Yum China Holdings, Inc.

Previous wording

Yum China Holdings, Inc. is the largest restaurant company in China in terms of 2025 system sales, with 18,737 restaurants covering over 2,600 cities primarily in China as of March 31, 2026. Our growing restaurant network consists of our flagship KFC and Pizza Hut brands, as well as emerging brands such as Lavazza, Huang Ji Huang, Little Sheep and Taco Bell. We have the exclusive right to operate and sublicense the KFC, Pizza Hut and, subject to the agreed terms, Taco Bell brands in China (excluding Hong Kong, Macau and Taiwan), and own the intellectual property of the Little Sheep and Huang Ji Huang concepts outright. We also established a joint venture with Lavazza Group, the world-renowned family-owned Italian coffee company, to explore and develop the Lavazza coffee concept in China. KFC was the first major global restaurant brand to enter China in 1987. With more than three decades of operations, we have developed extensive operating experience in the China market. We believe that there are significant opportunities to further expand within China, and we intend to focus our efforts on increasing our geographic footprint in both existing and new cities.

Current wording

Yum China Holdings, Inc. is the largest restaurant company in China in terms of 2025 system sales, with 19,297 restaurants covering over 2,700 cities primarily in China as of June 30, 2026. Our growing restaurant network consists of our flagship KFC and Pizza Hut brands, as well as emerging brands such as Lavazza, Huang Ji Huang, Little Sheep and Taco Bell. We have the exclusive right to operate and sublicense the KFC, Pizza Hut and, subject to the agreed terms, Taco Bell brands in China (excluding Hong Kong, Macau and Taiwan), and own the intellectual property of the Little Sheep and Huang Ji Huang concepts outright. We also established a joint venture with Lavazza Group, the world-renowned family-owned Italian coffee company, to explore and develop the Lavazza coffee concept in China. KFC was the first major global restaurant brand to enter China in 1987. With more than three decades of operations, we have developed extensive operating experience in the China market. We believe that there are significant opportunities to further expand within China, and we intend to focus our efforts on increasing our geographic footprint in both existing and new cities.

Previous wording

KFC is the leading and the largest quick-service restaurant (“QSR”) brand in China in terms of system sales. As of March 31, 2026, KFC operated 13,454 restaurants in over 2,600 cities across China.

Current wording

KFC is the leading and the largest quick-service restaurant (“QSR”) brand in China in terms of 2025 system sales. As of June 30, 2026, KFC operated 13,789 restaurants in over 2,700 cities across China.

Previous wording

Pizza Hut is the leading and the largest casual dining restaurant (“CDR”) brand in China in terms of system sales and number of restaurants. As of March 31, 2026, Pizza Hut operated 4,375 restaurants in over 1,100 cities.

Current wording

Pizza Hut is the leading and the largest casual dining restaurant (“CDR”) brand in China in terms of 2025 system sales and number of restaurants as of December 31, 2025. As of June 30, 2026, Pizza Hut operated 4,549 restaurants in over 1,200 cities.

Previous wording

As compared to the first quarter of 2025, Total revenues in the first quarter of 2026 increased 10%, or 4% excluding the impact of F/X, primarily attributable to 4% net new unit contribution.

Current wording

As compared to the second quarter of 2025, Total revenues in the second quarter of 2026 increased 13%, or 6% excluding the impact of F/X. Total revenues for the year to date ended June 30, 2026 increased 11%, or 5% excluding the impact of F/X. The increase in Total revenues for the quarter ended June 30, 2026, excluding the impact of F/X, was primarily attributable to 5% net new unit contribution and 1% same-store sales growth. The increase in Total revenues for the year to date ended June 30, 2026, excluding the impact of F/X, was primarily driven by 4% net new unit contribution and 1% same-store sales growth.

Previous wording

Operating profit for the first quarter increased 12%, or 6% excluding the impact of F/X, primarily driven by the increase in Total revenues, efficiency improvement from streamlined operations and favorable commodity prices, lower G&A and closures and impairment expenses, partially offset by increased delivery cost associated with higher delivery sales mix in the current period and value-for-money offerings.

