Exhibit 99.1
Yum! Brands Inc. Reports 2005 Third-Quarter EPS of $0.71 Prior to
Special Items, an 18% Increase;
Increases Full-Year 2005 EPS Estimate by $0.02 to $2.64 Prior to
Special Items or 12% Growth
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 5, 2005--Yum! Brands Inc.
(NYSE:YUM) today reported results for the third quarter ended
September 3, 2005.
The following are key points relative to the company's performance
in the third quarter versus a year ago:
-- Worldwide operating profit increased by 10% before special
items credit.
-- Worldwide system same-store sales grew by 2%.
-- China Division system restaurants expanded by 23%.
-- International Division system restaurants grew by 4%.
-- Systemwide U.S. same-store sales increased 4%.
-- U.S. multibrand restaurants expanded by 17%.
The company also reported estimated Period 10 sales:
-- International Division system sales increased 7% in U.S.
dollar terms or 4% prior to foreign currency conversion.
-- China Division system sales increased 16% in U.S. dollar terms
or 13% prior to foreign currency conversion.
-- U.S. blended same-store sales at company restaurants increased
3% (Taco Bell, +6%; Pizza Hut, (3)%; KFC, +6%).
Consolidated Financial Highlights
Third Quarter Year To Date
-------------------------------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- -------- ------- ------- --------
System Restaurants 31,537 30,943 +2 31,537 30,943 +2
Revenues (million) $2,243 $2,179 +3 $6,450 $6,226 +4
EPS prior to Special
Items $0.71 $0.61 +18 $1.86 $1.63 +14
Special Items EPS $0.01 $0.00 NM $0.01 $0.03 NM
Reported EPS $0.72 $0.61 +18 $1.87 $1.66 +13
- ----------------------------------------------------------------------
David C. Novak, Chairman and CEO, said, "I am pleased to report
that based on our third-quarter results we are again raising our 2005
full-year EPS estimate, now up to $2.64 or 12% growth prior to special
items. We continue to aggressively expand outside the United States
and expect to exceed our full-year target of over 1,100 new
restaurants. This includes a record number of new-restaurant openings
from our China Division where we fully expect to exceed our 2005
target of 375 openings. We are especially pleased that our
third-quarter U.S. blended same-store sales increased 4%, lapping our
strongest quarter last year, which is the best performance in five
years. We expect 4% U.S. blended growth for the full-year 2005.
"Looking forward to 2006, we are very confident we will continue
to deliver our stated annual goal of at least 10% growth in EPS.
Shareholders should expect us to continue to build value by executing
the unique growth opportunities that make us anything but an ordinary
restaurant company: Building dominant restaurant brands in China,
driving profitable international expansion, running great restaurants,
and multibranding category-leading brands. In doing so, we expect to
maintain our industry leading ROIC (return on invested capital) of
18%."
INTERNATIONAL DIVISION
- ----------------------
Third Quarter Year to Date
% Change % Change
------------- --------------
Reported Excl Reported Excl
2005 2004 F/x 2005 2004 F/x
------------------------------------------------------
Financial
Measures
Revenues(1)
($ million) $490 $509 (4) (8) $1,466 $1,485 (1) (6)
Operating Profit
($ million) $89 $79 +12 +9 $273 $241 +14 +9
- ----------------------------------------------------------------------
Operating
Metrics
Est. System-
Sales Growth +7 +4 +10 +6
System
Restaurants 11,066 10,689 +4 NM 11,066 10,689 +4 NM
- ----------------------------------------------------------------------
(1) Both third-quarter and year-to-date revenue comparisons were
adversely affected by the refranchising of our Puerto Rico market
in last year's fourth quarter. Excluding the impact of the change
in ownership of the Puerto Rico market, revenues increased 1% for
the third quarter and 3% year to date prior to foreign currency
conversion. The transaction resulted in the sale of this
company-operated market to a franchisee.
A key growth driver for the Yum! Restaurants International (YRI)
Division is new-restaurant openings across an array of international
markets and leveraging our substantial infrastructure in place around
the world.
In the third quarter, continued new-restaurant expansion of KFC
and Pizza Hut brands and positive system same-store-sales growth drove
YRI system-sales and operating-profit growth. New restaurants opened
in the quarter totaled 176.
For both third-quarter and year-to-date 2005, YRI's operating
profit growth outpaced revenue growth primarily due to strong
performance from our highly profitable franchise-only businesses.
Revenues are lower due to refranchising of the Puerto Rico market in
the fouth quarter of last year and lower sales this year in key
company markets: South Korea and the U.K. Operating profit for the
quarter and year-to-date is up primarily due to strong franchise
same-store sales and unit growth. Year to date, 93% of restaurant
openings have been by our franchise and joint-venture partners.
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 during the third quarter. These businesses
represent both KFC and Pizza Hut brands and cover more than 100
countries and territories. In the U.K., a key market with 7% growth in
system restaurants, system sales decreased 1% prior to currency
conversion, due in part to a very weak retail environment, recently
compounded by the impact of terrorist activity. Overall, Mexico was
the strongest performing company market.
