YUM 12 /10/08a

transcript

WELCOME

2008 Investor Update

December 10, 2008

WELCOME!

Investor Update MeetingDecember 2008

Tim JerzykSVP Treasurer/Investor Relations

Information herein is as of 12/10/08

This presentation will include forward-looking

statements that reflect management’s

expectations based on currently available data.

However, actual results are subject to future

events and uncertainties. The information in the

presentation related to projections or other

forward-looking statements may be relied on

subject to the safe harbor statement posted on our

Web site: www.yum.com.

What To Expect In 2009 . . .

Driven by:

Strong International New Unit Development

Continued Growth in Global Same-Store-Sales

Industry-Leading ROIC

At least 10% EPS Growth

YUM Shareholder Payout

Meaningful Dividend . . . 27% Increase

Share Buy Backs . . . . . nearly $1.7BN

Total Shareholder Payout . . . $2.0BN

Leader in Shareholder

Payout Among Global Consumer

Companies

Source: JPMorgan; Defined as last twelve months (LTM )dividend and share repurchase payout as % of average market cap over the past four quarters.

Yum! Leads in Shareholder Payout

Q3 2008 LTM

Longer Term, Since 2004 . . .

Reduced share count by 20%

Nearly quadrupled quarterly dividend

Increased debt by $2.0BN

Dramatically extended debt maturities with low-cost debt

2004 2008

Earlier Debt Profile

. . . . . .

Maturities:2 to 8 years

1.0 BNRevolver

Dramatically Extended Maturities

. . . . . .

Maturities:3 to 29 years

1.0 BNRevolver

1.5 BN

New Term Loan $375MM

3-Year Term Loan $375MM

3-Year Revolver 5-Year

New Debt Since 2004

10-Year Bond 6.25% $300MM

10-Year Bond 6.25% $600MM

30-Year Bond 6.875% $600MM

$1.0 BN $1.5 BN

Libor + 35 BPS

Libor + 150 BPS2008

1,2191,170

150113

Nearly 700

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 YTD

U.S. Refranchising Update

2008 is the most since 1999

1998 – 2008# of Units

Continued Strong Cash Generation

Forecast($ million)

2008 2009

Cash Flow from Operations 1,455 1,553

CAPEX (900) (900)

Refranchising & Sale of PP&E 295 300

Option Proceeds 90 80

940 1,033

Dividends (321) (360)

Excess Free Cash Flow 619 673

2009 Cash Priorities

Build Liquidity, Maintain Flexibility

Debt Reduction, Share Buy BacksSecond Half of 2009?

No Share Buy Backs Planned

Summary

No Near-Term Debt Maturity Issues

Strong Balance Sheet

Substantial Cash Generation

Agenda

Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tim Jerzyk

Strategic Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

Road Map to At Least 10% EPS Growth in 2009 . . . Rick Carucci

Q&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David NovakRick Carucci

Wrap Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David Novak

ADJOURN

Agenda

Financial Modeling and Q&A Session . . . . . . . . . . Rick CarucciTim JerzykTed KnopfLarry GathofDave Russell

Global Growth & Cash Machine

David NovakChairman and CEO

The Yum! Update

Driving Shareholder Value

Same-Store-Sales Growth

New Unit Growth

High Returnson Invested Capital

#1 Leading International Developer

New Permanent Sales Layers

Industry Leading Returns

Driving Global Growth

More Balanced OptionsMulti-DaypartsMulti-ProteinsDestination Desserts and BeveragesEveryday Value

Mainland China

Yum! Restaurants International

Taco Bell International

PHDEast Dawning

Contemporary Assets

GrowExistingAssets

DriveGlobalGrowth

EstablishNew Global

Brands

KeyGrowthDrivers

20 Straight Quarters of GlobalSame-Store-Sales Growth

’04 ’05 ’06 ’07 Q1 Q2 Q3 Q4 F

Worldwide Same-Store-Sales Growth

Yum! is the #1 international retail developer!

Record International New Unit Openings

1,189 1,181

1,3581,445

’04 ’05 ’06 ’07 ’08 F

YRI 895

China 550

Source: JPMorgan; LTM after-tax EBITR/Average Capital adjusted for operating leases less excess cash.

