-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G4H44rlzwwdACF5zUUbqnDTKgHhtIvPyTKkHt4cQXGS93IRbz2aZl/Q6T+AJv/5A isKbi7H9V3Pl5cz8p89Rhw== 0001157523-03-005236.txt : 20031007 0001157523-03-005236.hdr.sgml : 20031007 20031007161532 ACCESSION NUMBER: 0001157523-03-005236 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031007 ITEM INFORMATION: FILED AS OF DATE: 20031007 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YUM BRANDS INC CENTRAL INDEX KEY: 0001041061 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133951308 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13163 FILM NUMBER: 03931689 BUSINESS ADDRESS: STREET 1: 1441 GARDINER LANE CITY: LOUISVILLE STATE: KY ZIP: 40213 BUSINESS PHONE: 5028748300 MAIL ADDRESS: STREET 1: 1900 COLONEL SANDERS LANE CITY: LOUISVILLE STATE: KY ZIP: 40213 FORMER COMPANY: FORMER CONFORMED NAME: TRICON GLOBAL RESTAURANTS INC DATE OF NAME CHANGE: 19970627 FORMER COMPANY: FORMER CONFORMED NAME: GREAT AMERICAN RESTAURANT CO DATE OF NAME CHANGE: 19970618 8-K 1 a4487357.txt YUM BRANDS 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 7, 2003 Commission file number 1-13163 ------- YUM! BRANDS, INC. (Exact name of registrant as specified in its charter) North Carolina 13-3951308 - ---------------------------------------- ---------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 1441 Gardiner Lane, Louisville, Kentucky 40213 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (502) 874-8300 Former name or former address, if changed since last report: N/A ================================================================================ Item 12. Results of Operations and Financial Condition The information in this Form 8-K is furnished under "Item 12. Disclosure of Results of Operations and Financial Condition" in accordance with SEC Release No. 33-8176. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. On October 7, 2003 YUM! Brands, Inc. issued a press release announcing financial results for the quarter ended September 6, 2003. A copy of the press release is attached hereto as Exhibit 99.1. 99.1 Press release dated October 7, 2003 announcing financial results of the quarter ended September 6, 2003. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. YUM! BRANDS, INC. ----------------- (Registrant) Date: October 7, 2003 /s/ David J. Deno ---------------------------------- Chief Financial Officer (Principal Financial Officer) EX-99 3 a4487357_ex991.txt YUM BRANDS EXHIBIT 99.1 Exhibit 99.1 Yum! Brands Inc. Reports Third-Quarter Earnings Per Share, EPS, of $0.54 Prior to Special Items. Including a Special Items Charge of $0.01, Reported EPS Was $0.53. LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 7, 2003--Yum! Brands Inc. (NYSE: YUM): -- INCREASES FULL-YEAR 2003 EPS GUIDANCE TO AT LEAST $2.03 PRIOR TO SPECIAL ITEMS. REPORTED EPS IS EXPECTED TO BE $1.94, INCLUDING $0.09 OF SPECIAL-ITEMS CHARGES. -- REPORTS PERIOD 10 ESTIMATED INTERNATIONAL SYSTEM SALES INCREASED 14% IN U.S. DOLLAR TERMS OR 10% PRIOR TO U.S. DOLLAR CONVERSION. -- REPORTS PERIOD 10 ESTIMATED U.S. BLENDED SAME-STORE SALES AT COMPANY RESTAURANTS INCREASED 1% VERSUS LAST YEAR. Yum! Brands Inc. today reported results for the third quarter ended September 6, 2003. Key highlights for the quarter were -- 6% increase in traditional international restaurants in operation versus end of third quarter 2002. -- 20% increase in international franchise and license fees versus third quarter 2002. -- 18% increase in U.S. multibrand restaurants in operation versus end of third quarter 2002. -- The company paid down debt of $137 million, invested capital of $145 million and repurchased shares, spending $39 million. The company took a $6.8 million pretax special-items charge this quarter for interest charges related to the previously announced legal judgment against Taco Bell in Wrench v. Taco Bell Corp. The company plans to appeal the original jury verdict, and if unsuccessful on appeal, intends to seek reimbursement from appropriate parties. Future interest charges will be accrued until the appeal process is concluded. Financial Highlights (million, except unit counts and per-diluted-share amounts) - ---------------------------------------------------------------------- Third % Change Year % Change Quarter Vs. to Date Vs. 2003 Prior Year 2003 Prior Year ------- ---------- ------- ---------- Traditional System Units 30,598 2 30,598 2 Revenues $1,989 4 $5,727 8 - ---------------------------------------------------------------------- EPS before Special Items $0.54 17 $1.41 11 - ---------------------------------------------------------------------- Special Items EPS $0.01 NM $0.09 NM - ---------------------------------------------------------------------- Reported EPS $0.53 14 $1.32 Even - ---------------------------------------------------------------------- Notes to the preceding comments and table: "System Units" excludes licensed locations and includes company-owned, franchise and joint-venture restaurants. "Special Items" include AmeriServe and other charges (credits), which were previously referred to as unusual items in 2002, Wrench litigation and cumulative effect of accounting change, net of tax. See attachments to this press release for reconciliations of non-GAAP measurements to GAAP results. See the attachments to this press release for a description of Estimated System Sales, a key operating metric. David C. Novak, Chairman and CEO, said: "Continued robust new international restaurant growth, a strengthening in international same-store sales versus our expectations and another solid performance by Taco Bell contributed to 17 percent growth in EPS before special items. Additionally, Pizza Hut had one of its best quarters in same-store-sales growth since the first half of 2001. "While both Pizza Hut and Taco Bell had positive sales performances, continued weakness at KFC negatively impacted U.S. blended same-store-sales results. We have made a major change in the KFC brand's leadership by appointing a new president and a new chief marketing and food innovation officer. We fully expect this team to turn around KFC's business performance. "Given our overall performance and the strength of the largest businesses in our global portfolio, we are increasing our 2003 EPS guidance to at least $2.03 before special items. We are confident, looking ahead to 2004, of continuing to deliver our stated goal of at least 10 percent growth in EPS. Our confidence is based on the progress we are making towards executing our three key strategies: international new-restaurant growth, U.S. multibrand innovation and expansion, and differentiation of our core-brand portfolio by dramatically improving U.S. restaurant operations. This combination of strategies is unique to the restaurant industry