For the third quarter, restaurant margin as a percentage of sales
decreased 0.8 percentage points. Excluding the Puerto Rico market,
restaurant margin would have decreased 0.2 percentage points versus
last year.
Overall, foreign currency conversion added $3 million to operating
profit for the third quarter and $11 million year to date. Full-year
currency impact is estimated at $12 million.
For the full-year 2005, Yum! Restaurants International Division is
expected to produce revenue growth of approximately +4% in local
currency terms prior to the impact of refranchising the Puerto Rico
market, reported profit growth of 14%, and system-sales growth of 6%
in local currency terms, including at least 725 new-restaurant
openings. This would be the sixth straight year of at least 700
new-restaurant openings, and we expect our franchisees to open more
than 80% of the new restaurants.
CHINA DIVISION
- --------------
Third Quarter Year to Date
% Change % Change
-------------- -------------
Reported Excl Reported Excl
2005 2004 F/x 2005 2004 F/x
------------------------------------------------------
Financial
Measures
Revenues
($ million) $360 $301 +20 +18 $871 $726 +20 +19
Operating Profit
($ million) $85 $64 +32 +31 $163 $141 +15 +14
- ----------------------------------------------------------------------
Operating
Metrics
Est. System-
Sales Growth
(fiscal-period
basis) +18 +17 +17 +16
System
Restaurants 2,159 1,759 +23 NM 2,159 1,759 +23 NM
- ----------------------------------------------------------------------
Note: 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.
Overall, system restaurants in operation grew 23%. During the
third quarter, a total of 84 new restaurants opened, including 73 KFCs
and 11 Pizza Huts.
Operating profit for the third quarter benefited by $14 million of
financial recovery from a major supplier, and we expect to recognize
an additional meaningful financial recovery from the same supplier
during the fourth quarter of 2005. Additionally, due to a
fiscal-reporting calendar shift, third-quarter operating profit
increased by $6 million. Conversely, this shift negatively impacts the
fourth quarter by a similar amount.
Third-quarter restaurant margin decreased 1.6 percentage points
versus the prior year, driven primarily by negative same-store sales
in company-operated KFC restaurants in mainland China.
Foreign currency conversion added $1 million to operating profit
for the third quarter and $2 million year to date. Full-year currency
impact is estimated at $3 million.
For the full-year 2005, the China Division in local currency terms
is expected to produce system-sales growth of at least 15%, revenue
growth in the range of 17% and profit growth of approximately 10%, and
at least 375 new-restaurant openings (approximately 75% of new
restaurants are company owned, and 25% are joint venture and
franchise).
UNITED STATES BUSINESS
- ----------------------
Third Quarter Year to Date
2005 2004 % Change 2005 2004 % Change
------- ------- -------- ------- ------- ---------
Financial Measures
Revenues ($ million) $1,393 $1,369 +2 $4,113 $4,015 +2
Operating Profit
($ million) $189 $196 (4) $541 $567 (5)
- ----------------------------------------------------------------------
Operating Metrics
Systemwide
Same-Store-Sales
Growth % +4 +3 NM +4 +3 NM
System Restaurants 18,312 18,495 (1) 18,312 18,495 (1)
- ----------------------------------------------------------------------
A key growth driver for this business segment is positive
same-store-sales growth.
In the third quarter, the primary drivers of revenue growth were
higher same-store sales and continued development of new,
higher-volume restaurants, partially offset by 2 percentage points
negative impact from refranchising. When company restaurants are
refranchised, revenue from these restaurants changes from company
sales to franchise fees, reducing the company's reported revenue.
Operating profit increased 5% for the third quarter excluding the
impact of higher facility action expenses primarily related to
restaurant closures at KFC and Long John Silver's and one-time costs
associated with Hurricane Katrina.
For the fourth quarter, it is anticipated that U.S. operating
profit will show growth of about 5% prior to the impact of higher
facility action expenses and the benefit of the fifty-third week. This
includes the adverse impact of an incremental $4 to $6 million from
expected higher energy costs and lost profits related to closed
restaurants as a result of Hurricane Katrina.
For the full-year 2005, U.S. operating profit and restaurant
margin are expected to be flat versus prior year.
WORLDWIDE NEW-RESTAURANT DEVELOPMENT
- ------------------------------------
System New-Restaurant Openings Third Quarter Year to Date
-------------- ------------
Worldwide 347 874
Key Markets
International Franchise-Only Businesses
(more than 100 countries and territories) 107 237
Mainland China 77 235
United States 87 219
U.K. 19 50
Australia/New Zealand 7 25
- ----------------------------------------------------------------------
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, +6%; southern Africa, +7%; the Middle East, +7%; and
Caribbean/Latin America, +3%. For the 237 new openings year to date
from this group of markets, 119 were new KFCs and 93 were new Pizza
Huts.
In the U.S. market, the majority of new-restaurant openings were
by Pizza Hut, KFC and Taco Bell franchisees. Year to date, over 73% of
U.S. new-restaurant openings were franchised.