Restaurant Industry Leader in ROIC

2008 ROIC

Driving Shareholder Value

Same-Store-Sales Growth

New Unit Growth

High Return on Invested Capital

Executed with Consistency

7th Straight Year ofDouble-Digit EPS Growth

+13% +13%

+13%+14%

’02 ’03 ’04 ’05 ’06 ’07 ’08 F

Targetat least

Earnings Per Share Growth

Note: Prior to special items. 2005 growth rate is also prior to the impact of expensing stock options.

2009Getting Better and Better

What’s New for China in 2009

Dramatically ImproveU.S. Brand Positions,

Consistency and Returns

Drive Aggressive International

Expansion and BuildStrong Brands

Everywhere

Build Leading Brands Across CHINA

in Every Significant Category

Drive Industry-Leading, Long-Term Shareholder and Franchisee

Leading Competitor

The QSR brand I like most 58%* 41%

Not the traditional Western QSR &Driving a new direction for China

53%* 41%

KFC #1 Brand in China

Note: Percentages for Top 2 BoxesData source: BIT Oct. 2008, by CBC *Significant difference,N=1900 in 47 cities 95% confidence level

Q4 2008Brand Attributes

Mainland ChinaWestern QSR

# of Restaurants

Competitive PositionContinues to Strengthen

Building New Permanent Sales Layers

Chicken Fish BeefShrimp

Multiple Proteins…

Breakfast

“It’s easy to have a GOOD breakfast at KFC” Expanding to 65 cities

Delivery

…AND Multiple Dayparts

Mainland ChinaWestern Casual Dining

# of Restaurants

Competitive Position Continues to Strengthen

Already broadened menu from 76 to 102 items

…Work in Progress

Enhanced Casual Dining Experience

Pasta & Rice Drinks/Coffee SweetsAppetizers Pizza

Building Emerging Brands

Opened in Beijing, Guangzhou

Building commissary platform

Optimizing cost structure

75 Units in 11 Chinese cities

4 new cities in 2008

Pizza Hut Home Service

East Dawning

The Leading Western Retail Developerin Mainland China

Yum! China DivisionNew Unit Development

297357

409 396

506550

’03 ’04 ’05 ’06 ’07 ’08 F ’09 F

At least500

Note: This includes KFC Taiwan and Thailand.

Strategic Position Has Never Been Better

CountrywideDistribution

System

TargetedManufacturing

Unmatched Development

Capability

UnparalleledTalent &

Experience

National Scale — 500 Cities

What’s New for YRI in 2009

Everywhere

Consistent Growth From YRI Development

+780 +785+852 +895 +900

'05 '06 '07 ’08 F '09 F

YRINew Builds

+4% +3% +4% +4%Net Unit Growth +4%

93% 94% 94% 95%+% from Franchisees 95%+

Broad-Based YRI Development

Total UnitsNet Unit Growth

Asia 4,064 +4%

Canada 1,236 +1%

Europe 1,126 +9%

Latin America 1,060 +4%

Middle East 1,046 +13%

South Africa 555 +11%

Franchise Markets

9,087 +6%

YRI Total Units 12,900 +4%

Development by Region

Development coming from:

Over 75 countries

Over 200 franchisees

Top 4 countries: IndonesiaMalaysiaSouth AfricaSaudi Arabia

2008 F

+9%+10%

+9%+8%

+7%+8%

'06 '07 Q1 Q2 Q3 Q4 TD

YRI System-Sales Growth (%)Local Currency Basis

Consistent System-Sales Growth

'05 '06 '07 '08 F '09 F

…and Consistent Same-Store-Sales Growth

YRISame-Store-Sales Growth %

Rapid expansion as global launch begins in 2009

Over 1,000 KFC stores by year end 2009

YRI2009

South Africa Mexico Hong Kong

Global Roll-Out for 2009

Mexico

Indonesia

Building Emerging Brands

Opened in Dubai64 units in 11 countries

YRI: Stable Growth

Nearly 90% franchisedOver $650 million in fees

Total operating profit of over $500 million

Sales momentum

Strong unit economics and well-capitalized franchisees

2009: More of same . . . unit development and same-store-sales growth

What’s New for U.S. in 2009

Everywhere

Mexican Food

Fried Chicken

Transforming Our U.S. Business

FROM TO

HMRPizzaPastaChicken

Mexican-InspiredPowerhouse

Fried, Grilled,Value and Portable

Frutista Freeze

Add SIX NEW Flavors

Why Pay More! Fresco Dinner

More NewsMore New Products

Test in Early 2009for Possible Launch

Fiesta Meals . . . to go

“Make Every NightTaco Night”

