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YUM! Brands Q3 EPS excluding Special Items falls to $1.56

Pizza Hut's completed sales produced a $1.7 billion pre-tax gain, while diluted EPS excluding Special Items was $1.56.

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Rhea-AI Filing Summary

YUM! Brands (YUM) reported third-quarter revenue of $2.054 billion, up 4% year over year, and net income of $1.623 billion. Diluted GAAP EPS was $5.92, while diluted EPS excluding Special Items was $1.56 versus $1.58 a year earlier. GAAP operating profit included a $1.7 billion pre-tax gain from Pizza Hut divestitures; EPS excluding Special Items excludes that gain and other items.

YUM completed two Pizza Hut sales: mainland China to Yum China Holdings, Inc. on August 7, 2026, for $1.2 billion in proceeds, and the brand excluding mainland China to LongRange Capital on September 1, 2026, for $1.2 billion of net proceeds. Year-to-date revenue was $6.282 billion, up 10%, and diluted EPS excluding Special Items was $4.68, up 8%.

Excluding Pizza Hut results from both years, Core Operating Profit grew 1% for the quarter and 6% year to date. KFC’s unit count increased 7%, while Taco Bell’s third-quarter same-store sales fell 4%. YUM reported $1.8 billion returned to shareholders through dividends and share repurchases year to date.

2 points · 0 major

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Positive

  • Moderate pointYear-to-date revenue rose 10% to $6.282 billion.
  • Moderate pointYear-to-date diluted EPS excluding Special Items rose 8% to $4.68.

Negative

  • Moderate pointTaco Bell third-quarter operating profit fell 5% to $255 million.

Filing Explained

At September 30, short-term borrowings were 2,141 million dollars and long-term debt was 9,459 million dollars; Restricted Group detail is due with third-quarter Form 10-Q.

The attached third-quarter statements are preliminary and unaudited. As of September 30, 2026, cash and equivalents were $2,108 million, short-term borrowings were $2,141 million, and long-term debt was $9,459 million.

YUM says it will provide details on outstanding debt in the Restricted Group capital structure when it files its third-quarter Form 10-Q.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Third-quarter revenue $2.054 billion Quarter ended September 30, 2026; up 4% year over year
Third-quarter net income $1.623 billion Quarter ended September 30, 2026
Diluted GAAP EPS $5.92 per share Quarter ended September 30, 2026
Diluted EPS excluding Special Items $1.56 per share Third quarter of 2026; $1.58 in the prior-year quarter
Pizza Hut divestiture pre-tax gain $1.7 billion Recorded in the third quarter of 2026
Year-to-date revenue $6.282 billion Through September 30, 2026; up 10% year over year
Year-to-date diluted EPS excluding Special Items $4.68 per share Through September 30, 2026; up 8% year over year
Returned to shareholders $1.8 billion Year to date through dividends and share repurchases
Core Operating Profit financial
"Core Operating Profit excludes Special Items and foreign currency translation"
Core operating profit is the company's profit from its normal day-to-day business activities after removing one-time items, unusual gains or losses, and financing or tax effects. Investors use it like a household budget that strips out unexpected windfalls or repairs: it shows the steady earnings power of the business and helps compare performance across periods or with peers without distortion from rare or non‑operational events.
Special Items financial
"Special Items are not included in any of our Division segment results"
Special items are unusual or infrequent gains or losses that a company reports separately from its regular operating profit, such as restructuring costs, asset write-downs, legal settlements, or one-time gains from selling a business. Investors pay attention because these items can make reported profits look better or worse than the company’s ongoing performance—like a homeowner’s one-off roof repair affecting a single month’s budget but not the household’s regular income and expenses.
Company restaurant margin % financial
"Company restaurant margin as a percentage of sales"
same-store sales growth financial
"Same-Store Sales Growth (%)"
Same-store sales growth measures how much revenue changes at outlets that have been open for a comparable period (typically a year), excluding sales from newly opened or recently closed locations. It matters to investors because it shows whether demand is growing at the business’s existing operations — like checking whether established trees are producing more fruit rather than counting fruit from newly planted trees — and helps separate true organic performance from growth driven by expansion or closures.
Revenue $2.054 billion +4% year over year
Net income $1.623 billion +309% year over year
Diluted GAAP EPS $5.92 per share +319% year over year
Diluted EPS excluding Special Items $1.56 per share -1% year over year
Guidance

Long-term targets, on average over an extended period: 5% unit growth, 7% system sales growth excluding F/X, and at least 8% Core Operating Profit growth.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were YUM's third-quarter 2026 earnings?
YUM reported total revenue of $2.054 billion, up 4% year over year, and diluted GAAP EPS of $5.92. Diluted EPS excluding Special Items was $1.56, compared with $1.58 in the prior-year quarter.

How much did YUM receive from selling Pizza Hut?
YUM completed the mainland China sale to Yum China Holdings, Inc. for $1.2 billion in proceeds on August 7, 2026. The sale of Pizza Hut excluding mainland China to LongRange Capital, completed September 1, 2026, produced $1.2 billion of net proceeds.