U.S. MULTIBRANDING EXPANSION
- ----------------------------
Third Quarter
--------------------------
Incr/
Multibrand Restaurants in Operation 2005 2004 (Decr)
-------- -------- --------
U.S. Systemwide 2,918 2,484 +17%
% U.S. System Restaurants 16 13 +3 ppts
- ----------------------------------------------------------------------
In the third quarter, of the 100 U.S. multibrand additions, 67%
were conversions of existing single-brand restaurants (primarily Pizza
Hut/WingStreet), 24% were new-restaurant openings and 9% were a new
multibrand restaurant in place of a closed single-brand restaurant
nearby.
For the full-year 2005, the company expects the U.S. system to add
at least 550 multibrand restaurant locations.
FRANCHISE GROWTH AND FEES
- -------------------------
Third Quarter Year to Date
------------- -------------
Franchise Net New-Restaurant Growth +1% +1%
Total Franchise Fees ($ million) $268 $763
Growth Vs. 2004 +10% +9%
- ----------------------------------------------------------------------
Franchise fees experienced across-the-board growth driven by
worldwide franchise new-restaurant development, refranchising
(primarily the Puerto Rico market) and same-store-sales growth. For
the third quarter and year to date, favorable foreign currency
conversion added 1 percentage point of franchise-fee growth.
In the third quarter, worldwide franchise fees were generated
primarily in the United States (58%) and the International Division
(38%). The China Division contributed the remaining 4% to worldwide
franchise fees. The company has more than 2,400 worldwide franchise
partners including more than 800 in the United States, nearly 600 in
the International Division and 29 in the China Division
CASH FLOW
Year to date, the company generated $1,041 million in net cash
provided by operating activities, invested capital of $362 million and
repurchased $678 million of its own shares. We expect full-year
capital spending to be about $650 million versus the prior forecast of
$720 million. Additionally, we now expect full-year share repurchases
to total at least $800 million.
STOCK-OPTION EXPENSING
We will begin expensing all stock-based compensation, adopting
SFAS123R retroactively to the beginning of 2005, in fourth-quarter
2005. Thus, our 2005 results will reflect a full-year impact of the
adoption of SFAS123R. We currently estimate the impact of the adoption
will reduce full-year and fourth-quarter EPS by $0.12 and $0.04
respectively.
FOURTH-QUARTER 2005 OUTLOOK
The company expects EPS of $0.78 for the fourth quarter, excluding
the impact of adopting SFAS123R. A number of factors are expected to
impact results:
-- Higher facility-action expenses than last year.
-- The tax rate will be approximately 4 percentage points higher
than last year.
-- Incremental post-hurricane expenses noted in the U.S. business
section previously detailed (United States Business Section)
in this release.
-- Interest expense will increase $8 to $10 million versus last
year.
Updates will be provided if there is a material change to these
expectations.
FULL-YEAR OUTLOOK
Based on year-to-date performance and information currently
available, the company increased its full-year EPS expectations by
$0.02 to $2.64 prior to special items.
Projected factors contributing to the company's updated annual
2005 EPS guidance were published in the company's second-quarter
earnings release dated July 13, 2005. Based on current information,
the following is an update only on those full-year factors that have
changed:
-- Facility actions to include about $65 million of closure and
impairment charges, an increase of approximately $30 million
versus 2004. Refranchising gains are expected to be over $30
million for the full year versus $12 million last year.
Annual Outlook
Forecast Actual
2005 2004 Incr/(Decr)
--------- ------- -----------
EPS prior to Special Items $2.64 $2.36 +12%
Special Items EPS $0.01 $0.06 NM
Reported EPS $2.65 $2.42 +10%
- ----------------------------------------------------------------------
Note: This forecast is prior to the impact of adopting SFAS123R.
FULL-YEAR 2006 OUTLOOK
The company expects EPS growth of at least 10 percent, which is
expected to be driven by new-restaurant expansion outside the U.S. and
U.S. same-store-sales growth of +2% to +3%.
PERIOD 10 SALES
- ---------------
INTERNATIONAL DIVISION SYSTEM-SALES GROWTH (Estimated)
- ------------------------------------------------------
2005 2005 2004
Reported (U.S. $) Local Currency Local Currency
------------------ -------------- ----------------
Period 10 +7% +4% +7%
- ----------------------------------------------------------------------
Note: 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 10 +16% +13% +21%
- ----------------------------------------------------------------------
Note: For the purpose of the preceding period sales results, 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.
U.S. COMPANY SAME-STORE-SALES GROWTH (Estimated)
- ------------------------------------------------
Period 10, 2005 Period 10, 2004
----------------- -----------------
U.S. BLENDED +3% +3%
Taco Bell +6% +4%
Pizza Hut (3)% +6%
KFC +6% (1)%
- ----------------------------------------------------------------------
Note: The company's annual target growth rate for U.S. same-store
sales is +1% to +2%.
