Exhibit 99.1
Yum! Brands Inc. Reports 2005 Second-Quarter EPS of $0.62
Prior to Special Items, a 12% Increase;
Reported EPS, Including a 2004 Special-Item Credit, Grew by 6%
LOUISVILLE, Ky.--(BUSINESS WIRE)--July 13, 2005--
Increases Full-Year 2005 EPS Estimate by $0.02 Prior to Special
Items to $2.62 or 11% Growth
Yum! Brands Inc. (NYSE: YUM) today reported results for the second
quarter ended June 11, 2005.
The following are key points relative to the company's current
second-quarter and year-over-year performance:
-- Total International Division operating profit increased 22% or
16% prior to foreign currency conversion.
-- International Division system restaurants in operation at
quarter's end grew by 3% led by growth of 7% in the U.K. and
5% in international franchise-only businesses.
-- As expected and previously communicated, China Division
operating profit decreased $10 million or 30% as sales were
negatively impacted by adverse publicity relating to a
seasoning-ingredient issue, since resolved.
-- China Division system restaurants in operation at quarter's
end expanded by 22%.
-- U.S. multibrand restaurants in operation expanded by 18%.
-- Systemwide U.S. same-store sales increased 3%.
-- An IPO of our Poland/Czech Republic franchise business was
completed, generating a gain of $17 million.
-- Tax rate prior to special items declined to 23.6% from 26.2%.
The company also reported estimated Period 7 sales:
-- International Division system sales increased 10% in U.S.
dollar terms or 5% prior to foreign currency conversion.
-- China Division system sales increased 6% in U.S. dollar terms
or 5% prior to foreign currency conversion.
-- U.S. blended same-store sales at company restaurants increased
5% (Taco Bell, +10%; Pizza Hut, (2)%; KFC, +7%).
Consolidated Financial Highlights
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Second Quarter Year To Date
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2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
System Restaurants 31,434 30,875 +2 31,434 30,875 +2
Worldwide System
Same-Store-Sales
Growth +2% +2% NM +3% +2% NM
Revenues (million) $2,153 $2,077 +4 $4,207 $4,047 +4
EPS prior to
Special Items $0.62 $0.55 +12 $1.15 $1.02 +13
Special Items EPS $0.00 $0.03 NM $0.00 $0.03 NM
Reported EPS $0.62 $0.58 +6 $1.15 $1.05 +10
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David C. Novak, Chairman and CEO, said, "I am pleased to report
the strength of the Yum! Brands' global portfolio is allowing us to
raise our full-year 2005 EPS estimate to $2.62 or 11% growth. Our
high-return Yum! Restaurants International Division is well on the way
to another very strong year. Additionally, our China Division sales
performance is much improved, and we expect to return to solid profit
growth for the balance of the year. We are especially pleased with our
blended U.S. same-store-sales growth led by sustained performance at
Taco Bell and the continued turnaround of KFC-U.S., which has
experienced eight consecutive periods of positive same-store sales. We
expect the underlying strength of our global portfolio of businesses
to allow us to once again exceed our annual target of at least 10%
growth in EPS.
"Importantly, we remain bullish on our long-term new-unit growth
opportunity for both our China and Yum! Restaurants International
Divisions. In fact, we are on track to reach our full-year target to
open a record 375 new restaurants in our China Division and to open at
least 725 new restaurants for Yum! Restaurants International Division.
This will be the fifth straight year of at least 1,000 new restaurants
opened outside the U.S.A., and we expect to at least maintain this
pace going forward.
"Shareholders should continue to expect us to remain committed to
building value by executing the unique growth opportunities of our
global portfolio that make us anything but an ordinary restaurant
company: build dominant restaurant brands in China, drive profitable
international expansion, improve U.S. restaurant operations and
multibrand category-leading brands."
INTERNATIONAL DIVISION
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Second Quarter
% Change
-----------------------------
Excl
2005 2004 Reported F/x
------- ------- -------- ----
Financial Measures
Revenues ($ million) $492 $491 Even (6)
Operating Profit ($ million) $90 $74 +22 +16
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Operating Metrics
Est. System-Sales Growth +11 +6
System Restaurants 10,978 10,626 +3 NM
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Year to Date
% Change
-----------------------------
Excl
2005 2004 Reported F/x
------- ------- -------- ----
Financial Measures
Revenues ($ million) $976 $976 Even (5)
Operating Profit ($ million) $184 $162 +14 +9
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Operating Metrics
Est. System-Sales Growth +11 +7
System Restaurants 10,978 10,626 +3 NM
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Note: These results exclude the China Division. The Q2 2005 operating
profit does not include the gain of $17 million from the IPO of our
Poland/Czech Republic franchise business.
A key growth driver for the Yum! Restaurants International
Division is continued new-restaurant openings across an array of
international markets and leveraging the substantial infrastructure in
place around the world.
It is important to note that both second-quarter and year-to-date
revenue comparisons were adversely affected by the refranchising of
our Puerto Rico market in last year's fourth quarter. The transaction
resulted in the sale of this company-operated market to a franchisee.
Excluding the impact of the change in ownership of the Puerto Rico
market, revenues increased 3% for the second quarter and 4% year to
date, prior to foreign currency conversion.
In the second quarter, continued new-restaurant expansion of our
key international brands -- KFC and Pizza Hut -- and positive system
same-store-sales growth drove International Division system-sales and
operating-profit growth. New restaurants opened in the quarter totaled
126 across more than 36 different countries and territories. Year to
date, 227 new restaurants were opened, 94% by our franchisees. Total
new-restaurant openings for the full year are expected to be at least
725, the sixth straight year of at least 700 new-restaurant openings.
Second-quarter International Division system-sales growth prior to
foreign currency conversion was 6% versus our ongoing target of at
least 5% growth. Overall, system restaurants in operation grew 3%. The
company's international franchise-only markets led the way with 10%
growth in system sales prior to currency conversion and 5% growth in
system restaurants in operation. These businesses cover more than 100
countries and represent 42% of International Division's system
restaurants. Other markets contributing to overall system-sales growth
prior to currency conversion included the U.K., Mexico and Japan. In
the U.K., a key market, system sales increased 4% prior to currency
conversion, driven primarily by 7% growth in system restaurants in
operation.
For the second quarter, restaurant margin as a percentage of sales
decreased 0.2 percentage points. Excluding the Puerto Rico market,
restaurant margin would have increased 0.4 percentage points versus
last year for the second quarter. Substantially stronger performance
in Mexico was a significant positive factor for restaurant-margin
performance. For the full year, excluding the impact of refranchising
the Puerto Rico market, restaurant margin is expected to increase
slightly versus 2004 driven primarily by strong business performance
in Mexico.
For the second quarter, excluding the refranchising of the Puerto
Rico market, operating profit would have grown 21% prior to foreign
currency conversion.
Overall, foreign currency conversion added $5 million to operating
profit for the second quarter and $9 million year to date. For the
full year 2005, Yum! Restaurants International Division is expected to
produce profit growth of at least 14% with system-sales growth of 6%
in local currency terms.
