Appendix Appendix
AppendixAppendix
Definitions
Capital Spending — Includes capital spending, excludes acquisitions of restaurants from franchisees.
China Division — Includes mainland China, Thailand and KFC Taiwan businesses.
General & Administrative (G&A) Costs — Include general & administrative costs and franchise and license expense.
International Division — Countries & territories outside the U.S., excluding China Division, but including Hawaii.
Local Currency — 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 of sales trends without the distortion of foreign currency fluctuations.
Net Unit Growth – Growth in system restaurants excluding the impact of acquisitions.
Operating Margin — Represents operating profit dollars as a percentage of revenue dollars.
Reported Currency — Represents the percentage change including the impact of foreign currency translation. All fi i l b i thi d t i t d l th i t d financial numbers in this document are in reported currency unless otherwise noted.
New Restaurant Openings — Include unconsolidated affiliates (joint ventures), company-owned and franchise restaurants and exclude license restaurants.
Definitions
Special Items — Include the GAAP income statement captions of Wrench litigation, AmeriServe and other charges (credits) from 1998-2005 and the cumulative effect of accounting change in 2003, net of tax. For the years 2008 through 2010, special items also include the gain on the sale of our minority interest in our Japan unconsolidated affiliate, U.S. refranchising (gain)/loss, charges relating to U.S. General and Administrative productivity initiatives and realignment of refranchising (gain)/loss, charges relating to U.S. General and Administrative productivity initiatives and realignment of resources, as well as investments in our U.S. Brands.(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 EPS before special items provides additional information to investors to facilitate the comparison of past and present operations, excluding items that the Company does not believe are indicative of our ongoing operations due to their size and/or nature.)
Same-Store-Sales Growth — 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.
S t R t t I l d lid t d ffili t (j i t t ) d f hi d li System Restaurants — Include unconsolidated affiliates (joint ventures), company-owned, franchise and license restaurants.
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 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.
Total Units – Include unconsolidated affiliates (joint ventures), company-owned, franchise, and license restaurants.
Traditional Restaurants — Includes unconsolidated affiliate (joint-venture), company-owned and franchise restaurants, but excludes license restaurants unless noted. (Note: all units referenced in the YRI section are Traditional Restaurants)
Two Global Brands
YRI System Restaurants By Geography
Asia36% Americas
22%
6,900+
4,800+
Europe22%
Taco Bell/Long John Silver’s/
22%Australia/
New Zealand9%Long John Silver s/
A&W500+
Note: 2007 system restaurants.
Middle East/South Africa
11%
Highly Diversified Growth Business
’02 – ’07
YRI Overview
# of Countries
% of System Sales
02 07System Sales
CAGR
Middle East/Africa 24 12% 24%
Europe 30 31% 15%Europe 30 31% 15%
Asia/Australia 21 38% 8%/
The Americas 37 19% 8%
Note: Includes foreign-currency exchange impact
Taco Bell – Key Driver ofU.S. Performance
U.S. Operating Profit2008 F
8%
1%Long John Silver’s
& 8%KFC
&A&W
59%Taco Bell
32%Pizza Hut
Bell
New Restaurant Openings
1,7071,785
1,600+
WORLDWIDE
1,264
1,4381,489 1,498 1,497 1,450
1,5541,515
,
1,078
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
– +1 +1 – +1 +1 +1 +2 +1 +2 +2 +2Net UnitGrowth %
Note: Forecast rounded to nearest five.
New Restaurant Openings
550
CHINA DIVISION
409 396
506 500+
266302 297
357
138 128167
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
+22 +15 +18 +12 +25 +17 +18 +19 +15 +17 +16 +12Net UnitGrowth %
Note: Forecast rounded to nearest five.
New Restaurant Openings
811852
895 900YRI DIVISION
762 775749
811
720780 785
527 549
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
– +3 +5 +5 +4 +3 +3 +4 +3 +4 +4 +4Net UnitGrowth %
Note: Forecast rounded to nearest five.
New Restaurant Openings
587
509
UNITED STATES
413
509
448 447
389 373 365373 365334 349 340
200+200+
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
(1) (1) (1) (2) (2) (1) (1) (1) (2) (1) (1) -Net UnitGrowth %
Note: Forecast rounded to nearest five.
Same-Store-Sales Growth %
WORLDWIDEWORLDWIDE
4 34 4 4 4
32
1
31
23
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2006 2007 2008
System-Sales-Growth %
30
CHINA DIVISION
29
2523 23
3028 28
14
19 19 18 19
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4TDQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4TD
2006 2007 2008
Note: Local currency basis.
