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 Yum! Brands Reports Fourth-Quarter GAAP Operating Profit Growth of 14%; Delivers Fourth-Quarter Core Operating Profit Growth of 27%; On Track with Strategic Transformation to Accelerate Growth
   Thursday, February 09, 2017 7:00:08 AM ET

Yum! Brands, Inc. (YUM ) today reported results for the fourth quarter ended December 31, 2016. Fourth-quarter GAAP EPS from Continuing Operations was $0.76, an increase of 15%. Full-year GAAP EPS from Continuing Operations was $2.48, an increase of 18%. Fourth-quarter EPS from Continuing Operations excluding Special Items was $0.79, an increase of 19%. Full-year EPS from Continuing Operations excluding Special Items was $2.45, an increase of 5%.

This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20170209005464/en/



GREG CREED & DAVID GIBBS COMMENTS

"2016 was a landmark year for Yum! Brands," said Greg Creed, CEO. "Not only did we complete the spin-off of Yum China as an independent and powerful growth company, but we also launched a new multi-year strategic transformation of Yum! Brands. By being more focused, more franchised and more efficient, we will strengthen and grow our KFC, Pizza Hut and Taco Bell brands around the world, creating significant long-term value for all our stakeholders. I’m encouraged by strong fourth-quarter results and early progress on unlocking growth through our four key drivers: Distinctive, Relevant Brands; Unmatched Franchise Operating Capability; Bold Restaurant Development; and Unrivaled Culture and Talent."

David Gibbs, President and CFO, continued "I am pleased with our fourth quarter core operating profit growth of 27%, which was a solid end to an extraordinary year. As a testament to the power of our brands, KFC and Taco Bell had relatively strong performance in December, despite difficult U.S. industry conditions. This momentum has continued into the new year. As we look forward, we are confident in our three-year plans and there is no change to our long-term guidance."

SUMMARY FINANCIAL TABLE

                                                                                                                                                                             
------------------------------------------------------ -------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             Fourth Quarter                                                                                                                                            Full Year
                                                                                                 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         2016                     2015                       %                      2016                     2015                       %
                                                                                                                                                                                                                                      Change                                                                                                                                                                                       Change
                                                                                                 -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP EPS from Continuing Operations                                                                      $0.76                    $0.66                     15%                     $2.48                    $2.11                     18%
Special Items EPS(1)                                                                                    $(0.03)                  $(0.01)                    NM                      $0.03                   $(0.22)                    NM
                                                                                                 -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
EPS from Continuing Operations Excluding Special Items                                                   $0.79                    $0.67                     19%                     $2.45                    $2.33                     5%
                                                                                                 -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                       
------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(1)   See Reconciliation of GAAP Results to Non-GAAP Measurements for
                         further detail of Special Items.

All comparisons are versus the same period a year ago. Effective January 2016, the three restaurant brands of our India business were integrated into our global KFC, Pizza Hut and Taco Bell Divisions. Prior year figures have been restated to present comparable results.

Historical GAAP information attributable to our China operations prior to the separation is included in Discontinued Operations. Historical KFC and Pizza Hut segment results have been adjusted to reflect a 3% license fee between Yum! Brands, Inc. and Yum China Holdings, Inc. that was previously eliminated within our consolidated financial statements. A corresponding 3% license expense is included in Discontinued Operations such that there is no impact on previously reported net income.

Unless otherwise noted, all results include a 53rd week in 2016.

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 GAAP results to non-GAAP measurements within this release for further details.

FOURTH-QUARTER HIGHLIGHTS

-- Completed the separation of Yum China Holdings, Inc. on October 31, 2016.

-- GAAP EPS from Continuing Operations of $0.76, reflecting 15% growth. EPS from Continuing Operations excluding Special Items of $0.79, reflecting 19% growth.

-- Total restaurant openings of 1,188.

-- Foreign currency translation negatively impacted operating profit by $11 million.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             % Change
                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             System Sales     Same-Store      Net New Units          GAAP                   Core
                                                                                                                       Sales                                                                                                     Operating Profit                                             Operating Profit
                                                             ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
KFC Division                                                      +8              +3               +3                 +12                    +15
Pizza Hut Division                                                +3                                                    (2)                                                    +2                                                       +19                                                          +21
Taco Bell Division          +12             +3               +3                 +27                    +27
------------------ -------------------- -------------------- ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
Worldwide                   +8              +1               +3                 +14                    +27
------------------ -------------------- -------------------- ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                             
 
-----------------------------------------------------------------------------------------------------------------------------------------
                                          Results Excluding 53rd Week (% Change)
                                                             ----------------------------------------------------------------------------
                                                             System Sales             Core
                                                                                                                      Operating Profit
                                                             ------------ -------------------- -------------------- --------------------
KFC Division                                                      +6                   +11
Pizza Hut Division                                               Even                                                        +16
Taco Bell Division          +6                   +19
------------------ -------------------- -------------------- ------------ -------------------- -------------------- --------------------
Worldwide                   +4                   +21
------------------ -------------------- -------------------- ------------ -------------------- -------------------- --------------------
                                                                                                                     

FULL-YEAR HIGHLIGHTS

-- Worldwide system sales growth of 5%, excluding foreign currency translation.

-- During the year, we returned over $6 billion in capital through quarterly dividends and through repurchasing approximately 68 million shares.

-- Total restaurant openings of 2,316; Net-unit growth of 3%.

-- Foreign currency translation negatively impacted operating profit by $55 million.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             % Change
                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             System Sales     Same-Store      Net New Units          GAAP                   Core
                                                                                                                       Sales                                                                                                     Operating Profit                                             Operating Profit
                                                             ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
KFC Division                                                      +7              +3               +3                 +5                     +11
Pizza Hut Division                                                +2                                                    (1)                                                    +2                                                       +7                                                           +9
Taco Bell Division          +6              +2               +3                 +11                    +10
------------------ -------------------- -------------------- ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
Worldwide                   +5              +1               +3                 +16                    +13
------------------ -------------------- -------------------- ------------ -------------------- -------------------- ---------- -------------------- -------------------- ------------- -------------------- -------------------- ---------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                             
 
-----------------------------------------------------------------------------------------------------------------------------------------
                                          Results Excluding 53rd Week (% Change)
                                                             ----------------------------------------------------------------------------
                                                             System Sales             Core
                                                                                                                      Operating Profit
                                                             ------------ -------------------- -------------------- --------------------
KFC Division                                                      +6                   +10
Pizza Hut Division                                                +1                                                         +7
Taco Bell Division          +4                   +8
------------------ -------------------- -------------------- ------------ -------------------- -------------------- --------------------
Worldwide                   +4                   +11
------------------ -------------------- -------------------- ------------ -------------------- -------------------- --------------------
                                                                                                                     

KFC DIVISION

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Fourth Quarter                                                                                                                                                            Full Year
                                                                         ------------------------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      %/ppts Change                                                                                                                    %/ppts Change
                                                                          2016                                             2015                                            Reported     Ex F/X                                            2016                                             2015                                            Reported            Ex F/X
                                                                         ------                                           ------                                           --------                                           ------                                           ------                                           ------                                           --------                                           --------------------
Restaurants                                                              20,604                                           19,952                                              +3                                                NA                                             20,604                                           19,952                                              +3                                                       NA
System Sales Growth                                                                                                                                                           +6                                                +8                                                                                                                                                  +2                                                       +7
Same-Store Sales Growth (%)                                                +3                                               +3                                                NM                                                NM                                               +3                                               +1                                                NM                                                       NM
Franchise & License Fees ($MM)                                             345                                              321                                               +8                                                +10                                             1,066                                            1,032                                              +3                                                       +8
Restaurant Margin (%)                                                     15.0                                             14.0                                               1.0                                               1.1                                             14.7                                             14.0                                               0.7                                                      0.7
Operating Profit ($MM)                                                     284                                              253                                               +12                                               +15                                              874                                              832                                               +5                                                       +11
Operating Margin (%)                27.2       25.3         1.9         1.9       27.1       25.7         1.4                1.3
------------------------------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- -------- -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- -------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                     

-- KFC Division system sales increased 8% for the quarter and 7% for the year, excluding foreign currency translation.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                     % Change
                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Int’l Emerging Markets                                                                  Int’l Developed Markets                                                                          U.S.
                                                                       -------------------------------------------------------------------------------------------------------- -------------------- -------------------------------------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------------------
                                      Fourth                  Full Year                 Fourth                  Full Year                 Fourth                  Full Year
                                                         Quarter                                                                                                                       Quarter                                                                                                                       Quarter
                             -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
System Sales Growth (Ex F/X)                                                    +8                       +8                       +8                       +6                       +8                       +4
Same-Store Sales Growth                   +3                       +3                       +1                       +1                       +4                       +3
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                   

-- KFC Division opened 593 new international restaurants during the quarter. -- For the year, KFC Division opened 1,086 new international restaurants in 81 countries, including 885 units in emerging markets.