CHINA DIVISION
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Second Quarter Year to Date
% Change % Change
--------------------------- ---------------------------
Excl Excl
2005 2004 Reported F/x 2005 2004 Reported F/x
------ ------ -------- ---- ------ ------ -------- ----
Financial
Measures
Revenues ($
million) $276 $237 +16 +15 $511 $425 +20 +20
Operating
Profit ($
million) $25 $35 (30) (31) $78 $77 Even Even
- ----------------------------------------------------------------------
Operating
Metrics
Est. System-
Sales Growth
(fiscal-period
basis) +13 +12 +16 +16
System
Restaurants 2,082 1,704 +22 NM 2,082 1,704 +22 NM
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Note: The China Division includes mainland China, Thailand, and
KFC Taiwan. Please refer to "Notes and Definitions" at the end of this
release for explanation of estimated system-sales growth.
A key growth driver for the China Division is rapid new-restaurant
expansion of multiple Yum! restaurant brands.
In the second quarter, as originally detailed in the company's
sales release dated March 24, 2005, sales at KFC restaurants in
mainland China were negatively impacted by adverse publicity relating
to an issue, since resolved, with a seasoning supplier beginning with
results in the third week of Period 4. As a result, China Division
second-quarter system sales increased 12% excluding foreign currency
conversion, below our ongoing target of at least 22% growth.
As indicated in the company's most recent forecast, the
below-target sales resulted in a 30% decline in operating profit for
the second quarter.
Second-quarter restaurant margin decreased 3.3 percentage points
versus the prior year, driven primarily by negative same-store-sales
growth in company-operated KFC restaurants in mainland China as noted
previously.
Overall, system restaurants in operation grew 22%. During the
second quarter, a total of 68 new restaurants opened, including 50
KFCs, 16 Pizza Huts and 2 East Dawnings. Year to date 2005, 168 new
restaurants were opened with an ownership mix of 74% company, 23%
joint-venture and 3% franchise restaurants.
For the remainder of the year, sales trends are expected to
steadily improve from the low point in Period 4, and operating-profit
performance is expected to show growth versus last year. Additionally,
a partial financial recovery (approximately $13 million) from our
mainland China seasoning supplier will be recognized in the third
quarter. We expect to recognize some additional recovery during the
fourth quarter of 2005 or the first quarter of 2006.
UNITED STATES BUSINESS
- ----------------------
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Second Quarter Year to Date
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
Financial Measures
Revenues ($
million) $1,385 $1,349 +3 $2,720 $2,646 +3
Operating Profit
($ million) $190 $199 (4)% $352 $371 (5)%
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Operating Metrics
Systemwide
Same-Store-Sales
Growth +3% +2% NM +3% +3% NM
System Restaurants 18,374 18,545 (1)% 18,374 18,545 (1)%
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A key growth driver for this business segment is same-store-sales
growth.
In the second quarter, the primary drivers of revenue growth were
higher same-store sales and continued development of new,
higher-volume restaurants, which, on average, more than offset reduced
revenues associated with the closure of lower-volume restaurants.
Opening new restaurants with higher volumes than those restaurants
that were closed contributed 1 percentage point of revenue growth.
Operating profit for the second quarter declined $9 million or 4%
primarily due to $10 million in higher facility-actions expense mainly
at KFC-U.S. Excluding this factor, U.S. operating profit for the
second quarter was slightly higher versus last year. Higher G&A
expense of $6 million and commodity costs (mainly meats) of $3 million
also impacted year-over-year profit comparisons.
For the balance of the year, it is anticipated that U.S. operating
profit will show growth prior to the impact of higher facility-action
expense in the range of +6% to +8%.
WORLDWIDE NEW-RESTAURANT DEVELOPMENT
- ------------------------------------
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System New-Restaurant Openings Second Quarter Year to Date
---------------- ------------
Worldwide 258 527
Key Markets
Mainland China 64 158
United States 64 132
International Franchise-Only Businesses 61 130
(more than 100 countries and
territories)
U.K. 20 31
Australia/New Zealand 8 18
- ----------------------------------------------------------------------
New-restaurant development of our brands around the world is a key
factor in year-to-year earnings growth for the company overall.
For the International Division franchise-only businesses,
new-restaurant growth versus a year ago continued across all regions:
in Asia, +5%; southern Africa, +6%; the Middle East, +7%; and
Caribbean/Latin America, +2%. For the 130 new openings year to date
from this group of markets, 63 were new KFCs and 57 were new Pizza
Huts.
In the U.S. market, the majority of new-restaurant openings were
by Pizza Hut, KFC and Taco Bell franchisees. Over 75% of U.S.
new-restaurant openings were franchised.
Worldwide new franchise-restaurant openings are a key contributor
to the company's continued above-industry-average performance of
return on invested capital. Globally, our franchisees are required to
fund their new-restaurant development.
This discussion excludes changes in license-unit locations, which
are expected to have no material impact on the company's overall
profit performance in 2005. License locations are typically
nontraditional sites, such as airports, that normally have
substantially lower average unit volumes than traditional restaurant
locations.
U.S. MULTIBRANDING EXPANSION
- ----------------------------
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Second Quarter
--------------------
Incr/
Multibrand Restaurants in Operation 2005 2004 (Decr)
------ ------ ------
U.S. Systemwide 2,813 2,375 +18%
% U.S. System Restaurants 15% 13% +2
ppts
- ----------------------------------------------------------------------
In the second quarter, 121 multibrand restaurants were added in
the United States. Of the 121 U.S. multibrand additions, 76% were
conversions of existing single-brand restaurants, 15% were
new-restaurant openings and 9% were relocations -- building a
completely new multibrand restaurant in place of an older single-brand
restaurant nearby. More than 45% of the 2,813 U.S. multibrand
restaurants in operation at the end of the second quarter were
franchised.
For the full-year 2005, the company expects the U.S. system to add
at least 550 multibrand restaurant locations, including more than 300
Pizza Hut and WingStreet combinations and more than 100 with Long John
Silver's in combination with Taco Bell, KFC or A&W.
FRANCHISE GROWTH AND FEES
- -------------------------
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Second Quarter Year to Date
---------------- ------------
Franchise Net New-Restaurant Growth +1% +1%
Total Franchise Fees ($ million) $251 $495
Growth Vs. 2004 +9% +9%
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Franchise fees experienced across-the-board growth driven by
worldwide franchise new-restaurant development, refranchising
(primarily the Puerto Rico market), same-store-sales growth and
international royalty-rate increases. For the second quarter and year
to date, favorable foreign currency conversion added 2 percentage
points of franchise-fee growth.
In the second quarter, worldwide franchise fees were generated
primarily in the United States (58%) and the International Division
(39%). The China Division contributed the remaining 3% to worldwide
franchise fees. The company has more than 2,400 worldwide franchise
partners including more than 1,800 in the United States, nearly 600 in
the International Division and 29 in the China Division.