2005 Period 10 End Dates 2005 Period 11 End Dates
- ----------------------------------- ----------------------------------
International Division 9/5/2005 International Division 10/3/2005
China Division 9/30/2005 China Division 10/31/2005
U.S. Business 10/1/2005 U.S. Business 10/29/2005
- ----------------------------------- ----------------------------------
CONFERENCE CALL
Yum! Brands Inc. will host a conference call to review the
company's financial performance and strategies at 11:00 a.m. EDT
Wednesday, October 5, 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 Wednesday,
October 5, at 2:15 p.m. EDT through Friday, October 21. To access the
playback, dial 800/642-1687 in the United States and 706/645-9291
internationally. The playback pass code is 8671817.
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."
NOTES & DEFINITIONS FOR TERMS USED THROUGHOUT THIS DOCUMENT
China Division system-sales growth explanation:
Estimated system-sales growth differs from the 11% reported in the
Period 9 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.
China Division third- and fourth-quarter operating profit
explanation:
As part of the calendar shift previously described, China Division
third-quarter operating profit benefited by $6 million due to
reporting the higher sales in mainland China in Period 9 2005 (month
of August) as part of the third-quarter result versus last year, when
August was reported as part of the fourth quarter. Therefore, the
fourth quarter will be negatively impacted by a similar amount due to
this shift.
Mainland China Reporting Calendar
2005 2004
Quarter 1 Period 2 January December
Period 3 February January
Quarter 2 Period 4 March February
Period 5 April March
Period 6 May April
Quarter 3 Period 7 June May
Period 8 July June
Period 9 August July
Quarter 4 Period 10 September August
Period 11 October September
Period 12 November October
Period 13 December November
- ----------------------------------------------------------------------
Notes:
Sales results for Period 11 (the four-week period ending October
29, 2005) are scheduled to be released Monday, November 7, 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, which are typically nontraditional restaurants, such as
airports, with substantially lower average unit volumes than
traditional restaurant locations.
System-Sales Growth includes the results of all restaurants
regardless of ownership including unconsolidated affiliates (joint
ventures), 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 3,100
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 three years in
Fortune's "Top 50 Employers for Minorities."
Yum! Brands, Inc.
Consolidated Summary of Results
(amounts in millions, except per share amounts)
Quarter % Year to date %
----------------- Change ----------------- Change
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
Total revenues $ 2,243 $ 2,179 3 $ 6,450 $ 6,226 4
Costs and
expenses
Company
restaurant
expenses 1,679 1,640 (2) 4,861 4,707 (3)
General and
administrative
expenses 252 250 (1) 751 721 (4)
Franchise and
license
expenses 12 8 (43) 24 16 (44)
Facility actions 7 3 NM 22 22 NM
Other (income)
expense (27) (13) 98 (66) (35) 89
Wrench
litigation
income
(expense) (2) - NM (2) - NM
AmeriServe and
other charges
(credits) - - NM - (14) NM
-------- -------- -------- --------
Total costs and
expenses 1,921 1,888 (2) 5,590 5,417 (3)
-------- -------- -------- --------
Operating profit 322 291 11 860 809 6
Interest
expense, net 28 29 (2) 86 96 10
-------- -------- -------- --------
Income before
income taxes 294 262 12 774 713 9
Income tax
provision 80 77 (3) 212 208 (2)
-------- -------- -------- --------
Net income $ 214 $ 185 16 $ 562 $ 505 11
======== ======== ======== ========
Basic EPS Data
- ----------------
EPS $ 0.75 $ 0.64 18 $ 1.95 $ 1.74 12
======== ======== ======== ========
Average shares
outstanding 285 291 2 288 290 1
======== ======== ======== ========
Diluted EPS Data
- ----------------
EPS $ 0.72 $ 0.61 18 $ 1.87 $ 1.66 13
======== ======== ======== ========
Average shares
outstanding 298 305 2 301 305 1
======== ======== ======== ========
Dividends
declared per
common share $ - $ - - $ 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
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 1,975 $ 1,935 2 $ 5,687 $ 5,528 3
Franchise and
license fees 268 244 10 763 698 9
-------- -------- -------- --------
Revenues 2,243 2,179 3 6,450 6,226 4
-------- -------- -------- --------
Company
restaurants
Food and
paper 619 618 - 1,793 1,746 (3)
Payroll and
employee
benefits 499 497 - 1,486 1,470 (1)
Occupancy and
other
operating
expenses 561 525 (7) 1,582 1,491 (6)
-------- -------- -------- --------
1,679 1,640 (2) 4,861 4,707 (3)
General and
administrative
expenses 252 250 (1) 751 721 (4)
Franchise and
license
expenses 12 8 (43) 24 16 (44)
Facility actions 7 3 NM 22 22 NM
Other (income)
expense (27) (13) 98 (66) (35) 89
-------- -------- -------- --------
1,923 1,888 (2) 5,592 5,431 (3)
-------- -------- -------- --------
Operating profit
before special
items 320 291 10 858 795 8
Interest
expense, net 28 29 (2) 86 96 10
Income tax
provision 79 77 (2) 211 203 (4)
-------- -------- -------- --------
Earnings before
special items $ 213 $ 185 15 $ 561 $ 496 13
======== ======== ======== ========
Tax rate before 2.4 1.8
special items 27.0% 29.4% ppts. 27.3% 29.1% ppts.
