Yum! Brands Announces Full-Year 2012 EPS Growth of 13%, or $3.25 Per Share, Excluding Special Items; Opens a Record 1,976 New

  Yum! Brands Announces Full-Year 2012 EPS Growth of 13%, or $3.25 Per Share,
  Excluding Special Items; Opens a Record 1,976 New International Restaurants;
  Adverse Publicity Regarding Poultry Supply Continues to Significantly Impact
  China KFC Sales

Business Wire

LOUISVILLE, Ky. -- February 4, 2013

Yum! Brands Inc. (NYSE: YUM) today reported results for the fourth quarter
ended December 29, 2012 including EPS of $0.83, excluding Special Items.
Reported EPS was $0.72 for the quarter and $3.38 for the year.

FULL-YEAR HIGHLIGHTS

  *Worldwide system sales grew 5%, prior to foreign currency translation.

       *Worldwide system sales growth was 8%, excluding the 2011 divestiture
         of Long John Silver’s (LJS) and A&W All American Restaurants (A&W),
         the 53rd-week impact and the acquisition of Little Sheep, including
         17% in China, 7% at Yum! Restaurants International (YRI) and 5% in
         the U.S. The 2011 fourth-quarter and full-year results reflect the
         benefit of an additional (53rd) week.

  *Same-store sales grew 4% in China, 3% at YRI and 5% in the U.S.
  *Worldwide restaurant margin increased 0.6 percentage points to 16.6%.
  *Worldwide operating profit grew 12%, prior to foreign currency
    translation.
  *Record international development with 1,976 new restaurants opened,
    including 889 new units in China, 949 new units at YRI and 138 in India
    Division; 83% of this development occurred in emerging markets.

FOURTH-QUARTER HIGHLIGHTS

  *China Division KFC same-store sales turned sharply negative during the
    last two weeks of December as a result of adverse publicity from the
    poultry supply situation.
  *Worldwide system sales were flat, prior to foreign currency translation.

       *Worldwide system sales growth was 5%, excluding the 2011 divestiture
         of LJS and A&W, the 53rd week impact and the acquisition of Little
         Sheep, including 7% in China, 7% at YRI and 3% in the U.S.

  *Same-store sales grew 3% at YRI and 3% in the U.S. Same-store sales
    declined 6% in China.
  *Worldwide restaurant margin increased 0.1 percentage point to 14.4%.
  *Worldwide operating profit grew 6%, prior to foreign currency translation.
    Operating profit grew 10% at YRI, declined 5% in China and declined 5% in
    the U.S.

       *Excluding the 53rd-week impact, worldwide operating profit grew 11%,
         including 15% at YRI and 5% in the U.S.

The current negative sales trend in our China KFC business will adversely
impact 2013 EPS. See next page for details.


                  Fourth Quarter                 Full Year
                   2012       2011     %         2012     2011      %
                                         Change                         Change
EPS Excluding      $0.83       $0.75     10%       $3.25     $2.87      13%
Special Items
Special Items      $(0.11)     $0.00     NM        $0.13     $(0.13)    NM
Gain/(Loss)^1
EPS               $0.72      $0.75    (3)%     $3.38    $2.74     23%
^1 See Reconciliation of Non-GAAP Measurements to GAAP Results for further
detail of the Special Items. Special Items for 2012 are primarily related to
the U.S. pension settlement charge, Little Sheep acquisition gain, U.S.
refranchising gains and loss on refranchising of our Pizza Hut UK Dine-in
restaurants.

Note: All comparisons are versus the same period a year ago and exclude
Special Items unless noted.


CHINA UPDATE

KFC sales in the last two weeks of the fourth quarter were significantly
impacted by the intense media attention surrounding an investigation by the
Shanghai FDA (SFDA) into poultry supply management at Yum! China. The
investigation was prompted by a report broadcast on China’s national
television (CCTV), which aired on December 18, 2012. The report showed that a
few poultry farmers were ignoring laws and regulations by using excessive
levels of antibiotics in chicken. Regrettably, some of this product was
purchased by two poultry suppliers of KFC China. The investigation caused
further media attention, including social media commentary, and this
negatively affected consumer perceptions of poultry safety, and KFC in
particular.

On January 25, 2013, the SFDA concluded its investigation and released its
recommendations. We appreciate their thorough and diligent review. The SFDA
identified issues and provided “Supervisory Recommendations” to Yum! China to
strengthen our poultry supply chain practices including refined voluntary self
testing procedures, improved reporting and communications and enhanced
supplier management. Our team in China has taken a comprehensive review of our
current system and is in the process of incorporating all of the SFDA’s
recommendations. We have always recognized the importance of building a
world-class supply chain in China, which is why we have implemented a wide
range of quality assurance and testing practices over the years above legal
and regulatory standards. The SFDA’s recommendations will further strengthen
those practices. The SFDA did not bring a case against Yum! China and no fine
was assessed.

The past seven weeks of media attention have been intense and negative towards
the KFC brand image. Even though this is a very disappointing setback, we are
more committed than ever to continue to strengthen our efforts, restore the
confidence of our customers and win back their brand loyalty. To that end, the
China team will soon be launching a brand reputation quality campaign to
re-assure consumers of our high quality food, along with aggressive marketing
plans.

2013 OUTLOOK

We are confident the YRI and U.S. businesses will deliver annual operating
profit growth consistent with our ongoing growth model. Given current
uncertainties related to KFC sales in China, it is difficult to confidently
forecast our overall financial performance. We have made the assumption that
KFC China same-store sales will improve as the year progresses and will be
positive in the fourth quarter. With these assumptions, we estimate a
mid-single digit EPS decline in 2013 versus prior year, excluding Special
Items. This includes an expectation for a significant decline in EPS
performance in the first half of the year followed by EPS growth in the second
half.