Current wording

Operating profit for the year to date ended June 30, 2026 increased 13%, or 7% excluding the impact of F/X. The increase in Operating profit for the year to date ended June 30, 2026 was primarily driven by the increase in Total revenues, efficiency improvement from streamlined operations and favorable commodity prices, lower closures and impairment and G&A expenses, partially offset by increased delivery cost associated with higher delivery sales mix in the current period and value-for-money offerings.

Previous wording

Net income increased 6%, or remained flat excluding the impact of F/X, for the quarter ended March 31, 2026, mainly due to the increase in Operating Profit, offset by the decrease in fair value of our investment in Meituan and less interest income from lower investment balance and interest rates.

Current wording

Net income for the second quarter increased 14%, or 6% excluding the impact of F/X. Net income for the year to date ended June 30, 2026 increased 9%, or 3% excluding the impact of F/X. The increase in Net income was mainly due to the increase in Operating Profit, partially offset by less interest income from lower investment balance and interest rates.

Previous wording

The Consolidated Results of Operations for the quarters ended March 31, 2026 and 2025 and other data are presented below:

Current wording

The Consolidated Results of Operations for the quarters and years to date ended June 30, 2026 and 2025 and other data are presented below:

Previous wording

The increase in Franchise fees and income and Revenues from transactions with franchisees for the quarter, excluding the impact of F/X, was primarily driven by acceleration of franchise store openings.

Current wording

The quarter and year to date increase in Franchise fees and income and Revenues from transactions with franchisees, excluding the impact of F/X, was primarily driven by acceleration of franchise store openings.

Previous wording

The increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth and same-store sales growth. The increase in Restaurant profit for the quarter, excluding the impact of F/X, was primarily driven by the increase in Company sales, efficiency improvement from streamlined operations and favorable commodity prices, offset by increased rider cost associated with higher delivery sales mix in the current period and value-for-money offerings.

Current wording

As compared to the second quarter of 2025, the increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth and same-store sales growth. The increase in Restaurant profit for the quarter, excluding the impact of F/X, was primarily driven by the increase in Company sales, efficiency improvement from streamlined operations and favorable commodity prices, partially offset by increased delivery cost associated with higher delivery sales mix in the current period and value-for-money offerings.

Previous wording

The increase in Company sales for the quarter, excluding the impact of F/X, was primarily driven by net unit growth, partially offset by same-store sales decline. The increase in Restaurant profit for the quarter, excluding the impact of F/X, was primarily driven by the increase in Company sales, efficiency improvement from streamlined operations and favorable commodity prices, partially offset by value-for-money offerings and increased delivery cost associated with higher delivery sales mix in the current period.

Current wording

The increase in Company sales for the year to date ended June 30, 2026, excluding the impact of F/X, was primarily driven by net unit growth. The year to date increase in Restaurant profit, excluding the impact of F/X, was primarily driven by the increase in Company sales, efficiency improvement from streamlined operations and favorable commodity prices, partially offset by value-for-money offerings and increased delivery cost associated with higher delivery sales mix in the current period.

Previous wording

The increase in Franchise fees and income and Revenues from transactions with franchisees for the quarter, excluding the impact of F/X, was primarily driven by acceleration of franchise store openings.

Current wording

The quarter and year to date increase in Franchise fees and income and Revenues from transactions with franchisees, excluding the impact of F/X, was primarily driven by acceleration of franchise store openings.

Previous wording

The increase in Operating profit for the quarter, excluding the impact of F/X, was primarily driven by lower closures and impairment expenses, increased profit generated from acceleration of franchise store openings and increase in Restaurant profit.

Current wording

The quarter and year to date increase in Operating profit, excluding the impact of F/X, was primarily driven by the increase in Restaurant profit and lower closures and impairment expenses.

Previous wording

The increase in Total revenues of All other segments for the quarter, excluding the impact of F/X, was primarily driven by inter-segment revenue generated by our delivery team for services provided to Company-owned restaurants as a result of increased delivery sales.

Current wording

The quarter and year to date increase in Total revenues of All other segments, excluding the impact of F/X, was primarily driven by revenue generated by our delivery team for services provided to Company-owned restaurants, which is inter-segment revenue, and franchise restaurants as a result of increased delivery sales.

Previous wording

The improvement in Operating profit (loss) for the quarter, excluding the impact of F/X, was primarily driven by the decrease in Operating loss from certain emerging brands.

Current wording

The quarter and year to date improvement in Operating profit (loss) excluding the impact of F/X, was primarily driven by the decrease in Operating loss from certain emerging brands.