System-Sales Growth %
11 11
YRI
89
8
1011 11
9 98 8
6
8 8 87
8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 TDQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 TD
2006 2007 2008
Note: Local currency basis
Same-Store-Sales Growth %
UNITED STATES
5
1 1 13 2 3
21
(2) (3)
0 1 10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4TD
2006 2007 2008
Restaurant Margin
% of Company Net Sales
WORLDWIDE
13.5
15.4 15.1 14.816.0
14.8 14.5 14.015.2
14.613.5
14.5
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
* Beginning in 2002 with the adoption of SFAS 142, goodwill amortization is no longer reflected in marginNote: Forecast rounded to nearest 50 basis points.
Restaurant Margin
% of Company Net SalesCHINA DIVISION
17.8 17 4
19.3 19.820.3
17 4
20.4 20.1
18.0 18.0
14.9
17.4
14.9
17.4
* Beginning in 2002 with the adoption of SFAS 142, goodwill amortization is no longer reflected in marginNote: Forecast rounded to nearest 50 basis points.
’98 ’99 ’00 ’01 ’02* ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Restaurant Margin
% of Company Net SalesYRI DIVISION
12 7
13.714.3
13.4
14.2
13.0 13.012.7
12.1 12.2 12.3
11.0 11.0+
* Beginning in 2002 with the adoption of SFAS 142, goodwill amortization is no longer reflected in marginNote: Forecast rounded to nearest 50 basis points.
’98 ’99 ’00 ’01 ’02* ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Restaurant Margin
% of Company Net SalesUNITED STATES
15.715.2 15.2
16.0
14.6 14.6
13.6 13.8 13.813.3
12.0
13.0
* Beginning in 2002 with the adoption of SFAS 142, goodwill amortization is no longer reflected in marginNote: Forecast rounded to nearest 50 basis points.
’98 ’99 ’00 ’01 ’02* ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Operating Profit
WORLDWIDEOperating Profit
($ million)
$1 240 $1,262$1,357
$1,480$1,555
($ million)
$1,028
$1,240
$860 $891
$1,030$1,059
$1,155 $1,153
,
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest five.
Operating Profit
CHINA DIVISIONOperating Profit
($ million)
$460
$525-$550($ million)
$290
$375
$161
$205 $211
$ 90
$$39
$56 $63
$120
$161
$20
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest five.
Operating Profit
YRI DIVISIONOperating Profit
($ million) $530($ million)
$407
$480
$530$500
$243 $242 $241$280
$337$372
$186$205
$243 $242 $241
Note: Forecast rounded to nearest five. 2009 is negatively impacted due to the reallocation of $5 million of unallocated G&A reclassified as YRI G&A. 2009 is also negatively impacted by foreign currency translation of about $80 million.
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Operating Profit
UNITED STATESOperating Profit
($ million)
$721
$808
$728$695
$802 $812$777 $760 $763
$739$685
$735
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest five. 2009 is negatively impacted due to the reallocation of $45 million of unallocated G&A reclassified as U.S. G&A.
Top 5 Currencies Impact OnOperating Profit
2007 Operating Profit ($MM)
Chinese Yuan ~350Chinese Yuan
British Pound
~350
~100British Pound
Australian Dollar ~75Australian Dollar
E
75
50Euro ~50
Canadian Dollar ~50
Note: Operating profit rounded to nearest $25MM
Operating Profit Margin
15.9 % of RevenueWORLDWIDE
12 813.3
12 813.2 13.0 13.0
13.5
12.1 12.112.8 12.6 12.8
12.313.0 13.0
’98 ’99 ’00 ’01 ’02* ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest 50 basis points. Beginning in 2002 with the adoption of SFAS 142, goodwill amortization is no longer reflected in margin.
Operating Profit Margin
% of RevenueYRI DIVISION
15.3 15.7 15.415.8
17.5 17.6
15.6
17.017.5
11.9
15.314.5
5
10.5
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest 50 basis points. 2009 was negatively impacted due to the reallocation of $5 million of unallocated G&A reclassified as YRI G&A.
Operating Profit Margin
% of RevenueUNITED STATES
14.1 14.4 14.415.0
14.413 5 13.6
14.213.5
15.5
11.2
13.512.8
13.6 13.5
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Note: Forecast rounded to nearest 50 basis points. 2009 is negatively impacted due to reallocation of $45 million of unallocated G&A reclassified as U.S. G&A.