The first quarter for our China business includes only the months of January
and February and is highly impacted by consumer spending during the Chinese
New Year holiday. The timing of this holiday changes each year. This year it
is important to note that while the timing impact of Chinese New Year is
neutral to our first quarter, there is a significant negative impact to
January sales and a corresponding significant benefit to February sales due to
the timing of this week-long holiday. We expect that the underlying
performance of our China business will remain relatively unchanged for the
balance of the first quarter, with a same-store sales decline of approximately
25% for January and February combined (China’s first quarter).

DAVID NOVAK COMMENTS

David C. Novak, Chairman and CEO, said, “We delivered full-year 2012 EPS
growth of 13% or $3.25 per share, excluding Special Items. This marks the
11^th consecutive year we delivered at least 13% growth, which puts us in an
elite group of high-growth companies. We also take satisfaction with our
record level of international development in 2012 which lays the foundation
for future growth and makes Yum! a leader in emerging market development. With
new-unit development at the core of our growth model and the continued rapid
expansion of the consuming class overseas, we believe our opportunity for
long-term growth has never been better.

“We are obviously proud of our track record of achieving double-digit EPS
growth, and I am as confident as ever we can deliver this performance over the
long term. However, as a result of adverse publicity from the poultry supply
situation in mid-December, China KFC sales experienced a sharp decline. Due to
continued negative same-store sales and our assumption that it will take time
to recover consumer confidence, we no longer expect to achieve EPS growth in
2013.

“Although we cannot predict how long it will take to restore sales, we are
steadfast in our belief that the power and popularity of the KFC brand in
China will ultimately drive a full sales recovery. Having weathered other
storms in the past, we know that our brands are resilient. As a result, we
will stay the course with our target to develop at least 700 new units in 2013
in China to lay the foundation for future growth, and will not let this event
detract from our unparalleled China growth opportunity.

“Our growth strategies are unchanged, in China, Yum! Restaurants
International, India and the U.S. With our category-leading brands and
outstanding people capability, I’m confident we will bounce back strongly and
restore our track record of double-digit EPS growth in the years ahead.”


CHINA DIVISION

             Fourth Quarter                  Full Year^1
                           % Change                        % Change
              2012  2011   Reported  Ex      2012    2011   Reported  Ex
                                       F/X                               F/X
System
Sales                       +12        +11                    +23        +20
Growth
Same-Store
Sales         (6)    +21    NM         NM      +4      +19    NM         NM
Growth (%)
Restaurant    13.9   15.8   (1.9)      (1.9)   18.1    19.7   (1.6)      (1.6)
Margin (%)
Operating
Profit       203   210   (3)       (5)    1,015  908   +12       +9
($MM)
^1 The second quarter of 2012 is the first quarter to include the consolidated
operating results of Little Sheep.


  *China Division KFC same-store sales turned sharply negative during the
    last two weeks of December as a result of adverse publicity from the China
    poultry supply situation.
  *China  system sales increased 20% for the year and 11% in the fourth
    quarter, prior to foreign currency translation.

       *KFC same-store sales grew 3% for the year and declined 8% in the
         fourth quarter.
       *Pizza Hut Casual Dining same-store sales grew 10% for the year and 7%
         in the fourth quarter.

  *We estimate the timing of Chinese New Year had a negative mid teen impact
    on January same-store sales growth for both KFC and Pizza Hut Casual
    Dining.We expect this negative impact of Chinese New Year to reverse in
    February.January 2013 estimated same-store sales declined 37%, including
    41% for KFC and 15% at Pizza Hut Casual Dining.
  *China opened a record 889 new units during the year, including 369 in the
    fourth quarter.

China Units                             Q4 2012              % Change^2
Traditional Restaurants^1               5,275                +17
KFC                                      4,260                 +15
Pizza Hut Casual Dining                 826                  +32
^1 Total includes Pizza Hut Home Service and East Dawning; excludes Little
Sheep units
^2 Annual Rate of Change excludes Little Sheep units for comparability of core
business



  *Restaurant margin decreased 1.6 percentage points to 18.1% for the year,
    driven by wage rate inflation of 10%, commodity inflation of 1% and higher
    start-up costs from an increased pace of development. Restaurant margin
    decreased 1.9 percentage points to 13.9% in the fourth quarter, driven by
    a decline in same-store transactions.
  *Foreign currency translation positively impacted operating profit by $26
    million for the year and $3 million in the quarter.
  *For the year, the Little Sheep acquisition had a positive impact of 3
    percentage points on system sales growth, a negative impact of 0.4
    percentage points on restaurant margin and a negative impact of 1
    percentage point on operating profit. For the quarter, the Little Sheep
    acquisition had a positive impact of 4 percentage points on system sales
    growth, a negative impact of 0.3 percentage points on restaurant margin
    and a negligible impact on operating profit.


YUM! RESTAURANTS INTERNATIONAL (YRI) DIVISION

             Fourth Quarter                    Full Year
                              % Change                         % Change
              2012     2011     Reported  Ex    2012     2011     Reported  Ex
                                           F/X                                F/X
Traditional   14,500   13,987   +4         NA    14,500   13,987   +4         NA
Restaurants
System
Sales                           +1         +3                      +2         +5
Growth
Restaurant    14.1     11.9     2.2        2.2   12.9     12.4     0.5        0.5
Margin (%)
Franchise &
License       283      268      +5         +8    879      851      +3         +7
Fees ($MM)
Operating
Profit        224      206      +8         +10   715      673      +6         +10
($MM)
Operating    21.6    20.3    1.3       1.4  21.8    21.1    0.7       0.7
Margin (%)
                                                                              

  *YRI Division system sales increased 5% for the year and 3% in the fourth
    quarter, prior to foreign currency translation. The system sales increases
    were driven by record new-unit development and 3% same-store sales growth
    for both the quarter and the year.