What long-term growth targets has YUM set?
YUM's long-term targets, on average over an extended period, are 5% unit growth, 7% system sales growth excluding F/X, and at least 8% Core Operating Profit growth.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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0001041061false00010410612026-11-032026-11-03

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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

November 3, 2026
________________________
YUM! BRANDS, INC.
(Exact name of registrant as specified in its charter)

Commission File Number 1-13163

North Carolina13-3951308
(State or other jurisdiction of(I.R.S. Employer
incorporation)Identification No.)
1441 Gardiner Lane,Louisville,Kentucky40213
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(502)874-8300
Former name or former address, if changed since last report:N/A

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, no par valueYUMNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

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


    
Item 2.02 Results of Operations and Financial Condition

On November 3, 2026, YUM! Brands, Inc. (“YUM”) issued a press release announcing financial results for the quarter ended September 30, 2026.  A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

Item 9.01Financial Statements and Exhibits

(d) Exhibits
Exhibit NumberDescription
99.1
Earnings Press Release dated November 3, 2026 from YUM! Brands, Inc.
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

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


YUM! BRANDS, INC.
(Registrant)



Date:November 3, 2026/s/ David E. Russell
David E. Russell
Sr. Vice President, Finance and Corporate Controller
(Principal Accounting Officer)


image.jpg
NEWS
Yum! Brands Reports Third-Quarter Results
KFC Unit Growth of 7%; Yum! Completes Pizza Hut Divestiture;
Returns $1.8 Billion to Shareholders Through Dividends and Share Repurchases Year-to-Date;
Taco Bell U.S. Outpaces the QSR Industry Since End of September

Louisville, KY (November 3, 2026) - Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2026. Third-quarter GAAP EPS was $5.92 and third-quarter EPS excluding Special Items was $1.56.

CHRIS TURNER COMMENTS
Chris Turner, CEO, said “Yum! has entered its next chapter of growth, having completed the divestiture of Pizza Hut, with a sharper focus on our Raise the B.A.R. priorities. In support of those priorities, KFC delivered record Q3 global gross unit development and continues to scale its new global strategy reflecting the brand’s ambition of being the most modern chicken QSR. I’m also very pleased that, since the end of September, Taco Bell U.S. has been outpacing the QSR industry on same-store sales growth. Taco Bell will continue building on this momentum, with differentiated value and innovation that resonate across all consumer groups. With iconic brands, unmatched global scale and significant development white space, we remain confident in our ability to deliver consistent earnings growth and create long-term shareholder value.”

STRATEGIC ANNOUNCEMENTS
•On August 7th and September 1st, Yum! completed the sales of the Pizza Hut brand in mainland China to Yum China and Pizza Hut excluding mainland China to LongRange Capital, respectively.

PERFORMANCE METRICS EXCLUDING PIZZA HUT
•Unit count increased 7% including 955 gross new units in the quarter.
•Digital system sales over $9 billion, with digital mix reaching 64%.
Performance MetricsThird-Quarter % Change
System Sales
Ex F/X		Same-Store SalesUnits
KFC Division+6+1+7
Taco Bell Division(2)(4)+3
Worldwide3Even+7
OPERATING RESULTS
•2026 results presented below include the results of Pizza Hut prior to the sale dates referenced above. 2025 results include the results of Pizza Hut for the entirety of the periods presented below.
•Excluding the results of Pizza Hut from both 2026 and 2025, Core Operating Profit grew 1% for the quarter and 6% for the year to date.
•2026 GAAP Operating Profit figures presented below reflect a pre-tax gain of approximately $1.7 billion related to the sales of Pizza Hut.
•Foreign currency translation favorably impacted Divisional Operating Profit by $7 million and $48 million in the quarter and year to date, respectively.
Reported ResultsThird-Quarter % ChangeYear-to-Date % Change
GAAP Operating Profit
Core
Operating Profit1
GAAP Operating Profit
Core
Operating Profit1
KFC Division+9+8+13+8
Taco Bell Division(5)(4)+10+10
Pizza Hut Division(41)(41)(23)(24)
Worldwide+248(4)+97+2
Third-QuarterYear-to-Date
20262025% Change20262025% Change
GAAP EPS$5.92$1.41+319$10.51$3.64+188
Less Special Items EPS1
$4.36$(0.16)NM$5.83$(0.67)NM
EPS Excluding Special Items$1.56$1.58(1)$4.68$4.32+8
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.
All comparisons are versus the same period a year ago.
System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.
Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology.
Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 • P: 502 874-8300 • investors.yum.com



KFC DIVISION

Third-QuarterYear-to-Date
%/ppts Change%/ppts Change
20262025ReportedEx F/X20262025ReportedEx F/X
Restaurants35,42132,951+7N/A35,42132,951+7N/A
System Sales ($MM)10,0469,340+8+628,94126,401+10+6
Same-Store Sales Growth (%)+1+3NMNM+2+2NMNM
Franchise and Property Revenues ($MM)497459+8+71,4351,303+10+7
Operating Profit ($MM)425388+9+81,2171,082+13+8
Operating Margin (%)44.844.1+0.7+0.644.343.3+1.0+1.0

•KFC Division opened 878 gross new restaurants across 66 countries.
•Company-owned restaurant margins were 12.3%, down 140 basis points year-over-year, primarily driven by the 15 lower margin stores being tested under the Saucy brand in 2026.
•Foreign currency translation favorably impacted operating profit by $7 million.

