Yum! Brands Inc. Reports First-Quarter 2008 EPS of $0.50 per share, 19% Growth Excluding Special Items

Yum! Brands Inc. today reported results for the first
quarter ended March 22, 2008.

First-quarter Earnings Per Share (EPS) of $0.50 included the
benefit of a one-time gain from the sale of our minority interest in
KFC Japan, and charges related to our long-term plan for U.S. brands
transformation, including refranchising losses and charges related to
business restructuring. Excluding these special items, EPS was $0.42
or 19% growth, which the company believes is a better indication of
the underlying first-quarter performance.

FIRST-QUARTER HIGHLIGHTS

-- Very strong system-sales growth of +40% in mainland China and
+15% in Yum! Restaurants International (YRI), fueled by
same-store-sales growth, strong unit development, and
favorable foreign currency translation

-- Worldwide same-store-sales growth of +4%, including +12% in
mainland China, +5% in YRI, and +3% in the U.S. (all figures
are system-wide)

-- Operating profit growth of +33% in China Division and +18% in
YRI. Worldwide operating profit growth of +13% excluding the
benefit of special items

-- A quarterly record of nearly $1 billion in share buybacks

-- EPS growth as outlined below:

                                                First Quarter

                                                 2008   2007  % Change

                                                ------  ----- --------

  EPS                                            $0.50  $0.35   +43

  Less: Special Items(1)                         $0.08      -    NM

  EPS Excluding Special Items                    $0.42  $0.35   +19

(1) Special items of $0.08 include $100 million pre-tax gain from
the sale of minority interest in KFC Japan, $26 million of U.S.
refranchising pre-tax losses, and $6 million of pre-tax charges
related to U.S. restructuring.

FULL-YEAR OUTLOOK

The Company raised its full-year 2008 EPS forecast from $1.85 to
$1.87 per share or 11% growth. This is prior to full-year net gains
from special items of up to $0.06 per share as previously announced in
the Company's full-year 2007 earnings release on February 4, 2008.
Full-year EPS is expected to total up to $1.93, including all items.

David C. Novak, Chairman and CEO, said, "I am pleased to report a
strong start to 2008 with first-quarter EPS growth of +19% excluding
special items, led by outstanding operating-profit growth from our
China and YRI businesses. The global growth we are achieving in China
and YRI is among the best in the retail sector as we are driving
robust same-store-sales growth, record-level new-unit development and
excellent returns. In fact, we fully expect in 2008, for the eighth
straight year, to open at least 1,000 new restaurants outside the
U.S., reinforcing our position as the leading international retail
developer. While our U.S. profits are being challenged by significant
commodity pressure, we achieved 3% system same-store-sales growth, and
we remain confident in the steps we are taking to position the U.S.
brands for sustainable growth. Importantly, we continue to return
significant cash to our shareholders. During the first quarter, we
repurchased $1 billion of our shares at a price we believe created
significant shareholder value. Overall, this quarter again highlighted
the power of our global portfolio, and on the strength of our
first-quarter results, we are raising our full-year EPS forecast to
11% growth, or $1.87 per share excluding special items.

"Shareholders should expect us to continue building consistent
value by differentiating our portfolio of brands and driving
profitable global expansion through our four key strategies that make
us not your ordinary restaurant company: building leading brands in
China in every significant category, driving aggressive international
expansion and building strong brands everywhere, dramatically
improving U.S. brand positions, consistency and returns, and driving
industry-leading, long-term shareholder and franchisee value."

CHINA DIVISION

($ million, except restaurant counts                         %

and percentages)                       First Quarter      Change

                                                     -----------------

                                        2008   2007  Reported Excl F/x

                                       ------- ----- -------- --------

Traditional Restaurants-Mainland China

 (MLC)                                  2,640  2,202   +20       NA

  KFC                                   2,201  1,881   +17       NA

  Pizza Hut Casual Dining                362    273    +33       NA

  Pizza Hut Home Service                 59     39     +51       NA

System-Sales Growth %                                  +38      +28

 MLC system-sales growth %                             +40      +30

MLC Same-Store-Sales Growth %                           NA      +12

Restaurant Margin %                     21.3   22.9   (1.6)    (1.7)

Operating Profit                         101    76     +33      +23

CHINA DIVISION COMMENTS

-- Mainland China delivered an outstanding same-store-sales
growth of 12%, lapping a strong 9% last year.

-- We opened 88 new units in mainland China, exceeding last
year's development pace and further strengthening our
leadership position in China's rapidly growing restaurant
category.

-- Restaurant margin percentage declined due primarily to high
food cost inflation. Commodity costs increased by
approximately $11 million versus last year.