       *The 2011 divestiture of LJS / A&W and 53rd week had a negative impact
         of 2% on system sales for the year.
       *Emerging markets system sales grew 12% for the year, driven by 7%
         same-store sales growth and 7% unit growth.
       *Developed markets system sales grew 1% for the year, driven by 1%
         same-store sales growth and 1% unit growth.

  *YRI opened a record 949 new units in 78 countries.This included 473 new
    units in the fourth quarter.

       *For the year, 617 new units were opened in emerging markets.
       *Our franchise partners opened 92% of all new units.

  *Foreign currency negatively impacted operating profit by $26 million for
    the year and $5 million in the fourth quarter.
  *The 2011 divestiture of LJS / A&W had a negative impact of 1% on operating
    profit growth for the year.


                                                SYSTEM Sales Growth
                                          
YRI MARKETS^1                                   Ex F/X and Ex 53rd Week
                               Percent of      Fourth Quarter     Full Year
                               YRI^2            (%)                 (%)
Franchise                                                      
Asia (ex Japan)                16%              +1                  +2
Japan                          10%              (4)                 (2)
Latin America                  11%              +9                  +9
Middle East                    8%               +10                 +11
Continental Europe             7%               +2                  +4
Canada                         6%               +1                  Flat
                                                                    
Combined Company /
Franchise
UK                             12%              +3                  +4
Australia / New Zealand        11%              +4                  +2
Thailand                       2%               +20                 +14
Korea                          2%               +16                 +11
                                                                    
Key Growth
Africa                         7%               +21                 +17
France                         4%               +5                  +8
Germany / Netherlands          2%               +12                 +11
Russia                        2%              +47                +46
^1 See website www.yum.com under tab "Investors" for a list of the countries
within each of the YRI markets.
^2 Percentage of Total YRI System Sales for Full Year 2012.



U.S. DIVISION

                   Fourth Quarter               Full Year
                     2012   2011   % Change     2012   2011   % Change
Same-Store Sales     +3       +1       NM           +5       (1)      NM
Growth (%)
Restaurant           16.7     13.4     3.3          16.3     12.1     4.2
Margin (%)
Franchise and
License Fees         247      252      (2)          802      786      +2
($MM)
Operating Profit     180      191      (5)          666      589      +13
($MM)
Operating Margin   19.0   16.1   2.9        19.9   15.5   4.4
(%)
                                                                      

  *U.S. Division same-store sales increased 5% for the year, including growth
    of 8% at Taco Bell, 3% at Pizza Hut and 3% at KFC. In the fourth quarter,
    same-store sales increased 3%, driven by growth of 5% at Taco Bell, 4% at
    KFC and offset by a decline of 1% at Pizza Hut.
  *Restaurant margin increased 4.2 percentage points for the year, driven
    primarily by strong sales leverage. In the fourth quarter, restaurant
    margin increased 3.3 percentage points.
  *Positive net-unit development of 21 units for the year.
  *The 2011 divestiture of LJS / A&W and the 53rd week negatively impacted
    franchise and license fees by 7 percentage points and operating profit by
    1 percentage point for the year; and negatively impacted franchise and
    license fees by 10 percentage points and operating profit by 12 percentage
    points for the quarter.

INDIA DIVISION

  *India Division system sales increased 29% for the year and 24% for the
    fourth quarter, prior to foreign currency translation. The system sales
    increase was driven by unit growth of 27% and same-store sales growth of
    5% for the year.

                                  
India Units                Q4 2012  % Change^1
Traditional Restaurants^2  593      +27
KFC                         280       +38
Pizza Hut Casual Dining     181       +9
Pizza Hut Home Service     129      +37
^1 Annual rate of change
^2 Total includes 3 Taco Bell units


OWNERSHIP / SPECIAL ITEMS UPDATE

  *For the year in the U.S., we refranchised 468 units for proceeds of $311
    million, primarily related to Taco Bell. We recorded pre-tax U.S.
    refranchising gains of $122 million in Special Items. At fiscal year end,
    our company ownership in the U.S. is 11%.
  *During the quarter, we refranchised our Pizza Hut UK Dine-In business,
    which included 331 units. This resulted in a Special Items charge of $46
    million for the quarter. At fiscal year end, our company ownership at YRI
    is 8%.
  *During the quarter, in an effort to reduce ongoing volatility and
    administration expense in connection with the Company’s U.S. pension
    obligation, the Company offered certain former employees the limited
    opportunity to voluntarily elect an early payout of their pension benefits
    funded from existing pension plan assets. As a result of the program, we
    recorded a pre-tax non-cash pension settlement charge of $84 million in
    Special Items for the quarter.

OTHER ITEMS UPDATE

  *For the year, worldwide effective tax rate, prior to Special Items,
    increased 1.6 percentage points to 25.8%.
  *Increased annual dividend rate to $1.34 per share.This 18% increase
    marked the eighth consecutive year the dividend increased at a
    double-digit percentage rate.
  *For the year, we repurchased 14.9 million shares totaling $985 million at
    an average of $66. In the quarter, we repurchased 4.1 million shares for
    $283 million at an average price of $69.

CONFERENCE CALL

Yum! Brands Inc. will host a conference call to review the company’s financial
performance and strategies at 9:15 a.m. Eastern Time Tuesday, February 5,
2013. The number is 877/815-2029 for U.S. callers and 706/645-9271 for
international callers.

The call will be available for playback beginning at noon Eastern Time
Tuesday, February 5, through midnight Tuesday, February 19, 2013.  To access
the playback, dial 855/859-2056 in the United States and 404/537-3406
internationally. The playback pass code is 92461813.