KFC Markets1
Percent of KFC System Sales2
System Sales Growth Ex F/X
Third-Quarter
(% Change)		Year-to-Date
(% Change)
China26%+3+5
Europe13%+2+1
United States12%(6)(3)
Asia12%+12+11
Latin America8%+11+11
Australia7%+5+4
United Kingdom7%+7+8
Middle East / Turkey / North Africa6%+25+21
Africa5%+8+7
Canada2%Even(1)
India2%+20+17
1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.
2Reflects Full Year 2025.

2


TACO BELL DIVISION
Third-QuarterYear-to-Date
%/ppts Change%/ppts Change
20262025ReportedEx F/X20262025ReportedEx F/X
Restaurants9,1028,816+3N/A9,1028,816+3N/A
System Sales ($MM)4,2924,368(2)(2)13,36312,623+6+6
Same-Store Sales Growth (%)(4)+7NMNM+4+7NMNM
Franchise and Property Revenues ($MM)245254(3)(3)767735+4+4
Operating Profit ($MM)255267(5)(4)846770+10+10
Operating Margin (%)33.136.6(3.5)(3.5)35.036.7(1.7)(1.7)


•Taco Bell Division opened 73 gross new restaurants across 16 countries.
•Taco Bell U.S. system sales declined 3% and same-store sales declined 4%. U.S. company-owned restaurant margins were 20.5%.
•Taco Bell International system sales excluding foreign currency translation grew 14% and same-store sales grew 5%.

HABIT BURGER & GRILL DIVISION

•Habit Burger & Grill Division opened 4 gross new restaurants.
•Habit Burger & Grill Division system sales grew 3% and same-store sales were flat.

OTHER ITEMS
•See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Special Items by financial statement line item including the impact of Special Items on General and administrative expenses.
•Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.

LONG-TERM GROWTH ALGORITHM
•The Company targets the following long-term financial performance metrics, first announced in 2022, that it believes it can achieve over an extended period of time, on average:
•5% Unit Growth
•7% System Sales Growth, excluding F/X; and
•At least 8% Core Operating Profit Growth1























1At this time, we are unable to forecast any Special Items or any impact from changes in F/X rates, and therefore cannot provide an estimate of Operating Profit Growth on a GAAP basis.

3

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 November 3, 2026. The number is 833/461-5787 for North America callers and +1/585-542-9983 for international callers, conference ID 304548872.

The call will be available for playback beginning at 10:00 a.m. Eastern Time November 3, 2026 through November 10, 2026. To access the playback, dial +1/833-309-1852, conference ID 304548872.

The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q3 2026 Yum! Brands, Inc. Earnings Call.”
ADDITIONAL INFORMATION ONLINE
Quarter-end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included in our Condensed Consolidated Summary of Results.
FORWARD-LOOKING STATEMENTS
This announcement may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns, including the impact of the July 2026 cyclospora outbreak; the impact of such outbreak on sales and pace of recovery; adverse impacts of public health conditions or other catastrophic or unforeseen events; the success and financial stability of our concepts’ franchisees; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments, other strategic transactions or initiatives, or our portfolio business model; the possibility that we may not be able to realize the anticipated benefits of the sale of the Pizza Hut business; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability, including the expansion or threatened expansion of restrictive trade policies or anti-American sentiment; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy, data protection and emerging technology legal requirements; our ability to successfully and securely implement technology initiatives, including utilization of artificial intelligence; our increasing dependence on digital commerce and delivery platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel or failure to successfully transition senior management, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences such as wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of severe weather and climate change; pending or future litigation and legal claims or proceedings; changes in, or non-compliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and interest rate conditions; competition within the retail food industry; and risks relating to our level of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.

You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands is a leading restaurant company that grows iconic brands globally, powered by world-class talent, franchise partners and technology. Yum! subsidiaries or franchisees operate more than 44,000 KFC, Taco Bell and/or Habit Burger & Grill restaurants across 150-plus countries and territories.

KFC and Taco Bell are global leaders in their respective categories, while Habit Burger & Grill is a fast-casual concept known for made-to-order chargrilled burgers, sandwiches and more. Guided by its Recipe for Good Growth and Raising the B.A.R. priorities, Yum! brings together its global brands, franchise system, scale and leading digital and technology capabilities to drive growth and create long-term value. Together, these strengths help Yum! build the world’s most loved, trusted and connected restaurant brands.
    