Debt & Interest Expense
Debt($ billion)
Interest Expense, Net($ million)
3 53.7
272
($ billion) ($ million)
3.5
2.5 2.52 4
3.23.4
202
176158
172 173154
166
225 220
2.22.4
2.1
1.71.9
2.3 129 127
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
Reported Tax Rate
Q1 Q2 Q3 Q4 Full YearQ1 Q2 Q3 Q4 Full Year
2003 32.6% 31.4% 28.8% 29.2% 30.2%
2004 31 8% 26 8% 29 4% 24 8% 27 9%2004 31.8% 26.8% 29.4% 24.8% 27.9%
2005 31.4% 23.0% 26.8% 22.7% 25.8%
2006 31 3% 29 0% 25 8% 17 2% 25 6%2006 31.3% 29.0% 25.8% 17.2% 25.6%
2007 30.6% 21.5% 25.5% 16.4% 23.7%
2008 31.6% 14.8% 21.6%
AVG 31.6% 24.4% 26.3% 22.1% 26.6%
Consistent Double-Digit EPS Growth
+13% +13%+15%
+13%+14%
+15%+13% 13% 13%
+12%+10% Target
at least10%10%
Note: Prior to special items. 2005 growth rate is also prior to the impact of expensing stock options.
’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F
EPS Reconciliation
’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 F
EPS before Special Items 0.72 1.03 0.91 0.81 0.91 1.03 1.18 1.27 1.46 1.68 1.89
Special Items (0.01) (0.05) (0.22) — 0.03 (0.02) 0.03 0.01 — — .03
Reported EPS 0.71 0.98 0.69 0.81 0.94 1.01 1.21 1.28 1.46 1.68 1.92
Note: EPS is adjusted for stock splits in 2002 and 2007. Starting in 2005, EPS includes options expense.The estimated impact of stock option expense on EPS is approximately $0.07 per share for periods subsequent to 2004.
Significant Share Buybacks
Share Buybacks($ million)
Average Diluted Shares(million)
20%reduction
1,4101,700
611 597564 541
490
569
1,056 983
,
’04 ’05 ’06 ’07 ’08 F’04 ’05 ’06 ’07 ’08 F
AvgPrice*
$20 $25 $25 $34 $34Price*
*Rounded and split adjusted
Dividends
On May 6th
$0.25
On May 6 ,27% increase, from $0.15 to
$0 19 h
$0.15
$0.20 $0.19 per share
Doubled
$0 05
$0.10
Initiated
15% Increase
30% Increase
$0.00
$0.05
04 05 05 06 06 07 07 08 08
Q3 '04
Q1 '05
Q3 '05
Q1 '06
Q3 '06
Q1 '07
Q3 '07
Q1 '08
Q3 '08
Note: split-adjusted (May 2007 2-for-1 stock split) quarterly dividend
Yum! 2009 Capital Plan
($ million)
China YRI U.S. Total
New Company Restaurants 240 140 75 455Restaurants 240 140 75 455
Upgrade 70 55 85 210
Brand Projects 35 40 65 140Brand Projects 35 40 65 140
SUBTOTAL 345 235 225 805
Maintenance 15 30 50 95Maintenance 15 30 50 95
Corp/Other 0 0 0 0
TOTAL 360 265 275 900TOTAL 360 265 275 900
EBITDA
Note
We do not measure cash flow from operating activities on a segment basis However we believe segment EBITDA provides a segment basis. However, we believe segment EBITDA provides a reasonable approximation of the ongoing cash generated by our segments prior to interest and income taxes and is thus useful to management and investors. Operating profit does not reflect management and investors. Operating profit does not reflect interest expense and income taxes, and on a segment basis, also does not reflect certain unallocated expenses and other gains and losses.
EBITDA
($ million)
U.S. ’03 ’04 ’05 ’06 ’07 ’08 F
Operating profit $812 $777 $760 $763 $739 $685Operating profit $812 $777 $760 $763 $739 $685
Depreciation & amortization 240 267 266 259 247 225
Impairment 15 17 44 38 23 35
EBITDA $1,067 $1,061 $1,070 $1,060 $1,009 $945
5 Year CAGR(2)%
YRI Division
Operating profit $280 $337 $372 $407 $480 $530
Depreciation & amortization 86 99 107 115 161 145
Impairment 13 19 10 15 13 10
EBITDA $379 $455 $489 $537 $654 $6855 Year CAGR
+13%
China Division
Operating profit $161 $205 $211 $290 $375 $460
Depreciation & amortization 60 69 82 95 117 160
Impairment 6 5 8 7 7 10Impairment 6 5 8 7 7 10
EBITDA $227 $279 $301 $392 $499 $630
Continued on next slide
5 Year CAGR+23%
Note: Forecast rounded to nearest five
EBITDA
Total YUM ’03 ’04 ’05 ’06 ’07 ’08 F
Operating profit $1,059 $1,155 $1,153 $1,262 $1,357 $1,480
($ million)
Depreciation & amortization 401 448 469 479 542 530
Impairment 34 41 62 60 43 55
EBITDA $1,494 $1,644 $1,684 $1,801 $1, 942 $2,0655 Year CAGR
+7%
Reconciliation to Net Income