G&A EXPENSES
Worldwide G&A expenses for the second quarter were $28 million
higher than last year. G&A was negatively impacted by a charge of $10
million related to the potential resolution of certain litigation
matters as well as higher legal fees of $3 million associated with
these matters. Additionally, the company continues to invest in the
China Division infrastructure.
CASH FLOW
Year to date, the company generated $605 million in net cash
provided by operating activities, invested capital of $210 million and
repurchased $489 million of its own shares. As expected, additional
cash was generated from employee stock-option proceeds, refranchising
restaurants and the IPO of our Poland/Czech Republic franchise
business.
TAX RATE
The effective tax rate prior to special items of 23.6% was 2.6
percentage points lower than last year's second-quarter rate primarily
due to settlements related to the closure of regular audit cycles,
partially offset by additional tax expense due to anticipated foreign
earnings repatriation under the American Jobs Creation Act of 2004.
The lower tax rate for the second quarter added $0.03 to EPS versus
the company's previously announced expectations.
We had previously identified $110 million in expected foreign
earnings repatriation in the fourth quarter of 2004 and recorded the
appropriate additional tax expense that quarter. During the second
quarter of 2005, the company identified additional expected
repatriation of approximately $400 million. As a result, $19 million
of additional tax expense was reflected in the full-year effective tax
rate, $8 million of which was recorded as income tax expense in the
second-quarter. This repatriation will ultimately save the company
over $100 million versus normal and expected tax rates to repatriate
earnings. The additional taxes of $19 million included in this year's
tax rate equates to $0.06 per share on a full-year basis.
STOCK-OPTION EXPENSING
We are considering whether to begin options expensing, adopting
SFAS123R, in either the fourth quarter of 2005 or the first quarter of
2006. We will have a final decision communicated in our third-quarter
earnings release scheduled for October 4, 2005.
THIRD-QUARTER AND FOURTH-QUARTER 2005 OUTLOOK
The company expects EPS prior to special items of $0.70 and $0.77
for the third and fourth quarters, an increase of 15% and 5%
respectively. A number of factors are expected to impact results:
-- In the fourth quarter, facility-action expenses and the
effective tax rate are both expected to be unfavorable versus
the prior year, more than offsetting the benefit of the
fifty-third week.
-- The company will record a partial financial recovery of
approximately $13 million from its supplier in mainland China
related to the ingredient issue. This recovery will be
included in third-quarter 2005 results. We expect to recognize
some additional recovery during the fourth quarter of 2005 or
the first quarter of 2006.
-- Updates will be provided if there is a material change to
these expectations.
FULL-YEAR OUTLOOK
Each year, the company expects earnings per share to grow at least
10% with the continued execution of four key strategies: (1) build
dominant restaurant brands in China, (2) profitable international
expansion, (3) run great restaurants and (4) develop and expand
multibranding.
Based on second-quarter results year to date and information
currently available, the company increased its full-year EPS
expectations by $0.02 to $2.62 prior to special items.
Projected factors contributing to the company's original annual
2005 EPS guidance were published in the company's release dated
December 2, 2004. Based on current information, following is an update
on the full year:
-- Worldwide system-sales growth of +5% to +6%, which includes
about 1 percentage-point benefit from the fifty-third week;
International Division system-sales growth of at least +6%
(local currency basis); China Division system-sales growth of
+10% to +15% (local currency basis), and U.S. system-sales
growth of +3% to +4%.
-- Worldwide revenue growth of +4% to +5%, which includes about 1
percentage-point benefit from the fifty-third week: China
Division, +10% to +15% (local currency basis), and U.S., +3%
to +4%. International Division revenue is expected to increase
+5% to +6% (local currency basis) prior to the impact of
refranchising the Puerto Rico market. The impact of
refranchising the Puerto Rico market this past October will
result in a decline in reported revenue of about 1%.
-- U.S. blended same-store-sales growth at company restaurants in
a range of +3% to +4%.
-- Continued growth in franchise fees of at least 7% resulting
from worldwide restaurant expansion and same-store-sales
growth, which includes about 1 percentage-point benefit from
the fifty-third week. The growth in franchise fees includes
the benefit of +1 percentage point from refranchising the
Puerto Rico market in 2004.
-- Worldwide restaurant margin is expected to be flat to slightly
lower versus 2004. International Division margin is expected
to be about even versus 2004; China Division margin, which was
negatively impacted by sales declines caused by adverse
publicity relating to an isolated issue with a seasoning
supplier, is expected to be 17% to 18%, and U.S. margin is
expected to increase slightly.
-- General and administrative costs (G&A) will increase versus
2004 by approximately +3% prior to the impact of the
fifty-third week, due to increased China spending to support
brand expansion and higher charges relating to certain
litigation matters. The fifty-third week adds approximately
+1% for the full year.
-- Interest expense will be even versus last year.
-- Positive profit impact from foreign currency conversion on
operating profit of $15 to $17 million, or $0.03 or $0.04, for
the full year. As always, we will update you each quarter
relative to the impact of foreign currency conversion. The
Chinese renminbi, British pound sterling, Australian dollar,
Korean won, Japanese yen, Canadian dollar, Mexican peso and
European euro are important currencies in the company's
international business.
-- Facility actions to include $60 to $65 million of closure and
impairment charges, an increase of $20 million versus 2004.
Refranchising gains are expected to be about even with the
2004 full-year forecast of about $10 million. The forecast
could be revised upward based on additional reviews during the
third quarter.
-- Effective tax rate of 26% to 28%.
-- The U.S. restaurant base is expected to be down slightly,
about 1%, versus 2004.
The following full-year factors have not been changed:
-- Capital expenditures, including franchise restaurant
acquisitions, to be about $720 million. Pretax refranchising
and surplus PP&E proceeds are expected to total $180 million
resulting in net capital spending of $540 million being
invested in the business.
-- Over 1,450 new system restaurants to be opened worldwide
-- At least 725 new International Division restaurants
-- At least 375 new China Division restaurants
-- At least 350 new U.S. restaurants
-- International Division net-restaurant expansion to be at least
+3%.
-- Five hundred fifty (550) multibrand restaurant additions
(gross) for the U.S. system, including conversions of existing
restaurants, rebuilds, and new builds.
-- Average shares outstanding to be in a range of 295 to 300
million shares, less than the expected average 305 million
shares in 2004.
-- Return on invested capital to remain at about 18%.
-- Note: The fifty-third week primarily benefits the U.S.
business. The China market is a monthly reporting business
with no fifty-third week impact. Many International Division
markets are also monthly reporting businesses with no
fifty-third-week benefit. Additionally, in the U.S. the timing
of the KFC business closing will be accelerated by one week in
December 2005 eliminating any fifty-third week benefit for
this business. This will align all three major U.S. brands'
fiscal closings.