and makes us anything but an ordinary restaurant company." Following is an update on Yum! Brands' international and U.S. businesses as well as key business-growth drivers, which include international expansion, multibrand innovation and expansion in the U.S., portfolio of category-leading brands, franchise-fee growth and substantial cash generation with high returns. INTERNATIONAL BUSINESS - ---------------------- - ---------------------------------------------------------------------- Third Quarter Year to Date ---------------------------------------------------------- million, Incr/(Decr) Incr/(Decr) except unit---------------------------------------------------------- counts and Excl Excl percentages 2003 2002 Reported F/x 2003 2002 Reported F/x ---------------------------------------------------------- Revenues $652 $593 +10% +6% $1,810 $1,640 +10% +6% Restaurant (1.0) (0.8) (1.0) (0.8) Margin % 15.9 16.9 ppt ppt 15.2 16.2 ppt ppt Operating Profit $114 $90 +26% +19% $297 $249 +19% +13% - ---------------------------------------------------------------------- Operating Metrics Traditional System Units 11,845 11,202 +6% NM 11,845 11,202 +6% NM Est. System- Sales Growth +12% +6% +13% +6% - ---------------------------------------------------------------------- Notes to the preceding table: "Excl F/x" is prior to foreign currency conversion to U.S. dollars. "Traditional System Units" excludes licensed locations and includes company-owned, franchise and joint-venture restaurants. See the attachments to this press release for a description of Estimated System Sales, a key operating metric. In the third quarter for the company's international business, continued expansion of our key international brands -- KFC and Pizza Hut -- was the primary driver of revenue and operating-profit growth. Same-store sales in company markets and the overall system were down versus last year. Markets and businesses with positive same-store sales included KFC Australia, the U.K., Pizza Hut Korea, the Middle East and KFC South Africa. Markets and businesses experiencing negative growth included China, Japan, Mexico and Taiwan KFC. Restaurant margins were down in the third quarter primarily due to sales deleverage in Mexico. The favorable impact of foreign currency conversion added $6 million to operating profit for the third quarter. UNITED STATES BUSINESS - ---------------------- - ---------------------------------------------------------------------- Third Quarter Year to Date ---------------------------------------------------- million, except unit counts and percentages 2003 2002 Incr/(Decr) 2003 2002 Incr/(Decr) ---------------------------------------------------- Revenues $1,337 $1,322 +1% $3,917 $3,656 +7% Restaurant (1.4) (1.8) Margin % 14.8 16.2 ppts 14.5 16.3 ppts Operating Profit $204 $205 Even $572 $563 +2% - ---------------------------------------------------------------------- Operating Metrics Traditional System Units 18,753 18,861 (1)% 18,753 18,861 (1)% Multibrand Units 2,018 1,715 +18% 2,018 1,715 18% Est. System-Sales Growth Even +4% - ---------------------------------------------------------------------- Notes to the preceding table: "Traditional System Units" excludes licensed locations and includes company-owned, franchise and joint-venture restaurants. See the attachments to this press release for a description of Estimated System Sales, a key operating metric. In the third quarter, U.S. blended same-store sales for franchise (estimated) and company restaurants were both even with the same period last year. In the third quarter, U.S. restaurant margin was negatively impacted by sales deleverage at KFC, higher commodity costs (primarily cheese and beef) and higher occupancy costs. Traditional system units decreased slightly primarily due to A&W single-brand and Pizza Hut dine-in restaurant closures. The company expects these modest restaurant declines will continue in the near term for these two brands. A&W distribution is expected to grow as the brand is paired with KFC and Long John Silver's in a multibrand format. This expanded A&W distribution would be reflected in KFC and Long John Silver's multibrand units. Taco Bell and KFC restaurant counts were approximately even versus the prior year. WORLDWIDE NEW-RESTAURANT DEVELOPMENT - ------------------------------------ - ---------------------------------------------------------------------- New-Restaurant Openings Third Quarter Year to Date ------------- -------------- Worldwide 305 865 International 213 616 United States 92 249 - ---------------------------------------------------------------------- Note to the preceding table: "New-Restaurant Openings" excludes licensed locations. Worldwide new-restaurant openings for the third quarter were driven by growth in new international restaurants from our global brands: KFC and Pizza Hut. Primary growth drivers were four key international markets -- China, the U.K., Mexico and Korea -- with 94 new restaurant openings this quarter. Franchise and joint-venture partners opened 70% of systemwide new international restaurants year to date. Net traditional restaurant count increased 31% in China, 12% in Mexico, 9% in the U.K., and 2% in Korea versus the end of the third quarter 2002. In key franchise markets year-over-year unit growth was 10% in Asia, 5% in the Middle East, 4% in South Africa and 5% in Caribbean/Latin America. This discussion excludes changes in licensed-unit locations, which are expected to have no material impact on the company's overall profit performance in 2003. Licensed locations are typically nontraditional sites, such as airports, that normally have substantially lower average unit volumes than traditional restaurant locations. MULTIBRAND EXPANSION - -------------------- - ---------------------------------------------------------------------- Third Quarter Multibrand Restaurants in Operation 2003 2002 Incr/(Decr) ------ ------ ----------- U.S. Systemwide 2,018 1,715 +18% % U.S. System Units 11% 9% +2 ppts - ---------------------------------------------------------------------- Note to the preceding table: "System Units" excludes licensed locations. In the third quarter, 108 multibrand restaurants were added in the U.S., bringing the total to 234 U.S. multibrand additions year to date. In the U.S., third-quarter company and franchise additions were 65 and 43 respectively. Approximately 50% of the U.S. multibrand additions are expected to be conversions of existing single-brand restaurants, and 50% are expected to be new-restaurant openings for full year 2003. FRANCHISE GROWTH AND FEES - ------------------------- - ---------------------------------------------------------------------- Third Quarter Year to Date ------------- ------------ Franchise Restaurant Net Growth Vs. Q3 