs. * For the division, same-store sales grew 12% on a 2-year basis.

HABIT BURGER GRILL DIVISION

* The Habit Burger Grill Division opened 4 gross new restaurants in the U.S and Cambodia. * During the quarter, The Habit Burger Grill Division same-store sales grew 31%. For the year-to-date, The Habit Burger Grill Division same-store sales grew 22%. * For the division, same-store sales grew 7% on a 2-year basis, which includes the impact of about 1% of stores that were temporarily closed as of the end of the second-quarter 2021.

OTHER ITEMS

* Same-store sales growth on a 2-year basis is calculated using the geometric method as follows: (1 + Q2 2020 reported same-store sales growth) * (1 + Q2 2021 reported same-store sales growth) - 1. * On April 1, we issued $1.1 billion of YUM Senior Unsecured Notes with a coupon of 4.625% due in 2032. The proceeds from this transaction were used to redeem $1.05 billion of 5.25% Subsidiary Senior Unsecured Notes (due in 2026), including the applicable call premium. * On June 30, we issued a redemption notice for our $350 million 3.75% YUM Senior Unsecured Notes, which were scheduled to mature on November 1, 2021. The notes will be redeemed on August 2, 2021 at par. * Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the second-quarter Form 10-Q.

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 8:15 a.m. Eastern Time July 29, 2021. The number is 877/871-3172 for U.S. callers, 412/902-6603 for international callers, conference ID 5033749.

The call will be available for playback beginning at 10:00 a.m. Eastern Time July 29, 2021 through August 5, 2021. To access the playback, dial 877/344-7529 in the U.S., 855/669-9658 in Canada, and 412/317-0088 internationally, conference ID 10158416.

The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting "Q2 2021 Yum! Brands, Inc. Earnings Call."

ADDITIONAL INFORMATION ONLINE

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

FORWARD-LOOKING STATEMENTS

This announcement may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "likely," "seek," "project," "model," "ongoing," "will," "should," "forecast," "outlook" or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the severity and duration of the COVID-19 pandemic, food safety and food borne-illness issues; health concerns arising from outbreaks of a significant health epidemic; the success of our franchisees and licensees; our significant exposure to the Chinese market; changes in economic and political conditions in countries and territories outside of the U.S. where we operate; our ability to protect the integrity and security of personal information of our customers and employees; our ability to successfully implement technology initiatives; our increasing dependence on multiple digital commerce platforms; the impact of social media; our ability to secure and maintain distribution and adequate supply to our restaurants; the loss of key personnel, or labor shortages or difficulty finding qualified employees; the success of our development strategy in emerging markets; changes in commodity, labor and other operating costs; harm or dilution to our brands caused by franchisee and third party activity; pending or future litigation and legal claims or proceedings; changes in or noncompliance with government regulations, including labor standards and anti-bribery or anti-corruption laws; tax matters, including changes in tax laws or disagreements with taxing authorities; consumer preferences and perceptions of our brands; failure to protect our service marks or other intellectual property; changes in consumer discretionary spending and general economic conditions; competition within the retail food industry; not realizing the anticipated benefits from past or potential future acquisitions, investments or other strategic transactions, and risks relating to our significant amount of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

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

Yum! Brands, Inc., based in Louisville, Kentucky, has over 51,000 restaurants in more than 150 countries and territories primarily operating the company's brands - KFC, Pizza Hut and Taco Bell - global leaders of the chicken, pizza and Mexican-style food categories. The Company's family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index and in 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.

YUM! Brands, Inc.

Condensed Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)

Quarter ended % Year to date % Change Change

6/30/21 6/30/20 B/(W) 6/30/21 6/30/20 B/(W)

Revenues

Company sales $ 520 $ 403 29 $ 996 $ 758 31

Franchise and 706 525 35 1,364 1,121 22property revenues

Franchisecontributions for 376 270 39 728 582 25advertising andother services

Total revenues 1,602 1,198 34 3,088 2,461 26



Costs and Expenses, Net

Company restaurant 417 349 (20) 809 647 (25)expenses

General andadministrative 230 259 12 436 467 7expenses

Franchise and 27 36 25 50 94 48property expenses

Franchiseadvertising and 372 264 (41) 715 574 (25)other servicesexpense

Refranchising (7 ) (8 ) (18) (22 ) (21 ) 2(gain) loss

Other (income) (4 ) (2 ) NM (10 ) 150 NMexpense

Total costs and 1,035 898 (15) 1,978 1,911 (4)expenses, net



Operating Profit 567 300 89 1,110 550 102

Investment (income) (1 ) (91 ) (99) (1 ) (57 ) (99)expense, net

Other pension 2 2 23 5 5 7(income) expense

Interest expense, 159 132 (21) 290 250 (17)net

Income before 407 257 58 816 352 132income taxes

Income tax 16 51 68 99 63 (58)provision

Net Income $ 391 $ 206 89 $ 717 $ 289 148



Basic EPS

EPS $ 1.31 $ 0.68 92 $ 2.39 $ 0.96 150

Average shares 298 303 1 299 302 1outstanding



Diluted EPS

EPS $ 1.29 $ 0.67 91 $ 2.35 $ 0.94 150

Average shares 304 307 1 304 307 1outstanding



Dividends declared $ 0.50 $ 0.47 $ 1.00 $ 0.94 per common share

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

6/30/21

6/30/20

B/(W)