-- Operating margin increased 1.9 percentage points for the quarter and 1.4 percentage points for the year driven by franchise net-unit development and same-store sales growth.

-- The 53rd week provided a benefit of 2 percentage points to system sales growth and 4 percentage points to core operating profit growth for the quarter. For the year, the 53rd week provided a benefit of 1 percentage point to both system sales growth and core operating profit growth.

-- Foreign currency translation negatively impacted operating profit by $8 million for the quarter and $48 million for the year.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
KFC MARKETS(1)                                       Percent of KFC                           SYSTEM Sales Growth Ex F/X
                                                                                           System Sales(2)
                                                                                                                                                    ------------------------------------------------------------------
                                                                                                           Fourth Quarter (%)          Full Year (%)
Emerging Markets
   China                                                                                         27%                                                         +4                                                      +6
   Asia (e.g. Malaysia, Indonesia, Philippines)                                                  6%                                                          +12                                                     +10
   Africa                                                                                        5%                                                          +18                                                     +11
   Middle East / Turkey / North Africa                                                           4%                                                          +1                                                      +3
   Latin America (e.g. Mexico, Peru)                                                             4%                                                          +11                                                     +8
   Russia                                                                                        3%                                                          +34                                                     +33
   Thailand                                                                                      2%                                                          +1                                                      +6
   Continental Europe (e.g. Poland)                                                              2%                                                          +18                                                     +17
   India                                                                                         1%                                                          +16                                                     +7
Developed Markets
   U.S.                                                                                          18%                                                         +8                                                      +4
   U.K.                                                                                          7%                                                          +12                                                     +5
   Australia                                                                                     7%                                                          +14                                                     +7
   Asia (e.g. Japan, Korea, Taiwan)                                                              6%                                                          +2                                                      +3
   Continental Europe (e.g. France, Germany)                                                     5%                                                          +4                                                      +8
   Canada                                                                                        2%                                                          +11                                                     +7
   Latin America (e.g. Puerto Rico)                        1%                    +3               Even
----------------------------------------------- -------------------- -------------------- --------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------
(1)Refer to www.yum.com/investors
for a list of the countries within each of the markets.
(2)Reflects Full Year 2016.
 

PIZZA HUT DIVISION

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Fourth Quarter                                                                                                                                                            Full Year
                                                                         ------------------------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      %/ppts Change                                                                                                                    %/ppts Change
                                                                          2016                                             2015                                            Reported     Ex F/X                                            2016                                             2015                                            Reported            Ex F/X
                                                                         ------                                           ------                                           --------                                           ------                                           ------                                           ------                                           --------                                           --------------------
Restaurants                                                              16,409                                           16,063                                              +2                                                NA                                             16,409                                           16,063                                              +2                                                       NA
System Sales Growth                                                                                                                                                           +2                                                +3                                                                                                                                                 Even                                                      +2
Same-Store Sales Growth (%)                                                (2)                                             Even                                               NM                                                NM                                               (1)                                             Even                                               NM                                                       NM
Franchise & License Fees ($MM)                                             196                                              189                                               +4                                                +5                                               617                                              605                                               +2                                                       +4
Restaurant Margin (%)                                                      8.5                                              9.6                                              (1.1)                                             (1.0)                                             8.3                                              9.7                                              (1.4)                                                    (1.6)
Operating Profit ($MM)                                                     118                                              100                                               +19                                               +21                                              370                                              347                                               +7                                                       +9
Operating Margin (%)                36.0       27.0         9.0         9.3       33.3       28.5         4.8                4.7
------------------------------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- -------- -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- -------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                     

-- Pizza Hut Division system sales increased 3% for the quarter and 2% for the year, excluding foreign currency translation.

                                                                                                                                                                                                     % Change
                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Int’l Emerging Markets                                                                  Int’l Developed Markets                                                                          U.S.
                                                                       -------------------------------------------------------------------------------------------------------- -------------------- -------------------------------------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------------------
                                      Fourth                  Full Year                 Fourth                  Full Year                 Fourth                  Full Year
                                                         Quarter                                                                                                                       Quarter                                                                                                                       Quarter
                             -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
System Sales Growth (Ex F/X)                                                    +5                       +4                       +5                       +2                       +1                       +1
Same-Store Sales Growth                   (2)                      (4)                     Even                     Even                      (4)                     Even
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                   

-- Pizza Hut Division opened 379 new international restaurants during the quarter. -- For the year, Pizza Hut Division opened 745 new international restaurants in 74 countries, including 551 units in emerging markets.

-- Operating margin increased 9.0 percentage points for the quarter and 4.8 percentage points for the year driven by decreased G&A as a result of lower litigation costs and refranchising.

-- The 53rd week provided a benefit of 3 percentage points to system sales growth and 5 percentage points to core operating profit growth for the quarter. For the year, the 53rd week provided a benefit of 1 percentage point to system sales growth and 2 percentage points to core operating profit growth.

-- Foreign currency translation negatively impacted operating profit by $2 million for the quarter and $7 million for the year.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PIZZA HUT MARKETS(1)                                  Percent of Pizza                            SYSTEM Sales Growth Ex F/X
                                                                                           Hut System Sales(2)
                                                                                                                                                        ------------------------------------------------------------------
                                                                                                               Fourth Quarter (%)          Full Year (%)
Emerging Markets
   China                                                                                           17%                                                           +7                                                      +4
   Latin America (e.g. Mexico, Peru)                                                               5%                                                            +4                                                      +6
   Middle East / Turkey / Africa                                                                   4%                                                           Even                                                    Even
   Asia (e.g. Malaysia, Indonesia, Philippines)                                                    4%                                                            +5                                                      +4
   India                                                                                           1%                                                            +9                                                      +1
   Continental Europe (e.g. Poland)                                                                1%                                                            +5                                                      +9
Developed Markets
   U.S.                                                                                            47%                                                           +1                                                      +1
   Asia (e.g. Japan, Korea, Taiwan)                                                                6%                                                           Even                                                     (4)
   U.K.                                                                                            6%                                                            +7                                                      +5
   Continental Europe (e.g. France, Germany)                                                       4%                                                            +4                                                      +6
   Canada                                                                                          2%                                                            +11                                                     +9
   Australia                                                                                       2%                                                            +11                                                    Even
   Latin America (e.g. Puerto Rico)                          1%                      +4                +2
----------------------------------------------- -------------------- -------------------- ------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------
(1)Refer to www.yum.com/investors
for a list of the countries within each of the markets.
(2)Reflects Full Year 2016.
 

