04- Yum! Restaurants International...

Yum! Restaurants International Division

Graham Allan, President YRI DivisionGraham Allan, President YRI Division

Yum! International Division

Today’s Agenda . . .

Strategies and Results

How to Look at our Business

U.K., Franchise, Established, Emerging Markets

Future Growth

Drive Profitable International Expansion

Profitably expand KFC as leading chicken QSR

Profitably expand Pizza Hut as leader in casual/family dining

Drive differentiated Pizza Hut delivery-unit expansion

Franchise-led development

Equity ownership in markets offering significant scale, growth and returns

Yum! International Division — 2005 F

Sixth straight year of 700+ new openings

85% of openings by Franchisees

Seventh straight year of at-least 3% net restaurant growth

+6% system sales growth (local currency) . . . Ahead of our 5% target again

Continued double-digit growth in franchise fees

14% operating profit growth; +10% local currency basis

Record operating margin of 18%, and record ROIC of 19%

Yum! International Division Success Factors

Infrastructure in place

Strong local capability

Over $275 million G&A Invested

Strong supply-chain infrastructure: Global product strategies, local sourcing

Demonstrated product innovation ability and global best-practice sharing

700+ franchisees

YRI Is a Diverse and High-Return Business

$100+

170+

185+ (15) (60)384+

2005 F Operating Profit($ million)

U.K.U.K. Franchise-Only

Markets

Franchise-Only

Markets

EstablishedMarkets

EstablishedMarkets

EmergingMarketsEmergingMarkets

2005 F2005 FCorporateCorporate

U.K. Steady Development Growth

960 1,0241,120

1,2101,288

1,375

’00 ’01 ’02 ’03 ’04 ’05 F

Pizza Hut

KFCKFC

System Restaurants

7%5-Yr CAGR

7%5-Yr CAGR

System-Sales Growth +13% 5-Year CAGRSystem-Sales Growth +13% 5-Year CAGR

Double-Digit Growth Market

5163

76

96

115

100+

’00 ’01 ’02 ’03 ’04 ’05 F

+15% CAGR

U.K. Operating Profit($ million)

Brands fundamentally well positioned in their categories

Experienced teams focused on turnaround

Clearer brand positioning and sharper communication approach

More exciting product innovation

100+ new openings in 2005 and 2006

Optimistic About 2006 in the U.K.

High-Return Franchise-Only Markets

System sales growth of 10% (local currency)

Nearly 5,000 restaurants . . . Expanding at a +5% rate (5-year CAGR)

$170 million operating profit . . . +14% 5-year CAGR

Nearly 40%* of YRI Division operating profit

Another Great Year2005 F

* Operating profit calculation excludes headquarters G&A and emerging markets losses

Broad-Based System-Sales Growth

+10%+10%

+20%Southern Africa

+3%Continental Europe

+17%Middle East/Northern Africa

+9%Caribbean/Latin America

+8%Asia

’05 FSystem-Sales Growth

Franchise-Only Markets

Note: Local currency

Investing for Continued Long-Term Expansion

$(15) million loss vs. $(27) million loss in 2004

System-sales growth +44% (local currency)

Over 65 new-restaurant openings

KFC France: Already profitable

KFC Netherlands/Germany generating positive cash flow in 2005

India: Already profitable with huge potential

Emerging Markets2005 F

How We Are Driving Expansion Around the Globe

Emerging Market

INDIA

Emerging MarketEmerging Market

INDIA INDIA

Franchise-Only Market

MIDDLE EAST

FranchiseFranchise--Only MarketOnly Market

MIDDLE EAST MIDDLE EAST

Even More Long-Term Expansion Opportunities

Developing Pizza delivery as a differentiated Pizza Hut concept

Taco Bell International

Early success in Philippines

Investing behind capability now

Just starting to tap into . . .

Latin America

West Africa

Eastern Europe & Russia

Partnering in Russia to Pursue Exciting Opportunity

140+ million people

Acquiring trademarks of popular local chicken brand, Rostik’s

Strong market reputation and consumer acceptance, convert Rostik’slocations to co-brand with KFC in 90+ stores

Provide immediate presence and local market expertise in a key potential growth market

Yum! Restaurant International Division

Strong Organizational CapabilityStrong Organizational CapabilityStrong Organizational Capability

Clear Growth StrategyClear Growth StrategyClear Growth Strategy

Significant, Healthy, Growing Franchise Businesses

Significant, Healthy, Growing Significant, Healthy, Growing Franchise BusinessesFranchise Businesses

High Return ExpansionHigh Return Expansion

Confident of 2006 . . .

Expect continued strength across franchise businesses . . . action plans in place to address softer markets (U.K., Korea)

Large base of stores added in 2005, pipeline for 2006 better than ever

Strong new product pipeline – global best-practice sharing

More process and discipline around marketing and communication

More good news from our emerging markets – India, France, Netherlands & Russia

Yum! International Division

System-sales growth: at least +5% (Local Currency Basis)

Net unit growth of at least +3%

Operating profit growth: +10% to +15%

HIGH RETURNS!HIGH RETURNS!

What to Expect

More of What You Want to Know . . .More of What You Want to Know . . .