6/30/21

6/30/20

B/(W)

Company sales

$

147

$

86

70

$

280

$

216

29

Franchise and property revenues

379

251

52

733

566

30

Franchise contributions for advertising and other services

156

72

115

294

193

52

Total revenues

682

409

67

1,307

975

34

Company restaurant expenses

118

83

(41)

229

198

(16)

General and administrative expenses

80

70

(13)

153

143

(6)

Franchise and property expenses

15

29

46

29

62

53

Franchise advertising and other services expense

151

70

(117)

284

190

(50)

Other (income) expense

-

4

NM

(6

)

5

NM

Total costs and expenses, net

364

256

(42)

689

598

(15)

Operating Profit

$

318

$

153

108

$

618

$

377

64

Company restaurant margin %1

19.2

%

2.7

%

16.5 ppts.

18.0

%

8.1

%

9.9 ppts.

Operating margin

46.5

%

37.4

%

9.1 ppts.

47.3

%

38.7

%

8.6 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

6/30/21 6/30/20 B/(W) 6/30/21 6/30/20 B/(W)



Company sales $ 147 $ 86 70 $ 280 $ 216 29

Franchise and property 379 251 52 733 566 30revenues

Franchise contributionsfor advertising and 156 72 115 294 193 52other services

Total revenues 682 409 67 1,307 975 34



Company restaurant 118 83 (41) 229 198 (16)expenses

General and 80 70 (13) 153 143 (6)administrative expenses

Franchise and property 15 29 46 29 62 53expenses

Franchise advertisingand other services 151 70 (117) 284 190 (50)expense

Other (income) expense - 4 NM (6 ) 5 NM

Total costs and 364 256 (42) 689 598 (15)expenses, net

Operating Profit $ 318 $ 153 108 $ 618 $ 377 64



Company restaurant 19.2 % 2.7 % 16.5 18.0 % 8.1 % 9.9margin %^1 ppts. ppts.



Operating margin 46.5 % 37.4 % 9.1 47.3 % 38.7 % 8.6 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

6/30/21

6/30/20

B/(W)

6/30/21

6/30/20

B/(W)

Company sales

$

12

$

19

(34)

$

26

$

37

(29)

Franchise and property revenues

147

126

16

288

259

11

Franchise contributions for advertising and other services

90

90

-

186

174

7

Total revenues

249

235

6

500

470

6

Company restaurant expenses

11

18

36

24

37

34

General and administrative expenses

43

44

6

83

90

9

Franchise and property expenses

5

1

(389)

7

13

48

Franchise advertising and other services expense

91

87

(5)

185

171

(8)

Other (income) expense

(4

)

(2

)

NM

(4

)

(4

)

NM

Total costs and expenses, net

146

148

2

295

307

4

Operating Profit

$

103

$

87

18

$

205

$

163

25

Company restaurant margin %1

8.0

%

4.5

%

3.5 ppts.

7.3

%

0.8

%

6.5 ppts.

Operating margin

41.3

%

36.8

%

4.5 ppts.

41.0

%

34.8

%

6.2 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

6/30/21 6/30/ B/(W) 6/30/21 6/30/20 B/(W) 20



Company sales $ 12 $ 19 (34) $ 26 $ 37 (29)

Franchise and property 147 126 16 288 259 11revenues

Franchise contributionsfor advertising and 90 90 - 186 174 7other services

Total revenues 249 235 6 500 470 6



Company restaurant 11 18 36 24 37 34expenses

General and 43 44 6 83 90 9administrative expenses

Franchise and property 5 1 (389) 7 13 48expenses

Franchise advertisingand other services 91 87 (5) 185 171 (8)expense

Other (income) expense (4 ) (2 ) NM (4 ) (4 ) NM

Total costs and 146 148 2 295 307 4expenses, net

Operating Profit $ 103 $ 87 18 $ 205 $ 163 25



Company restaurant 8.0 % 4.5 % 3.5 7.3 % 0.8 % 6.5margin %^1 ppts. ppts.



Operating margin 41.3 % 36.8 % 4.5 41.0 % 34.8 % 6.2 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

6/30/21

6/30/20

B/(W)

6/30/21

6/30/20

B/(W)

Company sales

$

223

$

194

16

$

431

$

392

10

Franchise and property revenues

179

147

22

341

295

16

Franchise contributions for advertising and other services

130

108

21

248

215

15

Total revenues

532

449

19

1,020

902

13

Company restaurant expenses

165

147

(13)

323

300

(8)

General and administrative expenses

33

37

10

64

75

14

Franchise and property expenses

7

5

(34)

14

16

14

Franchise advertising and other services expense

130

107

(21)

246

213

(15)

Other (income) expense

(1

)

(1

)

NM

(3

)

-

NM

Total costs and expenses, net

334

295

(14)

644

604

(7)

Operating Profit

$

198

$

154

29

$

376

$

298

26

Company restaurant margin %1

25.9

%

24.5

%

1.4 ppts.