Previous wording

Revenues from transactions with franchisees primarily include revenues derived from the Company’s central procurement model, whereby food and paper products are centrally purchased and then mainly sold to KFC and Pizza Hut franchisees. The increase in revenues from transactions with franchisees for the quarter, excluding the impact of F/X, was mainly due to the increase in system sales for franchisees primarily driven by acceleration of franchise store openings.

Current wording

Revenues from transactions with franchisees primarily include revenues derived from the Company’s central procurement model, whereby food and paper products are centrally purchased and then mainly sold to KFC and Pizza Hut franchisees. The quarter and year to date increase in revenues from transactions with franchisees, excluding the impact of F/X, was mainly due to the increase in system sales for franchisees primarily driven by acceleration of franchise store openings.

Previous wording

The decrease in Corporate G&A expenses for the quarter, excluding the impact of F/X, was primarily due to timing of government subsidies and lower compensation costs.

Current wording

Corporate G&A expenses for the quarter remained flat. The year to date decrease in Corporate G&A expenses, excluding the impact of F/X, was primarily due to lower compensation costs and timing of government subsidies.

Previous wording

The decrease in interest income, net for the quarter, excluding the impact of F/X, was primarily driven by lower investment balance with cash used in return to shareholders and lower interest rates.

Current wording

The quarter and year to date decrease in interest income, net, excluding the impact of F/X, was primarily driven by lower investment balance with cash used in return to shareholders and lower interest rates.

Previous wording

The investment (loss) gain mainly relates to the change in fair value of our investment in Meituan. See Note 3 for additional information.

Current wording

The investment loss mainly relates to the change in fair value of our investment in Meituan. See Note 3 for additional information.

Previous wording

Our income tax provision primarily includes tax on our earnings generally at the Chinese statutory tax rate of 25% with certain Chinese subsidiaries qualified for preferential tax rates, withholding tax on planned or actual repatriation of earnings outside of China, Hong Kong profits tax, and U.S. corporate income tax, if any. The lower effective tax rate for the quarter ended March 31, 2026 was primarily due to higher excess tax benefits upon exercise of share-based awards.

Current wording

Our income tax provision primarily includes tax on our earnings generally at the Chinese statutory tax rate of 25% with certain Chinese subsidiaries qualified for preferential tax rates, withholding tax on planned or actual repatriation of earnings outside of China, Hong Kong profits tax, and U.S. corporate income tax, if any. The higher effective tax rate for the quarter ended June 30, 2026 was primarily due to higher U.S. tax impact. The lower effective tax rate for the year to date ended June 30, 2026 was primarily due to higher excess tax benefits upon exercise of share-based awards.

Previous wording

As of March 31, 2026, current VAT assets of $147 million, non-current VAT assets of $14 million and net VAT payable of $6 million were recorded in Prepaid expenses and other current assets, Other assets and Accounts payable and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.

Current wording

As of June 30, 2026, current VAT assets of $159 million, non-current VAT assets of $14 million and net VAT payable of $7 million were recorded in Prepaid expenses and other current assets, Other assets and Accounts payable and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.

Previous wording

Our cash flows for the quarters ended March 31, 2026 and 2025 were as follows:

Current wording

Our cash flows for the years to date ended June 30, 2026 and 2025 were as follows:

Previous wording

Net cash provided by operating activities was $550 million in 2026 as compared to $452 million in 2025. The increase was primarily driven by the increase in Operating profit along with working capital changes.

Current wording

Net cash provided by operating activities was $976 million in 2026 as compared to $864 million in 2025. The increase was primarily driven by the increase in Operating profit along with working capital changes.

Previous wording

Net cash used in investing activities was $233 million in 2026 as compared to $72 million in 2025. The increase was mainly due to the net impact on cash flows resulting from purchases and maturities of short-term investments, and long-term bank deposits and notes.

Current wording

Net cash used in investing activities was $265 million in 2026 as compared to $290 million in 2025. The decrease was mainly due to the net impact on cash flows resulting from purchases and maturities of short-term investments, and long-term bank deposits and notes.

Previous wording

Net cash used in financing activities was $353 million in 2026 as compared to $280 million in 2025. The increase was primarily driven by the increase of share repurchases, cash dividends paid on common stock and net outflow related to short-term borrowings.