TACO BELL DIVISION

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Fourth Quarter                                                                                                                                                          Full Year
                                                                         ----------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    %/ppts Change                                                                                                                  %/ppts Change
                                                                          2016                                            2015                                           Reported     Ex F/X                                            2016                                            2015                                           Reported            Ex F/X
                                                                         -----                                           -----                                           --------                                           ------                                           -----                                           -----                                           --------                                           --------------------
Restaurants                                                               6,604                                           6,407                                             +3                                                NA                                              6,604                                           6,407                                             +3                                                       NA
System Sales Growth                                                                                                                                                         +12                                               +12                                                                                                                                               +6                                                       +6
Same-Store Sales Growth (%)                                                +3                                              +4                                               NM                                                NM                                               +2                                              +5                                               NM                                                       NM
Franchise & License Fees ($MM)                                             159                                             138                                              +14                                               +14                                              485                                             447                                              +8                                                       +9
Restaurant Margin (%)                                                     23.4                                            23.6                                             (0.2)                                             (0.2)                                            22.2                                            22.2                                             Even                                                     Even
Operating Profit ($MM)                                                     192                                             150                                              +27                                               +27                                              593                                             536                                              +11                                                      +10
Operating Margin (%)                29.3      24.8        4.5         4.5       29.3      26.9        2.4                2.4
------------------------------ -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                 

-- Taco Bell Division system sales increased 12% for the quarter and 6% for the year.

-- Taco Bell Division opened 134 new restaurants in the fourth quarter. For the year, Taco Bell Division opened 294 new restaurants.

-- Operating margin increased 4.5 percentage points for the quarter and 2.4 percentage points for the year driven by same-store sales growth, decreased G&A and franchise net-unit development.

-- The 53rd week provided a benefit of 6 percentage points to system sales growth and 8 percentage points to core operating profit growth for the quarter. For the year, the 53rd week provided a benefit of 2 percentage points to both system sales growth and core operating profit growth.

SPECIAL ITEMS / REFRANCHISING / OTHER

-- Beginning in 2017, we removed the reporting lags from our international subsidiary fiscal calendars. To accommodate these changes, Yum! Brands will now report on a monthly calendar basis though certain subsidiaries, including our U.S. subsidiaries, will continue to be included in our consolidated results on a periodic basis with 3, 3, 3 & 4 periods in each quarter, respectively. Refer to the 8-K filed January 31, 2017 for details. 2017 quarter-end dates can be found on our website at www.yum.com/investors. We will provide restated comparable 2016 quarterly results by the beginning of April.

-- During the quarter, we refranchised 232 restaurants, including 120 KFC, 83 Pizza Hut and 29 Taco Bell units, for proceeds of $200 million. We recorded refranchising gains of $64 million in Special Items. As of year end, our franchise ownership mix was 93%.

-- During the quarter, we incurred $39 million in Special Items related to the strategic transformation of Yum! Brands, the biggest component of which were severance costs. In addition, we recorded a non-cash charge of $30 million in Special Items related to share-based compensation award modifications related to the separation of Yum China Holdings, Inc. Additionally, a Special Items charge of $24 million was incurred during the quarter related to settlement charges associated with payouts from a deferred vested pension payout program.

SHARE REPURCHASES

As of December 31, 2016, there was $1.9 billion remaining in share repurchase authorization through year end 2017.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Fourth Quarter                                                              Full Year
                                                                  ------------------------------------------------------------------------------------ -------------------- --------------------------------------------------------------------------
                                                                     Pre-           Post-          Pre-                Post-
                                                                  Separation                                           Separation                                           Separation                                                Separation
                                                                  ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- --------------------
Spend ($BN)                                                          $1.1           $0.6           $4.9                $0.6
Number of Shares (MM)          12.5            9.1           58.8                 9.1
----------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- --------------------
Average Price per Share         $89            $63            $83                 $63
----------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                  

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 Thursday, February 9, 2017. The number is 877/815-2029 for U.S. callers and 706/645-9271 for international callers.

The call will be available for playback beginning at 11:30 a.m. Eastern Time Thursday, February 9, 2017 through midnight Wednesday, March 8, 2017. To access the playback, dial 855/859-2056 in the United States and 404/537-3406 internationally. The playback passcode is 24322927.

The webcast and the playback can be accessed via the internet by visiting Yum! Brands’ website at www.yum.com/investors and selecting "Q4 2016 Earnings Conference Call" under "Events & Presentations."

ADDITIONAL INFORMATION ONLINE

Quarter end dates for each division, restaurant count details and definitions of terms are available at www.yum.com/investors. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included on our website at www.yum.com/investors.

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 as well as 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 borne-illness issues; health concerns arising from outbreaks of viruses or other diseases; 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 individually identifiable data of our customers and employees; the impact of social media; our ability to secure and maintain distribution and adequate supply to our restaurants; the success of our development strategy in emerging markets; changes in commodity, labor and other operating costs; the success of our franchisees and licensees; 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 disagreements with taxing authorities; consumer preferences and perceptions of our brands; changes in consumer discretionary spending and general economic conditions; competition within the retail food industry; 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 43,500 restaurants in more than 135 countries and territories and is one of the Aon Hewitt Top Companies for Leaders in North America. The company’s restaurant brands - KFC, Pizza Hut and Taco Bell - are the global leaders of the chicken, pizza and Mexican-style food categories. Worldwide, the Yum! Brands system opens over six new restaurants per day on average, making it a leader in international retail development.

                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                           YUM! Brands, Inc.
                                                                                                                                                                                                                    Consolidated Summary of Results
                                                                                                                                                                                                            (amounts in millions, except per share amounts)
                                                                                                                                                                                                                              (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                     Quarter ended                                                                                         % Change                                                                                            Year ended                                                                                              % Change
                                                                                        ------------------------------------------------------------------------------------------------------                                                                                                   ------------------------------------------------------------------------------------------------------
                                                                                                   12/31/16                          12/26/15                                                          B/(W)                                                          12/31/16                          12/26/15                                                             B/(W)
                                                                                        ------------------------------                                          ------------------------------                                          --------------                                           ------------------------------                                          ------------------------------                                          --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Company sales                                                                            $ 1,324                                                                 $ 1,328                                                                --                                            $ 4,200                                                                 $ 4,356                                                                         (4)
Franchise and license fees and income                                                        700                                                  648                                                    8                                                    2,166                                                2,084                                                       4
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Total revenues                                                                             2,024                                                1,976                                                    2                                                    6,366                                                6,440                                                      (1)
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Company restaurant expenses
   Food and paper                                                                            400                                                                     404                                                                       1                                                    1,269                                                                   1,348                                                                          6
   Payroll and employee benefits                                                             345                                                                     344                                                                      (1)                                                   1,109                                                                   1,131                                                                          2
   Occupancy and other operating expenses                                                    348                                                  357                                                    3                                                    1,120                                                1,168                                                       4
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Company restaurant expenses                                                                1,093                                                                   1,105                                                                       1                                                    3,498                                                                   3,647                                                                          4
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
General and administrative expenses                                                          430                                                                     381                                                                     (13)                                                   1,161                                                                   1,099                                                                         (6)
Franchise and license expenses                                                                60                                                                      96                                                                      36                                                      202                                                                     237                                                                         15
Closures and impairment (income) expenses                                                      3                                                                       7                                                                      60                                                       14                                                                      15                                                                         11
Refranchising (gain) loss                                                                    (64 )                                                                   (44 )                                                                    44                                                     (141 )                                                                    23                                                                         NM
Other (income) expense                                                                        13                                                    2                                                   NM                                                        7                                                   17                                                      58
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Total costs and expenses, net                                                              1,535                                                1,547                                                    1                                                    4,741                                                5,038                                                       6
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Operating Profit                                                                             489                                                                     429                                                                      14                                                    1,625                                                                   1,402                                                                         16
Interest expense, net                                                                        136                                                   38                                                   NM                                                      307                                                  141                                                      NM
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Income before income taxes                                                                   353                                                                     391                                                                     (10)                                                   1,318                                                                   1,261                                                                          4
Income tax provision                                                                          68                                                  101                                                   33                                                      324                                                  325                                                --
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Income from continuing operations                                                            285                                                                     290                                                                      (2)                                                     994                                                                     936                                                                          6
Income (loss) from discontinued operations                                                   (18 )                                                                   (15 )                                                                   (25)                                                     625                                                  357                                                      75
                                                                                        -----------------------------                                           -----------------------------                                                                                                    -----------------------------                                           -----------------------------
Net income                                                                               $   267                                              $   275                                                   (3)                                                 $ 1,619                                              $ 1,293                                                      25
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                    == ===== ====================                                           == ===== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Effective tax rate from Continuing Operations                                               19.4                    %                                               26.0                    %                                              6.6 ppts.                                                 24.6                    %                                               25.8                    %                                                 1.2 ppts.
---------------------------------------------                                           =======  ====================                                           =======  ====================                                                                                                    =======  ====================                                           =======  ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Basic EPS from Continuing Operations
---------------------------------------------
   EPS                                                                                   $  0.77                                              $  0.67                                                   16                                                  $  2.52                                              $  2.15                                                      17
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                       ===== ====================                                              ===== ====================
   Average shares outstanding                                                                368                                                  433                                                   15                                                      394                                                  436                                                      10
                                                                                        =============================                                           =============================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Diluted EPS from Continuing Operations
---------------------------------------------
   EPS                                                                                   $  0.76                                              $  0.66                                                   15                                                  $  2.48                                              $  2.11                                                      18
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                    == ===== ====================                                           == ===== ====================
   Average shares outstanding                                                                374                                                  439                                                   15                                                      400                                                  443                                                      10
                                                                                        =============================                                           =============================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Basic EPS from Discontinued Operations
---------------------------------------------
   EPS                                                                                   $ (0.05 )                                                               $ (0.03 )                                                                   (47)                                                 $  1.59                                              $  0.82                                                      93
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                    == ===== ====================                                           == ===== ====================
   Average shares outstanding                                                                368                                                  433                                                   15                                                      394                                                  436                                                      10
                                                                                        =============================                                           =============================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Diluted EPS from Discontinued Operations
---------------------------------------------
   EPS                                                                                   $ (0.05 )                                                               $ (0.03 )                                                                   (47)                                                 $  1.56                                              $  0.81                                                      94
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                    == ===== ====================                                           == ===== ====================
   Average shares outstanding                                                                368                                                  433                                                   15                                                      400                                                  443                                                      10
                                                                                        =============================                                           =============================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Dividends declared per common share                                                      $  0.81                                              $  0.92                                                                                                       $  1.73                                              $  1.74  
                                                                                        == ===== ====================                                           == ===== ====================                                                                                                    == ===== ====================                                           == ===== ====================
 