Segment operating profit $1,253 $1,319 $1,343 $1,460 $1,594
Unallocated and corporate expenses (179) (204) (246) (229) (257)
Unallocated other income (expense) (3) (2) 9 6 9
Unallocated refranchising gain (loss) 4 12 43 24 11
Wrench litigation (expense) income (42) 14 2 - -
AmeriServe and other (charges) credits 26 16 2 1 -
Interest expense (173) (129) (127) (154) (166)
Income taxes (268) (286) (264) (284) (282)
Continued next slideNote: Forecast rounded to nearest five
( ) ( ) ( ) ( ) ( )
Cumulative effect of accounting change (1) - - - -
Net income $617 $740 $762 $824 $909
EBITDA & Capital Spending
’03 ’04 ’05 ’06 ’07
($ million)
Capital Spending
U.S. $395 $365 $333 $329 $304
International Division 135 121 96 118 189
China Division 111 118 159 165 246
Corporate 22 41 21 2 3
Total $663 $645 $609 $614 $742
S f CU.S. EBITDA after CAPEX
EBITDA $1,067 $1,061 $1,070 $1,060 $1,009
Capital Spending 395 365 333 329 304
EBITDA after CAPEX $672 $696 $737 $731 $705EBITDA after CAPEX $672 $696 $737 $731 $705
YRI EBITDA after CAPEX
EBITDA $379 $455 $489 $537 $654
Capital Spending 135 121 96 118 189 Capital Spending 135 121 96 118 189
EBITDA after CAPEX $244 $334 $393 $419 $465
Continued on next slideNote: Forecast rounded to nearest five
EBITDA & Capital Spending
($ million)
’03 ’04 ’05 ’06 ’07
China EBITDA after CAPEX
EBITDA $227 $279 $301 $392 $499EBITDA $227 $279 $301 $392 $499
Capital Spending 111 118 159 165 246
EBITDA after CAPEX $116 $161 $142 $227 $253
YUM EBITDA after CAPEX
EBITDA $1,494 $1,644 $1,684 $1,801 $1,942
Capital Spending 663 645 609 614 742
EBITDA after CAPEX $831 $999 $1 075 $1 187 $1 200 EBITDA after CAPEX $831 $999 $1,075 $1,187 $1,200
Note: Forecast rounded to nearest five
Yum! Return on Invested Capital (ROIC)
($ million, except percentages)
’03 ’04 ’054 ’06 ’07
Operating Profit 1,059 1,155 1,153 1,262 1,357
Closure & Impairment Charges/(Credits) 40 38 62 59 35
Refranchising Net Loss/(Gain) (4) (16) (43) (24) (11)
Implicit Lease Interest Expense 139 155 164 196 227Implicit Lease Interest Expense 139 155 164 196 227
External Interest Income 12 16 20 18 30
Total ROIC Income Pretax 1,262 1,322 1,356 1,511 1,638
ROIC Income after Tax 880 957 1,007 1,123 1,252
Net Asset Base1,5 3,186 3,337 3,309 3,657 3,812
PV of Operating Leases 1,538 1,570 1,706 2,209 2,3332Closure & Impairment Charges/(Credits) Since 19972 483 515 567 611 635
Total 5,207 5,422 5,582 6,477 6,780
ROIC Net Asset Base3 4,967 5,315 5,502 6,029 6,628
ROIC 17.7% 18.0% 18.3% 18.6% 18.9%1T l l li bili i ( l di d b / l ) d h li bili i d d f d di1Total assets less current liabilities (excluding debt/cap leases) and other liabilities and deferred credits2Closure and impairment charges adjusted down for impairment on refranchised stores.3Average net asset base for current and prior year4 Includes impact of stock option expense under SFAS 123R, “Share-Based Payment” and 53rd Week5 Asset balances adjusted for excess cash to reflect average operating cash needs
U.S. Taco Bell
U.S. Pizza Hut/Wingstreet
U.S. KFC
YRI
Pizza Hut UK KFC Dubai
Pizza Hut Taiwan KFC Europe
China
Yum! Investor Relations Contacts
Tim Jerzyk . . . . . . . . . . . . . . . . . . . . . . SVP Investor Relations/[email protected]
Bruce Bishop . . . . . . . . . . . . . . . . . . . . Director, Investor [email protected]
Ben Dunham . . . . . . . . . . . . . . . . . . . . Manager, Investor RelationsBen Dunham . . . . . . . . . . . . . . . . . . . . Manager, Investor [email protected]
Ben Golden . . . . . . . . . . . . . . . . . . . . . Shareholder [email protected]@yum.com
Aidita Bartolomei . . . . . . . . . . . . . . . . . Institutional Investor [email protected]
Siena Crabtree . . . . . . . . . . . . . . . . . . Executive [email protected]
Janet duPont . . . . . . . . . . . . . . . . . . . Executive AssistantJanet duPont . . . . . . . . . . . . . . . . . . . Executive [email protected]
www.yum.com/investor888/298-6986