The webcast and the playback can be accessed via the internet by visiting Yum!
Brands’ Web site, www.yum.com/investors and selecting “Q4 2012 Earnings
Conference Call” under “Investment Events.” A podcast will be available within
24 hours.

ADDITIONAL INFORMATION ONLINE

Quarter end dates for each division, restaurant-count details and definitions
of terms are available online at www.yum.com under “Investors.”

This announcement, any related announcements and the related webcast may
contain “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
We intend all forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by the fact that they do not
relate strictly to historical or current facts. Our forward-looking statements
are subject to risks and uncertainties, which may cause actual results to
differ materially from those projected. Factors that can cause our actual
results to differ materially include, but are not limited to: food
borne-illness or food safety issues; economic and political conditions in the
countries where we operate; currency exchange and interest rates; commodity,
labor and other operating costs; our ability to secure and maintain
distribution and adequate supply to our restaurants; the effectiveness of our
operating initiatives and marketing; the success of our strategies for
refranchising and international development; the continued viability and
success of our franchise and license operators; publicity that may impact our
business and/or industry; pending or future legal claims; the impact of any
widespread illness; our effective tax rates; our actuarially determined
casualty loss estimates; government regulations; accounting policies and
practices; and competition, consumer preferences or perceptions. You should
consult our filings with the Securities and Exchange Commission (including the
information set forth under the captions “Risk Factors” and “Forward-Looking
Statements” in our Annual Report on Form 10-K) for additional detail about
factors that could affect our financial and other results. Forward-looking
statements are based on current expectations and assumptions and currently
available data and are neither predictions nor guarantees of future events or
performance. You should not place undue reliance on forward-looking
statements, which speak only as of the date hereof. We are not undertaking to
update any of these statements.

Yum! Brands, Inc., based in Louisville, Kentucky, is the world’s largest
restaurant company in terms of system restaurants with over 39,000 restaurants
in more than 120 countries and territories. Yum! is ranked #213 on the Fortune
500 List with revenues of more than $12 billion in 2011. The Company’s
restaurant brands - KFC, Pizza Hut and Taco Bell - are the global leaders of
the chicken, pizza and Mexican-style food categories. Outside the United
States, the Yum! Brands system opened approximately five new restaurants each
day of the year, making it a leader in international retail development.

                                                                               
YUM! Brands, Inc.

Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)
                                                                                        
                   Quarter                     %          Year                          %
                                               Change                                   Change
                   12/29/12    12/31/11      B/(W)      12/29/12     12/31/11       B/(W)
                                                                                        
Company sales      $ 3,585       $ 3,557       1          $ 11,833       $ 10,893       9
Franchise and
license fees       568          554          2          1,800         1,733         4
and income
Total revenues     4,153        4,111        1          13,633        12,626        8
                                                                                        
Company
restaurant
expenses, net
Food and paper     1,162         1,209         4          3,874          3,633          (7)
Payroll and
employee           834           809           (3)        2,620          2,418          (8)
benefits
Occupancy and
other              1,070        1,026        (4)        3,358         3,089         (9)
operating
expenses
Company
restaurant         3,066         3,044         (1)        9,852          9,140          (8)
expenses
                                                                                        
General and
administrative     560           499           (12)       1,510          1,372          (10)
expenses
Franchise and
license            49            41            (21)       133            145            8
expenses
Closures and
impairment         28            22            (23)       37             135            73
(income)
expenses
Refranchising      (37     )     3             NM         (78      )     72             NM
(gain) loss
Other (income)     (18     )     (5      )     NM         (115     )     (53      )     NM
expense
Total costs
and expenses,      3,648        3,604        (1)        11,339        10,811        (5)
net
                                                                                        
Operating          505           507           (1)        2,294          1,815          26
Profit
Interest           42           46           11         149           156           5
expense, net
Income before      463           461           —          2,145          1,659          29
income taxes
Income tax         127          104          (22)       537           324           (66)
provision
Net income -
including          336           357           (6)        1,608          1,335          20
noncontrolling
interests
Net income -
noncontrolling     (1      )     1            NM         11            16            35
interests
Net income -
YUM! Brands,       $ 337        $ 356        (5)        $ 1,597       $ 1,319       21
Inc.
                                                                                        
Effective tax      27.5    %     22.6    %     (4.9       25.0     %     19.5     %     (5.5
rate                                           ppts.)                                   ppts.)
                                                                                        
Effective tax                                  0.3                                      (1.6
rate before        26.4    %     26.7    %     ppts.      25.8     %     24.2     %     ppts.)
special items
                                                                                        
Basic EPS Data
EPS                $ 0.74       $ 0.77       (4)        $ 3.46        $ 2.81        23
Average shares     457          465          2          461           469           2
outstanding
                                                                                        
Diluted EPS
Data
EPS                $ 0.72       $ 0.75       (3)        $ 3.38        $ 2.74        23
Average shares     468          477          2          473           481           2
outstanding
                                                                                        
Dividends
declared per       $ 0.67       $ 0.57                  $ 1.24        $ 1.07   
common share
                                                                                        
See accompanying notes.

Percentages may not recompute due to rounding.

                                                                             
YUM! Brands, Inc.