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 ended                                                                                              % Change
                                                                                    --------------------------------------------------------------------------------------------------                                                                                                   ------------------------------------------------------------------------------------------------------
                                                                                              12/31/16                        12/26/15                                                         B/(W)                                                          12/31/16                          12/26/15                                                             B/(W)
                                                                                    ----------------------------                                          ----------------------------                                          --------------                                           ------------------------------                                          ------------------------------                                          --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                          
Company sales                                                                        $ 697                                                                 $ 678                                                                       3                                                  $ 2,166                                                                 $ 2,203                                                                         (2)
Franchise and license fees and income                                                  345                                                321                                                    8                                                    1,066                                                1,032                                                       3
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
   Total revenues                                                                    1,042                                                999                                                    4                                                    3,232                                                3,235                                                --
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                          
Company restaurant expenses
   Food and paper                                                                      237                                                                   231                                                                      (3)                                                     736                                                                     757                                                                          3
   Payroll and employee benefits                                                       163                                                                   159                                                                      (2)                                                     509                                                                     513                                                                          1
   Occupancy and other operating expenses                                              193                                                193                                             --                                                602                                                  625                                                       4
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
Company restaurant expenses                                                            593                                                                   583                                                                      (2)                                                   1,847                                                                   1,895                                                                          3
General and administrative expenses                                                    132                                                                   126                                                                      (4)                                                     391                                                                     401                                                                          2
Franchise and license expenses                                                          28                                                                    32                                                                       3                                                      108                                                                     100                                                                         (9)
Closures and impairment (income) expenses                                                4                                                                     6                                                                      31                                                       11                                                                       9                                                                        (18)
Other (income) expense                                                                   1                                                 (1 )                                                                    NM                                                        1                                                   (2 )                                                                       NM
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
Total costs and expenses, net                                                          758                                                746                                                   (2)                                                   2,358                                                2,403                                                       2
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
Operating Profit                                                                     $ 284                                              $ 253                                                   12                                                  $   874                                              $   832                                                       5
                                                                                    == === ====================                                           == === ====================                                                                                                    == ===== ====================                                           == ===== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                          
Company sales                                                                        100.0 %                                                               100.0 %                                                                                                                          100.0 %                                                                 100.0 %
Food and paper                                                                        34.0                                                                  34.1                                                                   0.1 ppts.                                                 34.0                                                                    34.3                                                                      0.3 ppts.
Payroll and employee benefits                                                         23.3                                                                  23.5                                                                   0.2 ppts.                                                 23.5                                                                    23.3                                                                     (0.2 ppts.)
Occupancy and other operating expenses                                                27.7                                               28.4                                                0.7 ppts.                                                 27.8                                                 28.4                                                   0.6 ppts.
                                                                                    ---------------------------                                           ---------------------------                                                                                                    -----------------------------                                           -----------------------------
Restaurant margin                                                                     15.0 %                                                                14.0 %                                                                 1.0 ppts.                                                 14.7 %                                                                  14.0 %                                                                    0.7 ppts.
                                                                                    ===========================                                           ===========================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                          
Operating margin                                                                      27.2 %                                                                25.3 %                                                                 1.9 ppts.                                                 27.1 %                                                                  25.7 %                                                                    1.4 ppts.
                                                                                    ===========================                                           ===========================                                                                                                    =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                          
See accompanying notes.
                                                                                                                                                                                                                                                                                                                                                                                                                                          
Percentages may not recompute due to rounding.
 