2002 +1% +1% Total Franchise Fees ($ million) $224 $642 Growth Vs. 2002 +6% +8% - ---------------------------------------------------------------------- Notes to the preceding table: "Franchise Restaurant" includes joint ventures; excludes licensed restaurants. "Franchise Fees" includes fees from joint ventures and licensed restaurants. Fees are for ongoing royalties and initial fees. For the third quarter, favorable foreign currency conversion added 2 percentage points of franchise-fee growth. Excluding foreign currency conversion, franchise fees increased 4%, primarily driven by net new-restaurant development and increased international royalty rates. CASH-FLOW GENERATION - -------------------- - ---------------------------------------------------------------------- $ million cash inflow/(cash outflow) Third Quarter Year to Date ------------- ------------ Net Cash Provided by Operating Activities 405 769 Proceeds from Refranchising Restaurants - 11 Employee Stock-Option Proceeds 36 70 Sales of Property, Plant and Equipment 9 29 ------------- ------------ Total Cash Generated 450 879 - ---------------------------------------------------------------------- Capital Spending and Franchise Acquisitions (145) (388) Debt -- Net Proceeds/(Payments) (137) (218) Repurchase Shares of Common Stock (39) (121) - ---------------------------------------------------------------------- Notes to the preceding table: -- See the attachments to this press release for reconciliations of non-GAAP measurements to GAAP results. -- Number of shares repurchased: 1,330,000 in the third quarter and 4,657,700 year to date. -- See the attachments to this press release for the Condensed Consolidated Statement of Cash Flows. For third quarter and year to date, the company more than funded capital spending with net cash provided by operating activities. Additional cash was generated from employee stock-option proceeds and sales of property, plant and equipment. As a result, the company was able to reduce debt and repurchase stock as indicated in the preceding table. Subsequent to the end of the quarter, the company contributed $130 million in cash to the closed pension plan. FOURTH-QUARTER 2003 OUTLOOK The company is comfortable with the current consensus estimate of $0.62 in reported EPS in the fourth quarter. At this time, the company expects no net special-items EPS impact in the quarter. This is an increase of $0.07, or 11%, compared to last year's performance, prior to a gain of $0.01 from special items in 2002. Projected factors contributing to the company's EPS expectations are -- International system-sales growth of +8% to +9% prior to foreign currency conversion, or +12% to +13% after conversion to U.S. dollars. Year-over-year net growth in international traditional restaurants of +5% to +6% will be the primary driver with slightly positive same-store-sales growth expected systemwide. -- Based on current foreign currency rates, the company expects a benefit of $5 to $6 million from foreign currency conversion on operating profit for the fourth quarter. The Chinese renminbi, British pound sterling, Australian dollar, Korean won, Japanese yen, Canadian dollar, and Mexican peso are important currencies in the company's international business. -- U.S. blended same-store-sales growth for company restaurants of approximately 1%. -- Worldwide company restaurant margin is expected to be down approximately 1.5 percentage points from fourth quarter last year. International margin is expected to decline by approximately 1 percentage point. -- General and administrative expenses flat versus last year in U.S. dollar terms. -- Interest expense down approximately $9 million from last year. -- Refranchising gains slightly higher than last year. -- A targeted tax rate before special items of 29% to 31% versus 30% last year. ANNUAL OUTLOOK The company expects earnings per share to grow at least 10% each year with the continued execution of its three key strategies: (1) international new-restaurant growth; (2) multibrand restaurant innovation and expansion in the U.S.; and (3) dramatically improving restaurant operations and differentiating our core-brand portfolio. For 2003, the company expects worldwide revenue growth of 7% to 8%, which includes 2 percentage points from the favorable impact of the Long John Silver's and A&W acquisition, at least 2% worldwide traditional system restaurant growth and U.S. company blended same-store sales even with last year. - ---------------------------------------------------------------------- Forecast Actual 2003 2002 Incr/(Decr) -------- ------ ----------- EPS Before Special Items $2.03 $1.82 +11% Special Items EPS $(0.09) $0.06 NM -------- ------ Reported EPS $1.94 $1.88 +3% - ---------------------------------------------------------------------- PERIOD 10 SALES Period 10 estimated international system sales increased 10% prior to foreign currency conversion or 14% after conversion to U.S. dollars. Estimated U.S. blended same-store sales at company restaurants increased 1% versus last year for the comparable four-week period ended October 4, 2003 (Period 10). INTERNATIONAL SYSTEM Sales Growth (Estimated) - --------------------------------------------- - ---------------------------------------------------------------------- Prior-Year Reported (U.S.$) Local Currency Basis Local Currency Basis ----------------- -------------------- -------------------- Period 10 +14% +10% +9% - ---------------------------------------------------------------------- U.S. Company Same-Store Sales Growth (Estimated) - ------------------------------------------------ - ---------------------------------------------------------------------- Period 10 Period 10 Current Year Prior Year ------------ ---------- U.S. BLENDED +1% (1)% Taco Bell +3% +3% Pizza Hut +1% +3% KFC (1)% (10)% - ---------------------------------------------------------------------- NOTES Sales results for Period 11 (the four-week period ending November 1, 2003), are scheduled to be released November 6, 2003, before market hours. U.S. same-store sales include only company restaurants that have been open one year or more. U.S. blended same-store sales include KFC, Pizza Hut, and Taco Bell company-owned restaurants only. U.S. same-store sales for Long John Silver's and A&W restaurants are not included. U.S. franchise and systemwide same-store sales results are reported quarterly within the company's earnings release and include only KFC, Pizza Hut and Taco Bell Restaurants. International system sales include the total of sales from approximately 12,000 company, franchise, license, and joint-venture restaurants in over 100 countries and territories outside the United States. The international business period close is one period prior to the company's