CHINA DIVISION Operating Results

(amounts in millions)

(unaudited)
                                                                                      
                   Quarter                     %          Year                        %
                                               Change                                 Change
                   12/29/12    12/31/11      B/(W)      12/29/12    12/31/11      B/(W)
                                                                                      
Company sales      $ 2,105       $ 1,853       14         $ 6,797       $ 5,487       24
Franchise and
license fees       31           27           16         101          79           29
and income
Total revenues     2,136        1,880        14         6,898        5,566        24
                                                                                      
Company
restaurant
expenses, net
Food and paper     701           673           (4)        2,312         1,947         (19)
Payroll and
employee           444           334           (33)       1,259         890           (41)
benefits
Occupancy and
other              668          553          (21)       1,993        1,568        (27)
operating
expenses
                   1,813         1,560         (16)       5,564         4,405         (26)
General and
administrative     121           104           (15)       334           275           (21)
expenses
Franchise and
license            3             1             (81)       9             4             NM
expenses
Closures and
impairment         5             9             46         9             12            23
(income)
expenses
Other (income)     (9      )     (4      )     72         (33     )     (38     )     (15)
expense
                   1,933        1,670        (16)       5,883        4,658        (26)
Operating          $ 203        $ 210        (3)        $ 1,015      $ 908        12
Profit
                                                                                      
Company sales      100.0   %     100.0   %                100.0   %     100.0   %
Food and paper     33.3          36.3          3.0        34.1          35.5          1.4
                                               ppts.                                  ppts.
Payroll and                                    (3.0                                   (2.3
employee           21.1          18.1          ppts.)     18.5          16.2          ppts.)
benefits
Occupancy and
other              31.7         29.8         (1.9       29.3         28.6         (0.7
operating                                      ppts.)                                 ppts.)
expenses
Restaurant         13.9    %     15.8    %     (1.9       18.1    %     19.7    %     (1.6
margin                                         ppts.)                                 ppts.)
                                                                                      
Operating          9.5     %     11.2    %     (1.7       14.7    %     16.3    %     (1.6
margin                                         ppts.)                                 ppts.)
                                                                                      
See accompanying notes.

Percentages may not recompute due to rounding.

                                                                           
YUM! Brands, Inc.

YUM! RESTAURANTS INTERNATIONAL DIVISION Operating Results

(amounts in millions)

(unaudited)
                                                                                    
                   Quarter                   %          Year                        %
                                             Change                                 Change
                   12/29/12   12/31/11     B/(W)      12/29/12    12/31/11      B/(W)
                                                                                    
Company sales      $  751       $  757       (1)        $ 2,402       $ 2,341       3
Franchise and
license fees       283         268         5          879          851          3
and income
Total revenues     1,034       1,025       1          3,281        3,192        3
                                                                                    
Company
restaurant
expenses, net
Food and paper     246          245          (1)        787           743           (6)
Payroll and
employee           184          195          6          599           608           2
benefits
Occupancy and
other              215         228         5          705          700          (1)
operating
expenses
                   645          668          3          2,091         2,051         (2)
General and
administrative     139          137          (1)        414           400           (3)
expenses
Franchise and
license            16           15           (23)       50            51            —
expenses
Closures and
impairment         17           4            NM         19            22            15
(income)
expenses
Other (income)     (7     )     (5     )     46         (8      )     (5      )     55
expense
                   810         819         1          2,566        2,519        (2)
Operating          $  224      $  206      8          $ 715        $ 673        6
Profit
                                                                                    
Company sales      100.0  %     100.0  %                100.0   %     100.0   %
Food and paper     32.7         32.2         (0.5       32.8          31.7          (1.1
                                             ppts.)                                 ppts.)
Payroll and                                  1.3                                    1.1
employee           24.5         25.8         ppts.      24.9          26.0          ppts.
benefits
Occupancy and
other              28.7        30.1        1.4        29.4         29.9         0.5
operating                                    ppts.                                  ppts.
expenses
Restaurant         14.1   %     11.9   %     2.2        12.9    %     12.4    %     0.5
margin                                       ppts.                                  ppts.
                                                                                    
Operating          21.6   %     20.3   %     1.3        21.8    %     21.1    %     0.7
margin                                       ppts.                                  ppts.
                                                                                    
See accompanying notes.

Percentages may not recompute due to rounding.

                                                                           
YUM! Brands, Inc.

UNITED STATES DIVISION Operating Results

(amounts in millions)

(unaudited)
                                                                                    
                   Quarter                   %          Year                        %
                                             Change                                 Change
                   12/29/12   12/31/11     B/(W)      12/29/12    12/31/11      B/(W)
                                                                                    
Company sales      $  700       $  925       (24)       $ 2,550       $ 3,000       (15)
Franchise and
license fees       247         252         (2)        802          786          2
and income
Total revenues     947         1,177       (20)       3,352        3,786        (11)
                                                                                    
Company
restaurant
expenses, net
Food and paper     203          283          28         740           917           19
Payroll and
employee           202          277          27         751           912           18
benefits
Occupancy and
other              179         242         26         643          809          21
operating
expenses
                   584          802          27         2,134         2,638         19
General and
administrative     145          148          2          467           450           (4)
expenses
Franchise and
license            30           26           (14)       74            92            20
expenses
Closures and
impairment         6            11           47         9             21            58
(income)
expenses
Other (income)     2           (1     )     NM         2            (4      )     NM
expense
                   767         986         22         2,686        3,197        16
Operating          $  180      $  191      (5)        $ 666        $ 589        13
Profit
                                                                                    
Company sales      100.0  %     100.0  %                100.0   %     100.0   %
Food and paper     29.0         30.5         1.5        29.0          30.5          1.5
                                             ppts.                                  ppts.
Payroll and                                  1.0                                    0.9
employee           28.9         29.9         ppts.      29.5          30.4          ppts.
benefits
Occupancy and
other              25.4        26.2        0.8        25.2         27.0         1.8
operating                                    ppts.                                  ppts.
expenses
                   16.7   %     13.4   %     3.3        16.3    %     12.1    %     4.2
                                             ppts.                                  ppts.
                                                                                    
Operating          19.0   %     16.1   %     2.9        19.9    %     15.5    %     4.4
margin                                       ppts.                                  ppts.
                                                                                    
See accompanying notes.

Percentages may not recompute due to rounding.


YUM! Brands, Inc.