                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                 YUM! Brands, Inc.
                                                                                                                                                                                                                       PIZZA HUT DIVISION Operating Results
                                                                                                                                                                                                                               (amounts in millions)
                                                                                                                                                                                                                                    (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                        Quarter ended                                                                                               % Change                                                                                            Year ended                                                                                                 % Change
                                                                                    --------------------------------------------------------------------------------------------------------------------                                                                                                -----------------------------------------------------------------------------------------------------------
                                                                                                  12/31/16                                 12/26/15                                                             B/(W)                                                           12/31/16                             12/26/15                                                            B/(W)
                                                                                    -------------------------------------                                          -------------------------------------                                          -----------                                           -------------------------------------                                          ----------------------------                                          --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Company sales                                                                             $     131                                                                      $     179                                                                    (27)                                                    $     494                                                                 $ 609                                                                        (19)
Franchise and license fees and income                                                           196                                                         189                                                   4                                                           617                                                605                                                       2
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
   Total revenues                                                                               327                                                         368                                                 (11)                                                        1,111                                              1,214                                                      (8)
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Company restaurant expenses
   Food and paper                                                                                37                                                                             49                                                                     26                                                           137                                                                   169                                                                         19
   Payroll and employee benefits                                                                 40                                                                             57                                                                     27                                                           156                                                                   190                                                                         17
   Occupancy and other operating expenses                                                        43                                                          56                                                  25                                                           160                                                191                                                      16
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
Company restaurant expenses                                                                     120                                                                            162                                                                     26                                                           453                                                                   550                                                                         18
General and administrative expenses                                                              78                                                                             92                                                                     15                                                           241                                                                   272                                                                         12
Franchise and license expenses                                                                   14                                                                             13                                                                    (14)                                                           49                                                                    44                                                                        (13)
Closures and impairment (income) expenses                                                        (3 )                                                                            1                                                                     NM                                                --                                                                     3                                                                         93
Other (income) expense                                                               --                                              --                                                  NM                                                            (2 )                                                                  (2 )                                                                       37
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
Total costs and expenses, net                                                                   209                                                         268                                                  22                                                           741                                                867                                                      15
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
Operating Profit                                                                          $     118                                                   $     100                                                  19                                                     $     370                                              $ 347                                                       7
                                                                                    ======= ======= ====================                                           ======= ======= ====================                                                                                                 ======= ======= ====================                                           == === ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Company sales                                                                                 100.0 %                                                                        100.0 %                                                                                                                              100.0 %                                                               100.0 %
Food and paper                                                                                 28.1                                                                           27.9                                                                 (0.2 ppts.)                                                     27.7                                                                  27.8                                                                      0.1 ppts.
Payroll and employee benefits                                                                  31.2                                                                           31.3                                                                  0.1 ppts.                                                      31.7                                                                  31.1                                                                     (0.6 ppts.)
Occupancy and other operating expenses                                                         32.2                                                        31.2                                              (1.0 ppts.)                                                     32.3                                               31.4                                                  (0.9 ppts.)
                                                                                    ------------------------------------                                           ------------------------------------                                                                                                 ------------------------------------                                           ---------------------------
                                                                                                8.5 %                                                                          9.6 %                                                               (1.1 ppts.)                                                      8.3 %                                                                 9.7 %                                                                   (1.4 ppts.)
                                                                                    ====================================                                           ====================================                                                                                                 ====================================                                           ===========================
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating margin                                                                               36.0 %                                                                         27.0 %                                                                9.0 ppts.                                                      33.3 %                                                                28.5 %                                                                    4.8 ppts.
                                                                                    ====================================                                           ====================================                                                                                                 ====================================                                           ===========================
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
See accompanying notes.
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Percentages may not recompute due to rounding.
                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                          YUM! Brands, Inc.
                                                                                                                                                                                                                TACO BELL DIVISION Operating Results
                                                                                                                                                                                                                        (amounts in millions)
                                                                                                                                                                                                                             (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                   Quarter ended                                                                                           % Change                                                                                          Year ended                                                                                              % Change
                                                                                    -----------------------------------------------------------------------------------------------------------                                                                                                ------------------------------------------------------------------------------------------------------
                                                                                              12/31/16                            12/26/15                                                             B/(W)                                                        12/31/16                          12/26/15                                                             B/(W)
                                                                                    ----------------------------                                          -------------------------------------                                          -----------                                           ------------------------------                                          ------------------------------                                          --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Company sales                                                                        $ 496                                                                      $     471                                                                      5                                                $ 1,540                                                                 $ 1,544                                                                   --
Franchise and license fees and income                                                  159                                                         138                                                  14                                                    485                                                  447                                                       8
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
   Total revenues                                                                      655                                                         609                                                   7                                                  2,025                                                1,991                                                       2
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Company restaurant expenses
   Food and paper                                                                      126                                                                            124                                                                     (2)                                                   396                                                                     422                                                                          6
   Payroll and employee benefits                                                       142                                                                            128                                                                    (11)                                                   444                                                                     428                                                                         (4)
   Occupancy and other operating expenses                                              112                                                         108                                                  (4)                                                   358                                                  352                                                      (2)
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
Company restaurant expenses                                                            380                                                                            360                                                                     (6)                                                 1,198                                                                   1,202                                                                   --
General and administrative expenses                                                     73                                                                             89                                                                     17                                                    213                                                                     230                                                                          7
Franchise and license expenses                                                           9                                                                             11                                                                     21                                                     21                                                                      22                                                                          7
Closures and impairment (income) expenses                                                2                                                                 --                                                                     NM                                                      3                                                                       3                                                                         (3)
Other (income) expense                                                                  (1 )                                                                           (1 )                                                                   NM                                                     (3 )                                                                    (2 )                                                                       80
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
Total costs and expenses, net                                                          463                                                         459                                                  (1)                                                 1,432                                                1,455                                                       2
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
Operating Profit                                                                     $ 192                                                   $     150                                                  27                                                $   593                                              $   536                                                      11
                                                                                    == === ====================                                           ======= ======= ====================                                                                                                 == ===== ====================                                           == ===== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Company sales                                                                        100.0 %                                                                        100.0 %                                                                                                                       100.0 %                                                                 100.0 %
Food and paper                                                                        25.5                                                                           26.4                                                                  0.9 ppts.                                               25.7                                                                    27.3                                                                      1.6 ppts.
Payroll and employee benefits                                                         28.5                                                                           27.2                                                                 (1.3 ppts.)                                              28.8                                                                    27.7                                                                     (1.1 ppts.)
Occupancy and other operating expenses                                                22.6                                                        22.8                                               0.2 ppts.                                               23.3                                                 22.8                                                  (0.5 ppts.)
                                                                                    ---------------------------                                           ------------------------------------                                                                                                 -----------------------------                                           -----------------------------
                                                                                      23.4 %                                                                         23.6 %                                                               (0.2 ppts.)                                              22.2 %                                                                  22.2 %                                                                 --
                                                                                    ===========================                                           ====================================                                                                                                 =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Operating margin                                                                      29.3 %                                                                         24.8 %                                                                4.5 ppts.                                               29.3 %                                                                  26.9 %                                                                    2.4 ppts.
                                                                                    ===========================                                           ====================================                                                                                                 =============================                                           =============================
                                                                                                                                                                                                                                                                                                                                                                                                                                                
See accompanying notes.
                                                                                                                                                                                                                                                                                                                                                                                                                                                
Percentages may not recompute due to rounding.
                                                                                                                                                                                                                                                                                                                                                                                                                                                
 
                                                                                                        YUM! Brands, Inc.
                                                                                                   Consolidated Balance Sheets
                                                                                                      (amounts in millions)
                                                                                                           (unaudited)
 
 
                                                                                            
                                                                                                                          12/31/2016                                                                     12/26/2015
                                                                                                             -------------------------------------                                          -------------------------------------
ASSETS
Current Assets
Cash and cash equivalents                                                                                          $     704                                                                      $     313
Accounts and notes receivable, less allowance: $13 in 2016 and $14                                                       370                                                                            324
in 2015
Inventories                                                                                                               36                                                                             40
Prepaid expenses and other current assets                                                                                238                                                                            133
Advertising cooperative assets, restricted                                                                               134                                                                            103
Current assets of discontinued operations                                                                     --                                                         774  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Current Assets                                                                                                1,482                                                                          1,687
                                                                                                                                                                                             
Property, plant and equipment, net of accumulated depreciation and                                                     2,160                                                                          2,347
amortization of $2,029 in 2016 and $2,048 in 2015
Goodwill                                                                                                                 541                                                                            571
Intangible assets, net                                                                                                   151                                                                            164
Other assets                                                                                                             370                                                                            330
Deferred income taxes                                                                                                    774                                                                            591
Noncurrent assets of discontinued operations                                                                  --                                                       2,371  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Assets                                                                                                    $   5,478                                                   $   8,061  
                                                                                                             ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable and other current liabilities                                                                     $   1,132                                                                      $   1,074
Income taxes payable                                                                                                      37                                                                             55
Short-term borrowings                                                                                                     66                                                                            921
Advertising cooperative liabilities                                                                                      134                                                                            103
Current liabilities of discontinued operations                                                                --                                                         934  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Current Liabilities                                                                                           1,369                                                       3,087  
                                                                                                             ------------------------------------                                           ------------------------------------
                                                                                                                                                                                             
Long-term debt                                                                                                         9,061                                                                          3,007
Other liabilities and deferred credits                                                                                   704                                                                            745
Noncurrent liabilities of discontinued operations                                                             --                                                         247  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Liabilities                                                                                                  11,134                                                       7,086  
                                                                                                             ------------------------------------                                           ------------------------------------
                                                                                                                                                                                             
