Yum! Brands Announces Full-Year 2011 Expectations

Yum! Brands Inc. (NYSE: YUM), in advance of its annual Investor Update Meeting, reaffirms its full year 2010 EPS growth forecast of 14%, excluding special items. Yum! also announces it expects to deliver at least 10% EPS growth in 2011, excluding special items, which would mark its tenth straight year of meeting or exceeding this annual EPS growth target.

“On the Ground Floor of Global Growth”

David C. Novak, Chairman and CEO, said, “2010 has been a strong year led by our China business, and I’m pleased to report we remain on track to deliver 14% EPS growth. We take satisfaction that our EPS growth this year has been driven by strong operating profit growth, including expected gains in all of our business segments. Continued robust new unit development in China and Yum! Restaurants International not only contributed to this year’s strong results, but sets the company up for growth in 2011.

We continue to generate strong free cash flow and our Return on Invested Capital (ROIC) remains among the best in the industry. We are also pleased that in September, we increased our quarterly dividend 19%, raising our annual dividend rate to $1.00 per share. We also reinstituted share repurchases this year.”

The annual investor meeting theme is “On the Ground Floor of Global Growth” as the company will share its plan to continue its quest to be the defining global company that feeds the world.

YUM! ONGOING EARNINGS GROWTH MODEL

• Earnings per share growth of at least 10%
• China operating profit growth of 15%, driven primarily by:
  
  • Double-digit percentage growth in units
  • System sales growth of at least 12%
  • Same-store-sales growth of at least 4%
  • Moderate G&A leverage

• Yum! Restaurants International (YRI) operating profit growth of 10% driven primarily by:
  
  • New unit development of 3 to 4%
  • System sales growth of 6%
  • Same-store-sales growth of at least 2 to 3%
  • Margin improvement and G&A leverage

• U.S. Division:
  
  • Taco Bell operating profit growth of 6% with 3% same-store-sales growth
  • Rest of U.S. business, 3% operating profit growth

2011 OVERALL GUIDANCE

Yum! expects to deliver at least 10% EPS growth in 2011, excluding special items.

• About 1,400 new international units, including 475 in China and 900 at YRI

• Estimated tax rate of about 26% with annual and quarterly volatility (2011-2012)
• New incremental taxes applied to sales in China will negatively impact operating profit by about $25 million
• China currency translation benefit of at least $20 million
• YRI foreign currency translation benefit of about $20 million
• Global capital expenditures of approximately $900 million
• U.S. refranchising of about 500 units and $150 million in proceeds
• Interest expense expected to decrease by at least $10 million
• Flat to slightly lower average diluted shares outstanding as a result of share repurchases

In 2011, our U.S. business, and a portion of our YRI business will have a 53^rd week. We intend to use the benefit of the 53^rd week to invest in strategic growth initiatives.

SPECIAL ITEMS

• Consistent with our U.S. transformation plan, any U.S. refranchising gains or losses will be included in special items.

2010 INVESTOR UPDATE MEETING

The company will present a business update and take questions on its strategies and global expansion outlook on Wednesday, December 8, 2010 from approximately 8:45 am to 12:30 pm EST, at the Pierre Hotel in New York City. Following the event beginning at 12:45 pm, the company will have a detailed modeling session and will provide further details to full-year 2011 guidance.

The 2010 Investor Update Meeting will be webcast live with the presentation and will also be available following the event along with the detailed full-year 2011 guidance. These can be accessed online at www.yum.com.

Yum! Brands, Inc., based in Louisville, Kentucky, is the world’s largest restaurant company in terms of system restaurants, with more than 37,000 restaurants in over 110 countries and territories. The company is ranked #216 on the Fortune 500 List, with revenues of nearly $11 billion in 2009. 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. Outside the United States in 2009, the Yum! Brands system opened more than four new restaurants each day of the year, making it a leader in international retail development.

Logos, product and company names mentioned are the property of their respective owners.

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