Consolidated Balance Sheets

(amounts in millions)

                                                   (unaudited)  
                                                     12/29/12        12/31/11
ASSETS
Current Assets
Cash and cash equivalents                            $  776          $ 1,198
Accounts and notes receivable, less allowance:       301             286
$12 in 2012 and $22 in 2011
Inventories                                          313             273
Prepaid expenses and other current assets            272             338
Deferred income taxes                                111             112
Advertising cooperative assets, restricted           136            114     
Total Current Assets                                 1,909           2,321
                                                                     
Property, plant and equipment, net of
accumulated depreciation and amortization of         4,250           4,042
$3,139 in 2012 and $3,225 in 2011
Goodwill                                             1,034           681
Intangible assets, net                               690             299
Investments in unconsolidated affiliates             72              167
Restricted cash                                      —               300
Other assets                                         575             475
Deferred income taxes                                481            549     
Total Assets                                         $  9,011       $ 8,834 
                                                                     
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities       $  1,945        $ 1,874
Income taxes payable                                 97              142
Short-term borrowings                                10              320
Advertising cooperative liabilities                  136            114     
Total Current Liabilities                            2,188           2,450
                                                                     
Long-term debt                                       2,932           2,997
Other liabilities and deferred credits               1,579          1,471   
Total Liabilities                                    6,699          6,918   
                                                                     
Redeemable noncontrolling interest                   59             —       
                                                                     
Shareholders' Equity
Common stock, no par value, 750 shares
authorized; 451 shares and 460 shares issued in      —               18
2012 and 2011, respectively
Retained earnings                                    2,286           2,052
Accumulated other comprehensive income (loss)        (132      )     (247    )
Total Shareholders' Equity - YUM! Brands, Inc.       2,154           1,823
Noncontrolling interests                             99             93      
Total Shareholders' Equity                           2,253          1,916   
Total Liabilities, Redeemable Noncontrolling         $  9,011       $ 8,834 
Interest and Shareholders' Equity
                                                                             


See accompanying notes.

                                                  


YUM! Brands, Inc.

Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)
                                                     
                                                     Year
                                                     12/29/2012   12/31/2011
Cash Flows - Operating Activities
Net income - including noncontrolling interests      $  1,608       $  1,335
Depreciation and amortization                        645            628
Closures and impairment (income) expenses            37             135
Refranchising (gain) loss                            (78      )     72
Contributions to defined benefit pension plans       (119     )     (63      )
YUM Retirement Plan settlement charge                84             —
Gain upon acquisition of Little Sheep                (74      )     —
Deferred income taxes                                28             (137     )
Equity income from investments in unconsolidated     (47      )     (47      )
affiliates
Distributions of income received from                41             39
unconsolidated affiliates
Excess tax benefit from share-based compensation     (98      )     (66      )
Share-based compensation expense                     50             59
Changes in accounts and notes receivable             (18      )     (39      )
Changes in inventories                               9              (75      )
Changes in prepaid expenses and other current        (14      )     (25      )
assets
Changes in accounts payable and other current        9              144
liabilities
Changes in income taxes payable                      126            109
Other, net                                           105           101      
Net Cash Provided by Operating Activities            2,294         2,170    
                                                                    
Cash Flows - Investing Activities
Capital spending                                     (1,099   )     (940     )
Proceeds from refranchising of restaurants           364            246
Acquisitions                                         (543     )     (81      )
Changes in restricted cash                           300            (300     )
Other, net                                           (27      )     69       
Net Cash Used in Investing Activities                (1,005   )     (1,006   )
                                                                    
Cash Flows - Financing Activities
Proceeds from long-term debt                         —              404
Repayments of long-term debt                         (282     )     (666     )
Short-term borrowings, three months or less, net     —              —
Revolving credit facilities, three months or         —              —
less, net
Repurchase shares of Common Stock                    (965     )     (752     )
Excess tax benefit from share-based compensation     98             66
Employee stock option proceeds                       62             59
Dividends paid on Common Stock                       (544     )     (481     )
Other, net                                           (85      )     (43      )
Net Cash Used in Financing Activities                (1,716   )     (1,413   )
Effect of Exchange Rate on Cash and Cash             5             21       
Equivalents
Net Decrease in Cash and Cash Equivalents            (422     )     (228     )
Cash and Cash Equivalents - Beginning of Year        1,198         1,426    
Cash and Cash Equivalents - End of Year              $  776        $  1,198 
                                                                             
See accompanying notes.

                                                 
Reconciliation of Non-GAAP Measurements to GAAP Results
(amounts in millions, except per share amounts)
(unaudited)

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 in 2012 and
2011 on a basis before Special Items. Included in Special Items are the U.S.
refranchising gain (loss), the YUM Retirement Plan settlement charge, the gain
on the acquisition of Little Sheep, losses associated with the refranchising
of the Pizza Hut UK dine-in business and the losses, other costs and tax
benefits in 2011 relating to our divestiture of the Long John Silver's ("LJS")
and A&W All-American Food Restaurants ("A&W") brands. These amounts are
described in (d), (e), (f), (g) and (h) in the accompanying notes. Other
Special Items include the depreciation reductions from Pizza Hut UK and KFC
U.S. restaurants impaired upon our decision or offer to refranchise that
remained Company stores for some or all of the periods presented, gains from
sales of real estate related to our previously refranchised Mexico business
and charges relating to U.S. General and Administrative ("G&A") productivity
initiatives and realignment of resources.