Analysts are invited to contact:
Matt Morris, Head of Investor Relations at 888/298-6986
Members of the media are invited to contact:
Lori Eberenz, Director, Public Relations, at 502/874-8200
4

YUM! Brands, Inc.
Condensed Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
Quarter ended% ChangeYear to date% Change
9/30/269/30/25B/(W)9/30/269/30/25B/(W)
Revenues
Company sales$784 $697 13$2,406 $1,974 22
Franchise and property revenues854 857 —2,605 2,476 5
Franchise contributions for advertising and other services415 426 (3)1,271 1,249 2
Total revenues2,054 1,979 46,282 5,699 10
Costs and Expenses, Net
Company restaurant expenses679 587 (16)2,057 1,668 (23)
General and administrative expenses305 282 (8)950 885 (7)
Franchise and property expenses51 35 (48)136 107 (27)
Franchise advertising and other services expense413 427 31,276 1,251 (2)
Refranchising (gain) loss(22)(17)29(24)(33)(27)
Other (income) expense(7)(1)NM(46)(15)NM
Total costs and expenses, net1,419 1,313 (8)4,349 3,863 (13)
Gain on Pizza Hut divestitures1,683 — N/A1,683 — N/A
Operating Profit2,317 666 2483,616 1,836 97
Investment (income) expense, net— — NM(6)(1)NM
Other pension (income) expense2 1 (121)2 — (563)
Interest expense, net120 124 4377 368 (3)
Income before income taxes2,195 541 3063,243 1,470 121
Income tax provision572 144 (296)335 446 25
Net Income$1,623 $397 309$2,908 $1,024 184
Basic EPS
EPS$5.96 $1.42 318$10.58 $3.67 188
Average shares outstanding272 278 2275 279 1
Diluted EPS
EPS$5.92 $1.41 319$10.51 $3.64 188
Average shares outstanding274 281 2277 281 2
Dividends declared per common share$0.75 $0.71 $2.25 $2.13 

See accompanying notes.

5

YUM! Brands, Inc.
KFC DIVISION Operating Results
(amounts in millions)
(unaudited)

Quarter ended% ChangeYear to date% Change
9/30/269/30/25B/(W)9/30/269/30/25B/(W)
Company sales$274 $259 6$804 $721 12
Franchise and property revenues497 459 81,435 1,303 10
Franchise contributions for advertising and other services177 161 9511 478 7
Total revenues948 879 82,750 2,501 10
Company restaurant expenses240 224 (7)711 635 (12)
General and administrative expenses90 92 2264 261 (1)
Franchise and property expenses21 15 (39)57 51 (12)
Franchise advertising and other services expense174 160 (8)503 472 (7)
Other (income) expense(2)— NM(4)1 NM
Total costs and expenses, net523 491 (6)1,533 1,419 (8)
Operating Profit$425 $388 9$1,217 $1,082 13
Company restaurant margin %1
12.3 %13.7 %(1.4) ppts.11.6 %11.9 %(0.3) ppts.
Operating margin44.8 %44.1 %0.7 ppts.44.3 %43.3 %1.0 ppts.
 
See accompanying notes.

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

6

YUM! Brands, Inc.
TACO BELL DIVISION Operating Results
(amounts in millions)
(unaudited)
 
Quarter ended% ChangeYear to date% Change
9/30/269/30/25B/(W)9/30/269/30/25B/(W)
Company sales$354 $298 19$1,122 $848 32
Franchise and property revenues245 254 (3)767 735 4
Franchise contributions for advertising and other services171 178 (4)530 514 3
Total revenues770 730 52,420 2,098 15
Company restaurant expenses283 227 (24)860 649 (33)
General and administrative expenses52 50 (4)158 148 (7)
Franchise and property expenses11 8 (39)27 22 (23)
Franchise advertising and other services expense169 177 5529 510 (4)
Other (income) expense— — NM— — NM
Total costs and expenses, net515 463 (11)1,574 1,328 (19)
Operating Profit$255 $267 (5)$846 $770 10
Company restaurant margin %1
20.2 %23.7 %(3.5) ppts.23.4 %23.5 %(0.1) ppts.
Operating margin33.1 %36.6 %(3.5) ppts.35.0 %36.7 %(1.7) ppts.
 
See accompanying notes.

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



7

YUM! Brands, Inc.
PIZZA HUT DIVISION Operating Results
(amounts in millions)
(unaudited)

 
Quarter ended% ChangeYear to date% Change
9/30/269/30/25B/(W)9/30/269/30/25B/(W)
Company sales$26 $9 177$89 $20 350
Franchise and property revenues109 146 (25)394 436 (10)
Franchise contributions for advertising and other services67 85 (21)226 255 (11)
Total revenues202 240 (16)709 710 —
Company restaurant expenses24 10 (126)85 21 (297)
General and administrative expenses43 50 14159 159 —
Franchise and property expenses18 11 (72)49 32 (53)
Franchise advertising and other services expense69 89 22240 268 10
Other (income) expense(2)(4)NM(8)(9)NM
Total costs and expenses, net152 156 3524 471 (11)
Operating Profit$50 $84 (41)$184 $239 (23)
Company restaurant margin %1
8.4 %(12.2)%20.6 ppts.3.9 %(9.2)%13.1 ppts.
Operating margin24.7 %35.1 %(10.4) ppts.26.0 %33.6 %(7.6) ppts.
 
See accompanying notes.