25.0

%

23.5

%

1.5 ppts.

Operating margin

37.2

%

34.4

%

2.8 ppts.

36.8

%

33.0

%

3.8 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

6/30/21 6/30/20 B/(W) 6/30/21 6/30/20 B/(W)



Company sales $ 223 $ 194 16 $ 431 $ 392 10

Franchise and property 179 147 22 341 295 16revenues

Franchise contributionsfor advertising and 130 108 21 248 215 15other services

Total revenues 532 449 19 1,020 902 13



Company restaurant 165 147 (13) 323 300 (8)expenses

General and 33 37 10 64 75 14administrative expenses

Franchise and property 7 5 (34) 14 16 14expenses

Franchise advertisingand other services 130 107 (21) 246 213 (15)expense

Other (income) expense (1 ) (1 ) NM (3 ) - NM

Total costs and 334 295 (14) 644 604 (7)expenses, net

Operating Profit $ 198 $ 154 29 $ 376 $ 298 26



Company restaurant 25.9 % 24.5 % 1.4 25.0 % 23.5 % 1.5margin %^1 ppts. ppts.



Operating margin 37.2 % 34.4 % 2.8 36.8 % 33.0 % 3.8 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

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

YUM! Brands, Inc.

Condensed Consolidated Balance Sheets

(amounts in millions)

(unaudited) 6/30/21

12/31/20

ASSETS

Current Assets

Cash and cash equivalents

$

552

$

730

Accounts and notes receivable, less allowance: $34 in 2021 and $45 in 2020

525

534

Prepaid expenses and other current assets

437

425

Total Current Assets

1,514

1,689

Property, plant and equipment, net of accumulated depreciation of $1,279 in 2021 and $1,230 in 2020

1,211

1,235

Goodwill

597

597

Intangible assets, net

352

343

Other assets

1,408

1,435

Deferred income taxes

567

553

Total Assets

$

5,649

$

5,852

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities

Accounts payable and other current liabilities

$

1,142

$

1,189

Income taxes payable

16

33

Short-term borrowings

400

453

Total Current Liabilities

1,558

1,675

Long-term debt

10,258

10,272

Other liabilities and deferred credits

1,726

1,796

Total Liabilities

13,542

13,743

Shareholders' Deficit

Common Stock, no par value, 750 shares authorized; 296 shares issued in 2021 and 300 issued in 2020

-

-

Accumulated deficit

(7,569

)

(7,480

)

Accumulated other comprehensive loss

(324

)

(411

)

Total Shareholders' Deficit

(7,893

)

(7,891

)

Total Liabilities and Shareholders' Deficit

$

5,649

$

5,852

See accompanying notes.

YUM! Brands, Inc.

Condensed Consolidated Balance Sheets

(amounts in millions)

(unaudited) 12/31/20 6/30/21

ASSETS

Current Assets

Cash and cash equivalents $ 552 $ 730

Accounts and notes receivable, less allowance: $34 in 525 534 2021 and $45 in 2020

Prepaid expenses and other current assets 437 425

Total Current Assets 1,514 1,689



Property, plant and equipment, net of accumulated 1,211 1,235 depreciation of $1,279 in 2021 and $1,230 in 2020

Goodwill 597 597

Intangible assets, net 352 343

Other assets 1,408 1,435

Deferred income taxes 567 553

Total Assets $ 5,649 $ 5,852



LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities

Accounts payable and other current liabilities $ 1,142 $ 1,189

Income taxes payable 16 33

Short-term borrowings 400 453

Total Current Liabilities 1,558 1,675



Long-term debt 10,258 10,272

Other liabilities and deferred credits 1,726 1,796

Total Liabilities 13,542 13,743



Shareholders' Deficit

Common Stock, no par value, 750 shares authorized; 296 - - shares issued in 2021 and 300 issued in 2020

Accumulated deficit (7,569 ) (7,480 )

Accumulated other comprehensive loss (324 ) (411 )

Total Shareholders' Deficit (7,893 ) (7,891 )

Total Liabilities and Shareholders' Deficit $ 5,649 $ 5,852

See accompanying notes.

YUM! Brands, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

Quarter ended

6/30/21

6/30/20

Cash Flows - Operating Activities

Net Income

$

717

$

289

Depreciation and amortization

78

53

Impairment and closure expense

1

146

Refranchising (gain) loss

(22

)

(21

)

Investment (income) expense, net

(1

)

(57

)

Contributions to defined benefit pension plans

(3

)

(1

)

Deferred income taxes

(41

)

(20

)

Share-based compensation expense

38

29

Changes in accounts and notes receivable

25

4

Changes in prepaid expenses and other current assets

(11

)

(26

)

Changes in accounts payable and other current liabilities

(95

)

(76

)

Changes in income taxes payable

(25

)

(49

)

Other, net

112

91

Net Cash Provided by Operating Activities

773

362

Cash Flows - Investing Activities

Capital spending

(84

)

(67

)

Acquisition of The Habit Restaurants, Inc.