Current wording

Net cash used in financing activities was $739 million in 2026 as compared to $709 million in 2025. The increase was primarily driven by the increase of share repurchases and cash dividends paid on common stock, partially offset by the increase in the proceeds from short-term borrowings.

Previous wording

If our cash flows from operations are less than we require, we may need to access the capital markets to obtain financing. Our access to, and the availability of, financing on acceptable terms and conditions in the future or at all will be impacted by many factors, including, but not limited to:

Current wording

For long term financing, the Company is evaluating a range of options. The timing and terms of any such financing will depend on market conditions and other factors. Our access to, and the availability of, financing on acceptable terms and conditions in the future or at all will be impacted by many factors, including, but not limited to:

Previous wording

As of March 31, 2026, our Board of Directors authorized an aggregate of $5.4 billion for our share repurchase program, of which $0.9 billion remained available as of March 31, 2026. Yum China may repurchase shares under this program from time to time in the open market or, subject to applicable regulatory requirements, through privately negotiated transactions, block trades, accelerated share repurchase transactions and the use of Rule 10b5-1 trading plans. During the quarters ended March 31, 2026 and 2025, the Company repurchased 4.1 million shares of common stock for $214 million and 3.6 million shares of common stock for $172 million, respectively, under the repurchase program, excluding transaction costs and excise tax.

Current wording

As of June 30, 2026, our Board of Directors authorized an aggregate of $5.4 billion for our share repurchase program, of which $641 million remained available as of June 30, 2026. Yum China may repurchase shares under this program from time to time in the open market or, subject to applicable regulatory requirements, through privately negotiated transactions, block trades, accelerated share repurchase transactions and the use of Rule 10b5-1 trading plans. During the years to date ended June 30, 2026 and 2025, the Company repurchased 10.7 million shares of common stock for $515 million and 7.7 million shares of common stock for $356 million, respectively, under the repurchase program, excluding transaction costs and excise tax.

Previous wording

For the quarters ended March 31, 2026 and 2025, the Company paid cash dividends of approximately $102 million and $90 million, respectively, to stockholders through a quarterly dividend payment of $0.29 and $0.24 per share, respectively.

Current wording

For the quarters ended June 30, 2026 and 2025, the Company paid cash dividends of approximately $101 million and $90 million, respectively, and for the years to date ended June 30, 2026 and 2025, the Company paid aggregate cash dividends of approximately $203 million and $180 million, respectively, to stockholders through a quarterly dividend payment of $0.29 and $0.24 per share, respectively.

Previous wording

The Company plans to return $1.5 billion to shareholders in 2026, adding to both $1.5 billion it delivered to shareholders in 2025 and 2024 in share repurchases and dividends.

Current wording

The Company plans to return $1.5 billion to shareholders in 2026, adding to the $1.5 billion it delivered to shareholders in each of 2025 and 2024 in share repurchases and dividends.

Previous wording

On April 29, 2026, the Board of Directors declared a cash dividend of $0.29 per share, payable on June 17, 2026, to stockholders of record as of the close of business on May 27, 2026. The total estimated cash dividend payable is approximately $101 million.

Current wording

On July 30, 2026, the Board of Directors declared a cash dividend of $0.29 per share, payable on September 17, 2026, to stockholders of record as of the close of business on August 27, 2026. The total estimated cash dividend payable is approximately $99 million.

Previous wording

Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. Our ability to return capital to shareholders in the future is also subject to the factor described below under “Forward-Looking Statements.” In addition, our ability to declare and pay any dividends on our stock may be restricted by our earnings available for distribution under applicable Chinese laws. The laws, rules and regulations applicable to our Chinese subsidiaries permit payments of dividends only out of their accumulated profits, if any, determined in accordance with applicable Chinese accounting standards and regulations. Under Chinese laws, an enterprise incorporated in China is required to set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund statutory surplus reserve, until the aggregate amount of such a fund reaches 50% of its registered capital. As a result, our Chinese subsidiaries are restricted in their ability to transfer a portion of their net assets to us in the form of dividends. At the discretion of the board of directors, as an enterprise incorporated in China, each of our Chinese subsidiaries may allocate a portion of its after-tax profits based on Chinese accounting standards to discretionary surplus reserve. These reserves are not distributable as cash dividends.