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


8

YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited)


9/30/26
12/31/25
ASSETS
Current Assets
Cash and cash equivalents$2,108 $709 
Accounts and notes receivable, less allowance: $54 in 2026 and $60 in 2025639 841 
Prepaid expenses and other current assets558 490 
Total Current Assets3,305 2,040 
Property, plant and equipment, net of accumulated depreciation of $1,531 in 2026
and $1,485 in 20251,638 1,605 
Goodwill718 969 
Intangible assets, net803 909 
Other assets1,620 1,708 
Deferred income taxes685 965 
Total Assets$8,769 $8,197 
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and other current liabilities$1,271 $1,433 
Income taxes payable20 46 
Short-term borrowings2,141 38 
Total Current Liabilities3,431 1,516 
Long-term debt9,459 11,872 
Other liabilities and deferred credits2,043 2,133 
Total Liabilities14,933 15,521 
Shareholders' Deficit
Common Stock, no par value, 750 shares authorized; 269 shares issued in 2026 and 277 shares issued in 2025
— — 
Accumulated deficit(5,924)(7,014)
Accumulated other comprehensive loss(241)(311)
Total Shareholders' Deficit(6,165)(7,325)
Total Liabilities and Shareholders' Deficit$8,769 $8,197 
 See accompanying notes.


9

YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Year to date
9/30/269/30/25
Cash Flows - Operating Activities
Net Income$2,908 $1,024 
Depreciation and amortization177 139 
Refranchising (gain) loss(24)(33)
Gain on Pizza Hut divestitures(1,683)— 
Deferred income taxes62 175 
Share-based compensation expense51 54 
Changes in accounts and notes receivable18 51 
Changes in prepaid expenses and other current assets(52)(8)
Changes in accounts payable and other current liabilities(6)(42)
Changes in income taxes payable(44)(31)
Other, net(9)64 
Net Cash Provided by Operating Activities 1,398 1,393 
Cash Flows - Investing Activities
Capital spending(262)(236)
Acquisition of franchise restaurants(5)(100)
Proceeds from refranchising of restaurants32 53 
Maturities (purchases) of Short-term investments, net— 91 
Proceeds from Pizza Hut divestitures2,380 — 
Other, net10 (16)
Net Cash Provided by (Used in) Investing Activities2,155 (208)
Cash Flows - Financing Activities
Proceeds from long-term debt— 1,493 
Repayments of long-term debt(27)(957)
Revolving credit facilities, three months or less, net(300)(350)
Repurchase shares of Common Stock(1,202)(374)
Dividends paid on Common Stock(616)(592)
Other, net(35)(42)
Net Cash Used in Financing Activities (2,180)(822)
Effect of Exchange Rate on Cash and Cash Equivalents3 29 
Net Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents1,376 393 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period923 807 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period$2,299 $1,200 
See accompanying notes.

10

Reconciliation of Non-GAAP Measurements to GAAP Results
(amounts in millions, except per share amounts)
(unaudited)
 
In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.

•Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below);
•Effective Tax Rate excluding Special Items;
•Core Operating Profit. Core Operating Profit excludes Special Items and foreign currency translation (“F/X”) and we use Core Operating Profit for the purposes of evaluating performance internally;
•Net Income, excluding Special Items;
•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) - (f) 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. Further, while we generally include depreciation and amortization of restaurant-level assets within Divisional Company restaurant expenses used to derive Divisional Company restaurant profit, we record amortization of reacquired franchise rights arising from acquisition accounting within Corporate and Unallocated Company restaurant expenses as such amortization is not believed to be indicative of ongoing Divisional results as well as to enhance the comparability of acquired stores' margins with those of existing restaurants. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

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

Quarter endedYear to date
9/30/269/30/259/30/269/30/25
Reconciliation of GAAP Operating Profit to Core Operating Profit
Consolidated
GAAP Operating Profit$2,317$666$3,616 $1,836 
Detail of Special Items:
Charges associated with Pizza Hut Strategic Options Review (a)
268107 8 
Gain on Pizza Hut divestitures(b)
(1,683)—(1,683)— 
Charges associated with Brand HQ Consolidation (c)
—31 20 
Charges associated with Resource Optimization—5— 37 
Income from Litigation Settlement(d)
——(44)— 
German acquisition and Turkey termination-related costs(e)
—1— 8 
Special Items (Income) Expense - Operating Profit(1,656)18(1,618)73 
Positive Foreign Currency Impact on Division Operating Profit(7)N/A(48)N/A
Core Operating Profit$654$684$1,950 $1,909 
11