======== ======== ======== ========
Diluted EPS
before special
items $ 0.71 $ 0.61 18 $ 1.86 $ 1.63 14
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 0.6 0.1
31.3 31.9 ppts. 31.5 31.6 ppts.
Payroll and
employee 0.3 0.4
benefits 25.4 25.7 ppts. 26.2 26.6 ppts.
Occupancy and
other operating (1.2) (0.8)
expenses 28.4 27.2 ppts. 27.8 27.0 ppts.
-------- -------- -------- --------
Restaurant (0.3) (0.3)
margin 14.9% 15.2% ppts. 14.5% 14.8% ppts.
======== ======== ======== ========
Reconciliation of Segment Operating Profit to Reported Operating
Profit
- ----------------------------------------------------------------------
U.S. operating
profit $ 189 $ 196 (4) $ 541 $ 567 (5)
International
Division
operating
profit 89 79 12 273 241 14
China Division
operating
profit 85 64 32 163 141 15
Unallocated and
corporate
expense (52) (48) (7) (155) (140) (10)
Unallocated
other income
(expense) (1) (1) NM 15 (4) NM
Unallocated
facility
actions 10 1 NM 21 (10) NM
-------- -------- -------- --------
Operating profit
before special
items 320 291 10 858 795 8
Wrench
litigation
income
(expense) 2 - NM 2 - NM
AmeriServe and
other (charges)
credits - - NM - 14 NM
-------- -------- -------- --------
Reported
operating
profit $ 322 $ 291 11 $ 860 $ 809 6
======== ======== ======== ========
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
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 1,239 $ 1,225 1 $ 3,678 $ 3,599 2
Franchise and
license fees 154 144 7 435 416 4
-------- -------- -------- --------
Revenues 1,393 1,369 2 4,113 4,015 2
-------- -------- -------- --------
Company
restaurants
Food and paper 368 371 1 1,105 1,069 (3)
Payroll and
employee
benefits 365 366 - 1,099 1,099 -
Occupancy and
other
operating
expenses 332 314 (5) 960 917 (5)
-------- -------- -------- --------
1,065 1,051 (1) 3,164 3,085 (3)
General and
administrative
expenses 117 115 (2) 355 347 (3)
Franchise and
license
expenses 9 7 (31) 18 11 (59)
Facility actions 13 - NM 35 5 NM
-------- -------- -------- --------
1,204 1,173 (3) 3,572 3,448 (4)
-------- -------- -------- --------
Operating profit $ 189 $ 196 (4) $ 541 $ 567 (5)
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 0.7 (0.3)
29.6 30.3 ppts. 30.0 29.7 ppts.
Payroll and
employee 0.3 0.6
benefits 29.6 29.9 ppts. 29.9 30.5 ppts.
Occupancy and
other operating (1.1) (0.6)
expenses 26.8 25.7 ppts. 26.1 25.5 ppts.
-------- -------- -------- --------
Restaurant (0.1) (0.3)
margin 14.0% 14.1% ppts. 14.0% 14.3% ppts.
======== ======== ======== ========
See accompanying notes.
Yum! Brands, Inc.
INTERNATIONAL DIVISION Operating Results
(amounts in millions)
Quarter % Year to date %
----------------- Change ----------------- Change
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 387 $ 420 (8) $ 1,165 $ 1,229 (5)
Franchise and
license fees 103 89 16 301 256 17
-------- -------- -------- --------
Revenues 490 509 (4) 1,466 1,485 (1)
-------- -------- -------- --------
Company
restaurants
Food and paper 128 141 10 384 416 8
Payroll and
employee
benefits 92 99 7 279 292 4
Occupancy and
other
operating
expenses 118 123 3 352 357 1
-------- -------- -------- --------
338 363 7 1,015 1,065 5
General and
administrative
expenses 60 67 10 184 186 1
Franchise and
license
expenses 3 1 NM 6 5 (9)
Facility actions 4 4 NM 6 6 NM
Other (income)
expense (4) (5) (46) (18) (18) 5
-------- -------- -------- --------
401 430 6 1,193 1,244 4
-------- -------- -------- --------
Operating profit $ 89 $ 79 12 $ 273 $ 241 14
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 0.7 0.9
33.1 33.8 ppts. 33.0 33.9 ppts.
Payroll and
employee (0.2) (0.2)
benefits 23.7 23.5 ppts. 23.9 23.7 ppts.
Occupancy and
other operating (1.3) (1.1)
expenses 30.5 29.2 ppts. 30.2 29.1 ppts.
-------- -------- -------- --------
Restaurant (0.8) (0.4)
margin 12.7% 13.5% ppts. 12.9% 13.3% ppts.
======== ======== ======== ========
See accompanying notes.
