Reportable Operating Segments

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Reportable Operating Segments

Reportable Operating SegmentsWe identify our operating segments based on management responsibility. The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:

	Quarter ended				Year to date
Revenues	2023		2022		2023		2022
KFC Division	$	682	$	677	$	1,369	$	1,337
Taco Bell Division	621		586		1,193		1,103
Pizza Hut Division	242		235		496		479
Habit Burger Grill Division	142		138		274		264
	$	1,687	$	1,636	$	3,332	$	3,183

	Quarter ended				Year to date
Operating Profit	2023		2022		2023		2022
KFC Division	$	326	$	293	$	631	$	584
Taco Bell Division	228		215		432		400
Pizza Hut Division	91		93		195		195
Habit Burger Grill Division	3		(2)		(2)		(10)
Corporate and unallocated G&A expenses(a)	(86)		(65)		(170)		(136)
Unallocated Franchise and property expenses(a)	(1)		(4)		(2)		(4)
Unallocated Refranchising gain (loss)	17		8		21		12
Unallocated Other income (expense)(a)	(5)		16		(9)		22
Operating Profit	$	573	$	554	$	1,096	$	1,063
Investment income (expense), net(b)	29		(15)		5		(8)
Other pension income (expense)	1		(1)		3		(1)
Interest expense, net(c)	(125)		(148)		(255)		(266)
Income before income taxes	$	478	$	390	$	849	$	788

Our chief operating decision maker (“CODM”) does not consider the impact of Corporate and unallocated amounts when assessing Divisional segment performance. As such, we do not allocate such amounts to our Divisional segments for performance reporting purposes.

(a)Our operating results presented herein reflect revenues from and expenses to support the Russian operations for KFC and Pizza Hut prior to the dates of sale or transfer (see Note 1), within their historical financial statement line items and operating segments. However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed such net profits and losses subsequent to that date from the Division segment results in which they were earned to Unallocated Other income (expense). As a result, we reclassed net operating losses of $1 million from KFC Division Other income (expense) to Unallocated Other income (expense) during the year to date ended June 30, 2023, and net operating profit of $9 million and $11 million from Divisional Other income (expense) to Unallocated Other income (expense) during the quarter and year to date ended June 30, 2022, respectively. Additionally, we recorded a $4 million loss to Unallocated Other income (expense) during the quarter and year to date ended June 30, 2023 from the sale of our KFC Russia business.

Also, included in Unallocated Other income (expense) were $1 million in foreign exchange losses attributable to fluctuations in the value of the Russian Ruble during the quarter and year to date ended June 30, 2023, and foreign exchange gains of $11 million and $16 million during the quarter and year to date ended June 30, 2022, respectively. Additionally, we recorded charges of $3 million and $4 million to Corporate and unallocated G&A expenses and $1 million and $2 million to Unallocated Franchise and property expenses during the quarter and year to date ended June 30, 2023, respectively, for certain expenses related to the disposition of the businesses and other costs related to our exit from Russia. We recorded similar charges of $2 million and $4 million to Corporate and Unallocated G&A expenses and Unallocated Franchise and property expenses, respectively, during the quarter and year to date ended June 30, 2022.

(b)Includes changes in the value of our investment in Devyani International Limited (see Note 12).

(c)Includes a $23 million call premium and $5 million of unamortized debt issuance costs written off related to the redemption of the 2025 Notes (as discussed in our 2022 Form 10-K) during the quarter ended June 30, 2022.