Redeemable noncontrolling interest                                                                            --                                                           6  
                                                                                                             ------------------------------------                                           ------------------------------------
                                                                                                                                                                                             
Shareholders’ Equity
Common stock, no par value, 750 shares authorized; 355 shares and                                             --                                                                 --
420 shares issued in 2016 and 2015, respectively
Retained earnings (Accumulated Deficit)                                                                               (5,223 )                                                                        1,150
Accumulated other comprehensive income (loss)                                                                           (433 )                                                                         (239 )
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Shareholders’ Equity (Deficit) - YUM! Brands, Inc.                                                           (5,656 )                                                                          911
Noncontrolling interests                                                                                      --                                                          58  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Shareholders’ Equity (Deficit)                                                                               (5,656 )                                                                          969  
                                                                                                             ------------------------------------                                           ------------------------------------
   Total Liabilities, Redeemable Noncontrolling Interest and                                                       $   5,478                                                   $   8,061  
   Shareholders’ Equity (Deficit)
                                                                                                             ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                             
See accompanying notes.
                                                                                                                                                                                                             
                                                                  
                                                                                  YUM! Brands, Inc.
                                                                        Consolidated Statements of Cash Flows
                                                                                (amounts in millions)
                                                                                     (unaudited)
                                                                                       
                                                                                                                                Year ended
                                                                                      -----------------------------------------------------------------------------------------------
                                                                                                                  12/31/16                               12/26/15
                                                                                      -------------------------------------                     -------------------------------------
Cash Flows - Operating Activities from Continuing Operations
Income from continuing operations                                                           $     994                                                 $     936
Depreciation and amortization                                                                     314                                                       322
Closures and impairment (income) expenses                                                          14                                                        15
Refranchising (gain) loss                                                                        (141 )                                                      23
Contributions to defined benefit pension plans                                                    (41 )                                                     (98 )
Deferred income taxes                                                                             (11 )                                                    (111 )
Excess tax benefit from share-based compensation                                                  (83 )                                                     (47 )
Share-based compensation expense                                                                   80                                                        46
Changes in accounts and notes receivable                                                          (46 )                                                     (35 )
Changes in inventories                                                                 --                                                        (3 )
Changes in prepaid expenses and other current assets                                                6                                                       (13 )
Changes in accounts payable and other current liabilities                                          17                                                        93
Changes in income taxes payable                                                                    54                                                        24
Other, net                                                                                         47                                     59  
                                                                                      ------------------------------------                      ------------------------------------
Net Cash Provided by Operating Activities from Continuing                                       1,204                                  1,211  
Operations
                                                                                      --------------  --------------------                      --------------  --------------------
                                                                                                                                                 
Cash Flows - Investing Activities from Continuing Operations
Capital spending                                                                                 (422 )                                                    (461 )
Proceeds from refranchising of restaurants                                                        346                                                       219
Other, net                                                                                         52                                     53  
                                                                                      ------------------------------------                      ------------------------------------
Net Cash Used in Investing Activities from Continuing Operations                                  (24 )                                                    (189 )
                                                                                      ------------------------------------                      ------------------------------------
                                                                                                                                                 
Cash Flows - Financing Activities from Continuing Operations
Proceeds from long-term debt                                                                    6,900                                            --
Repayments of long-term debt                                                                     (324 )                                                    (261 )
Revolving credit facilities, three months or less, net                                           (701 )                                                     285
Short-term borrowings, by original maturity
     More than three months - proceeds                                                          1,400                                                       609
     More than three months - payments                                                         (2,000 )                                          --
     Three months or less, net                                                         --                                            --
Repurchase shares of Common Stock                                                              (5,402 )                                                  (1,200 )
Excess tax benefit from share-based compensation                                                   83                                                        47
Dividends paid on Common Stock                                                                   (744 )                                                    (730 )
Debt issuance costs                                                                               (86 )                                          --
Net transfers from discontinued operations                                                        289                                                       237
Other, net                                                                                        (92 )                                                     (43 )
                                                                                      ------------------------------------                      ------------------------------------
Net Cash Used in Financing Activities from Continuing Operations                                 (677 )                                                  (1,056 )
                                                                                      ------------------------------------                      ------------------------------------
Effect of Exchange Rate on Cash and Cash Equivalents                                              (25 )                                                      11  
                                                                                      ------------------------------------                      ------------------------------------
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted                                     478                                                       (23 )
Cash and Restricted Cash Equivalents - Continuing Operations
                                                                                                                                                 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash                                       334                                    357  
Equivalents - Beginning of Period
                                                                                      --------------  --------------------                      --------------  --------------------
Cash, Cash Equivalents, Restricted Cash and Restricted Cash                                 $     812                              $     334  
Equivalents - End of Period
                                                                                      ======= ======= ====================                      ======= ======= ====================
See accompanying notes.
                                                                                                                                                                 

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

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") throughout this document, the Company has provided non-GAAP measurements which present operating results from Continuing Operations in 2016 and 2015 on a basis before Special Items. These Special Items are described in (b), (c), (d), (e), and (f) in the accompanying notes.

The Company uses earnings before Special Items as a key performance measure of results of the operations for the purpose of evaluating performance internally and Special Items are not included in any of our segment results. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of earnings from Continuing Operations before Special Items provides additional information to investors to facilitate the comparison of past and present operations, excluding items in the quarters and years ended December 31, 2016 and December 26, 2015 that the Company does not believe are indicative of our ongoing operations due to their size and/or nature.