- ----------------------------------------------------------------------
Annual Outlook
Forecast Actual
2005 2004 Incr/(Decr)
-------- ------ -----------
EPS prior to Special Items $2.62 $2.36 +11%
Special Items EPS $0.00 $0.06 NM
Reported EPS $2.62 $2.42 +8%
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PERIOD 7 SALES
- --------------
INTERNATIONAL DIVISION SYSTEM-SALES GROWTH (Estimated)
- ------------------------------------------------------
- ----------------------------------------------------------------------
2005 2005 2004
Reported (U.S. $) Local Currency Local Currency
----------------- --------------- ---------------
Period 7 +10% +5% +8%
- ----------------------------------------------------------------------
Note: These results exclude the China Division. The company's annual
target growth rate for International Division system sales is at least
+5% prior to foreign currency conversion.
CHINA DIVISION SYSTEM-SALES GROWTH (Estimated)
- ----------------------------------------------
- ----------------------------------------------------------------------
2005 2005 2004
Reported (U.S. $) Local Currency Local Currency
----------------- ---------------- ---------------
Period 7 +6% +5% +28%
- ----------------------------------------------------------------------
Note: The China Division includes mainland China, Thailand, and
KFC Taiwan. For the purpose of this sales release, like calendar
months have been compared. The company's annual target growth rate for
China Division system sales is at least +22% prior to foreign currency
conversion.
China Division Period 7 system sales increased 5% prior to foreign
currency conversion versus last year. As originally detailed in the
company's sales release dated March 24, 2005, sales at KFC restaurants
in mainland China were negatively impacted by adverse publicity
relating to an isolated issue with a seasoning supplier. Since that
point in time, sales growth has continued to improve at a steady pace.
Sales in our mainland China Pizza Hut restaurants were not impacted.
Currently, we expect Period 8 system sales to increase at least
12% versus last year and sales recovery from the low point in the last
week of Period 4 to continue. Period 8 sales growth will benefit by
approximately 2 percentage points due to a shift in the number of
weekend days (with higher sales) versus last year's Period 8. This
impact will reverse in Period 9, resulting in a negative impact of 2
percentage points.
U.S. COMPANY SAME-STORE-SALES GROWTH (Estimated)
- ------------------------------------------------
- ----------------------------------------------------------------------
Period 7, 2005 Period 7, 2004
--------------- ----------------
U.S. BLENDED +5% +4%
Taco Bell +10% +5%
Pizza Hut (2)% +6%
KFC +7% Even
- ----------------------------------------------------------------------
Note: The company's annual target growth rate for U.S. same-store
sales is +1% to +2%.
- ----------------------------------------------------------------------
2005 Period 7 End Dates 2005 Period 8 End Dates
- ------------------------------------- ----------------------------
International International
Division 6/13/2005 Division 7/11/2005
China Division 6/30/2005 China Division 7/31/2005
U.S. Business 7/9/2005 U.S. Business 8/6/2005
- ----------------------------------------------------------------------
CONFERENCE CALL
- ---------------
Yum! Brands Inc. will host a conference call to review the
company's financial performance and strategies at 9:15 a.m. EDT
Thursday, July 14, 2005.
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 Thursday, July
14, at 12:15 p.m. EDT through Friday, July 29, at midnight EDT. To
access the playback, dial 800/642-1687 in the United States and
706/645-9291 internationally. The playback pass code is 7195371.
The call and the playback can be accessed via the Internet by
visiting Yum! Brands' Web site: www.yum.com and selecting "2nd Quarter
Earnings Webcast."
NOTES & DEFINITIONS FOR TERMS USED THROUGHOUT THIS DOCUMENT
- -----------------------------------------------------------
China Division system-sales growth explanation:
Estimated system-sales growth differs from the 2% reported in the
Period 6 sales release, which compared like calendar months. For 2005,
we have moved forward the mainland China business reporting calendar
one month to more closely align the timing of reporting that
business's results of operations with our U.S. business.
Notes:
Sales results for Period 8 (the four-week period ending August 6,
2005) are scheduled to be released August 11, 2005, before market
hours.
Sales and profit information included in the release is rounded to
the nearest million; however, percentage-point change calculations are
based on numbers that are not rounded.
Definitions:
Excl F/x represents the percentage change excluding the impact of
foreign currency translation. These amounts are calculated by
translating current-year results at prior-year average exchange rates.
We believe elimination of the foreign currency translation impact
provides better year-to-year comparability without the distortion of
foreign currency fluctuations.
Franchise Fees include fees from unconsolidated affiliates (joint
ventures) and franchise and license restaurants. Fees include ongoing
royalty and license fees, initial fees for new restaurants and
contract-renewal fees.
Franchise Restaurants include unconsolidated affiliates (joint
ventures) and franchise restaurants and exclude license restaurants.
Franchise Net New-Restaurant Growth is the year-over-year total of
franchise restaurant and unconsolidated affiliates (joint-venture)
openings less franchise restaurant and unconsolidated affiliates
(joint-venture) closings divided by the prior year's franchise and
unconsolidated affiliates (joint-venture) restaurant total.
New-Restaurant Openings include unconsolidated affiliates (joint
ventures), company-owned and franchise restaurants and exclude license
restaurants.
Special Items include AmeriServe and other charges (credits) and
Wrench litigation.
System Restaurants include unconsolidated affiliates (joint
ventures), company-owned and franchise restaurants but exclude license
restaurants.
System-Sales Growth includes the results of all restaurants
regardless of ownership including unconsolidated affiliates,
company-owned, franchise and license restaurants. Sales of
unconsolidated affiliates (joint ventures), franchise and license
restaurants generate franchise and license fees for the company
(typically at a rate of 4% to 6% of sales). Unconsolidated affiliates
(joint ventures), franchise and license restaurant sales are not
included in company sales we present on the Condensed Consolidated
Statements of Income; however, the franchise fees previously defined
are included in the company's revenues. We believe system-sales growth
is useful to investors as a significant indicator of the overall
strength of our business as it incorporates all our revenue drivers,
company and franchise same-store sales as well as new-restaurant
development.
System Same-Store-Sales Growth is the estimated growth in sales of
all restaurants that have been open one year or more regardless of
ownership including unconsolidated affiliates (joint ventures),
company-owned, franchise and license restaurants.
Systemwide U.S. Same-Store Sales include all company, franchise
and license restaurants that have been open one year or more. U.S.
same-store sales include KFC, Pizza Hut, Taco Bell, Long John Silver's
and A&W restaurants.
U.S. Blended 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.
