Reportable Operating Segments (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Segment Reporting Information, by Segment

Reportable Operating Segments

We 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	$	700	$	704	$	2,069	$	2,041
Taco Bell Division	629		568		1,822		1,671
Pizza Hut Division	242		237		738		716
Habit Burger Grill Division	137		131		411		395
	$	1,708	$	1,640	$	5,040	$	4,823


	Quarter ended				Year to date
Operating Profit	2023		2022		2023		2022
KFC Division	$	344	$	304	$	975	$	888
Taco Bell Division	226		204		658		604
Pizza Hut Division	97		92		292		287
Habit Burger Grill Division	(2)		(4)		(4)		(14)
Corporate and unallocated G&A expenses(a)	(68)		(67)		(238)		(203)

Unallocated Franchise and property income (expenses)(a)	1		—		(1)		(4)
Unallocated Refranchising gain (loss)	19		3		40		15
Unallocated Other income (expense)(a)	(4)		14		(13)		36
Operating Profit	$	613	$	546	$	1,709	$	1,609
Investment income (expense), net(b)	16		27		21		19
Other pension income (expense)	2		(2)		5		(3)
Interest expense, net(c)	(126)		(124)		(381)		(390)
Income before income taxes	$	505	$	447	$	1,354	$	1,235

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 September 30, 2023, and net operating profit of $19 million and $30 million from Divisional Other income (expense) to Unallocated Other income (expense) during the quarter and year to date ended September 30, 2022, respectively. Additionally, we recorded income of $1 million and a charge of $3 million to Unallocated Other income (expense) during the quarter and year to date ended September 30, 2023, respectively, 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 year to date ended September 30, 2023, and foreign exchange losses of $1 million and foreign exchange gains of $15 million during the quarter and year to date ended September 30, 2022, respectively. Additionally, we recorded expense of $4 million to Corporate and unallocated G&A expenses during the year to date ended September 30, 2023, and income of $1 million and expense of $1 million to Unallocated Franchise and property expenses during the quarter and year to date ended September 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 $1 million and $3 million to Corporate and Unallocated G&A expenses and $1 million and $5 million to Unallocated Franchise and property expenses during the quarter and year to date ended September 30, 2022, respectively.

(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 year to date ended September 30, 2022.