The Company uses earnings before Special Items as a key performance measure of
results of operations for the purpose of evaluating performance internally and
Special Items are not included in any of our segment results. 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 investors to facilitate the comparison of past and present operations,
excluding items in 2012 and 2011 that the Company does not believe are
indicative of our ongoing operations due to their size and/or nature.
                                                     
                     Quarter                         Year
                     12/29/12       12/31/11        12/29/12      12/31/11
Detail of Special
Items
U.S.
Refranchising        $  69           $  (14   )      $  122         $ (17   )
gain (loss)^(d)
YUM Retirement
Plan settlement      (84       )     —               (84       )    —
charge^(e)
Gain upon
acquisition of       —               —               74             —
Little Sheep^(f)
Loss associated
with the
refranchising of     (46       )     —               (70       )    (76     )
the Pizza Hut UK
dine-in
business^(g)
Losses and other
costs relating to    —               —               —              (86     )
the LJS and A&W
divestitures^(h)
Other Special
Items Income         1              (14      )      16            (8      )
(Expense)
Total Special
Items Income         (60       )     (28      )      58             (187    )
(Expense)
Tax Benefit
(Expense) on         10             27             1             123     
Special Items
Special Items
Income (Expense),    $  (50    )     $  (1    )      $  59         $ (64   )
net of tax
Average diluted
shares               468            477            473           481     
outstanding
Special Items        $  (0.11  )     $  —           $  0.13       $ (0.13 )
diluted EPS
                                                                    
Reconciliation of
Operating Profit
Before Special
Items to Reported
Operating Profit
Operating Profit
Before Special       $  565          $  535          $  2,236       $ 2,002
Items
Special Items        (60       )     (28      )      58            (187    )
Income (Expense)
Reported             $  505         $  507         $  2,294      $ 1,815 
Operating Profit
                                                                    
Reconciliation of
EPS Before
Special Items to
Reported EPS
Diluted EPS
Before Special       $  0.83         $  0.75         $  3.25        $ 2.87
Items
Special Items EPS    (0.11     )     —              0.13          (0.13   )
Reported EPS         $  0.72        $  0.75        $  3.38       $ 2.74  
                                                                    
Reconciliation of
Effective Tax
Rate Before
Special Items to
Reported
Effective Tax
Rate
Effective Tax
Rate Before          26.4      %     26.7     %      25.8      %    24.2    %
Special Items
Impact on Tax
Rate as a result     1.1       %     (4.1     )%     (0.8      )%   (4.7    )%
of Special Items
Reported
Effective Tax        27.5      %     22.6     %      25.0      %    19.5    %
Rate

                                                                           
YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)
                                                                                        
                                                                        Corporate
Quarter Ended                                  United
12/29/12           China         YRI                         India      and             Consolidated
                                               States
                                                                        Unallocated
Total revenues     $ 2,136      $ 1,034      $ 947        $ 36      $  —           $  4,153  
                                                                                        
Company
restaurant         1,813         645           584           28         (4       )      3,066
expenses
General and
administrative     121           139           145           8          147             560
expenses
Franchise and
license            3             16            30            —          —               49
expenses
Closures and
impairment         5             17            6             —          —               28
(income)
expenses
Refranchising      —             —             —             —          (37      )      (37       )
(gain) loss
Other (income)     (9      )     (7      )     2            —         (4       )      (18       )
expense
                   1,933        810          767          36        102            3,648     
Operating          $ 203        $ 224        $ 180        $ —       $  (102  )      $  505    
Profit (loss)
                                                                                                  
                                                                        Corporate
Quarter Ended                                  United
12/31/11           China         YRI                         India      and             Consolidated
                                               States
                                                                        Unallocated
Total revenues     $ 1,880      $ 1,025      $ 1,177      $ 29      $  —           $  4,111  
                                                                                        
Company
restaurant         1,560         668           802           20         (6       )      3,044
expenses
General and
administrative     104           137           148           8          102             499
expenses
Franchise and
license            1             15            26            —          (1       )      41
expenses
Closures and
impairment         9             4             11            —          (2       )      22
(income)
expenses
Refranchising      —             —             —             —          3               3
(gain) loss
Other (income)     (4      )     (5      )     (1      )     —         5              (5        )
expense
                   1,670        819          986          28        101            3,604     
Operating          $ 210        $ 206        $ 191        $ 1       $  (101  )      $  507    
Profit (loss)
                                                                                                  
The above tables reconcile segment information, which is based on management responsibility, with
our Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts
that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

                                                                            
YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)
                                                                                         
                                                                         Corporate
Year Ended                                     United
12/31/12           China         YRI                         India       and             Consolidated
                                               States
                                                                         Unallocated
Total revenues     $ 6,898      $ 3,281      $ 3,352      $ 102      $  —           $  13,633  
                                                                                         
Company
restaurant         5,564         2,091         2,134         79          (16      )      9,852
expenses
General and
administrative     334           414           467           24          271             1,510
expenses
Franchise and
license            9             50            74            —           —               133
expenses
Closures and
impairment         9             19            9             —           —               37
(income)
expenses
Refranchising      —             —             —             —           (78      )      (78        )
(gain) loss
Other (income)     (33     )     (8      )     2            —          (76      )      (115       )
expense
                   5,883        2,566        2,686        103        101            11,339     
Operating          $ 1,015      $ 715        $ 666        $ (1  )     $  (101  )      $  2,294   
Profit (loss)
                                                                                                    
                                                                         Corporate
Year Ended                                     United
12/31/11           China         YRI                         India       and             Consolidated
                                               States
                                                                         Unallocated
Total revenues     $ 5,566      $ 3,192      $ 3,786      $ 82       $  —           $  12,626  
                                                                                         
Company
restaurant         4,405         2,051         2,638         60          (14      )      9,140
expenses
General and
administrative     275           400           450           22          225             1,372
expenses
Franchise and
license            4             51            92            —           (2       )      145
expenses
Closures and
impairment         12            22            21            —           80              135
(income)
expenses
Refranchising      —             —             —             —           72              72
(gain) loss
Other (income)     (38     )     (5      )     (4      )     —          (6       )      (53        )
expense
                   4,658        2,519        3,197        82         355            10,811     
Operating          $ 908        $ 673        $ 589        $ —        $  (355  )      $  1,815   
Profit (loss)
                                                                                                    

The above tables reconcile segment information, which is based on management responsibility, with our
Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts
that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.