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. Accordingly, you are cautioned not to
place undue reliance on forward-looking statements. Factors that can
cause actual results to differ materially include, but are not limited
to, changes in global and local business, economic and political
conditions in the countries and territories where Yum! Brands
operates, including the effects of war and terrorist activities;
changes in currency exchange and interest rates; changes in commodity,
labor and other operating costs; changes in competition in the food
industry, consumer preferences or perceptions concerning the products
of the company and/or our competitors, spending patterns and
demographic trends; the impact that any widespread illness or general
health concern may have on our business and the economy of the
countries in which we operate; the effectiveness of our operating
initiatives and marketing, advertising and promotional efforts;
new-product and concept development by Yum! Brands and other
food-industry competitors; the success of our strategies for
refranchising and international development and operations; the
ongoing business viability of our franchise and license operators; our
ability to secure distribution to our restaurants at competitive rates
and to ensure adequate supplies of restaurant products and equipment
in our stores; unexpected disruptions in our supply chain; publicity
that may impact our business and/or industry; severe weather
conditions; effects and outcomes of pending or future legal claims
involving the company; changes in effective tax rates; our actuarially
determined casualty loss estimates; new legislation and governmental
regulations or changes in legislation and regulations and the
consequent impact on our business; 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 restaurants with nearly
34,000 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 2,900
multibrand restaurants. Outside the United States in 2004, 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. The
company has been recognized in Black Enterprise Magazine as one of the
"30 Best Companies for Diversity" and for the past two years in
Fortune's top 50 "Best Companies for Minorities," claiming the
number-one spot for "managerial diversity."
Yum! Brands, Inc.
Consolidated Summary of Results
(amounts in millions, except per share amounts)
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
Total revenues $2,153 $2,077 4 $4,207 $4,047 4
Costs and expenses
Company restaurant
expenses 1,634 1,576 (4) 3,182 3,067 (4)
General and
administrative expenses 262 234 (12) 499 471 (6)
Franchise and license
expenses 4 6 29 12 8 (45)
Facility actions 4 10 NM 15 19 NM
Other (income) expense (25) (10) NM (39) (22) 83
Wrench litigation
(income) expense - - - - - -
AmeriServe and other
charges (credits) - (14) NM - (14) NM
------- ------- ------- -------
Total costs and expenses 1,879 1,802 (4) 3,669 3,529 (4)
------- ------- ------- -------
Operating profit 274 275 - 538 518 4
Interest expense, net 30 32 10 58 67 14
------- ------- ------- -------
Income before income
taxes 244 243 1 480 451 7
Income tax provision 57 65 11 132 131 (1)
------- ------- ------- -------
Net income $ 187 $ 178 6 $ 348 $ 320 9
======= ======= ======= =======
Basic EPS Data
- --------------
EPS $ 0.65 $ 0.61 6 $ 1.20 $ 1.10 9
======= ======= ======= =======
Average shares
outstanding 288 290 - 290 290 -
======= ======= ======= =======
Diluted EPS Data
- ----------------
EPS $ 0.62 $ 0.58 6 $ 1.15 $ 1.05 10
======= ======= ======= =======
Average shares
outstanding 302 304 1 303 305 -
======= ======= ======= =======
Dividends declared per
common share $0.115 $ 0.10 15 $0.215 $ 0.10 NM
======= ======= ======= =======
See accompanying notes.
Wrench litigation and AmeriServe and other charges (credits) have been
summed and referred to as "Special Items" throughout this press
release. See further discussion in the accompanying Notes.
Yum! Brands, Inc.
WORLDWIDE Operating Results
(amounts in millions)
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
Company sales $1,902 $1,846 3 $3,712 $3,593 3
Franchise and license
fees 251 231 9 495 454 9
--------------- ---------------
Revenues 2,153 2,077 4 4,207 4,047 4
--------------- ---------------
Company restaurants
Food and paper 600 588 (2) 1,174 1,128 (4)
Payroll and employee
benefits 504 493 (2) 987 973 (1)
Occupancy and other
operating expenses 530 495 (7) 1,021 966 (6)
--------------- ---------------
1,634 1,576 (4) 3,182 3,067 (4)
General and
administrative expenses 262 234 (12) 499 471 (6)
Franchise and license
expenses 4 6 29 12 8 (45)
Facility actions 4 10 NM 15 19 NM
Other (income) expense (25) (10) NM (39) (22) 83
--------------- ---------------
1,879 1,816 (3) 3,669 3,543 (4)
--------------- ---------------
Operating profit before
special items 274 261 5 538 504 7
Interest expense, net 30 32 10 58 67 14
Income tax provision 57 60 4 132 126 (5)
--------------- ---------------
Earnings before special
items $ 187 $ 169 11 $ 348 $ 311 12
======= ======= ======= =======
Tax rate before special
items 23.6% 26.2% 2.6 27.5% 28.9% 1.4
======= ======= ppts. ======= ======= ppts.
Diluted EPS before
special items $ 0.62 $ 0.55 12 $ 1.15 $ 1.02 13
======= ======= ======= =======
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 31.6 31.9 0.3 31.6 31.4 (0.2)
ppts. ppts.
Payroll and employee
benefits 26.5 26.7 0.2 26.6 27.0 0.4
ppts. ppts.
Occupancy and other
operating expenses 27.8 26.8 (1.0) 27.5 26.9 (0.6)
ppts. ppts.
--------------- ---------------
Restaurant margin 14.1% 14.6% (0.5) 14.3% 14.7% (0.4)
ppts. ppts.
======= ======= ======= =======
Reconciliation of Segment Operating Profit to Reported
Operating Profit
- ----------------------------------------------------------------------
U.S. operating profit $ 190 $ 199 (4) $ 352 $ 371 (5)
International Division
operating profit 90 74 22 184 162 14
China Division operating
profit 25 35 (30) 78 77 -
Unallocated and
corporate expense (61) (44) (38) (103) (92) (12)
Unallocated other income
(expense) 17 - NM 16 (3) NM
Unallocated facility
actions 13 (3) NM 11 (11) NM
------- ------- ------- -------
Operating profit before
special items 274 261 5 538 504 7
Wrench litigation
(income) expense - - - - - -
AmeriServe and other
(charges) credits - 14 NM - 14 NM
------- ------- ------- -------
Reported operating
profit $ 274 $ 275 - $ 538 $ 518 4
======= ======= ======= =======
See accompanying notes and reconciliations of non-GAAP measurements to
GAAP results.
Yum! Brands, Inc.
UNITED STATES Operating Results
(amounts in millions)
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
Company sales $1,240 $1,208 3 $2,439 $2,374 3
Franchise and license
fees 145 141 3 281 272 3
--------------- ---------------
Revenues 1,385 1,349 3 2,720 2,646 3
--------------- ---------------
Company restaurants
Food and paper 374 365 (3) 737 698 (6)
Payroll and employee
benefits 369 367 - 734 733 -
Occupancy and other
operating expenses 317 299 (6) 628 603 (4)
--------------- ---------------
1,060 1,031 (3) 2,099 2,034 (3)
General and
administrative expenses 118 112 (5) 238 232 (3)
Franchise and license
expenses 3 3 12 9 4 (99)
Facility actions 14 4 NM 22 5 NM
--------------- ---------------
1,195 1,150 (4) 2,368 2,275 (4)
--------------- ---------------
Operating profit $ 190 $ 199 (4) $ 352 $ 371 (5)
======= ======= ======= =======
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 30.2 30.2 - 30.2 29.4 (0.8)
ppts.
Payroll and employee
benefits 29.7 30.3 0.6 30.1 30.9 0.8
ppts. ppts.