period-end date to facilitate consolidated reporting. Please refer to the reporting calendar posted on Yum! Brands' web site at the following URL: http://investors.yum.com/ireye/ir_site.zhtml?ticker=YUM&script=1000. CONFERENCE CALL Yum! Brands Inc. will hold a conference call to review the company's financial performance and strategies at 9:15 a.m. EDT Wednesday, October 8, 2003. For U.S. callers, the number is 877/815-2029. For international callers, the number is 706/645-9271. The call will be available for playback beginning Wednesday, October 8, at 12:15 p.m. EDT through Friday, October 24, at midnight EDT. To access the playback, dial 800/642-1687 in the U.S.A. and 706/645-9291 internationally. The playback pass code is 2511659. The call and the playback can be accessed via the Internet by visiting Yum! Brands' web site: www.yum.com and selecting "3rd Quarter Earnings Webcast." (Windows Media Player is required, which can be downloaded at no charge from the following URL: http://www.microsoft.com/windows/windowsmedia/players.asp. The process could take several minutes.) 2003 ANNUAL CONFERENCE FOR INVESTORS & ANALYSTS Please note, Wednesday, December 10, Yum! Brands will host the company's Annual Conference for Investors and Analysts from approximately 8:00 a.m. to 1:00 p.m. Eastern Time, at The St. Regis Hotel in New York. Everyone is invited, but on-line registration is required before 5:00 p.m. Eastern Time Friday, December 5. To register, please log on to the following URL: www.regweb.com/Yum/03IRConference. If you have questions, call Yum! Brands Investor Relations at 888/298-6986. This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include those identified by such words as may, will, expect, project, anticipate, believe, plan and other similar terminology. These "forward-looking" statements reflect management's current expectations regarding future events and operating and financial performance and are based on currently available data. However, actual results are subject to future events and uncertainties, which could cause actual results to differ from those projected in this announcement. Factors that can cause actual results to differ materially include changes in global and local business, economic and political conditions in the countries and territories where Yum! Brands operates; changes in currency exchange and interest rates; changes in commodity, labor and other operating costs; changes in competition in the food industry, consumer preferences, spending patterns and demographic trends; the effectiveness of our operating initiatives and advertising and promotional efforts; new-product and concept development by Yum! Brands and other food-industry competitors; the success of our refranchising strategy; the ongoing business viability of our franchise and license operators; our ability to secure alternative distribution to our restaurants at competitive rates and to ensure adequate supplies of restaurant products and equipment in our stores; the impact that Severe Acute Respiratory Syndrome (SARS) may have on our business and the economy of the countries in which we operate; our actuarially determined casualty loss estimates; changes in legislation and governmental regulations; and changes in accounting policies and practices. Further information about factors that could affect Yum! Brands' financial and other results are included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission. Yum! Brands, Inc., based in Louisville, Kentucky, is the world's largest restaurant company in terms of system units with approximately 33,000 restaurants in more than 100 countries and territories. Four of the company's restaurant brands --KFC, Pizza Hut, Taco Bell and Long John Silver's-- are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories respectively. Yum! Brands is the worldwide leader in multibranding, which offers consumers more choice and convenience at one restaurant location from a combination of KFC, Taco Bell, Pizza Hut, A&W or Long John Silver's brands. The company and its franchisees today operate over 2,000 multibrand restaurants. Outside the United States in 2002, the Yum! Brands' system opened about three new restaurants each day of the year, making it one of the fastest growing retailers in the world. In 2002, the company changed its name to Yum! Brands, Inc., from Tricon Global Restaurants, Inc., to reflect its expanding portfolio of brands and its ticker symbol on the New York Stock Exchange. Analysts are invited to contact Tim Jerzyk, Vice President Investor Relations, at 888/298-6986 Individual shareholders are invited to contact Lynn Schweinfurth, Director Investor Relations, at 888/298-6986 Members of the media are invited to contact Amy Sherwood, Vice President Public Relations, at 502/874-8200 Yum! Brands, Inc. Condensed Consolidated Statements of Income (amounts in millions, except per share amounts) Quarter % Change Year to date % Change --------------- --------------- 9/6/03 9/7/02 B/(W) 9/6/03 9/7/02 B/(W) ------- ------- --------- ------- ------- --------- Revenues Company sales $1,765 $1,705 4 $5,085 $4,702 8 Franchise and license fees 224 210 6 642 594 8 ------- ------- ------- ------- Revenues 1,989 1,915 4 5,727 5,296 8 ------- ------- ------- ------- Costs and expenses, net Company restaurants Food and paper 544 517 (5) 1,568 1,438 (9) Payroll and employee benefits 473 457 (4) 1,396 1,274 (10) Occupancy and other operating expenses 481 450 (7) 1,373 1,224 (12) ------- ------- ------- ------- 1,498 1,424 (5) 4,337 3,936 (10) General and administrative expenses 212 219 3 623 616 (1) Franchise and license expenses 7 12 46 20 31 37 Other (income) expense (7) 9 NM (13) 21 NM Refranchising net loss (gain) 6 (3) NM 13 (9) NM Wrench litigation 7 - NM 42 - NM AmeriServe and other charges (credits) (3) (4) NM (1) (24) NM ------- ------- ------- ------- Total costs and expenses, net 1,720 1,657 (4) 5,021 4,571 (10) ------- ------- ------- ------- Operating profit 269 258 4 706 725 (3) Interest expense, net 39 45 14 123 112 (9) ------- ------- ------- ------- Income before income taxes and cumulative effect of accounting change 230 213 8 583 613 (5) Income tax provision 66 66 - 179 202 11 ------- ------- ------- ------- Income before cumulative effect of accounting change 164 147 12 404 411 (2) Cumulative effect of accounting change, net of tax - - - (1) - NM ------- ------- ------- ------- Net income $164 $147 12 $403 $411 (2) ======= ======= ======= ======= Basic EPS Data - ------------------- EPS $0.56 $0.49 13 $1.37 $1.39 (1) ======= ======= ======= ======= Average shares outstanding 294 297 1 293 296 1 ======= ======= ======= ======= Diluted EPS Data - ------------------- EPS $0.53 $0.47 14 $1.32 $1.32 - ======= ======= ======= ======= Average