-- Foreign currency conversion benefited operating profit by $8
million.

YUM! RESTAURANTS INTERNATIONAL DIVISION (YRI)

($ million, except restaurant counts                         %

 and percentages)                      First Quarter      Change

                                                     -----------------

                                        2008   2007  Reported Excl F/x

                                       ------ ------ -------- --------

Traditional Restaurants                12,275 11,791    +4       NA

System-Sales Growth %                                  +15       +9

Same-Store-Sales Growth %                               NA       +5

Franchise & License Fees                145    121     +20      +14

Operating Margin %                      20.0   17.4    +2.6     +2.3

Operating Profit                        139    119     +18      +11

YRI DIVISION COMMENTS

-- YRI achieved same-store-sales growth of 5%, lapping 7% from
2007.

-- We opened 158 new restaurants in our YRI Division, 96% of
which were opened by our franchise partners. YRI continues to
build an enviable development track record.

-- Franchise fees, a key driver of our high-return business, grew
by 20% and is expected to reach approximately $650 million for
the full year.

-- The strength of foreign currencies versus the U.S. dollar
benefited operating profit by $7 million.

-- The loss of a VAT exemption in our Mexico business adversely
impacted restaurant margin percentage by approximately 1
percentage point and operating profit by $5 million during the
first quarter. As previously communicated, this loss is
expected to negatively impact restaurant margin percentage by
1.2 percentage points and operating profit by more than $30
million for the full-year 2008.

UNITED STATES BUSINESS

($ million, except restaurant counts     First Quarter

and percentages)                             2008       2007  % Change

                                         ------------- ------ --------

Traditional Restaurants                     17,919     18,050   (1)

Same-Store-Sales Growth %

  System                                      +3        (3)      NM

  Company                                     +3        (6)      NM

Franchisee Sales                             3,052     2,932     +4

Company Sales                                1,034     1,051    (2)

Franchise & License Fees                      157       149      +5

Restaurant Margin %                          12.4       13.3   (0.9)

Operating Margin %                           13.2       13.8   (0.6)

Operating Profit                              157       165     (5)

U.S. BUSINESS COMMENTS

-- The U.S. business delivered same-store-sales growth of 3%,
reversing last year's negative trend.

-- Restaurant margin percentage and operating profit declined due
largely to significant commodity inflation (cheese, wheat and
chicken costs). Overall, commodity costs increased $25 million
compared to prior year.

-- As part of our long-term plan to transform our U.S. business
-- which includes building permanent sales layers, investing
in brand repositioning, refranchising and restructuring -- we
previously guided that we are expanding our refranchising of
U.S. company-owned restaurants, with company ownership to
potentially reach below 10% by year-end 2010. We remain
confident in our ability to achieve this goal, and expect
subsequent quarters' activity in 2008 to be higher than the
relatively low rate during the first quarter.

SHAREHOLDER PAYOUTS

During the first quarter of 2008, we purchased 27.7 million shares
at an average price of $35.39, or a total of $981 million, a quarterly
record.

For 2008, we expect to return over $2 billion to shareholders
through both dividends and significant share buybacks.

Q2 2008 UPDATE

-- We expect a special item loss in the range of $0.01 to $0.03
per share due to the continuation of our U.S. business
transformation, including refranchising losses and
restructuring charges.

-- Tax rate is likely to be significantly higher than the
second-quarter 2007 tax rate of 21.5%

-- U.S. restaurant margin will be adversely impacted by continued
higher commodity costs (at a level similar to first-quarter's
inflation) and dramatically higher insurance expenses.

YUM! ONGOING EARNINGS GROWTH MODEL

-- China Division operating-profit growth of 20%. This growth is
driven largely by new-unit development in mainland China. Our
key metric for mainland China is system-sales growth with an
annual target of +20% driven by at least 425 new-restaurant
openings.

-- YRI Division operating-profit growth of 10%. This growth is
driven mainly by new-unit development, measured by
system-sales growth of at least 5% (3% to 4% unit growth and
2% to 3% same-store-sales growth) including 750 new-restaurant
openings.

-- U.S. operating-profit growth of 5% with same-store-sales
growth of 2% to 3% and leverage of the G&A infrastructure.

-- EPS growth of at least 10%. This reflects additional benefit
from reduction in shares outstanding due to substantial share
buybacks.

   2008 First-Quarter End Dates        2008 Second-Quarter End Dates

-----------------------------------   --------------------------------



International Division    2/25/2008   International Division 5/19/2008

China Division            2/29/2008   China Division         5/31/2008

U.S. Business             3/22/2008   U.S. Business          6/14/2008

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