Value Pasta Balanced Options Wings

Testing More Options More Options National Launch National Launch

Kentucky Grilled Chicken

Winning concept and product test results

Overcomes key “fried only” consumer barrier

Proven operating platform

Better economics than fried

Longest Market Test in KFC History

KFC SnackersOriginal Recipe

Honey BBQ

2 Biscuits

2 Apple Turnovers

Value Drink

Side Salad

Toasted Wrap

Snack BoxesPopcorn Chicken

3 Hot Wings

Snack Size Bowl

Honey BBQ Sandwich

Successfully Tested in 3 Markets

First NationalKFC Value Menu

FRESH Advertising:

Makes me start thinking of

KFC in a different way

Much better opinion of KFC

Tells me something interesting

Not typical of fast food advertising

+18 pts.

vs. KFC Average

Reinforcing the Core

Prepared “FRESH”

Early Test Results Are Encouraging

Source: Company focus group study

US Brands: Even Better Operations

Drive Thru: Accuracy with Speed

Grilled to Order – “Hot”

Fast & on time

Nice . . . Little Red Book . . .Culture of Hospitality

Renewed focus and investment in BASICS

Launching new sales layers

Dramatically reduced cost structure . . . ~$60 million

Investments in KFC operations

Successfully executing refranchising program . . . Nearly 700 unitsin 2008, +500 in 2009

Executing U.S. Business Transformation

15% U.S. Operating Profit Growth

What’s New in 2009

Everywhere

Track Record of Expanding ROIC

18.9%19% 19%

’03 ’04 ’05 ’06 ’07 ’08 F ’09 F

YUM ROIC

Note: Details of calculations in APPENDIX

Driving ROIC Higher

Continue to refranchise U.S. to 10% or less ownership . . .+3 pts. benefit to YUM ROIC

New permanent sales layers, increasing asset utilization around the world

Allocating more CAPEX to high-return markets

China, YRI emerging markets

…Half of our 2009 profit growth already in-placeRecord YRI & China 2008 new units…in the groundSignificant U.S. G&A cost savings…$60 million

2009 YRI and China new unit development on track

Sales layer initiatives will be more broad-based

Improved KFC U.S. Performance

We’re Confident About 2009. . .

Road Map At Least 10% EPS Growth in 2009

Rick CarucciChief Financial Officer

Yum! On-Going Growth Model

Profit Growth Target

EPSImpact

China Division +20% +7%

YRI +10% +4%

U.S. Division +5% +3%

At least 10%

2009 Challenges

Challenging consumer environment at home and abroad

Significant forex downside for YRI

Tight and expensive credit markets

2009 Opportunities

Record international development

U.S. restructuring and G&A cost savings

Lapping KFC U.S. 2008 results

2009 Road Map to At Least 10% EPS Growth

On-Going Before Forex After Forex

China Division 20% 15% to 20% 15% to 20%

YRI 10% 10% ~(5)%

U.S. Division 5% At least 5% ~15%

Before G&A Savings

After G&A Savings

Operating Profit Growth

China Division Profit Model

Unit Growth

Same-Store-Sales

Growth

G&A Leverage

Guidance of 15% to 20%Profit Growth in 2009

Widespread KFC Development in Mainland China

TierNumber Of Cities

2008FTotal Units

2008FNew Units

1 4 629 77

2 26 710 97

3 43 353 66

4 85 361 74

5, 6 318 343 88

TOTAL 476 2,396 402

Great ReturnsStrong Pipeline for 2009!