shares outstanding 307 312 2 305 312 2 ======= ======= ======= ======= See accompanying notes. Wrench litigation, AmeriServe and other charges (credits) and Cumulative effect of accounting change, net of tax have been summed and referred to as "Special Items" throughout this press release. See accompanying reconciliation of non-GAAP measurements to GAAP results. Yum! Brands, Inc. WORLDWIDE Operating Results (amounts in millions) Quarter % Change Year to date % Change --------------- ------------- 9/6/03 9/7/02 B/(W) 9/6/03 9/7/02 B/(W) ------- ------- ------------ ------- ------- ------------ Company sales $1,765 $1,705 4 $5,085 $4,702 8 Franchise and license fees 224 210 6 642 594 8 ------- ------- ------- ------- Revenues 1,989 1,915 4 5,727 5,296 8 ------- ------- ------- ------- Company restaurants Food and paper 544 517 (5) 1,568 1,438 (9) Payroll and employee benefits 473 457 (4) 1,396 1,274 (10) Occupancy and other operating expenses 481 450 (7) 1,373 1,224 (12) ------- ------- ------- ------- 1,498 1,424 (5) 4,337 3,936 (10) General and administrative expenses 212 219 3 623 616 (1) Franchise and license expenses 7 12 46 20 31 37 Other (income) expense (7) 9 NM (13) 21 NM Refranchising net loss (gain) 6 (3) NM 13 (9) NM ------- ------- ------- ------- 1,716 1,661 (3) 4,980 4,595 (8) ------- ------- ------- ------- Operating profit before special items 273 254 8 747 701 7 Interest expense, net 39 45 14 123 112 (9) Income tax provision 67 65 (5) 194 194 (1) ------- ------- ------- ------- Earnings before special items $167 $144 16 $430 $395 9 ======= ======= ======= ======= Tax rate before special items and cumulative effect of accounting change 29.0% 31.0% 2.0 ppts. 31.1% 32.8% 1.7 ppts. ======= ======= ======= ======= Company sales 100.0% 100.0% 100.0% 100.0% Food and paper 30.8 30.3 (0.5) ppts. 30.8 30.6 (0.2) ppts. Payroll and employee benefits 26.8 26.8 - 27.5 27.1 (0.4) ppts. Occupancy and other operating expenses 27.3 26.5 (0.8) ppts. 27.0 26.0 (1.0) ppts. ------- ------- ------- ------- Restaurant margin 15.1% 16.4% (1.3) ppts. 14.7% 16.3% (1.6) ppts. ======= ======= ======= ======= Reconciliation of Segment Operating Profit to Reported Operating Profit - ---------------------------------------------------------------------- U.S. operating profit $204 $205 - $572 $563 2 International operating profit 114 90 26 297 249 19 Unallocated and corporate expense (38) (43) 11 (107) (119) 10 Unallocated other income (expense) (1) (1) NM (2) (1) NM Refranchising net gain (loss) (6) 3 NM (13) 9 NM ------- ------- ------- ------- Operating profit before special items 273 254 8 747 701 7 Wrench litigation (7) - NM (42) - NM AmeriServe and other (charges) credits 3 4 NM 1 24 NM ------- ------- ------- ------- Reported operating profit $269 $258 4 $706 $725 (3) ======= ======= ======= ======= See accompanying notes and reconciliations of non-GAAP measurements to GAAP results. Yum! Brands, Inc. UNITED STATES Operating Results (amounts in millions) Quarter % Change Year to date % Change --------------- --------------- 9/6/03 9/7/02 B/(W) 9/6/03 9/7/02 B/(W) ------- ------- ------------ ------- ------- ------------ Company sales $1,199 $1,183 1 $3,518 $3,262 8 Franchise and license fees 138 139 (1) 399 394 1 ------- ------- ------- ------- Revenues 1,337 1,322 1 3,917 3,656 7 ------- ------- ------- ------- Company restaurants Food and paper 344 330 (4) 1,010 916 (10) Payroll and employee benefits 366 361 (2) 1,093 1,005 (9) Occupancy and other operating expenses 311 299 (4) 905 808 (12) ------- ------- ------- ------- 1,021 990 (3) 3,008 2,729 (10) General and administrative expenses 108 112 4 325 318 (2) Franchise and license expenses 4 9 63 10 24 59 Other (income) expense - 6 NM 2 22 NM ------- ------- ------- ------- 1,133 1,117 (1) 3,345 3,093 (8) ------- ------- ------- ------- Operating profit $204 $205 - $572 $563 2 ======= ======= ======= ======= Company sales 100.0% 100.0% 100.0% 100.0% Food and paper 28.7 28.0 (0.7) ppts. 28.7 28.1 (0.6) ppts. Payroll and employee benefits 30.6 30.5 (0.1) ppts. 31.1 30.8 (0.3) ppts. Occupancy and other operating expenses 25.9 25.3 (0.6) ppts. 25.7 24.8 (0.9) ppts. ------- ------- ------- ------- Restaurant margin 14.8% 16.2% (1.4) ppts. 14.5% 16.3% (1.8) ppts. ======= ======= ======= ======= See accompanying notes. Yum! Brands, Inc. INTERNATIONAL Operating Results (amounts in millions) Quarter % Change Year to date % Change --------------- --------------- 9/6/03 9/7/02 B/(W) 9/6/03 9/7/02 B/(W) ------- ------- ------------ ------- ------- ------------ Company sales $566 $522 8 $1,567 $1,440 9 Franchise and license fees 86 71 20 243 200 21 ------- ------- ------- ------- Revenues 652 593 10 1,810 1,640 10 ------- ------- ------- ------- Company restaurants Food and paper 200 187 (7) 558 522 (7) Payroll and employee benefits 107 96 (11) 303 269 (13) Occupancy and other operating expenses 170 151 (12) 468 416 (12) ------- ------- ------- ------- 477 434 (10) 1,329 1,207 (10) General and administrative expenses 67 64 (4) 192 179 (7) Franchise and license expenses 2 3 7 9 7 (41) Other (income) expense (8) 2 NM (17) (2) NM ------- ------- ------- ------- 538 503 (7) 1,513 1,391 (9) ------- ------- ------- ------- Operating profit $114 $90 26 $297 $249 19 ======= ======= ======= ======= Company sales 100.0% 100.0% 100.0% 100.0% Food and paper 35.2 35.6 0.4 ppts. 35.6 36.2 0.6 ppts. Payroll and employee benefits 18.9 18.4 (0.5) ppts. 19.3 18.7 (0.6) ppts. Occupancy and other operating expenses 30.0 29.1 (0.9) ppts. 29.9 28.9 (1.0) ppts. ------- ------- ------- ------- Restaurant margin 15.9% 16.9% (1.0) ppts. 15.2% 16.2% (1.0) ppts. ======= ======= ======= ======= See accompanying notes. YUM! Brands, Inc. Condensed Consolidated Balance Sheets (amounts in millions) 9/6/03 12/28/02 --------- --------- ASSETS Current Assets Cash and cash equivalents $298 $130 Short-term investments, at cost 26 27 Accounts and notes receivable, less allowance: $32 in 2003 and $42 in 2002 186 168 Inventories 67 63 Assets classified as held for sale 95 111 Prepaid expenses and other current assets 107 110 Deferred income taxes 121 121 --------- --------- Total Current Assets 900 730 Property, plant and equipment, net 3,128 3,037 Goodwill 493 485 Intangible assets 361 364 Investments in unconsolidated affiliates 229 229 Other assets 544 555 --------- --------- Total Assets $5,655 $5,400 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and other current liabilities $1,199 $1,166 Income taxes payable 268 208 Short-term borrowings 97 146 --------- --------- Total Current Liabilities 1,564 1,520 Long-term debt 2,046 2,299 Other liabilities and deferred credits 1,042 987 --------- --------- Total Liabilities 4,652 4,806 --------- --------- Shareholders' Equity Preferred stock, no