Notes to the Consolidated Summary of Results, Consolidated Balance Sheets
and Consolidated Statements of Cash Flows
(amounts in millions, except per share amounts)
(unaudited)

(a)  Amounts presented as of and for the quarter and year ended December 29,
      2012 are preliminary.

      Other (income) expense for the China Division primarily consists of
(b)   equity income from investments in unconsolidated affiliates. The year
      ended December 29, 2012 also includes costs related to the acquisition
      of Little Sheep Group Limited ("Little Sheep").

      Beginning the first quarter of 2012, our India Division is being
      reported as a standalone reporting segment separate from YRI as a result
      of changes to our management reporting structure. While our consolidated
(c)   results are not impacted, our historical segment information has been
      restated to be consistent with the current period presentation. This new
      segment also includes the franchise businesses in the neighboring
      countries of Bangladesh, Mauritius, Nepal and Sri Lanka.

      As part of our plan to transform our U.S. business we took certain
      measures ("the U.S. business transformation measures") in 2012 and 2011
      which includes the continuation of our U.S. refranchising, potentially
      reducing our Company ownership in the U.S. to less than 10%, including a
      reduction of Taco Bell Company ownership to 16%. During the quarter and
(d)   year ended December 28, 2012, we recorded gains of $69 million and $122
      million, respectively, related to refranchising in the U.S., primarily
      at Taco Bell. We have traditionally not allocated refranchising (gains)
      losses for segment reporting purposes. Additionally, U.S. refranchising
      (gains) losses have been reflected as Special Items for certain
      performance measures (see accompanying reconciliation to reported
      results).

      During the quarter ended December 29, 2012, the Company allowed certain
      former employees with deferred vested balances in the YUM Retirement
      Plan an opportunity to voluntarily elect an early payout of their
      pension benefits. These payouts were funded from existing pension plan
(e)   assets. The Company recorded a pre-tax settlement charge of $84 million
      as a result of these payouts in the quarter ended December 29, 2012.
      This charge was recorded in General and administrative expenses, was not
      allocated for segment reporting purposes and is reflected as a Special
      Item for certain performance measures (see accompanying reconciliation
      to reported results).

      On February 1, 2012 we acquired an additional 66% interest in Little
      Sheep for $540 million, net of cash acquired of $44 million, increasing
      our ownership to 93%. The acquisition was driven by our strategy to
      build leading brands across China in every significant category. Prior
      to our acquisition of this additional interest, our 27% interest in
      Little Sheep was accounted for under the equity method of accounting. As
      a result of the acquisition we obtained voting control of Little Sheep,
      and thus we began consolidating Little Sheep upon acquisition. As
(f)   required by GAAP, we remeasured our previously held 27% ownership in
      Little Sheep, which had a recorded value of $107 million at the date of
      acquisition, at fair value and recognized a non-cash gain of $74
      million. This gain, which resulted in no related income tax expense, was
      recorded in Other (income) expense on our Consolidated Statement of
      Income during the year ended December 29, 2012, was not allocated for
      segment reporting purposes and is reflected as a Special Item for
      certain performance measures (see accompanying reconciliation to
      reported results).

      Consolidated Little Sheep results are included in the China Division
      from the beginning of the second quarter of 2012. Little Sheep impacted
      China Division revenues by 4% and 3% for the quarter and year ended
      December 29, 2012, respectively. Other than the $74 million gain
      discussed above, Little Sheep did not have a significant impact on China
      Division's Operating Profit or Net Income - YUM! Brands, Inc. for the
      quarter and year ended December 29, 2012. China Division and Worldwide
      system sales include sales from Little Sheep's company-owned restaurants
      but exclude sales from Little Sheep's franchise restaurants. Our
      Consolidated Balance Sheet at December 29, 2012 reflects the
      consolidation of this entity, including $376 million of goodwill, $421
      million of other intangible assets and a $59 million redeemable
      noncontrolling interest. Also, in the year ended December 29, 2012, we
      released from escrow $300 million of cash that was deemed restricted
      prior to our acquisition of Little Sheep.

      During the quarter ended December 29, 2012, we refranchised our
      remaining 331 Pizza Hut UK dine-in restaurants and recorded a loss of
      $46 million to Refranchising (gain) loss. During the quarter ended March
      24, 2012, we recorded pre-tax losses of $24 million to Refranchising
      (gain) loss primarily to adjust the carrying amount of the asset group
(g)   to its then estimated fair value. We had previously recorded $76 million
      of pre-tax losses to Refranchising (gain) loss in 2011 primarily to
      reduce the carrying amount of the asset group to its then estimated fair
      value upon our initial decision to sell the Pizza Hut dine-in business.
      These charges were not allocated for segment reporting purposes and were
      reflected as Special Items for certain performance measures (see
      accompanying reconciliation to reported results).

      In 2011 we sold the Long John Silver's and A&W All American Food
      Restaurants brands to key franchise leaders and strategic investors in
      separate transactions. During 2011, we recognized $86 million of pre-tax
(h)   losses and other costs primarily in Closures and impairment (income)
      expenses and $104 million of tax benefits as a result of these sales.
      These amounts were not allocated for segment reporting purposes and were
      reflected as Special Items for certain performance measures (see
      accompanying reconciliation to reported results).

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Contact:

Yum! Brands Inc.
Analysts:
Tim Jerzyk, Senior Vice President Investor Relations, 888-298-6986
Steve Schmitt, Senior Director Investor Relations, 888-298-6986
or
Media:
Amy Sherwood, Vice President Public Relations, 502-874-8200
 
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