Yum! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
Quarter % Year to date %
----------------- Change ----------------- Change
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 349 $ 290 20 $ 844 $ 700 20
Franchise and
license fees 11 11 11 27 26 12
-------- -------- -------- --------
Revenues 360 301 20 871 726 20
-------- -------- -------- --------
Company
restaurants
Food and paper 123 106 (17) 304 261 (16)
Payroll and
employee
benefits 42 32 (30) 108 79 (37)
Occupancy and
other
operating
expenses 111 88 (27) 270 217 (25)
-------- -------- -------- --------
276 226 (23) 682 557 (23)
General and
administrative
expenses 23 20 (12) 57 48 (18)
Franchise and
license
expenses - - - - - -
Facility actions - - NM 2 1 NM
Other (income)
expense (24) (9) NM (33) (21) 47
-------- -------- -------- --------
275 237 (16) 708 585 (22)
-------- -------- -------- --------
Operating profit $ 85 $ 64 32 $ 163 $ 141 15
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 1.0 1.3
35.4 36.4 ppts. 36.0 37.3 ppts.
Payroll and
employee (0.9) (1.6)
benefits 12.0 11.1 ppts. 12.8 11.2 ppts.
Occupancy and
other operating (1.7) (1.1)
expenses 32.0 30.3 ppts. 32.0 30.9 ppts.
-------- -------- -------- --------
Restaurant (1.6) (1.4)
margin 20.6% 22.2% ppts. 19.2% 20.6% ppts.
======== ======== ======== ========
See accompanying notes.
China Division includes mainland China, Thailand and KFC Taiwan.
Yum! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
9/3/05 12/25/04
-------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 263 $ 62
Short-term investments 89 54
Accounts and notes receivable, less allowance:
$22 in 2005 and 2004 227 192
Inventories 74 76
Prepaid expenses and other current assets 81 142
Deferred income taxes 157 156
Advertising cooperative assets, restricted 76 65
-------- ----------
Total Current Assets 967 747
Property, plant and equipment, net of accumulated
depreciation and amortization of $2,799 in 2005
and $2,618 in 2004 3,373 3,439
Goodwill 545 553
Intangible assets, net 337 347
Investments in unconsolidated affiliates 190 194
Other assets 462 416
-------- ----------
Total Assets $ 5,874 $ 5,696
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities $ 1,240 $ 1,189
Income taxes payable 136 111
Short-term borrowings 213 11
Advertising cooperative liabilities 76 65
-------- ----------
Total Current Liabilities 1,665 1,376
Long-term debt 1,590 1,731
Other liabilities and deferred credits 1,019 994
-------- ----------
Total Liabilities 4,274 4,101
-------- ----------
Shareholders' Equity
Preferred stock, no par value, 250 shares
authorized; no shares issued - -
Common stock, no par value, 750 shares authorized;
284 shares and 290 shares issued in 2005 and
2004, respectively 174 659
Retained earnings 1,573 1067
Accumulated other comprehensive loss (147) (131)
-------- ----------
Total Shareholders' Equity 1,600 1,595
-------- ----------
Total Liabilities and Shareholders' Equity $ 5,874 $ 5,696
======== ==========
See accompanying notes.
Yum! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
Year to date
-----------------
9/3/05 9/4/04
-------- --------
Cash Flows - Operating Activities
Net income $ 562 $ 505
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 319 302
Facility actions 22 22
Other liabilities and deferred credits 25 (30)
Deferred income taxes (66) 28
Other non-cash charges and credits, net (16) 22
Changes in operating working capital, excluding
effects of acquisitions and
dispositions:
Accounts and notes receivable (22) (12)
Inventories 7 (5)
Prepaid expenses and other current assets 70 (19)
Accounts payable and other current liabilities 54 27
Income taxes payable 86 (49)
-------- --------
Net change in operating working capital 195 (58)
-------- --------
Net Cash Provided by Operating Activities 1,041 791
-------- --------
Cash Flows - Investing Activities
Capital spending (362) (383)
Proceeds from refranchising of restaurants 79 14
Acquisition of restaurants from franchisees - (38)
Short-term investments (32) (46)
Sales of property, plant and equipment 25 32
Other, net 41 30
-------- --------
Net Cash Used in Investing Activities (249) (391)
-------- --------
Cash Flows - Financing Activities
Revolving Credit Facility activity, by original
maturity
Three months or less, net 78 -
Repayments of long-term debt (11) (9)
Short-term borrowings-three months or less, net (32) -
Repurchase shares of common stock (678) (294)
Employee stock option proceeds 113 127
Dividends paid on common shares (91) (29)
-------- --------
Net Cash Used in Financing Activities (621) (205)
-------- --------
Effect of Exchange Rates on Cash and Cash
Equivalents (4) -
-------- --------
Net Increase in Cash and Cash Equivalents 167 195
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 $ 263 $ 387
======== ========
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 and AmeriServe and
other charges (credits). These amounts are described in (f) and (g)
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
----------------- -----------------
9/3/05 9/4/04 9/3/05 9/4/04
-------- -------- -------- --------
Detail of Special Items
- ----------------------------------
Wrench litigation income (expense) $ 2 $ - $ 2 $ -
AmeriServe and other (charges)
credits - - - 14
-------- -------- -------- --------
Total special items 2 - 2 14
Tax on special items (1) - (1) (5)
-------- -------- -------- --------
Special items, net of tax $ 1 $ - $ 1 $ 9
======== ======== ======== ========
Average shares outstanding 298 305 301 305
======== ======== ======== ========
Special items diluted EPS $ 0.01 $ - $ 0.01 $ 0.03
======== ======== ======== ========
Reconciliation of Earnings Before
Special Items to Net Income
- ----------------------------------
Earnings before special items $ 213 $ 185 $ 561 $ 496
Special items, net of tax 1 - 1 9
-------- -------- -------- --------
Net income $ 214 $ 185 $ 562 $ 505
======== ======== ======== ========
Reconciliation of EPS Before
Special Items to Reported EPS
- ----------------------------------
Diluted EPS before special items $ 0.71 $ 0.61 $ 1.86 $ 1.63
Special items EPS 0.01 - 0.01 0.03
-------- -------- -------- --------
Reported EPS $ 0.72 $ 0.61 $ 1.87 $ 1.66
======== ======== ======== ========
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.