par value, 250 shares authorized; no shares issued - - Common stock, no par value, 750 shares authorized; 294 shares issued in 2003 and 2002 1,024 1,046 Retained earnings (accumulated deficit) 200 (203) Accumulated other comprehensive income (loss) (221) (249) --------- --------- Total Shareholders' Equity 1,003 594 --------- --------- Total Liabilities and Shareholders' Equity $5,655 $5,400 ========= ========= See accompanying notes. YUM! Brands, Inc. Condensed Consolidated Statements of Cash Flows (amounts in millions) Year to date --------------- 9/6/03 9/7/02 ------- ------- Cash Flows - Operating Activities Net income $403 $411 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of accounting change, net of tax 1 - Depreciation and amortization 273 244 Refranchising net loss (gain) 13 (9) Wrench litigation 42 - AmeriServe and other charges (credits) (3) (1) Other liabilities and deferred credits (24) 13 Deferred income taxes 2 3 Other non-cash charges and credits, net 41 56 Changes in operating working capital, excluding effects of acquisitions and dispositions: Accounts and notes receivable 3 34 Inventories (4) 12 Prepaid expenses and other current assets (17) 5 Accounts payable and other current liabilities (19) (26) Income taxes payable 58 93 ------- ------- Net change in operating working capital 21 118 ------- ------- Net Cash Provided by Operating Activities 769 835 ------- ------- Cash Flows - Investing Activities Capital spending (358) (461) Proceeds from refranchising of restaurants 11 67 Acquisition of Yorkshire Global Restaurants, Inc. - (275) Acquisition of restaurants from franchisees (30) (13) Short-term investments 3 (3) Sales of property, plant and equipment 29 33 Other, net 9 2 ------- ------- Net Cash Used In Investing Activities (336) (650) ------- ------- Cash Flows - Financing Activities Proceeds from Senior Unsecured Notes - 398 Revolving Credit Facility activity Three months or less, net (153) 79 Repayments of long-term debt (15) (498) Short-term borrowings-three months or less, net (50) (25) Repurchase shares of common stock (121) (161) Employee stock option proceeds 70 110 Other, net - (15) ------- ------- Net Cash (Used In) Provided by Financing Activities (269) (112) ------- ------- Effect of Exchange Rates on Cash and Cash Equivalents 4 3 ------- ------- Net Increase in Cash and Cash Equivalents 168 76 Cash and Cash Equivalents - Beginning of Period 130 110 ------- ------- Cash and Cash Equivalents - End of Period $298 $186 ======= ======= See accompanying notes. Reconciliation of Non-GAAP Measurements to GAAP Results (amounts in millions, except per share amounts) 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 on a basis before special items. Special items include the GAAP income statement captions of Wrench litigation, AmeriServe and other charges (credits) and the Cumulative effect of accounting change, net of tax. These amounts are described in (d), (e) and (f) in the accompanying notes. The Company uses earnings before special items as a key performance measure of results of operations for purposes of evaluating performance internally. 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 before special items provides additional information to investors to facilitate the comparison of past and present operations, excluding items that the Company does not believe are indicative of our ongoing operations. Quarter Year to date --------------- --------------- 9/6/03 9/7/02 9/6/03 9/7/02 ------- ------- ------- ------- Detail of Special Items - -------------------------------------- Wrench litigation $(7) $- $(42) $- AmeriServe and other (charges) credits 3 4 1 24 Cumulative effect of accounting change - - (2) - ------- ------- ------- ------- Total special items (4) 4 (43) 24 Tax on special items 1 (1) 16 (8) ------- ------- ------- ------- Special items, net of tax $(3) $3 $(27) $16 ======= ======= ======= ======= Average shares outstanding 307 312 305 312 ======= ======= ======= ======= Special items diluted EPS $(0.01) $0.01 $(0.09) $0.05 ======= ======= ======= ======= Reconciliation of Earnings Before Special Items to Net Income - --------------------------------- Earnings before special items $167 $144 $430 $395 Special items, net of tax (3) 3 (27) 16 ------- ------- ------- ------- Net income $164 $147 $403 $411 ======= ======= ======= ======= Reconciliation of EPS Before Special Items to Reported EPS - ------------------------------------ Diluted EPS before special items $0.54 $0.46 $1.41 $1.27 Special items diluted EPS (0.01) 0.01 (0.09) 0.05 ------- ------- ------- ------- Reported diluted EPS $0.53 $0.47 $1.32 $1.32 ======= ======= ======= ======= Reconciliation of Non-GAAP Measurements to GAAP Results (amounts in millions) The Company has also provided a non-GAAP measurement - total cash generated - which is intended to measure cash flow inclusive of certain items not contained in the GAAP measurement of net cash provided by operating activities. This non-GAAP measurement is not intended to replace presentations of cash flows in accordance with GAAP. Rather, we use total cash generated to measure Company cash flow internally, and the presentation of total cash generated provides additional information to investors as to cash available to the Company to fund capital spending, repurchases of shares of common stock and debt repayments. Reconciliation of Net Cash Provided by Operating Activities to Total Cash Generated - ------------------------------------------------ Quarter Year to date --------- ------------ Net cash provided by operating activities $405 $769 Proceeds from refranchising of restaurants - 11 Sales of property, plant and equipment 9 29 Employee stock option proceeds 36 70 --------- ------------ Total cash generated $450 $879 ========= ============ Notes to the Condensed Consolidated Statements of Income and Cash Flows and Condensed Consolidated Balance Sheets (amounts in millions, except per share amounts) (a) Percentages may not recompute due to rounding. (b) Other (income) expense includes the following: Quarter Year to date --------------- --------------- 9/6/03 9/7/02 9/6/03 9/7/02 ------- ------- ------- ------- Store closure costs $- $4 $(2) $17 Store impairment charges 3 12 13 24 Equity income from investments in unconsolidated affiliates (9) (6) (22) (19) Foreign exchange net loss (gain) (1) (1) (2) (1) ------- ------- ------- ------- Other (income) expense $(7) $9 $(13) $21 ======= ======= ======= ======= (c) Refranchising net loss (gain) includes write-downs of approximately $5 million ($3 million after tax) and $15 million ($9 million after tax) for the quarter and year to date ended September 6, 2003, respectively, to reflect estimates of the fair value of an international market which is held for sale. (d) The