Occupancy and other
operating expenses 25.5 24.8 (0.7) 25.7 25.4 (0.3)
ppts. ppts.
--------------- ---------------
Restaurant margin 14.6% 14.7% (0.1) 14.0% 14.3% (0.3)
ppts. ppts.
======= ======= ======= =======
See accompanying notes.
Yum! Brands, Inc.
INTERNATIONAL DIVISION Operating Results
(amounts in millions)
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
Company sales $ 394 $ 409 (4) $ 778 $ 809 (4)
Franchise and license
fees 98 82 19 198 167 18
--------------- ---------------
Revenues 492 491 - 976 976 -
--------------- ---------------
Company restaurants
Food and paper 128 137 7 256 275 7
Payroll and employee
benefits 96 99 2 187 193 3
Occupancy and other
operating expenses 119 119 1 234 234 -
--------------- ---------------
343 355 3 677 702 4
General and
administrative expenses 62 60 (2) 124 119 (4)
Franchise and license
expenses 1 3 53 3 4 23
Facility actions 1 2 NM 2 2 NM
Other (income) expense (5) (3) 64 (14) (13) 24
--------------- ---------------
402 417 4 792 814 3
--------------- ---------------
Operating profit $ 90 $ 74 22 $ 184 $ 162 14
======= ======= ======= =======
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 32.6 33.6 1.0 32.9 33.9 1.0
ppts. ppts.
Payroll and employee
benefits 24.4 24.1 (0.3) 24.1 23.9 (0.2)
ppts. ppts.
Occupancy and other
operating expenses 30.1 29.2 (0.9) 30.1 29.0 (1.1)
ppts. ppts.
--------------- ---------------
Restaurant margin 12.9% 13.1% (0.2) 12.9% 13.2% (0.3)
ppts. ppts.
======= ======= ======= =======
See accompanying notes.
Yum! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
Company sales $ 268 $ 229 17 $ 495 $ 410 21
Franchise and license
fees 8 8 5 16 15 14
--------------- ---------------
Revenues 276 237 16 511 425 20
--------------- ---------------
Company restaurants
Food and paper 98 86 (13) 181 155 (16)
Payroll and employee
benefits 39 27 (44) 66 47 (42)
Occupancy and other
operating expenses 94 77 (23) 159 129 (24)
--------------- ---------------
231 190 (21) 406 331 (23)
General and
administrative expenses 21 18 (24) 34 28 (23)
Franchise and license
expenses - - - - - -
Facility actions 2 1 NM 2 1 NM
Other (income) expense (3) (7) (52) (9) (12) (29)
--------------- ---------------
251 202 (25) 433 348 (25)
--------------- ---------------
Operating profit $ 25 $ 35 (30) $ 78 $ 77 -
======= ======= ======= =======
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 36.4 37.7 1.3 36.5 37.9 1.4
ppts. ppts.
Payroll and employee
benefits 14.5 11.8 (2.7) 13.3 11.3 (2.0)
ppts. ppts.
Occupancy and other
operating expenses 35.2 33.3 (1.9) 32.1 31.4 (0.7)
ppts. ppts.
--------------- ---------------
Restaurant margin 13.9% 17.2% (3.3) 18.1% 19.4% (1.3)
ppts. ppts.
======= ======= ======= =======
See accompanying notes.
China Division includes mainland China, Thailand and KFC Taiwan.
Yum! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
6/11/05 12/25/04
--------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 113 $ 62
Short-term investments 87 54
Accounts and notes receivable, less allowance:
$21 in 2005 and $22 in 2004 212 192
Inventories 77 76
Prepaid expenses and other current assets 91 142
Deferred income taxes 143 156
Advertising cooperative assets, restricted 78 65
--------- ---------
Total Current Assets 801 747
Property, plant and equipment, net of accumulated
depreciation and amortization of $2,733 in 2005
and $2,618 in 2004 3,371 3,439
Goodwill 550 553
Intangible assets, net 340 347
Investments in unconsolidated affiliates 179 194
Other assets 434 416
--------- ---------
Total Assets $ 5,675 $ 5,696
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities $ 1,214 $ 1,189
Income taxes payable 60 111
Short-term borrowings 222 11
Advertising cooperative liabilities 78 65
--------- ---------
Total Current Liabilities 1,574 1,376
Long-term debt 1,562 1,731
Other liabilities and deferred credits 992 994
--------- ---------
Total Liabilities 4,128 4,101
--------- ---------
Shareholders' Equity
Preferred stock, no par value, 250 shares
authorized; no shares issued - -
Common stock, no par value, 750 shares authorized;
286 shares and 290 shares issued in 2005 and
2004, respectively 328 659
Retained earnings 1,359 1,067
Accumulated other comprehensive loss (140) (131)
--------- ---------
Total Shareholders' Equity 1,547 1,595
--------- ---------
Total Liabilities and Shareholders' Equity $ 5,675 $ 5,696
========= =========
See accompanying notes.
Yum! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
Year to date
-------------------
6/11/05 6/12/04
--------- ---------
Cash Flows - Operating Activities
Net income $ 348 $ 320
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 208 195
Facility actions 15 19
Other liabilities and deferred credits 4 8
Deferred income taxes (23) -
Other non-cash charges and credits, net (4) 19
Changes in operating working capital, excluding
effects of acquisitions and dispositions:
Accounts and notes receivable (4) (14)
Inventories 4 (6)
Prepaid expenses and other current assets 57 (21)
Accounts payable and other current liabilities - (64)
Income taxes payable - (66)
--------- ---------
Net change in operating working capital 57 (171)
--------- ---------
Net Cash Provided by Operating Activities 605 390
--------- ---------
Cash Flows - Investing Activities
Capital spending (210) (221)
Proceeds from refranchising of restaurants 41 8
Acquisition of restaurants from franchisees - (5)
Short-term investments (31) (27)
Sales of property, plant and equipment 22 24
Other, net 38 23
--------- ---------
Net Cash Used in Investing Activities (140) (198)
--------- ---------
Cash Flows - Financing Activities
Revolving Credit Facility activity, by original
maturity
Three months or less, net 46 -
Repayments of long-term debt (9) (7)
Short-term borrowings-three months or less, net (23) -
Repurchase shares of common stock (489) (294)
Employee stock option proceeds 89 102
Dividends paid on common shares (58) -
--------- ---------
Net Cash Used in Financing Activities (444) (199)
--------- ---------
Effect of Exchange Rates on Cash and Cash
Equivalents (4) (2)
--------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents 17 (9)
Net Increase in Cash and Cash Equivalents of the
China Division for December 2004 34 -
Cash and Cash Equivalents - Beginning of Period 62 192
--------- ---------
Cash and Cash Equivalents - End of Period $ 113 $ 183
========= =========
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 (income) expense
and AmeriServe and other charges (credits). These amounts are
described in (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 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
------------------- -------------------
6/11/05 6/12/04 6/11/05 6/12/04
--------- --------- --------- ---------
Detail of Special Items
- ------------------------------
Wrench litigation (income)
expense $ - $ - $ - $ -
AmeriServe and other (charges)
credits - 14 - 14
--------- --------- --------- ---------
Total special items - 14 - 14
Tax on special items - (5) - (5)
--------- --------- --------- ---------
Special items, net of tax $ - $ 9 $ - $ 9
========= ========= ========= =========
Average shares outstanding 302 304 303 305
========= ========= ========= =========
Special items diluted EPS $ - $ 0.03 $ - $ 0.03
========= ========= ========= =========
Reconciliation of Earnings
Before Special Items to Net
Income
- ------------------------------
Earnings before special items $ 187 $ 169 $ 348 $ 311
Special items, net of tax - 9 - 9
--------- --------- --------- ---------
Net income $ 187 $ 178 $ 348 $ 320
========= ========= ========= =========
Reconciliation of EPS Before
Special Items to Reported EPS
- ------------------------------
Diluted EPS before special
items $ 0.62 $ 0.55 $ 1.15 $ 1.02
Special items EPS - 0.03 - 0.03
--------- --------- --------- ---------
Reported EPS $ 0.62 $ 0.58 $ 1.15 $ 1.05
========= ========= ========= =========
Notes to the Consolidated Summary of Results, Condensed Consolidated
Balance Sheets and Condensed Consolidated Statements of Cash Flows
(amounts in millions, except per share amounts)
(a) Percentages may not recompute due to rounding.