Special Items as shown above were recorded to the financial statement line items identified below.
Quarter endedYear to date
9/30/269/30/259/30/269/30/25
Condensed Consolidated Summary of Results Line Item
Decrease in Franchise and property revenues$—$4$—$5
Increase in General and administrative expenses261410971
Increase in Gain on Pizza Hut divestitures(1,683)—(1,683)—
Increase in Other income——(44)(3)
Special Items (Income) Expense - Operating Profit$(1,656)$18$(1,618)$73
KFC Division
GAAP Operating Profit$425 $388 $1,217 $1,082 
Negative (Positive) Foreign Currency Impact (7)N/A(44)N/A
Core Operating Profit$418 $388 $1,174 $1,082 
Taco Bell Division
GAAP Operating Profit$255 $267 $846 $770 
Negative (Positive) Foreign Currency Impact— N/A(1)N/A
Core Operating Profit$255 $267 $846 $770 
Pizza Hut Division
GAAP Operating Profit$50 $84 $184 $239 
Negative (Positive) Foreign Currency Impact— N/A(4)N/A
Core Operating Profit$50 $84 $181 $239 
Habit Burger & Grill Division
GAAP Operating Profit (Loss)$(1)$(2)$(12)$— 
Negative (Positive) Foreign Currency Impact— N/A— N/A
Core Operating Profit (Loss)$(1)$(2)$(12)$— 
Reconciliation of GAAP Net Income to Net Income excluding Special Items
GAAP Net Income$1,623 $397 $2,908 $1,024 
Special Items (Income) Expense - Operating Profit(1,656)18 (1,618)73 
Special Items Expense - Other pension (income) expense(b)
2 — 2 — 
Special Items Tax Expense(f)
459 28 2 116 
Net Income excluding Special Items$427 $442 $1,294 $1,214 
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS $5.92 $1.41 $10.51 $3.64 
Less Special Items Diluted EPS4.36 (0.16)5.83 (0.67)
Diluted EPS excluding Special Items$1.56 $1.58 $4.68 $4.32 
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate26.1 %26.7 %10.3 %30.3 %
Impact on Tax Rate as a result of Special Items5.2 %5.9 %(10.2)%8.9 %
Effective Tax Rate excluding Special Items20.9 %20.8 %20.5 %21.4 %
12



Reconciliation of GAAP Operating Profit to Company Restaurant Profit
Quarter ended 9/30/2026
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
GAAP Operating Profit (Loss)$425 $255 $50 $(1)$1,589 $2,317 
Less:
Franchise and property revenues497 245 109 3 — 854 
Franchise contributions for advertising and other services177 171 67 1 — 415 
Gain on Pizza Hut divestitures— — — — 1,683 1,683 
Add:
General and administrative expenses90 52 43 12 108 305 
Franchise and property expenses21 11 18 1 — 51 
Franchise advertising and other services expense174 169 69 1 — 413 
Refranchising (gain) loss— — — — (22)(22)
Other (income) expense(2)— (2)— (3)(7)
Company restaurant profit (loss)$34 $72 $2 $9 $(11)$105 
Company sales$274 $354 $26 $130 $— $784 
Company restaurant margin %12.3 %20.2 %8.4 %6.6 %N/A13.4 %

Quarter ended 9/30/2025
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
GAAP Operating Profit (Loss) $388 $267 $84 $(2)$(71)$666 
Less:
Franchise and property revenues459 254 146 3 (4)857 
Franchise contributions for advertising and other services161 178 85 1 — 426 
Add:
General and administrative expenses92 50 50 13 77 282 
Franchise and property expenses15 8 11 1 — 35 
Franchise advertising and other services expense160 177 89 1 — 427 
Refranchising (gain) loss— — — — (17)(17)
Other (income) expense— — (4)— 3 (1)
Company restaurant profit (loss)$36 $71 $(1)$9 $(4)$110 
Company sales$259 $298 $9 $130 $— $697 
Company restaurant margin % 13.7 %23.7 %(12.2)%7.0 %N/A15.8 %

13

Year to Date 9/30/2026
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
GAAP Operating Profit (Loss)$1,217 $846 $184 $(12)$1,380 $3,616 
Less:
Franchise and property revenues1,435 767 394 9 — 2,605 
Franchise contributions for advertising and other services511 530 226 3 — 1,271 
Gain on Pizza Hut divestitures— — — — 1,683 1,683 
Add:
General and administrative expenses264 158 159 37 332 950 
Franchise and property expenses57 27 49 3 — 136 
Franchise advertising and other services expense503 529 240 3 — 1,276 
Refranchising (gain) loss— — — — (24)(24)
Other (income) expense(4)— (8)8 (42)(46)
Company restaurant profit (loss)$93 $262 $3 $26 $(36)$349 
Company sales$804 $1,122 $89 $390 $— $2,406 
Company restaurant margin % 11.6 %23.4 %3.9 %6.8 %N/A14.5 %

Year to Date 9/30/2025
KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
GAAP Operating Profit (Loss)$1,082 $770 $239 $— $(254)$1,836 
Less:
Franchise and property revenues1,303 735 436 8 (5)2,476 
Franchise contributions for advertising and other services478 514 255 2 — 1,249 
Add:
General and administrative expenses261 148 159 39 279 885 
Franchise and property expenses51 22 32 3 — 107 
Franchise advertising and other services expense472 510 268 2 — 1,251 
Refranchising (gain) loss— — — — (33)(33)
Other (income) expense1 — (9)1 (8)(15)
Company restaurant profit (loss)$85 $199 $(2)$34 $(11)$306 
Company sales$721 $848 $20 $385 $— $1,974 
Company restaurant margin % 11.9 %23.5 %(9.2)%8.7 %N/A15.5 %
14

YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)

    
Quarter ended 9/30/2026KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
Total revenues$948 $770 $202 $134 $— $2,054 
Company restaurant expenses240 283 24 122 11 679 
General and administrative expenses90 52 43 12 108 305 
Franchise and property expenses21 11 18 1 — 51 
Franchise advertising and other services expense174 169 69 1 — 413 
Refranchising (gain) loss— — — — (22)(22)
Other (income) expense(2)— (2)— (3)(7)
Total costs and expenses, net523 515 152 135 94 1,419 
Gain on Pizza Hut divestitures— — — — 1,683 1,683 
Operating Profit (Loss)$425 $255 $50 $(1)$1,589 $2,317 

Quarter ended 9/30/2025KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
Total revenues$879 $730 $240 $134 $(4)$1,979 
Company restaurant expenses224 227 10 121 4 587 
General and administrative expenses92 50 50 13 77 282 
Franchise and property expenses15 8 11 1 — 35 
Franchise advertising and other services expense160 177 89 1 — 427 
Refranchising (gain) loss— — — — (17)(17)
Other (income) expense— — (4)— 3 (1)
Total costs and expenses, net491 463 156 136 67 1,313 
Operating Profit (Loss)$388 $267 $84 $(2)$(71)$666 


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.


15

YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
Year to Date 9/30/2026KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
Total revenues$2,750 $2,420 $709 $403 $— $6,282 
Company restaurant expenses711 860 85 364 36 2,057 
General and administrative expenses264 158 159 37 332 950 
Franchise and property expenses57 27 49 3 — 136 
Franchise advertising and other services expense503 529 240 3 — 1,276 
Refranchising (gain) loss— — — — (24)(24)
Other (income) expense(4)— (8)8 (42)(46)
Total costs and expenses, net1,533 1,574 524 415 303 4,349 
Gain on Pizza Hut divestitures— — — — 1,683 1,683 
Operating Profit (Loss)$1,217 $846 $184 $(12)$1,380 $3,616 

Year to Date 9/30/2025KFC DivisionTaco Bell DivisionPizza Hut DivisionHabit Burger & Grill DivisionCorporate and UnallocatedConsolidated
Total revenues$2,501 $2,098 $710 $395 $(5)$5,699 
Company restaurant expenses635 649 21 352 11 1,668 
General and administrative expenses261 148 159 39 279 885 
Franchise and property expenses51 22 32 3 — 107 
Franchise advertising and other services expense472 510 268 2 — 1,251 
Refranchising (gain) loss— — — — (33)(33)
Other (income) expense1 — (9)1 (8)(15)
Total costs and expenses, net1,419 1,328 471 396 249 3,863 
Operating Profit (Loss)$1,082 $770 $239 $— $(254)$1,836 


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.
16

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

Amounts presented as of and for the quarters and years to date ended September 30, 2026 and 2025 are preliminary.

Amounts presented in the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (the "Financial Statements") and in the tabular presentations in these Notes are rounded to the nearest underlying whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within the Financial Statements and these Notes.

As of September 1, 2026, the Company determined it has three reportable segments on a prospective basis as a result of the sale of the Pizza Hut business. The Company has included the results of our divested segment, Pizza Hut Division, through the sale dates in the financial statements and tables for comparability purposes.

Certain General and administrative expenses allocations between KFC Division and Corporate and Unallocated for the prior periods have been restated to be comparable with the allocations for the quarter and year to date ended September 30, 2026.

(a)In 2025, we began a review of strategic options for the Pizza Hut brand which culminated in the quarter ended September 30, 2026 with two separate transactions for the sale of the brand. We recorded charges of $26 million and $107 million during the quarter and year to date ended September 30, 2026, respectively, and charges of $4 million in both the quarter and year to date ended September 30, 2025, to Corporate and unallocated General and administrative expenses, which primarily included third-party advising costs associated with this strategic options review. Additionally in 2025, we wrote off approximately $4 million of franchise incentive assets associated with rationalizing the Pizza Hut estate in preparation for a potential transaction. Given the significance of the costs incurred through the course of this strategic options review, we have reflected such amounts as Special Items.

(b)During the quarter ended September 30, 2026, we completed the divestiture of the Pizza Hut brand in two transactions. On August 7, 2026, we completed the sale of Pizza Hut in mainland China to Yum China Holdings, Inc. for $1.2 billion in proceeds. On September 1, 2026, we completed the sale of Pizza Hut excluding mainland China to LongRange Capital, a private equity firm, for $1.2 billion of net proceeds. The Pizza Hut divestitures resulted in a pre-tax gain of $1.7 billion, which represented the amount of net consideration received over the carrying value of the net assets and was recorded to Gain on Pizza Hut divestitures in the quarter ended September 30, 2026. Additionally, we incurred charges of $2 million within Other Pension (income) expense associated with an option for certain Pizza Hut employees to voluntarily elect an early payout of their pension benefits in connection with the sales. Due to the nature and size of the divestitures, we have reflected such amounts as Special Items.