-

(408

)

Proceeds from refranchising of restaurants

43

3

Other, net

33

-

Net Cash Used in Financing Activities

(8

)

(472

)

Cash Flows - Financing Activities

Proceeds from long-term debt

1,900

600

Repayments of long-term debt

(2,002

)

(41

)

Revolving credit facilities, three months or less, net

-

575

Short-term borrowings by original maturity

More than three months - proceeds

-

85

More than three months - payments

-

(90

)

Three months or less, net

-

-

Repurchase shares of Common Stock

(530

)

-

Dividends paid on Common Stock

(299

)

(283

)

Debt issuance costs

(18

)

(7

)

Other, net

(17

)

(31

)

Net Cash Provided by (Used in) Financing Activities

(966

)

808

Effect of Exchange Rate on Cash and Cash Equivalents

11

(18

)

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

(190

)

680

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

1,024

768

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

$

834

$

1,448

See accompanying notes.

Reconciliation of Non-GAAP Measurements to GAAP Results(amounts in millions, except per share amounts)(unaudited)

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

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

* Effective Tax Rate excluding Special Items;

* Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally;

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

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

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

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

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

YUM! Brands, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

Quarter ended

6/30/21 6/30/20

Cash Flows - Operating Activities

Net Income $ 717 $ 289

Depreciation and amortization 78 53

Impairment and closure expense 1 146

Refranchising (gain) loss (22 ) (21 )

Investment (income) expense, net (1 ) (57 )

Contributions to defined benefit pension plans (3 ) (1 )

Deferred income taxes (41 ) (20 )

Share-based compensation expense 38 29

Changes in accounts and notes receivable 25 4

Changes in prepaid expenses and other current assets (11 ) (26 )

Changes in accounts payable and other current liabilities (95 ) (76 )

Changes in income taxes payable (25 ) (49 )

Other, net 112 91

Net Cash Provided by Operating Activities 773 362



Cash Flows - Investing Activities

Capital spending (84 ) (67 )

Acquisition of The Habit Restaurants, Inc. - (408 )

Proceeds from refranchising of restaurants 43 3

Other, net 33 -

Net Cash Used in Financing Activities (8 ) (472 )



Cash Flows - Financing Activities

Proceeds from long-term debt 1,900 600

Repayments of long-term debt (2,002 ) (41 )

Revolving credit facilities, three months or less, net - 575

Short-term borrowings by original maturity

More than three months - proceeds - 85

More than three months - payments - (90 )

Three months or less, net - -

Repurchase shares of Common Stock (530 ) -

Dividends paid on Common Stock (299 ) (283 )

Debt issuance costs (18 ) (7 )

Other, net (17 ) (31 )

Net Cash Provided by (Used in) Financing Activities (966 ) 808

Effect of Exchange Rate on Cash and Cash Equivalents 11 (18 )

Net Increase (Decrease) in Cash, Cash Equivalents, (190 ) 680 Restricted Cash and Restricted Cash Equivalents

Cash, Cash Equivalents, Restricted Cash and Restricted Cash 1,024 768 Equivalents - Beginning of Period

Cash, Cash Equivalents, Restricted Cash and Restricted Cash $ 834 $ 1,448 Equivalents - End of Period



See accompanying notes.

Reconciliation of Non-GAAP Measurements to GAAP Results(amounts in millions, except per share amounts)(unaudited)

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

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

* Effective Tax Rate excluding Special Items;

* Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally;

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

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

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

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

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

Quarter ended Year to date

6/30/21 6/30/20 6/30/21 6/30/20

Detail of Special Items

Refranchising gain (loss)^(a) $ 2 $ 3 $ 4 $ 6

Costs associated withacquisition and integration of - (3 ) - (9 )Habit Burger Grill^(b)

Impairment of Habit Burger Grill - - - (139 )goodwill^(c)

Unlocking Opportunity Initiative - (50 ) - (50 )contribution^(d)

Charges associated with resource (2 ) - (3 ) - optimization^(e)

Other Special Items Income - (4 ) 1 (7 )(Expense)

Special Items Income (Expense) - - (54 ) 2 (199 )Operating Profit

Charges associated with resourceoptimization - Other pension 1 - 1 - (expense) income^(e)

Interest expense, net^(f) (34 ) - (34 ) -

Special Items Income (Expense) (33 ) (54 ) (31 ) (199 )before Income Taxes

Tax Benefit on Special Items^(g) 8 7 7 40

Tax Benefit - Intra-entitytransfer of intellectual 64 - 64 - property^(h)

Special Items Income (Expense), $ 39 $ (47 ) $ 40 $ (159 )net of tax

Average diluted shares 304 307 304 307 outstanding

Special Items diluted EPS $ 0.13 $ (0.15 ) $ 0.13 $ (0.52 )



Reconciliation of GAAP Operating Profit to Core Operating Profit



Consolidated

GAAP Operating Profit $ 567 $ 300 $ 1,110 $ 550

Special Items Income (Expense) - (54 ) 2 (199 )

