Yum! Brands: Reaffirms 2010 EPS Growth Forecast of 14%

Louisville / KY. (yb) In advance of its annual Investor Update Meeting on December 08 in New York, Yum! Brands Inc. reaffirms its full year 2010 EPS growth forecast of 14 percent, excluding special items. Yum! also announces it expects to deliver at least ten percent EPS growth in 2011, excluding special items, which would mark its tenth straight year of meeting or exceeding this annual EPS growth target.

David C. Novak, Chairman and CEO: «2010 has been a strong year led by our China business, and I am pleased to report we remain on track to deliver 14 percent 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 percent, raising our annual dividend rate to 1,00 USD 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 ten percent
• China operating profit growth of 15 percent, driven primarily by:
  • Double–digit percentage growth in units
  • System sales growth of at least twelve percent
  • Same–store–sales growth of at least four percent
  • Moderate G+A leverage
• Yum! Restaurants International (YRI) operating profit growth of ten percent driven primarily by:
  • New unit development of three to four percent
  • System sales growth of six percent
  • Same–store–sales growth of at least two to three percent
  • Margin improvement and G+A leverage
• U.S. Division:
• Taco Bell operating profit growth of six percent with three percent same–store–sales growth
• Rest of U.S. business, three percent operating profit growth

2011 Overall Guidance

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

In 2011, Yum! Brand´s U.S. business and a portion of the YRI business will have a 53rd week. The company intends to use the benefit of the 53rd week to invest in strategic growth initiatives.

2010 Investor Update Meeting

The company will present a business update and take questions on its strategies and global expansion outlook on December 08, 2010 in New York City. Following the event, the company will have a detailed modeling session and will provide further details to full-year 2011 guidance.