506550

’06 ’07 ’08 F ’09 F

2009: Another Year of Strong Unit Growth

China Division New Builds

293 348Mainland ChinaKFC New Builds

402 400+

Slower Pizza Hut Casual Dining Development in Tier 1 Cities

Modest Same-Store-Sales Forecast

Mainland China Same-Store-Sales Growth %

Challenging First Half 2009: Lapping +13% in 2008

1H ~3%

2H ~7%

Maintaining High Margins in 2009

Minimal New Pricing

Flat Commodity Inflation

Labor Inflation

Flat Marginsversus Prior Year

Mainland China 19%

China Division 2009 Profit Road Map

Unit Growth

Same-Store-Sales

Growth

G&A Leverage

At Least 12% +3 to +5% +1%

Guidance of 15% to 20%Profit Growth in 2009

YRI Division 2009 Profit Road Map

Unit Growth

Same-Store-Sales

GrowthOther

+10% Profit Growth in 2009

+4% +3% to +5% +1% to +2%

Unmatched Unit Growth Opportunity

Note: Units as of year-end 2007 using World Bank definitions of developing countries Source: Public disclosures

Developing CountriesTotal Units

+1,397 INCREASE

2002 2007

U.S. Division 2009 Profit Road Map

Margin Accretion

~15% Profit Growth in 2009

At Least +3% +4% +9%

Same-Store-Sales

Growth

G&A Cost Savings

Taco Bell and Pizza Hut Met U.S. Growth Target in 2008

Operating Profit Year-Over-Year Growth/(Decline)

2008 F

'08 F '09 F

Percent ChangeCommodities +10% +4%Labor +3% +3%Pricing ~5% +3-4%

Commodities ($ Millions)

U.S. Margins Impacted by Commodities …Partially Offset by Pricing

Mostly Carryover

Reducing Company Ownership to ~10%

Cumulative Financial Impact (estimate)

Margin Improvement ~2.5%

Op Profit Neutral to Slightly Dilutive

Pre Tax Proceeds(net of investments)

~$1.0 billion

Net Refranchising Gain ~$150 million

Yum ROIC + 3 points

18%15%

’07 ’08 F ’09 F ’10 F

Company Ownership

U.S. Business

U.S. Brands

Optimized Organizational Structure

Yum!/Shared Services

Yum! Corporate

U.S. Shared Services

Key Priorities in New Structure

Focused on U.S. CompanyRestaurants

Will Reduce Size withRefranchising

Owns Consumer Insightsand Brand Building

Clear Responsibility for Development

One System Operations

Increased KFC Investment

Corporate Strategy

Public CompanyResponsibilities

Performance Management

Know-How Building for System-Wide Innovation

Talent Development

Culture Design & Evolution

CorporateU.S. Shared ServicesU.S. Brands

U.S. Division G&A Cost Savings $60 Million

($ millions)

'08 F Reported '08 F Restated '09 F

$485$530

Like-for-Like Percent Change (11)%

$60 Million

Other Key Assumptions

2009 F

Share Reduction 2%

Tax Rate 27%

Interest Expense Down Slightly

Refranchising 500 Units

Yum! Global Key Metrics

Worldwide 2009 Improvement

Net Unit Growth +3%

System Sales Growth +9%

Franchise Fee Growth +11%

Restaurant Margin +1 point

Operating Margin +1 point

Note: System Sales Growth and Franchise Fee Growth on a local currency basis. Franchisee Fee Growth also excludes Special Items.

2009 Risks and Opportunities

Building on Our Consistent Track Record in 2009

+13% +13%

+13%+14%

+12%At least+10%

’02 ’03 ’04 ’05 ’06 ’07 ’08 F ’09 F

Earnings Per Share Growth

Note: Prior to special items. 2005 growth rate is also prior to the impact of expensing stock options.

Proactivelyplanned to cover risks

…Half of our 2009 profit growth already in-placeRecord YRI & China 2008 new units…on the groundSignificant U.S. G&A cost savings…$60 million

2009 YRI and China new unit development on track

Sales layer initiatives will be more broad-based

Improved KFC U.S. Performance

We’re Confident About 2009. . .

YUM 12 /10/08a

Economy & Finance