                                                                                                                                                                                                                                
                                                                                                                                                                         Quarter ended                                                                                                                                                              Year ended                                                           
                                                                                                                --------------------------------------------------------------------------------------------------------------------------------------------------                                           --------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    12/31/16                                      12/26/15                                                                              12/31/16                                      12/26/15               
                                                                                                                ------------------------------------------------                                          --------------------------------------------------------                                           ------------------------------------------------                                          --------------------------------------------------------
Detail of Special Items
---------------------------------------------------------------------
Refranchising initiatives(b)                                                                                                       $    64                                                                                   $             49                                                                                   $   141                                                                                   $            (20 )
YUM’s Strategic Transformation initiatives(c)                                                                                          (39 )                                                                                   --                                                                                       (71 )                                                                                   --
Non-cash charges associated with share-based compensation(d)                                                                           (30 )                                                                                   --                                                                                       (30 )                                                                                   --
Costs associated with KFC U.S. Acceleration Agreement(e)                                                                                (9 )                                                                                              (41 )                                                                                     (26 )                                                                                              (72 )
Settlement charges associated with pension deferred vested project(f)                                                                  (24 )                                                                                   --                                                                                       (25 )                                                                                   --
Other Special Items Income (Expense)                                                                                                    (1 )                                                                                               (1 )                                                                                      (3 )                                                                                   --  
                                                                                                                -----------------------------------------------                                           --------------------------------------------------------                                           -----------------------------------------------                                           --------------------------------------------------------
Special Items Income (Expense) - Operating Profit                                                                                      (39 )                                                                                                7                                                                                       (14 )                                                                                              (92 )
Tax Benefit (Expense) on Special Items                                                                                                  28                                                                              (9 )                                                                                      27                                                                              (4 )
                                                                                                                -----------------------------------------------                                           --------------------------------------------------------                                           -----------------------------------------------                                           --------------------------------------------------------
Special Items Income (Expense) - Income from Continuing Operations                                                                 $   (11 )                                                                                 $             (2 )                                                                                 $    13                                                                $            (96 )
                                                                                                                ==================== ===== ====================                                           ==================== ============== ====================                                           ==================== ===== ====================                                           ==================== ============== ====================
Average diluted shares outstanding                                                                                                     374                                                                             439                                                                    400                                                                             443  
                                                                                                                ===============================================                                           ========================================================                                           ===============================================                                           ========================================================
Special Items diluted EPS from Continuing Operations                                                                               $ (0.03 )                                                                                 $          (0.01 )                                                                                 $  0.03                                                                $          (0.22 )
                                                                                                                ==================== ===== ====================                                           ==================== ============== ====================                                           ==================== ===== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Reconciliation of GAAP Operating Profit to Core Operating Profit
and Core Operating Profit, excluding 53rd Week
---------------------------------------------------------------------
GAAP Operating Profit                                                                                                              $   489                                                                                   $            429                                                                                   $ 1,625                                                                                   $          1,402
Special Items Income (Expense) - Operating Profit                                                                                      (39 )                                                                                                7                                                                                       (14 )                                                                                              (92 )
Foreign Currency Impact on Reported Operating Profit                                                                                   (11 )                                                                                              N/A                                                                    (55 )                                                                                              N/A  
                                                                                                                -----------------------------------------------                                           --------------------------------------------------------                                           -----------------------------------------------                                           --------------------------------------------------------
Core Operating Profit                                                                                                              $   539                                                                                   $            422                                                                                   $ 1,694                                                                                   $          1,494
Impact of 53rd Week                                                                                                  27                                               --                                                  27                                               --  
                                                                                                                -------------------- ----- --------------------                                           -------------------- -------------- --------------------                                           -------------------- ----- --------------------                                           -------------------- -------------- --------------------
Core Operating Profit, excluding 53rd Week                                                                                         $   512                                                                $            422                                                                $ 1,667                                                                $          1,494  
                                                                                                                ==================== ===== ====================                                           ==================== ============== ====================                                           ==================== ===== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Reconciliation of Diluted EPS from Continuing Operations to
Diluted EPS from Continuing Operations Before Special Items
---------------------------------------------------------------------
Diluted EPS from Continuing Operations                                                                                             $  0.76                                                                                   $           0.66                                                                                   $  2.48                                                                                   $           2.11
Special Items EPS                                                                                                                    (0.03 )                                                                                            (0.01 )                                                                                    0.03                                                                           (0.22 )
                                                                                                                -----------------------------------------------                                           --------------------------------------------------------                                           -----------------------------------------------                                           --------------------------------------------------------
Diluted EPS from Continuing Operations before Special Items                                                                        $  0.79                                                                $           0.67                                                                $  2.45                                                                $           2.33  
                                                                                                                ==================== ===== ====================                                           ==================== ============== ====================                                           ==================== ===== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate
Before Special Items
---------------------------------------------------------------------
GAAP Effective Tax Rate                                                                                                               19.4                    %                                                                          26.0                    %                                                                 24.6                    %                                                                          25.8                    %
Impact on Tax Rate as a result of Special Items                                                                                       (5.1                   )%                                                                           2.0                    %                                                                 (1.7                   )%                                                                           2.1                    %
                                                                                                                -----------------------------------------------                                           --------------------------------------------------------                                           -----------------------------------------------                                           --------------------------------------------------------
Effective Tax Rate Before Special Items                                                                                               24.5                    %                                                                          24.0                    %                                                                 26.3                    %                                                                          23.7                    %
                                                                                                                ===============================================                                           ========================================================                                           ===============================================                                           ========================================================
                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                        
                                                                                                                                                                                                                     YUM! Brands, Inc.
                                                                                                                                                                                                                      Segment Results
                                                                                                                                                                                                                   (amounts in millions)
                                                                                                                                                                                                                        (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                        
Quarter Ended 12/31/16                                                                               KFC                                                                         Pizza Hut                                                                      Taco Bell                                                                        Corporate and                                                                    Consolidated
                                                                                                                                                                                                                                                                                                                                                  Unallocated
                                                                                    ----------------------------------                                             ----------------------------------                                             ----------------------------------                                             -----------------------------------------                                             --------------------------------
Total revenues                                                                            $   1,042                                                   $     327                                                   $     655                                                   $ --                                                  $  2,024  
                                                                                    ------- ------- --------------------                                           ------- ------- --------------------                                           ------- ------- --------------------                                           ------- -------------- --------------------                                           ------ ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                        
Company restaurant expenses                                                                     593                                                                            120                                                                            380                                                                        --                                                                        1,093
General and administrative expenses                                                             132                                                                             78                                                                             73                                                                                   147                                                                          430
Franchise and license expenses                                                                   28                                                                             14                                                                              9                                                                                     9                                                                           60
Closures and impairment (income) expenses                                                         4                                                                             (3 )                                                                            2                                                                        --                                                                            3
Refranchising (gain) loss                                                            --                                                                 --                                                                 --                                                                                   (64 )                                                                        (64 )
Other (income) expense                                                                            1                                              --                                                          (1 )                                                                                  13                                                        13  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
                                                                                                758                                                         209                                                         463                                                                105                                                     1,535  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
Operating Profit (loss)                                                                   $     284                                                   $     118                                                   $     192                                                   $           (105 )                                                                   $    489  
                                                                                    ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ============== ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                      
Quarter Ended 12/26/15                                                                               KFC                                                                         Pizza Hut                                                                      Taco Bell                                                                        Corporate and                                                                    Consolidated
                                                                                                                                                                                                                                                                                                                                                  Unallocated
                                                                                    ----------------------------------                                             ----------------------------------                                             ----------------------------------                                             -----------------------------------------                                             --------------------------------
Total revenues                                                                            $     999                                                   $     368                                                   $     609                                                   $ --                                                  $  1,976  
                                                                                    ------- ------- --------------------                                           ------- ------- --------------------                                           ------- ------- --------------------                                           ------- -------------- --------------------                                           ------ ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                        
Company restaurant expenses                                                                     583                                                                            162                                                                            360                                                                        --                                                                        1,105
General and administrative expenses                                                             126                                                                             92                                                                             89                                                                                    74                                                                          381
Franchise and license expenses                                                                   32                                                                             13                                                                             11                                                                                    40                                                                           96
Closures and impairment (income) expenses                                                         6                                                                              1                                                                 --                                                                        --                                                                            7
Refranchising (gain) loss                                                            --                                                                 --                                                                 --                                                                                   (44 )                                                                        (44 )
Other (income) expense                                                                           (1 )                                                               --                                                          (1 )                                                                                   4                                                         2  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
                                                                                                746                                                         268                                                         459                                                                 74                                                     1,547  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
Operating Profit (loss)                                                                   $     253                                                   $     100                                                   $     150                                                   $            (74 )                                                                   $    429  
                                                                                    ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ============== ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                      

The above tables reconcile segment information, which is based on management responsibility, with our 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 GAAP Results to Non-GAAP Measurements.