63% 35%

Taco Bell/Long John Silver’s/A&W

2%

By BRAND2By GEOGRAPHY1

Asia23% Americas

25%

Europe26%

Australia/New Zealand15%

Middle East/Southern Africa

11%

International Division Profit Source2005 F

Power of Global Scale and Two Global Brands

1Excludes international headquarters’ G&A2Excludes all G&A

Yum! International Division — Proven Capability

’00 ’05 F 5-Yr CAGR

Total System Restaurants 9,396 11,450 +4%

KFC 5,179 6,280 +4%

Pizza Hut 3,968 4,680 +3%

OPERATING PROFIT ($ million) $243 $384+ +10%

A Track Record of Success

Note: Includes license units

Consistent YRI Division Brand Growth

System Restaurants

4,9145,179

5,4655,698

5,944 6,0846,280

’99 ’00 ’01 ’02 ’03 ’04 ’05 F

3,8113,968

4,1234,249

4,3574,528

4,680

’99 ’00 ’01 ’02 ’03 ’04 ’05 F

+4% CAGR+3% CAGR

Note: Includes license units

YRI Division Business Grouping — Details

KFC U.K.Pizza Hut U.K.

U.K.

IndiaKFC FranceRussiaKFC GermanyKFC NetherlandsKFC Brazil

Emerging Markets

Australia / New ZealandKoreaJapanMexicoCanadaPizza Hut France

Established Markets

Asia (excluding India)Continental EuropeMiddle East/North AfricaCaribbean/Latin AmericaSouthern Africa

Franchise-Only Markets

YRI Development Sourced from All Segments

100+

440+

150+65+ 750+

New-Restaurant Openings

U.K.U.K. Franchise-Only

Markets

Franchise-Only

Markets

EstablishedMarkets

EstablishedMarkets

EmergingMarketsEmergingMarkets

2005 F2005 F

Broad-Based International Division Expansion

Q3 ’05 YTD New Restaurant Openings

Antigua 1 Iceland 1 Pakistan 4Australia 19 India 12 Panama 4Brazil 1 Indonesia 46 Peru 6Bulgaria 2 Ireland 7 Philippines 24Canada 12 Israel 1 Poland 1Chile 4 Jamaica 3 Portugal 5Costa Rica 2 Japan 28 Romania 2Cyprus 2 Jordan 3 Russia 2Czech 9 Korea 19 Saudi Arabia 18Ecuador 4 Kuwait 4 Singapore 3Egypt 4 Lebanon 1 South Africa 19El Salvador 3 Malaysia 15 Spain 6France 4 Malta 1 Sweden 1Germany 2 Mexico 7 Taiwan (Pizza Hut) 6Great Britain 43 Netherlands 2 Turkey 5Guatemala 4 New Zealand 6 UAE 7Honduras 1 Oman 2 Vietnam 3Hong Kong 9

Growth in 52 Countries YTD

Growth in 52 Countries YTD

Pizza Hut U.K. Growth

Joint venture with Whitbread PLC since 1982

Unit growth +9% 5-year CAGR

System-sales growth 5-year CAGR +13%

Unique asset base, limited dine-in competition

Large barriers to entry

Strong family-dining brand; broad consumer base

KFC U.K. Growth

Company/franchise ownership, similar to U.S.

Unit growth +6% 5-year CAGR

System-sales growth 5-year CAGR +13%

Dominant in chicken, menu-innovation leader

Enviable real estate

Broad-Based, Diverse Expansion

+5%+5%

+4%Southern Africa

+2%Continental Europe

+7%Middle East/Northern Africa

+4%Caribbean/Latin America

+8%Asia

Restaurant Unit Growth5-Year CAGR

Franchise-Only Markets

Franchise-Only Markets Scale Is Significant

Asia: 2,050 restaurants

Caribbean/Latin America: 920 restaurants

Middle East/Northern Africa: 760 restaurants

Continental Europe: 830 restaurants

Southern Africa: 425 restaurants

Note: Asia excludes Pizza Hut South Korea, India, China, Thailand, KFC Taiwan; Continental Europe excludes KFC Germany, KFC Netherlands and France

Philippines El Salvador

Established Markets . . . Solid Businesses, Strong Cash Flow

2005 F

$185 million Operating Profit

• 4% 5-year CAGR

4,765 System Restaurants

• 2,885 KFCs

• 1,795 Pizza Huts

Ownership mix will move towards more franchised.

Korea Pizza Hut

Japan JV

Mexico

Australia / New Zealand

Canada

France Pizza Hut

Considerable Progress in Emerging Markets

(5)(9)

(17)

(31)(27)

(15)

’00 ’01 ’02 ’03 ’04 ’05 F

Operating Profit($ millions)

International Division Capital Spending

’04 ’05 F ’06 Plan $ Million Units $ Million Units $ Million Units

New 59.0 59 45.0 50 57.0 55

Replacements 15.0 21 12.5 15 12.0 21

Remodels 12.5 52 17.0 100 12.0 113

Brand Projects 7.0 9.0 13.0

Maintenance 24.0 23.0 16.0

Corp. 10.0 11.5 12.0

Total 127.5 118.0

122.0

YRI Division’s Top 6 Currencies

Japanese Yen

Korean Won

Canadian Dollar

Mexican Peso

Australian Dollar

British Pound± 10% GBP = ~$10 millionYRI Op Profit

± 10% GBP = ~$10 millionYRI Op Profit