Current wording

Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. Our ability to return capital to shareholders in the future is also subject to the factors described below under “Forward-Looking Statements.” In addition, our ability to declare and pay any dividends on our stock may be restricted by our earnings available for distribution under applicable Chinese laws. The laws, rules and regulations applicable to our Chinese subsidiaries permit payments of dividends only out of their accumulated profits, if any, determined in accordance with applicable Chinese accounting standards and regulations. Under Chinese laws, an enterprise incorporated in China is required to set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund statutory surplus reserve, until the aggregate amount of such a fund reaches 50% of its registered capital. As a result, our Chinese subsidiaries are restricted in their ability to transfer a portion of their net assets to us in the form of dividends. At the discretion of the board of directors, as an enterprise incorporated in China, each of our Chinese subsidiaries may allocate a portion of its after-tax profits based on Chinese accounting standards to discretionary surplus reserve. These reserves are not distributable as cash dividends.

Previous wording

As of March 31, 2026, the Company had credit facilities of RMB10,758 million (approximately $1,560 million), comprised of onshore credit facilities in the aggregate amount of RMB8,000 million (approximately $1,160 million), offshore credit facilities in the aggregate amount of $200 million and a credit facility of $200 million that can be used for either onshore or offshore.

Current wording

As of June 30, 2026, the Company had credit facilities of RMB10,715 million (approximately $1,579 million), comprised of onshore credit facilities in the aggregate amount of RMB8,000 million (approximately $1,179 million), offshore credit facilities in the aggregate amount of $200 million and a credit facility of $200 million that can be used for either onshore or offshore.

Previous wording

The credit facilities had remaining terms ranging from less than one year to three years as of March 31, 2026. Our credit facilities mainly include term loans, overdrafts, letters of credit, banker’s acceptance notes and bank guarantees. The credit facilities in general bear interest based on the Loan Prime Rate (“LPR”) published by the National Interbank Funding Centre of the PRC, or Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Each credit facility contains a cross-default provision whereby our failure to make any payment on a principal amount from any credit facility will constitute a default on other credit facilities. Some of the credit facilities contain covenants limiting, among other things, certain additional indebtedness and liens, and certain other transactions specified in the respective agreements. As of March 31, 2026, we had outstanding short-term bank borrowings of RMB137 million (approximately $20 million), mainly to manage working capital at our operating subsidiaries. Such bank borrowings are due within one year from their issuance dates. As of March 31, 2026, we also had outstanding bank guarantees of RMB306 million (approximately $44 million) mainly to secure our lease payments to landlords for certain Company-owned restaurants, as well as outstanding bank guarantees of RMB360 million (approximately $52 million) to secure the balance of prepaid stored-value cards issued by the Company pursuant to regulatory requirements. Our credit facilities were therefore reduced by outstanding short-term bank borrowings, adjusted for unamortized interest and outstanding guarantees. As of March 31, 2026, the Company had unused credit facilities of approximately $1,444 million.

Current wording

The credit facilities had remaining terms ranging from less than one year to three years as of June 30, 2026. Our credit facilities mainly include term loans, overdrafts, letters of credit, banker’s acceptance notes and bank guarantees. The credit facilities in general bear interest based on the Loan Prime Rate (“LPR”) published by the National Interbank Funding Centre of the PRC, or Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Each credit facility contains a cross-default provision whereby our failure to make any payment on a principal amount from any credit facility will constitute a default on other credit facilities. Some of the credit facilities contain covenants limiting, among other things, certain additional indebtedness and liens, and certain other transactions specified in the respective agreements. As of June 30, 2026, we had outstanding short-term bank borrowings of RMB445 million (approximately $66 million), mainly to manage working capital at our operating subsidiaries. Such bank borrowings are due within one year from their issuance dates. As of June 30, 2026, we also had outstanding bank guarantees of RMB315 million (approximately $46 million) mainly to secure our lease payments to landlords for certain Company-owned restaurants, as well as outstanding bank guarantees of RMB600 million (approximately $89 million) to secure the balance of prepaid stored-value cards issued by the Company pursuant to regulatory requirements. Our credit facilities were therefore reduced by outstanding short-term bank borrowings, adjusted for unamortized interest and outstanding guarantees. As of June 30, 2026, the Company had unused credit facilities of approximately $1,378 million.