                                                                                                                                                                                                                        
                                                                                                                                                                                                                     YUM! Brands, Inc.
                                                                                                                                                                                                                      Segment Results
                                                                                                                                                                                                                   (amounts in millions)
                                                                                                                                                                                                                        (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                        
Year Ended 12/31/16                                                                                  KFC                                                                         Pizza Hut                                                                      Taco Bell                                                                        Corporate and                                                                    Consolidated
                                                                                                                                                                                                                                                                                                                                                  Unallocated
                                                                                    ----------------------------------                                             ----------------------------------                                             ----------------------------------                                             -----------------------------------------                                             --------------------------------
Total revenues                                                                            $   3,232                                                   $   1,111                                                   $   2,025                                                   $             (2 )                                                                   $  6,366  
                                                                                    ------- ------- --------------------                                           ------- ------- --------------------                                           ------- ------- --------------------                                           ------- -------------- --------------------                                           ------ ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                        
Company restaurant expenses                                                                   1,847                                                                            453                                                                          1,198                                                                        --                                                                        3,498
General and administrative expenses                                                             391                                                                            241                                                                            213                                                                                   316                                                                        1,161
Franchise and license expenses                                                                  108                                                                             49                                                                             21                                                                                    24                                                                          202
Closures and impairment (income) expenses                                                        11                                                                 --                                                                              3                                                                        --                                                                           14
Refranchising (gain) loss                                                            --                                                                 --                                                                 --                                                                                  (141 )                                                                       (141 )
Other (income) expense                                                                            1                                                          (2 )                                                                           (3 )                                                                                  11                                                         7  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
                                                                                              2,358                                                         741                                                       1,432                                                                210                                                     4,741  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
Operating Profit (loss)                                                                   $     874                                                   $     370                                                   $     593                                                   $           (212 )                                                                   $  1,625  
                                                                                    ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ============== ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                      
Year Ended 12/26/15                                                                                  KFC                                                                         Pizza Hut                                                                      Taco Bell                                                                        Corporate and                                                                    Consolidated
                                                                                                                                                                                                                                                                                                                                                  Unallocated
                                                                                    ----------------------------------                                             ----------------------------------                                             ----------------------------------                                             -----------------------------------------                                             --------------------------------
Total revenues                                                                            $   3,235                                                   $   1,214                                                   $   1,991                                                   $ --                                                  $  6,440  
                                                                                    ------- ------- --------------------                                           ------- ------- --------------------                                           ------- ------- --------------------                                           ------- -------------- --------------------                                           ------ ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                        
Company restaurant expenses                                                                   1,895                                                                            550                                                                          1,202                                                                        --                                                                        3,647
General and administrative expenses                                                             401                                                                            272                                                                            230                                                                                   196                                                                        1,099
Franchise and license expenses                                                                  100                                                                             44                                                                             22                                                                                    71                                                                          237
Closures and impairment (income) expenses                                                         9                                                                              3                                                                              3                                                                        --                                                                           15
Refranchising (gain) loss                                                            --                                                                 --                                                                 --                                                                                    23                                                                           23
Other (income) expense                                                                           (2 )                                                                           (2 )                                                                           (2 )                                                                                  23                                                        17  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
                                                                                              2,403                                                         867                                                       1,455                                                                313                                                     5,038  
                                                                                    ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           -------------------------------------------                                           ----------------------------------
Operating Profit (loss)                                                                   $     832                                                   $     347                                                   $     536                                                   $           (313 )                                                                   $  1,402  
                                                                                    ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ============== ====================                                           ====== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                      

The above tables reconcile segment information, which is based on management responsibility, with our 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 GAAP Results to Non-GAAP Measurements.

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

(a)         Amounts presented as of and for the quarter and year ended December
            31, 2016 are preliminary.
 
(b)         We have historically recorded refranchising gains and losses in the
            U.S. as Special Items due to the scope of our U.S. refranchising
            program and the volatility in associated gains and losses. Beginning
            in 2016, we are also including all international refranchising gains
            and losses in Special Items. The inclusion in Special Items of these
            additional international refranchising gains and losses is the
            result of the anticipated size and volatility of refranchising
            initiatives outside the U.S. that will take place in connection with
            our previously announced plans to have at least 98% franchise
            ownership by the end of 2018. During the quarters ended December 31,
            2016 and December 26, 2015 we recorded net refranchising gains of
            $64 million and $49 million, respectively, that have been reflected
            as Special Items. During the years ended December 31, 2016 and
            December 26, 2015 we recorded net refranchising gains of $141
            million and net refranchising losses of $20 million, respectively,
            that have been reflected as Special Items.
 
            The fourth quarter 2016 net refranchising gains relate primarily to
            refranchising Taco Bell restaurants in the U.S. and KFC restaurants
            in Thailand. The net refranchising gains for the year 2016 relate
            primarily to refranchising Pizza Hut and Taco Bell restaurants in
            the U.S. The fourth quarter 2015 net refranchising gains relate
            primarily to refranchising Taco Bell restaurants in the U.S.
 
            The net refranchising losses for the year 2015 relate to our Mexico
            and Korea businesses, partially offset by refranchising gains
            related to Taco Bell restaurants in the U.S. In 2010 we refranchised
            our then remaining Company-operated restaurants in Mexico. To the
            extent we owned it, we did not sell the real estate related to
            certain of these restaurants, instead leasing it to the franchisee.
            During the quarter ended June 13, 2015 we initiated plans to sell
            this real estate and determined it was held for sale in accordance
            with GAAP. On September 28, 2015, subsequent to our quarter ended
            September 5, 2015, we sold the real estate for approximately $58
            million. While these proceeds exceeded the book value of the real
            estate, the sale represented a substantial liquidation of our
            Mexican operations under U.S. GAAP. Accordingly, we were required to
            include accumulated translation losses associated with our Mexican
            business within our carrying value when performing impairment
            evaluations in the quarters subsequent to determining that the real
            estate was held for sale. We recorded charges of $80 million in the
            year ended December 26, 2015, representing the excess of the sum of
            the book value of the real estate and other related assets and our
            accumulated translation losses over the then expected sales price.
            Consistent with the classification of the original market
            refranchising transaction, these charges were classified as
            Refranchising Loss within Special Items. We did not record any
            additional charges as a result of the consummation of the sale.
 
            Additionally, during the quarter and year ended December 26, 2015 we
            recognized Special Items charges of $3 million and $16 million,
            respectively, within Refranchising (gain) loss associated with the
            decision to offer to refranchise our Pizza Hut Korea restaurants.
 
(c)         As part of our plan to transform our global business we took several
            measures to increase focus on development of brands, increase our
            franchise ownership and creating a leaner, more efficient cost
            structure ("YUM’s Strategic Transformation initiatives"). During the
            quarter and year ended December 31, 2016 we recognized Special Item
            charges of $39 million and $71 million, respectively, related to
            these initiatives. The majority of these costs related to severance
            costs and charges associated with a voluntary retirement program
            offered to certain U.S. employees that were recorded within G&A
            expense.
 
(d)         In connection with the separation of Yum China we modified certain
            share-based compensation awards held as part of our Executive Income
            Deferral Plan in YUM stock to provide one Yum China share-based
            award for each outstanding YUM share-based award. These Yum China
            awards may now be settled in cash, as opposed to stock, which
            requires recognition of the fair value of these awards each quarter
            in our income statement. Cumulative fair value in excess of
            previously recorded expense as of December 31, 2016 and related
            costs resulted in non-cash Special Item charges of $30 million being
            recorded to G&A expense for the quarter and year ended December 31,
            2016.
 
(e)         During the first quarter of 2015, we reached an agreement with our
            KFC U.S. franchisees that gave us brand marketing control as well as
            an accelerated path to improved assets and customer experience. In
            connection with this agreement we recognized Special Item charges of
            $9 million and $41 million for the quarters ended December 31, 2016
            and December 26, 2015. During the years ended December 31, 2016 and
            December 26, 2015, we recognized Special Item charges of $26 million
            and $72 million, respectively. The majority of these costs were
            recorded in Franchise and license expense. These charges primarily
            related to the funding of investments for new back-of-house
            equipment for franchisees.
 
(f)         During the fourth quarter of 2016, the Company allowed certain
            former employees with deferred vested balances in the YUM Retirement
            Plan an opportunity to voluntarily elect an early payout of their
            pension benefits. As a result of payments made of $225 million
            related to this program exceeding the sum of service and interest
            costs within the Plan, we recorded a Special Items settlement charge
            of $24 million in G&A expense during the quarter and year ended
            December 31, 2016. Additionally, we incurred program costs of $1
            million in the year ended December 31, 2016.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170209005464r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170209005464/en/

SOURCE: Yum! Brands, Inc.

Analysts are invited to contact: 
Keith Siegner, 888-298-6986 
Vice President, Investor Relations, Corporate Strategy and Treasurer 
or 
Elizabeth Grenfell, 888-298-6986 
Director, Investor Relations 
or 
Members of the media are invited to contact: 
Virginia Ferguson, 502-874-8200 
Director, Public Relations


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