Foreign Currency Impact on 27 N/A 43 N/A Divisional Operating Profit

Core Operating Profit $ 540 $ 354 $ 1,065 $ 749



KFC Division

GAAP Operating Profit $ 318 $ 153 $ 618 $ 377

Foreign Currency Impact on 23 N/A 36 N/A Divisional Operating Profit

Core Operating Profit $ 295 $ 153 $ 582 $ 377

Pizza Hut Division

GAAP Operating Profit

$

103

$

87

$

205

$

163

Foreign Currency Impact on Divisional Operating Profit

4

N/A

7

N/A

Core Operating Profit

$

99

$

87

$

198

$

163

Taco Bell Division

GAAP Operating Profit

$

198

$

154

$

376

$

298

Foreign Currency Impact on Divisional Operating Profit

-

N/A

-

N/A

Core Operating Profit

$

198

$

154

$

376

$

298

Habit Burger Grill Division

GAAP Operating Profit (Loss)

$

5

$

(6

)

$

5

$

(8

)

Foreign Currency Impact on Divisional Operating Profit

-

N/A

-

N/A

Core Operating Profit

$

5

$

(6

)

$

5

$

(8

)

Reconciliation of Diluted EPS to Diluted EPS excluding Special Items

Diluted EPS

$

1.29

$

0.67

$

2.35

$

0.94

Special Items Diluted EPS

0.13

(0.15

)

0.13

(0.52

)

Diluted EPS excluding Special Items

$

1.16

$

0.82

$

2.22

$

1.46

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

GAAP Effective Tax Rate

4.0

%

19.8

%

12.1

%

17.8

%

Impact on Tax Rate as a result of Special Items

(16.0

)%

1.0

%

(8.0

)%

(0.9

)%

Effective Tax Rate excluding Special Items

20.0

%

18.8

%

20.1

%

18.7

%

Pizza Hut Division

GAAP Operating Profit $ 103 $ 87 $ 205 $ 163

Foreign Currency Impact on 4 N/A 7 N/A Divisional Operating Profit

Core Operating Profit $ 99 $ 87 $ 198 $ 163



Taco Bell Division

GAAP Operating Profit $ 198 $ 154 $ 376 $ 298

Foreign Currency Impact on - N/A - N/A Divisional Operating Profit

Core Operating Profit $ 198 $ 154 $ 376 $ 298



Habit Burger Grill Division

GAAP Operating Profit (Loss) $ 5 $ (6 ) $ 5 $ (8 )

Foreign Currency Impact on - N/A - N/A Divisional Operating Profit

Core Operating Profit $ 5 $ (6 ) $ 5 $ (8 )



Reconciliation of Diluted EPS to Diluted EPS excluding Special Items

Diluted EPS $ 1.29 $ 0.67 $ 2.35 $ 0.94

Special Items Diluted EPS 0.13 (0.15 ) 0.13 (0.52 )

Diluted EPS excluding Special Items $ 1.16 $ 0.82 $ 2.22 $ 1.46



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

GAAP Effective Tax Rate 4.0 % 19.8 % 12.1 % 17.8 %

Impact on Tax Rate as a result of (16.0 ) 1.0 % (8.0 ) (0.9 )Special Items % % %

Effective Tax Rate excluding 20.0 % 18.8 % 20.1 % 18.7 %Special Items

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

Quarter ended 6/30/2021

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Unallocated

Total

GAAP Operating Profit (Loss)

$

318

$

103

$

198

$

5

$

(57

)

$

567

Less:

Franchise and property revenues

379

147

179

1

-

706

Franchise contributions for advertising and other services

156

90

130

-

-

376

Add:

General and administrative expenses

80

43

33

11

63

230

Franchise and property expenses

15

5

7

-

-

27

Franchise advertising and other services expense

151

91

130

-

-

372

Refranchising (gain) loss

-

-

-

-

(7

)

(7

)

Other (income) expense

-

(4

)

(1

)

-

1

(4

)

Company restaurant profit

$

29

$

1

$

58

$

15

$

-

$

103

Company sales

$

147

$

12

$

223

$

138

$

-

$

520

Company restaurant margin %

19.2

%

8.0

%

25.9

%

11.6

%

-

%

19.8

%

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

Quarter ended 6/30/2021

Pizza Taco Habit KFC Hut Bell Burger Unallocated Total Division Division Division Grill Division

GAAP Operating $ 318 $ 103 $ 198 $ 5 $ (57 ) $ 567 Profit (Loss)

Less:

Franchise andproperty 379 147 179 1 - 706 revenues

Franchisecontributionsfor 156 90 130 - - 376 advertisingand otherservices

Add:

General andadministrative 80 43 33 11 63 230 expenses

Franchise andproperty 15 5 7 - - 27 expenses

Franchiseadvertisingand other 151 91 130 - - 372 servicesexpense

Refranchising - - - - (7 ) (7 )(gain) loss

Other (income) - (4 ) (1 ) - 1 (4 )expense

Companyrestaurant $ 29 $ 1 $ 58 $ 15 $ - $ 103 profit

Company sales $ 147 $ 12 $ 223 $ 138 $ - $ 520

Companyrestaurant 19.2 % 8.0 % 25.9 % 11.6 % - % 19.8 %margin %

Quarter ended 6/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Unallocated

Total

GAAP Operating Profit (Loss)

$

153

$

87

$

154

$

(6

)

$

(88

)

$

300

Less:

Franchise and property revenues

251

126

147

1

-

525

Franchise contributions for advertising and other services

72

90

108

-

-

270

Add:

General and administrative expenses

70

44

37

10

98

259

Franchise and property expenses

29

1

5

-

1

36

Franchise advertising and other services expense

70

87

107

-

-

264

Refranchising (gain) loss

-

-

-

-

(8

)

(8

)

Other (income) expense

4

(2

)

(1

)

-

(3

)

(2

)

Company restaurant profit

$

3

$

1

$

47

$

3

$

-

$

54

Company sales

$

86

$

19

$

194

$

104

$

-

$

403

Company restaurant margin %

2.7

%

4.5

%

24.5

%

3.0

%

-

%

13.4

%

Quarter ended 6/30/2020

Pizza Taco Habit KFC Hut Bell Burger Unallocated Total Division Division Division Grill Division

GAAP Operating $ 153 $ 87 $ 154 $ (6 ) $ (88 ) $ 300 Profit (Loss)

Less:

Franchise andproperty 251 126 147 1 - 525 revenues

Franchisecontributionsfor 72 90 108 - - 270 advertisingand otherservices

Add:

General andadministrative 70 44 37 10 98 259 expenses

Franchise andproperty 29 1 5 - 1 36 expenses

Franchiseadvertisingand other 70 87 107 - - 264 servicesexpense

Refranchising - - - - (8 ) (8 )(gain) loss

Other (income) 4 (2 ) (1 ) - (3 ) (2 )expense

Companyrestaurant $ 3 $ 1 $ 47 $ 3 $ - $ 54 profit

Company sales $ 86 $ 19 $ 194 $ 104 $ - $ 403

Companyrestaurant 2.7 % 4.5 % 24.5 % 3.0 % - % 13.4 % margin %

Year to date 6/30/2021

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Unallocated

Total

GAAP Operating Profit (Loss)

$

618

$

205

$

376

$

5

$

(94

)

$

1,110

Less:

Franchise and property revenues

733

288

341

2

-

1,364

Franchise contributions for advertising and other services

294

186

248

-

-

728

Add:

General and administrative expenses

153

83

64

23

113

436

Franchise and property expenses

29

7

14

-

-

50

Franchise advertising and other services expense

284

185

246

-

-

715

Refranchising (gain) loss

-

-

-

-

(22

)

(22

)

Other (income) expense

(6

)

(4

)

(3

)

-

3

(10

)

Company restaurant profit

$

51

$

2

$

108

$

26

$

-

$

187

Company sales

$

280

$

26

$

431

$

259

$

-

$

996

Company restaurant margin %

18.0

%

7.3

%

25.0

%

10.3

%

-

%

18.7

%

Year to date 6/30/2021

Pizza Taco Habit KFC Hut Bell Burger Unallocated Total Division Division Division Grill Division

GAAP Operating $ 618 $ 205 $ 376 $ 5 $ (94 ) $ 1,110 Profit (Loss)

Less:

Franchise andproperty 733 288 341 2 - 1,364 revenues

Franchisecontributionsfor 294 186 248 - - 728 advertisingand otherservices

Add:

General andadministrative 153 83 64 23 113 436 expenses

Franchise andproperty 29 7 14 - - 50 expenses

Franchiseadvertisingand other 284 185 246 - - 715 servicesexpense

Refranchising - - - - (22 ) (22 )(gain) loss

Other (income) (6 ) (4 ) (3 ) - 3 (10 )expense

Companyrestaurant $ 51 $ 2 $ 108 $ 26 $ - $ 187 profit

Company sales $ 280 $ 26 $ 431 $ 259 $ - $ 996

Companyrestaurant 18.0 % 7.3 % 25.0 % 10.3 % - % 18.7 %margin %

Year to date 6/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Unallocated

Total

GAAP Operating Profit (Loss)

$

377

$

163

$

298

$

(8

)

$

(280

)

$

550

Less:

Franchise and property revenues

566

259

295

1

-

1,121

Franchise contributions for advertising and other services

193

174

215

-

-

582

Add:

General and administrative expenses

143

90

75

11

148

467

Franchise and property expenses

62

13

16

-

3

94

Franchise advertising and other services expense

190

171

213

-

-

574

Refranchising (gain) loss

-

-

-

-

(21

)

(21

)

Other (income) expense

5

(4

)

-

-

149

150

Company restaurant profit

$

18

$

-

$

92

$

2

$

(1

)

$

111

Company sales

$

216

$

37

$

392

$

113

$

-

$

758

Company restaurant margin %

8.1

%

0.8

%

23.5

%

2.1

%

-

%

14.7

%

Year to date 6/30/2020

Pizza Taco Habit KFC Hut Bell Burger Unallocated Total Division Division Division Grill Division

GAAP Operating $ 377 $ 163 $ 298 $ (8 ) $ (280 ) $ 550 Profit (Loss)

Less:

Franchise andproperty 566 259 295 1 - 1,121 revenues

Franchisecontributionsfor 193 174 215 - - 582 advertisingand otherservices

Add:

General andadministrative 143 90 75 11 148 467 expenses

Franchise andproperty 62 13 16 - 3 94 expenses

Franchiseadvertisingand other 190 171 213 - - 574 servicesexpense

Refranchising - - - - (21 ) (21 )(gain) loss

Other (income) 5 (4 ) - - 149 150 expense

Companyrestaurant $ 18 $ - $ 92 $ 2 $ (1 ) $ 111 profit

Company sales $ 216 $ 37 $ 392 $ 113 $ - $ 758

Companyrestaurant 8.1 % 0.8 % 23.5 % 2.1 % - % 14.7 %margin %



YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Quarter Ended 6/30/2021

KFC

Pizza Hut

Taco Bell

Habit Burger Grill

Corporate and Unallocated

Consolidated

Total revenues

$

682

$

249

$

532

$

139

$

-

$

1,602

Company restaurant expenses

118

11

165

123

-

417

General and administrative expenses

80

43

33

11

63

230

Franchise and property expenses

15

5

7

-

-

27

Franchise advertising and other services expense

151

91

130

-

-

372

Refranchising (gain) loss

-

-

-

-

(7

)

(7

)

Other (income) expense

-

(4

)

(1

)

-

1

(4

)

Total costs and expenses, net

364

146

334

134

57

1,035

Operating Profit (Loss)

$

318

$

103

$

198

$

5

$

(57

)

$

567

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Quarter Ended Pizza Taco Habit Corporate6/30/2021 KFC Hut Bell Burger and Consolidated Grill Unallocated

Total revenues $ 682 $ 249 $ 532 $ 139 $ - $ 1,602



Companyrestaurant 118 11 165 123 - 417 expenses

General andadministrative 80 43 33 11 63 230 expenses

Franchise andproperty 15 5 7 - - 27 expenses

Franchiseadvertisingand other 151 91 130 - - 372 servicesexpense

Refranchising - - - - (7 ) (7 )(gain) loss

Other (income) - (4 ) (1 ) - 1 (4 )expense

Total costsand expenses, 364 146 334 134 57 1,035 net

Operating $ 318 $ 103 $ 198 $ 5 $ (57 ) $ 567 Profit (Loss)

Quarter Ended 6/30/2020

KFC

Pizza Hut

Taco Bell

Habit Burger Grill

Corporate and Unallocated

Consolidated

Total revenues

$

409

$

235

$

449

$

105

$

-

$

1,198

Company restaurant expenses

83

18

147

101

-

349

General and administrative expenses

70

44

37

10

98

259

Franchise and property expenses

29

1

5

-

1

36

Franchise advertising and other services expense

70

87

107

-

-

264

Refranchising (gain) loss

-

-

-

-

(8)

(8)

Other (income) expense

4

(2)

(1)

-

(3)

(2)

Total costs and expenses, net

256

148

295

111

88

898

Operating Profit (Loss)

$

153

$

87

$

154

$

(6)

$

(88)

$

300

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Quarter Ended Pizza Taco Habit Corporate6/30/2020 KFC Hut Bell Burger and Consolidated Grill Unallocated

Total revenues $ 409 $ 235 $ 449 $ 105 $ - $ 1,198



Companyrestaurant 83 18 147 101 - 349 expenses

General andadministrative 70 44 37 10 98 259 expenses

Franchise andproperty 29 1 5 - 1 36 expenses

Franchiseadvertisingand other 70 87 107 - - 264 servicesexpense

Refranchising - - - - (8) (8) (gain) loss

Other (income) 4 (2) (1) - (3) (2) expense

Total costsand expenses, 256 148 295 111 88 898 net

Operating $ 153 $ 87 $ 154 $ (6) $ (88) $ 300 Profit (Loss)

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Year to Date 6 Pizza Habit Corporate/30/2021 KFC Hut Taco Bell Burger and Consolidated Grill Unallocated

Total revenues $ 1,307 $ 500 $ 1,020 $ 261 $ - $ 3,088



Companyrestaurant 229 24 323 233 - 809 expenses

General andadministrative 153 83 64 23 113 436 expenses

Franchise andproperty 29 7 14 - - 50 expenses

Franchiseadvertisingand other 284 185 246 - - 715 servicesexpense

Refranchising - - - - (22 ) (22 )(gain) loss

Other (income) (6 ) (4 ) (3 ) - 3 (10 )expense

Total costsand expenses, 689 295 644 256 94 1,978 net

Operating $ 618 $ 205 $ 376 $ 5 $ (94 ) $ 1,110 Profit (Loss)

Year to Date 6/30/2020

KFC

Pizza Hut

Taco Bell

Habit Burger Grill

Corporate and Unallocated

Consolidated

Total revenues

$

975

$

470

$

902

114

$

-

$

2,461

Company restaurant expenses

198

37

300

111

1

647

General and administrative expenses

143

90

75

11

148

467

Franchise and property expenses

62

13

16

-

3

94

Franchise advertising and other services expense

190

171

213

-

-

574

Refranchising (gain) loss

-

-

-

-

(21

)

(21

)

Other (income) expense

5

(4

)

-

-

149

150

Total costs and expenses, net

598

307

604

122

280

1,911

Operating Profit

$

377

$

163

$

298

$

(8

)

$

(280

)