amounts recorded as Wrench litigation for the year to date ended September 6, 2003 reflect the legal judgment against Taco Bell Corp. on June 4, 2003 in Wrench v. Taco Bell Corp. and related interest. The amount recorded as Wrench litigation for the quarter ended September 6, 2003 reflects the interest accrued for the passage of time during the quarter and an adjustment to previously recorded interest necessary as a result of an amended judgment on September 9, 2003. (e) The amount recorded as AmeriServe and other charges (credits) for the quarter ended September 6, 2003 primarily resulted from the reversal of reserves associated with the settlement of certain wage and hour litigation. The amount recorded as AmeriServe and other charges (credits) for the year to date ended September 6, 2003 primarily resulted from recoveries related to the AmeriServe bankruptcy reorganization process and the reversal of reserves associated with the settlement of certain wage and hour litigation, partially offset by costs to defend certain wage and hour litigation and integration costs related to our acquisition of Yorkshire Global Restaurants, Inc. ("YGR"). Amounts recorded as AmeriServe and other charges (credits) for the quarter and year to date ended September 7, 2002, which were referred to as unusual items in 2002, primarily resulted from recoveries related to the AmeriServe bankruptcy reorganization process partially offset by costs to defend certain wage and hour litigation and integration costs related to the acquisition of YGR. (f) Effective December 29, 2002, the Company adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS 143 addresses the financial accounting and reporting for legal obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. As a result of obligations under certain leases that are within the scope of SFAS 143, the Company has recorded a cumulative effect adjustment of $2 million ($1 million after tax). The adoption of SFAS 143 did not materially affect the results of our operations for the quarter or year to date ended September 6, 2003, nor do we anticipate that it will materially affect the results of operations in future periods. (g) System sales include the results of all restaurants regardless of ownership, including company-owned, franchise, joint-venture and license restaurants. Sales of franchise, joint-venture and license restaurants generate franchise and license fees for us (typically at a rate of 4% - 6% of sales). Franchise, joint-venture and license restaurant sales are not included in the Company sales we present on the Condensed Consolidated Statements of Income; however, the fees are included in the Company's revenues. We believe that system sales are useful to investors as a significant indicator of our Company's market share relative to competitors and the overall strength of our brands in the market place. System sales were as follows: % % Change Change Quarter B/(W) Year to date B/(W) ----------------- ------- ----------------- ------- 9/6/03 9/7/02 9/6/03 9/7/02 -------- -------- -------- -------- United States Company sales $1,199 $1,183 1 $3,518 $3,262 8 Estimated franchisee, licensee and joint venture sales 2,697 2,717 (1) 7,804 7,655 2 -------- -------- -------- -------- System sales 3,896 3,900 - 11,322 10,917 4 ======== ======== ======== ======== International Company sales $566 $522 8 $1,567 $1,440 9 Estimated franchisee, licensee and joint venture sales 1,702 1,508 13 4,878 4,274 14 -------- -------- -------- -------- System sales 2,268 2,030 12 6,445 5,714 13 ======== ======== ======== ======== Worldwide system sales $6,164 $5,930 4 $17,767 $16,631 7 ======== ======== ======== ======== YUM! Brands, Inc. Restaurant Units Activity Summary For the Year to Date Ended September 6, 2003 Unconsolidated Total Affili- Franchi- Excluding Total Company ates(a) sees Licensees Licensees Units ------- ---------- -------- --------- --------- ------- Total U.S. Beginning of Year 5,193 4 13,663 18,860 2,266 21,126 New Builds 80 2 167 249 156 405 Acquisitions 106 - (108) (2) 2 - Refranchising & Licensing (26) - 26 - - - Closures & Divestitures (107) - (248) (355) (243) (598) Other - - 1 1 - 1 ------- ---------- -------- --------- --------- ------- End of Quarter 5,246 6 13,501 18,753 2,181 20,934 ======= ========== ======== ========= ========= ======= % of Total 25% - 65% 90% 10% 100% Total International Beginning of Year 2,333 2,144 7,061 11,538 260 11,798 New Builds 183 88 345 616 10 626 Acquisitions 7 (4) (3) - - - Refranchising & Licensing (50) - 50 - - - Closures & Divestitures (52) (40) (211) (303) (10) (313) Other - - (6) (6) - (6) ------- ---------- -------- --------- --------- ------- End of Quarter 2,421 2,188 7,236 11,845 260 12,105 ======= ========== ======== ========= ========= ======= % of Total 20% 18% 60% 98% 2% 100% Total System Beginning of Year 7,526 2,148 20,724 30,398 2,526 32,924 New Builds 263 90 512 865 166 1,031 Acquisitions 113 (4) (111) (2) 2 - Refranchising & Licensing (76) - 76 - - - Closures & Divestitures (159) (40) (459) (658) (253) (911) Other - - (5) (5) - (5) ------- ---------- -------- --------- --------- ------- End of Quarter 7,667 2,194 20,737 30,598 2,441 33,039 ======= ========== ======== ========= ========= ======= % of Total 23% 7% 63% 93% 7% 100% (a) Total U.S. and Total System include 6 Yan Can units. YUM! Brands, Inc. Restaurant Units Activity Summary For the Year to Date Ended September 6, 2003 United States - ---------------------------------------------------------------------- Total Excluding Total Company Franchisees Licensees Licensees Units ------- ----------- --------- --------- ------ Pizza Hut U.S. Beginning of Year 1,760 4,743 6,503 1,096 7,599 New Builds 25 67 92 116 208 Acquisitions 88 (88) - - - Refranchising & Licensing - - - - - Closures & Divestitures (35) (112) (147) (99) (246) Other - - - - - ------- ----------- --------- --------- ------ End of Quarter 1,838 4,610 6,448 1,113 7,561 ======= =========== ========= ========= ====== % of Total 24% 61% 85% 15% 100% Taco Bell U.S. Beginning of Year 1,284 3,759 5,043 1,122 6,165 New Builds 9 17 26 20 46 Acquisitions - (2) (2) 2 - Refranchising & Licensing - - - - - Closures & Divestitures (6) (34) (40) (142) (182) Other - - - - - ------- ----------- --------- --------- ------ End of Quarter 1,287 3,740 5,027 1,002 6,029 ======= =========== ========= ========= ====== % of Total 21% 62% 83% 17% 100% KFC U.S. Beginning of Year 1,284 4,140 5,424 48 5,472 New Builds 44 55 99 20 119 Acquisitions 18 (18) - - - Refranchising & Licensing (13) 13 - - - Closures & Divestitures (34) (42) (76) (2) (78) Other - - - - - ------- ----------- --------- --------- ------ End of Quarter 1,299 4,148 5,447 66 5,513 ======= =========== ========= ========= ====== % of Total 