(b) In 2005, we began reporting information for our international
business in two separate operating segments as a result of changes
to our management structure. The China Division includes mainland
China ("China"), Thailand and KFC Taiwan, and the International
Division includes the remainder of our international operations.
While this reporting change did not impact our consolidated
results, segment information for previous periods has been
restated to be consistent with the current period presentation.
(b) In 2005, we also changed the China business reporting calendar to
more closely align the timing of the reporting of its results of
operations with our U.S. business. Previously our China business,
like the rest of our international businesses, closed one month
(or one period for certain of our international businesses)
earlier than YUM's period end date to facilitate consolidated
reporting. To maintain comparability of our consolidated results
of operations, net income of the China business of $6 million for
the one month period ended December 31, 2004 was recognized as an
adjustment to consolidated retained earnings in the year to date
ended June 11, 2005, as opposed to being recorded in our
Consolidated Statement of Income. Our consolidated results of
operations for the quarter and year to date ended June 11, 2005
include the results of operations of the China business for the
months of March, 2005 through May, 2005 and January, 2005 through
May, 2005, respectively, and the months to be included in future
quarterly reporting periods will begin one month later than in
previous years. Our consolidated results of operations for the
quarter and year to date ended June 12, 2004 continue to include
the results of operations of the China business for the months of
February, 2004 through April, 2004 and December, 2003 through
April, 2004, respectively.
(c) Franchisee sales represents the combined estimated sales of
unconsolidated affiliate, franchise and license restaurants.
Franchisee sales, which are not included in the Company sales we
present on the Consolidated Statements of Income, generate
franchise and license fees (typically at a rate of 4% to 6% of
sales) that are included in the Company's revenues.
Quarter % Year to date %
--------------- Change --------------- Change
6/11/05 6/12/04 B/(W) 6/11/05 6/12/04 B/(W)
------- ------- ------ ------- ------- ------
United States
Company sales $1,240 $1,208 3 $2,439 $2,374 3
Franchisee sales 2,849 2,736 4 5,531 5,313 4
International Division
Company sales $ 394 $ 409 (4) $ 778 $ 809 (4)
Franchisee sales 1,898 1,651 15 3,882 3,386 15
China Division
Company sales $ 268 $ 229 17 $ 495 $ 410 21
Franchisee sales 138 130 6 262 241 9
Worldwide
Company sales $1,902 $1,846 3 $3,712 $3,593 3
Franchisee sales 4,885 4,517 8 9,675 8,940 8
(d) Facility actions included the following:
Quarter Year to date
------------------- -------------------
6/11/05 6/12/04 6/11/05 6/12/04
--------- --------- --------- ---------
Store closure costs $ (1) $ (5) $ 3 $ (5)
Asset impairment charges 18 12 23 13
Refranchising net loss
(gain) (13) 3 (11) 11
--------- --------- --------- ---------
Facility actions $ 4 $ 10 $ 15 $ 19
========= ========= ========= =========
(e) Other (income) expense primarily includes the $17 million gain
associated with the IPO of our Poland/Czech Republic business in
the quarter ended June 11, 2005 as well as equity income from
investments in unconsolidated affiliates.
(f) Amounts recorded as AmeriServe and other charges (credits)
primarily result from cash recoveries related to the AmeriServe
bankruptcy reorganization process, which were not significant for
both the quarter and year to date ended June 11, 2005.
There was no Wrench litigation (income) expense recorded for the
quarter and year to date ended June 11, 2005.
(g) For the quarter and year to date ended June 11, 2005, we
repurchased approximately 7.5 million shares and 9.8 million
shares of our Common Stock, respectively, at an average price of
$50 per share for both the quarter and year to date.
Yum! Brands, Inc.
Restaurant Units Activity Summary
Total
Unconsolidated Excluding
Company Affiliates Franchisees Licensees(a)
------- -------------- ----------- ------------
Total U.S.
Beginning of Year 4,989 - 13,482 18,471
New Builds 32 - 100 132
Acquisitions - - - -
Refranchising (83) - 81 (2)
Closures (62) - (160) (222)
Other (10) - 5 (5)
------- -------------- ----------- ------------
End of Quarter 4,866 - 13,508 18,374
======= ============== =========== ============
% of Total 26% - 74% 100%
Total International
Division
Beginning of Year 1,504 1,204 8,179 10,887
New Builds 14 20 193 227
Acquisitions - - - -
Refranchising (58) (135) 193 -
Closures (15) (16) (104) (135)
Other (6) - 5 (1)
------- -------------- ----------- ------------
End of Quarter 1,439 1,073 8,466 10,978
======= ============== =========== ============
% of Total 13% 10% 77% 100%
Total China Division
Beginning of Year(b) 1,266 460 198 1,924
New Builds 124 39 5 168
Acquisitions - - - -
Refranchising - - - -
Closures (10) (4) - (14)
Other - - 4 4
------- -------------- ----------- ------------
End of Quarter (c) 1,380 495 207 2,082
======= ============== =========== ============
% of Total 66% 24% 10% 100%
Total Worldwide
Beginning of Year 7,759 1,664 21,859 31,282
New Builds 170 59 298 527
Acquisitions - - - -
Refranchising (141) (135) 274 (2)
Closures (87) (20) (264) (371)
Other (16) - 14 (2)
------- -------------- ----------- ------------
End of Quarter 7,685 1,568 22,181 31,434
======= ============== =========== ============
% of Total 24% 5% 71% 100%
(a) The total excludes 2,148 U.S. and 197 International Division
licensee units. There are no licensed units in the China Division.