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 September 3, 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 September 3,
2005 include the results of operations of the China business for
the months of June, 2005 through August, 2005 and January, 2005
through August, 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 September 4, 2004 continue to
include the results of operations of the China business for the
months of May, 2004 through July, 2004 and December, 2003 through
July, 2004, respectively.
(c) Franchisee sales represent 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
9/3/05 9/4/04 B/(W) 9/3/05 9/4/04 B/(W)
-------- -------- -------- -------- -------- --------
United States
Company sales $ 1,239 $ 1,225 1 $ 3,678 $ 3,599 2
Franchisee
sales 2,999 2,832 6 8,530 8,145 5
International
Division
Company sales $ 387 $ 420 (8) $ 1,165 $ 1,229 (5)
Franchisee
sales 1,959 1,767 11 5,841 5,153 13
China Division
Company sales $ 349 $ 290 20 $ 844 $ 700 20
Franchisee
sales 189 165 15 451 406 11
Worldwide
Company sales $ 1,975 $ 1,935 2 $ 5,687 $ 5,528 3
Franchisee
sales 5,147 4,764 8 14,822 13,704 8
(d) Facility actions included the following:
Quarter Year to date
----------------- -----------------
9/3/05 9/4/04 9/3/05 9/4/04
-------- -------- -------- --------
Store closure costs $ 5 $ 2 $ 4 $ (3)
Asset impairment charges 12 2 39 15
Refranchising net loss (gain) (10) (1) (21) 10
-------- -------- -------- --------
Facility actions $ 7 $ 3 $ 22 $ 22
======== ======== ======== ========
Asset impairment charges in the quarter ended September 3, 2005
primarily resulted from decisions to close certain KFC and LJS
restaurants.
(e) Other (income) expense includes equity income from investments in
unconsolidated affiliates. In the quarter and year to date ended
September 3, 2005 other (income) expense also includes a partial
financial recovery of $14 million related to a China supplier
ingredient issue. In the year to date ended September 3, 2005
other (income) expense also includes a $17 million gain associated
with the IPO of our Poland/Czech Republic business.
(f) Income of $2 million was recorded for the quarter and year to date
ended September 3, 2005 from a settlement with an insurance
carrier related to the legal judgment against Taco Bell Corp. on
June 4, 2003, in Wrench v. Taco Bell Corp.
(g) 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 September 3, 2005.
(h) For the quarter and year to date ended September 3, 2005, we
repurchased approximately 3.8 million shares and 13.6 million
shares of our Common Stock, respectively, at an average price of
$50 per share for both 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 58 - 161 219
Acquisitions - - - -
Refranchising (128) - 126 (2)
Closures (127) - (244) (371)
Other (10) - 5 (5)
------- -------------- ----------- ------------
End of Quarter 4,782 - 13,530 18,312
======= ============== =========== ============
% of Total 26% - 74% 100%
Total International
Division
Beginning of Year 1,504 1,204 8,179 10,887
New Builds 27 28 348 403
Acquisitions - - - -
Refranchising (77) (128) 205 -
Closures (24) (24) (189) (237)
Other (5) - 18 13
------- -------------- ----------- ------------
End of Quarter 1,425 1,080 8,561 11,066
======= ============== =========== ============
% of Total 13% 10% 77% 100%
Total China Division
Beginning of Year(b) 1,266 460 198 1,924
New Builds 184 60 8 252
Acquisitions - - - -
Refranchising - - - -
Closures (16) (5) - (21)
Other - - 4 4
------- -------------- ----------- ------------
End of Quarter(c) 1,434 515 210 2,159
======= ============== =========== ============
% of Total 66% 24% 10% 100%
Total Worldwide
Beginning of Year 7,759 1,664 21,859 31,282
New Builds 269 88 517 874
Acquisitions - - - -
Refranchising (205) (128) 331 (2)
Closures (167) (29) (433) (629)
Other (15) - 27 12
------- -------------- ----------- ------------
End of Quarter 7,641 1,595 22,301 31,537
======= ============== =========== ============
% of Total 24% 5% 71% 100%
(a) The total excludes 2,177 U.S. and 194 International Division
licensee units. There are no licensed units in the China Division.