24% 75% 99% 1% 100% Long John Silver's U.S. Beginning of Year 741 480 1,221 - 1,221 New Builds 2 15 17 - 17 Acquisitions - - - - - Refranchising & Licensing (13) 13 - - - Closures & Divestitures (8) (11) (19) - (19) Other 4 1 5 - 5 ------- ----------- --------- --------- ------ End of Quarter 726 498 1,224 - 1,224 ======= =========== ========= ========= ====== % of Total 59% 41% 100% - 100% A&W U.S. Beginning of Year 124 541 665 - 665 New Builds - 13 13 - 13 Acquisitions - - - - - Refranchising & Licensing - - - - - Closures & Divestitures (24) (49) (73) - (73) Other (4) - (4) - (4) ------- ----------- --------- --------- ------ End of Quarter 96 505 601 - 601 ======= =========== ========= ========= ====== % of Total 16% 84% 100% - 100% YUM! Brands, Inc. Restaurant Units Activity Summary For the Year to Date Ended September 6, 2003 International - ---------------------------------------------------------------------- Unconsoli- Total dated Franchi- Excluding Total Company Affiliates sees Licensees Licensees Units ------- ----------- -------- --------- --------- ------ Pizza Hut International Beginning of Year 779 941 2,557 4,277 154 4,431 New Builds 44 33 137 214 4 218 Acquisitions 7 (3) (4) - - - Refranchising & Licensing (41) - 41 - - - Closures & Divestitures (31) (13) (96) (140) (5) (145) Other - - (3) (3) 1 (2) ------- ----------- -------- --------- --------- ------ End of Quarter 758 958 2,632 4,348 154 4,502 ======= =========== ======== ========= ========= ====== % of Total 17% 21% 59% 97% 3% 100% Taco Bell International Beginning of Year 38 28 138 204 63 267 New Builds 1 - 4 5 2 7 Acquisitions - - - - - - Refranchising & Licensing - - - - - - Closures & Divestitures (1) (3) - (4) (3) (7) Other - - 4 4 (1) 3 ------- ----------- -------- --------- --------- ------ End of Quarter 38 25 146 209 61 270 ======= =========== ======== ========= ========= ====== % of Total 14% 9% 54% 77% 23% 100% KFC International Beginning of Year 1,516 1,175 4,156 6,847 43 6,890 New Builds 138 55 182 375 2 377 Acquisitions - (1) 1 - - - Refranchising & Licensing (9) - 9 - - - Closures & Divestitures (20) (24) (83) (127) (2) (129) Other - - (7) (7) - (7) ------- ----------- -------- --------- --------- ------ End of Quarter 1,625 1,205 4,258 7,088 43 7,131 ======= =========== ======== ========= ========= ====== % of Total 23% 17% 59% 99% 1% 100% Long John Silver's International Beginning of Year - - 28 28 - 28 New Builds - - 1 1 1 2 Acquisitions - - - - - - Refranchising & Licensing - - - - - - Closures & Divestitures - - (1) (1) - (1) Other - - - - - - ------- ----------- -------- --------- --------- ------ End of Quarter - - 28 28 1 29 ======= =========== ======== ========= ========= ====== % of Total - - 97% 97% 3% 100% A&W International Beginning of Year - - 182 182 - 182 New Builds - - 21 21 1 22 Acquisitions - - - - - - Refranchising & Licensing - - - - - - Closures & Divestitures - - (31) (31) - (31) Other - - - - - - ------- ----------- -------- --------- --------- ------ End of Quarter - - 172 172 1 173 ======= =========== ======== ========= ========= ====== % of Total - - 99% 99% 1% 100% YUM! Brands, Inc. Systemwide Multibrand Restaurants For the Year to Date Ended September 6, 2003 United States ---------------------------------------- Multibrand Restaurants in Operation at 9/6/03 ------------------------ Gross Additions Year to Date 9/6/03 Company Franchise Total --------------- ------- --------- ------ KFC Taco Bell 28 188 475 663 Pizza Hut 7 115 42 157 A&W 66 101 126 227 Taco Bell/Pizza Hut 3 n 1 2 21 25 46 Long John Silver's 23 19 16 35 Wing Works 2 26 - 26 --------------- ------- --------- ------ 128 470 684 1,154 Taco Bell Pizza Hut 14 313 279 592 Long John Silver's 18 19 6 25 Backyard Burgers 5 8 - 8 A&W 2 2 - 2 --------------- ------- --------- ------ 39 342 285 627 Pizza Hut KFC - - 1 1 Taco Bell 1 - 6 6 Wing Works 2 3 - 3 Pasta Bravo 2 2 1 3 Wing Streets 29 29 - 29 --------------- ------- --------- ------ 34 34 8 42 Long John Silver's A&W 33 110 85 195 --------------- ------- --------- ------ Total 234 956 1,062 2,018 =============== ======= ========= ====== Multibrand conversions increase the sales and points of distribution for the second brand added to a restaurant but do not result in an additional unit count. Though no additional unit counts are realized, these conversions drive increases in same-store sales and result in upgraded, new-image restaurants. Similarly, a new multibrand restaurant, while increasing sales and points of distribution for two brands, results in just one additional unit count. YUM! Brands, Inc. Systemwide Multibrand Restaurants For the Year to Date Ended September 6, 2003 International ---------------------------------------- Multibrand Restaurants in Operation at 9/6/03 ----------------------- Gross Additions Year to Date 9/6/03 Company Franchise Total ---------------- ------- --------- ----- KFC Taco Bell 6 10 46 56 Pizza Hut 10 20 67 87 A&W 3 3 - 3 Taco Bell/Pizza Hut 3 n 1 - 2 4 6 Long John Silver's - - - - Wing Works - - - - ---------------- ------- --------- ----- 19 35 117 152 Taco Bell Pizza Hut 12 11 22 33 Long John Silver's - - 1 1 Backyard Burgers - - - - ---------------- ------- --------- ----- 12 11 23 34 Pizza Hut KFC - - - - Taco Bell - - - - Wing Works - - - - Pasta Bravo - - - - ---------------- ------- --------- ----- - - - - Long John Silver's A&W - - 1 1 ---------------- ------- --------- ----- Total 31 46 141 187 ================ ======= ========= ===== YUM! Brands, Inc. Systemwide Multibrand Restaurants For the Year to Date Ended September 6, 2003 Worldwide ---------------------------------------- Multibrand Restaurants in Operation at 9/6/03 ------------------------ Gross Additions Year to Date 9/6/03 Company Franchise Total --------------- ------- --------- ------ KFC Taco Bell 34 198 521 719 Pizza Hut 17 135 109 244 A&W 69 104 126 230 Taco Bell/Pizza Hut 3 n 1 2 23 29 52 Long John Silver's 23 19 16 35 Wing Works 2 26 - 26 --------------- ------- --------- ------ 147 505 801 1,306 Taco Bell Pizza Hut 26 324 301 625 Long John Silver's 18 19 7 26 Backyard Burgers 5 8 - 8 A&W 2 2 - 2 --------------- ------- --------- ------ 51 353 308 661 Pizza Hut KFC - - 1 1 Taco Bell 1 - 6 6 Wing Works 2 3 - 3 Pasta Bravo 2 2 1 3 Wing Streets 29 29 - 29 --------------- ------- --------- ------ 34 34 8 42 Long John Silver's A&W 33 110 86 196 --------------- ------- --------- ------ Total 265 1,002 1,203 2,205 =============== ======= ========= ====== CONTACT: Yum! Brands, Inc., Louisville Analysts: Tim Jerzyk, 888-298-6986 Vice President Investor Relations or Individual shareholders: Lynn Schweinfurth, 888-298-6986 Director Investor Relations or Media: Amy Sherwood, 502-874-8200 Vice President Public Relations -----END PRIVACY-ENHANCED MESSAGE-----