(c)In 2025, we decided to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to the KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. We also decided to relocate our YUM Corporate headquarters to a new space in Louisville, Kentucky and accordingly, donated our existing space. Costs incurred to date primarily include severance for the employees who chose not to relocate and consultant fees. As a result of these decisions, we recorded charges of approximately $3 million during the quarter ended September 30, 2025, and approximately $1 million and $20 million for the years to date ended September 30, 2026 and 2025, respectively to Corporate and unallocated General and administrative expenses. Due to their scope and size, these charges have been reflected as Special Items.

(d)During the quarter ended March 31, 2026, we received approximately $44 million, net of legal expenses, related to a credit card interchange fee litigation settlement in which we were a plaintiff. This settlement was recorded to Unallocated Other (income) expense. Due to the nature and size of the settlement, including the years to which the litigation related, it has been reflected as a Special Item within Other income.

(e)On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S. (IS Holding), after failure by IS Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut restaurants in Turkey were closed during the first quarter of 2025. We also re-acquired the master franchise rights in Germany for KFC and Pizza Hut from the owner of IS Holding in December 2024. We recorded charges of $1 million and $8 million during the quarter and year to date ended September 30, 2025, respectively, to Corporate and unallocated General and administrative expenses consisting primarily of severance costs associated with re-acquiring the master franchise rights in Germany. Consistent with prior charges related to the matter, these charges have been reflected as Special Items.

17

(f)The below table includes the detail of Special Items Tax (Benefit) Expense:

Quarter endedYear to date
9/30/269/30/259/30/269/30/25
Tax (Benefit) on Special Items Expense - Operating Profit$(7)$(4)$(16)$(18)
Tax Expense - Income tax impacts from Gain on Pizza Hut divestitures466 — 107 — 
Tax (Benefit) - Intra-entity transfers and valuations of intellectual property
— — (101)— 
Tax Expense - U.S. OBBBA
— 76 — 76 
Tax (Benefit) - Tax audit
— (47)— (47)
Tax Expense - Other Income tax impacts recorded as Special— — 13 — 
Tax Expense - Foreign tax reserve— 3 — 105 
Special Items Tax Expense$459 $28 $2 $116 

Tax (Benefit) on Special Items Expense - Operating Profit was determined by assessing the tax impact of each individual component within Special Items, other than the income tax impacts from Gain on Pizza Hut divestitures which is shown separately, based upon the nature of the item and jurisdictional tax law.

Tax Expense - Income tax impacts from Gain on Pizza Hut divestitures in the quarter ended September 30, 2026, reflects $466 million of tax expense recorded upon the sales of the Pizza Hut business. The year to date ended September 30, 2026 also reflects a $359 million net deferred tax benefit, reflecting the recognition of certain tax basis in entities expected to be sold with the Pizza Hut business upon entering into definitive agreements during the quarter ended June 30, 2026.

Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the year to date ended September 30, 2026, reflects tax benefits of $113 million resulting from an 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 part of this reorganization, certain Pizza Hut intellectual property ("IP") rights from subsidiaries in the U.S. were transferred to international subsidiaries resulting in a step-up in amortizable tax basis of those IP rights. This reorganization began in the fourth quarter of 2025 in connection with our Pizza Hut strategic options review.

Additionally, Tax (Benefit) - Intra-entity transfers and valuations of intellectual property in the year to date ended September 30, 2026, includes $12 million of tax expense representing an adjustment to the valuation allowance on tax credits previously granted by local Swiss tax authorities in connection with transferred IP rights in Switzerland. Previously recorded impacts associated with this IP transfer were recorded as Special Items.

Tax Expense - U.S. OBBBA in the quarter and year to date ended September 30, 2025, reflects the tax expense recorded upon the July 4, 2025, enactment of H.R.1, commonly known as the One Big Beautiful Bill Act (“OBBBA”) in the United States. The tax expense was primarily associated with a change in management's judgment regarding our ability to utilize U.S. foreign tax credit related deferred tax assets that existed at the date of enactment and has been reflected as a Special Item due to the size of the non-recurring adjustment necessary upon enactment of the legislation.

Tax (Benefit) - Tax audit in the quarter and year to date ended September 30, 2025, reflects the benefit associated with the reversal of a reserve due to a favorable audit resolution. Such reserve was established in prior years and was originally recorded as a Special Item.

Tax Expense - Other Income tax impacts recorded as Special in the year to date ended September 30, 2026, includes a $13 million adjustment to tax expense associated with our decision to exit Russia. Consistent with previously recorded impacts associated with our decision to exit Russia, this adjustment was recorded as a Special Item.

Tax Expense - Foreign tax reserve in the quarter and year to date ended September 30, 2025, is associated with a reserve, and the related ongoing foreign exchange and inflationary adjustments, associated with a change in management's judgment around a Mexican subsidiary's ability to utilize losses to offset recapture gains triggered by a historical tax deconsolidation in Mexico. This expense was reflected as a Special Item due to its size and the time elapsed since the years to which the reserve relates.

18

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