The U.S. licensee unit count includes 1,270 Pizza Huts, 822 Taco
Bells and 85 KFCs. The International Division licensee unit count
includes 92 Pizza Huts, 60 KFCs, 41 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 23 52 75
Acquisitions - - -
Refranchising (60) 60 -
Closures (32) (82) (114)
Other - - -
------- ----------- ---------
End of Quarter 1,672 4,595 6,267
======= =========== =========
% of Total 27% 73% 100%
KFC
Beginning of Year 1,248 4,202 5,450
New Builds 6 55 61
Acquisitions - - -
Refranchising (7) 7 -
Closures (46) (77) (123)
Other (10) 5 (5)
------- ----------- ---------
End of Quarter 1,191 4,192 5,383
======= =========== =========
% of Total 22% 78% 100%
Taco Bell
Beginning of Year 1,283 3,747 5,030
New Builds 12 43 55
Acquisitions - - -
Refranchising (40) 38 (2)
Closures (15) (42) (57)
Other - - -
------- ----------- ---------
End of Quarter 1,240 3,786 5,026
======= =========== =========
% of Total 25% 75% 100%
Long John Silver's
Beginning of Year 700 500 1,200
New Builds 17 8 25
Acquisitions - - -
Refranchising (21) 21 -
Closures (32) (15) (47)
Other - - -
------- ----------- ---------
End of Quarter 664 514 1,178
======= =========== =========
% of Total 56% 44% 100%
A&W
Beginning of Year 17 468 485
New Builds - 3 3
Acquisitions - - -
Refranchising - - -
Closures (2) (28) (30)
Other - - -
------- ----------- ---------
End of Quarter 15 443 458
======= =========== =========
% 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 21 13 178 212
Acquisitions - - - -
Refranchising (1) (86) 87 -
Closures (8) (12) (93) (113)
Other (1) 1 6 6
------- -------------- ----------- ---------
End of Quarter 737 355 5,032 6,124
======= ============== =========== =========
% of Total 12% 6% 82% 100%
Pizza Hut
Beginning of Year 766 765 2,903 4,434
New Builds 6 15 146 167
Acquisitions - - - -
Refranchising (67) (42) 109 -
Closures (16) (12) (78) (106)
Other (4) (1) 9 4
------- -------------- ----------- ---------
End of Quarter 685 725 3,089 4,499
======= ============== =========== =========
% of Total 15% 16% 69% 100%
A&W
Beginning of Year - - 209 209
New Builds - - 16 16
Acquisitions - - - -
Refranchising - - - -
Closures - - (13) (13)
Other - - - -
------- -------------- ----------- ---------
End of Quarter - - 212 212
======= ============== =========== =========
% of Total - - 100% 100%
Taco Bell
Beginning of Year 12 - 180 192
New Builds - - 6 6
Acquisitions - - - -
Refranchising (9) - 9 -
Closures - - (3) (3)
Other - - 3 3
------- -------------- ----------- ---------
End of Quarter 3 - 195 198
======= ============== =========== =========
% of Total 2% - 98% 100%
Long John Silver's
Beginning of Year - - 33 33
New Builds - - 2 2
Acquisitions - - - -
Refranchising - - - -
Closures - - (2) (2)
Other - - - -
------- -------------- ----------- ---------
End of Quarter - - 33 33
======= ============== =========== =========
% 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 140 60 7 207
Acquisitions - - - -
Refranchising - - - -
Closures (13) (5) - (18)
Other - - 4 4
------- -------------- ----------- ---------
End of Quarter 1,166 515 186 1,867
======= ============== =========== =========
% of Total 62% 28% 10% 100%
Pizza Hut
Beginning of Year 224 - 23 247
New Builds 41 - 1 42
Acquisitions - - - -
Refranchising - - - -
Closures (2) - - (2)
Other - - - -
------- -------------- ----------- ---------
End of Quarter 263 - 24 287
======= ============== =========== =========
% of Total 92% - 8% 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 9/3/05
------------------------
Gross
Additions
Year to
Date
9/3/05 Company Franchise Total
---------- ------- --------- ------
KFC
Taco Bell 3 179 500 679
A&W 16 116 204 320
Long John Silver's 45 66 108 174
Pizza Hut - 96 47 143
Taco Bell/Pizza Hut 3 n 1 - 19 24 43
Wing Works - 25 1 26
---------- ------- --------- ------
64 501 884 1,385
Taco Bell
Pizza Hut 2 315 270 585
Long John Silver's 21 68 42 110
A&W - 2 - 2
---------- ------- --------- ------
23 385 312 697
Pizza Hut
WingStreet 209 512 27 539
---------- ------- --------- ------
Long John Silver's
A&W 29 183 114 297
---------- ------- --------- ------
Total 325 1,581 1,337 2,918
========== ======= ========= ======
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 189 International Division multibrand units
in operation at the end of the period. There are no multibrand
units in the China Division.
CONTACT: Yum! Brands Inc.
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