$

550

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Notes to the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheetsand Condensed Consolidated Statements of Cash Flows(amounts in millions)(unaudited)

Year to Date 6 Pizza Taco Habit Corporate/30/2020 KFC Hut Bell Burger and Consolidated Grill Unallocated

Total revenues $ 975 $ 470 $ 902 114 $ - $ 2,461



Companyrestaurant 198 37 300 111 1 647 expenses

General andadministrative 143 90 75 11 148 467 expenses

Franchise andproperty 62 13 16 - 3 94 expenses

Franchiseadvertisingand other 190 171 213 - - 574 servicesexpense

Refranchising - - - - (21 ) (21 )(gain) loss

Other (income) 5 (4 ) - - 149 150 expense

Total costsand expenses, 598 307 604 122 280 1,911 net

Operating $ 377 $ 163 $ 298 $ (8 ) $ (280 ) $ 550 Profit

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Notes to the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheetsand Condensed Consolidated Statements of Cash Flows(amounts in millions)(unaudited)

Amounts presented as of and for the quarters and years to date ended June 30,2021 and 2020 are preliminary.



Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our previously announced plans to have at least 98% franchise restaurant(a) ownership by the end of 2018. As such, refranchising gains and losses recorded during the quarters and years to date ended June 30, 2021 and 2020 as Special Items directly relate to refranchising actions initiated prior to December 31, 2018.



During the quarters ended June 30, 2021 and 2020, we recorded net refranchising gains of $2 million and $3 million, respectively, that have been reflected as Special Items. During the years to date ended June 30, 2021 and 2020, we recorded net refranchising gains of $4 million and $6 million, respectively, that have been reflected as Special Items.



Additionally, we recorded net refranchising gains of $5 million during both quarters ended June 30, 2021 and 2020, that have not been reflected as Special Items. During the years to date ended June 30, 2021 and 2020, we recorded net refranchising gains of $18 million and $15 million, respectively, that have not been reflected as Special Items. These gains relate to refranchising of restaurants in 2021 and 2020 that were not part of our aforementioned plans to achieve 98% franchise ownership and that we believe are now more indicative of our expected ongoing refranchising activity.



During the quarter and year to date ended June 30, 2020, we recorded(b) Special Item charges of $3 million and $9 million, respectively, related to the acquisition and integration of The Habit Restaurants, Inc. ("Habit").



On March 18, 2020 we acquired all of the issued and outstanding common shares of Habit for total cash consideration of $408 million, net of cash acquired. During the first-quarter of 2020 the operation of substantially all Habit restaurants was impacted by government recommendations and mandates arising from containment and mitigation measures related to the(c) COVID-19 global pandemic. As a result of the impacts of the COVID-19 pandemic on Habit's results through March 31, 2020 as well as general market conditions, during the quarter ended March 31, 2020 we recorded a goodwill impairment charge of $139 million to Other (income) expense, which has been reflected as a Special Item. We reflected the tax benefit of this impairment charge of $32 million as a Special Item.



On June 24, 2020, the YUM! Brands, Inc. Board of Directors approved the establishment of the Company's new global "Unlocking Opportunity Initiative" including a $100 million investment over the next five years to fight inequality by unlocking opportunities for employees, restaurant team(d) members and communities. The Company contributed $50 million in the quarter ended June 30, 2020 to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) as part of these efforts and investment. As a result of the size and specific nature of this contribution, we have reflected the associated expense as a Special Item.



During the quarter ended June 30, 2021, we recorded a charge of $2 million to General and administrative expenses and a credit of $1 million to Other pension (income) expense related to a resource optimization program initiated in the third quarter of 2020. This program is part of our efforts(e) to optimize our resources, reallocating them toward critical areas of the business that will drive future growth. These critical areas include accelerating our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. These charges have been reflected as Special Items.



During the quarter ended June 30, 2021, certain subsidiaries of the Company redeemed $1,050 million aggregate principal amount of 5.25% Subsidiary Senior Unsecured Notes due in 2026 (the "2026 Notes"). The redemption amount was equal to 102.625% of the $1,050 million aggregate principal(f) amount redeemed, reflecting a $28 million "call premium". We recognized the call premium and the write-off of $6 million of unamortized debt issuance costs associated with the 2026 Notes within Interest expense, net and we reflected the charges as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.



Tax Benefit on Special Items was determined based upon the impact of the(g) nature, as well as the jurisdiction of the respective individual components within Special Items.



During the quarter ended June 30, 2021, the United Kingdom ("UK") Finance Act 2021 was enacted resulting in an increase in the UK corporate income tax rate from 19% to 25%. As a result, in the quarter ended June 30, 2021,(h) we remeasured the deferred tax assets originally recorded as a Special Item as part of a fourth quarter 2019 intercompany restructuring of intellectual property rights into the UK, which resulted in the recognition of an additional $64 million deferred tax benefit as a Special Item.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005361/en/

CONTACT: Analysts are invited to contact: Jodi Dyer, Vice President, Investor Relations and CFO, Digital & Technology at 888/298-6986

CONTACT: Members of the media are invited to contact: Virginia Ferguson, Vice President, Public Relations, at 502/874-8200