The U.S. licensee unit count includes 1,241 Pizza Huts, 832 Taco
Bells and 75 KFCs. The International Division licensee unit count
includes 91 Pizza Huts, 62 KFCs, 43 Taco Bells and 1 Long John
Silver's.
(b) Beginning of the year balances have been adjusted to include
December activity in Mainland China due to the change in its
reporting calendar. The net change was an addition of 16, 2, 1 and
19 units for company, unconsolidated affiliates, franchisees and
total excluding licensees, respectively.
(c) The totals include 3 Company-owned Taco Bell Grandes and 2
Company-owned East Dawning units.
Yum! Brands, Inc.
Restaurant Units Activity Summary
United States
- ----------------------------------------------------------------------
Total
Excluding
Company Franchisees Licensees
-------------- ----------- ------------
Pizza Hut
Beginning of Year 1,741 4,565 6,306
New Builds 14 36 50
Acquisitions - - -
Refranchising (60) 60 -
Closures (21) (51) (72)
Other - - -
-------------- ----------- ------------
End of Quarter 1,674 4,610 6,284
============== =========== ============
% of Total 27% 73% 100%
KFC
Beginning of Year 1,248 4,202 5,450
New Builds 4 35 39
Acquisitions - - -
Refranchising (7) 7 -
Closures (22) (47) (69)
Other (10) 5 (5)
-------------- ----------- ------------
End of Quarter 1,213 4,202 5,415
============== =========== ============
% of Total 22% 78% 100%
Taco Bell
Beginning of Year 1,283 3,747 5,030
New Builds 2 20 22
Acquisitions - - -
Refranchising (8) 6 (2)
Closures (5) (28) (33)
Other - - -
-------------- ----------- ------------
End of Quarter 1,272 3,745 5,017
============== =========== ============
% of Total 25% 75% 100%
Long John Silver's
Beginning of Year 700 500 1,200
New Builds 12 7 19
Acquisitions - - -
Refranchising (8) 8 -
Closures (12) (10) (22)
Other - - -
-------------- ----------- ------------
End of Quarter 692 505 1,197
============== =========== ============
% of Total 58% 42% 100%
A&W
Beginning of Year 17 468 485
New Builds - 2 2
Acquisitions - - -
Refranchising - - -
Closures (2) (24) (26)
Other - - -
-------------- ----------- ------------
End of Quarter 15 446 461
============== =========== ============
% of Total 3% 97% 100%
Yum! Brands, Inc.
Restaurant Units Activity Summary
International Division
- ----------------------------------------------------------------------
Total
Unconsolidated Excluding
Company Affiliates Franchisees Licensees
------- -------------- ----------- ------------
KFC
Beginning of Year 726 439 4,854 6,019
New Builds 11 11 97 119
Acquisitions - - - -
Refranchising (1) (89) 90 -
Closures (3) (6) (46) (55)
Other (1) 1 (2) (2)
------- -------------- ----------- ------------
End of Quarter 732 356 4,993 6,081
======= ============== =========== ============
% of Total 12% 6% 82% 100%
Pizza Hut
Beginning of Year 766 765 2,903 4,434
New Builds 3 9 85 97
Acquisitions - - - -
Refranchising (48) (46) 94 -
Closures (12) (10) (48) (70)
Other (5) (1) 5 (1)
------- -------------- ----------- ------------
End of Quarter 704 717 3,039 4,460
======= ============== =========== ============
% of Total 16% 16% 68% 100%
A&W
Beginning of Year - - 209 209
New Builds - - 9 9
Acquisitions - - - -
Refranchising - - - -
Closures - - (9) (9)
Other - - (1) (1)
------- -------------- ----------- ------------
End of Quarter - - 208 208
======= ============== =========== ============
% of Total - - 100% 100%
Taco Bell
Beginning of Year 12 - 180 192
New Builds - - - -
Acquisitions - - - -
Refranchising (9) - 9 -
Closures - - - -
Other - - 3 3
------- -------------- ----------- ------------
End of Quarter 3 - 192 195
======= ============== =========== ============
% of Total 2% - 98% 100%
Long John Silver's
Beginning of Year - - 33 33
New Builds - - 2 2
Acquisitions - - - -
Refranchising - - - -
Closures - - (1) (1)
Other - - - -
------- -------------- ----------- ------------
End of Quarter - - 34 34
======= ============== =========== ============
% of Total - - 100% 100%
Yum! Brands, Inc.
Restaurant Units Activity Summary
China Division
- ----------------------------------------------------------------------
Total
Unconsolidated Excluding
Company Affiliates Franchisees Licensees
------- -------------- ----------- ------------
KFC
Beginning of Year 1,039 460 175 1,674
New Builds 91 39 4 134
Acquisitions - - - -
Refranchising - - - -
Closures (8) (4) - (12)
Other - - 4 4
------- -------------- ----------- ------------
End of Quarter 1,122 495 183 1,800
======= ============== =========== ============
% of Total 62% 28% 10% 100%
Pizza Hut
Beginning of Year 224 - 23 247
New Builds 30 - 1 31
Acquisitions - - - -
Refranchising - - - -
Closures (1) - - (1)
Other - - - -
------- -------------- ----------- ------------
End of Quarter 253 - 24 277
======= ============== =========== ============
% of Total 91% - 9% 100%
China Division includes mainland China, Thailand and KFC Taiwan.
Yum! Brands, Inc.
United States Multibrand Restaurants
United States(a)
------------------------------------------
Multibrand Restaurants in
Operation
at 6/11/05
-----------------------------
Gross
Additions
Year to Date
6/11/05 Company Franchise Total
------------ --------- --------- ---------
KFC
Taco Bell 2 180 488 668
A&W 13 121 196 317
Long John Silver's 27 63 93 156
Pizza Hut - 97 42 139
Taco Bell/Pizza Hut 3 n 1 - 19 23 42
Wing Works - 26 - 26
------------ --------- --------- ---------
42 506 842 1,348
Taco Bell
Pizza Hut 2 314 274 588
Long John Silver's 6 68 27 95
A&W - 2 - 2
------------ --------- --------- ---------
8 384 301 685
Pizza Hut
WingStreet 151 456 22 478
KFC - - 4 4
Taco Bell - - 1 1
Wing Works - 1 - 1
------------ --------- --------- ---------
151 457 27 484
Long John Silver's
A&W 24 176 120 296
------------ --------- --------- ---------
Total 225 1,523 1,290 2,813
============ ========= ========= =========
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. Similarly, a new multibrand restaurant, while
increasing sales and points of distribution for two brands, results in
just one additional unit count.
(a) Amounts do not reflect 185 International Division multibrand units
in operation at the end of the period. There are no multibrand
units in the China Division.
MULTIMEDIA AVAILABLE:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=4929094
CONTACT: Yum! Brands, Inc., Louisville
Analysts are invited to contact:
Tim Jerzyk, Vice President Investor Relations,
888-298-6986
or
Quan Nghe, Director Investor Relations, 888-298-6986
or
Members of the media are invited to contact:
Amy Sherwood, Vice President Public Relations,
502-874-8200