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Yum! Brands Reports Second-Quarter EPS Growth Of 1%, Or $0.67 Per Share, Excluding Special Items; Projects Record International New-Unit Development For The Year; Reconfirms Full-Year 2012 EPS Growth Forecast Of At Least 12%

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 to Date
6/16/12     6/11/11 6/16/12     6/11/11
Detail of Special Items
U.S. Refranchising gain (loss) (d) $ 9 $ (8 ) $ 54 $ (7 )
Gain upon acquisition of Little Sheep (e) 74
Loss associated with the planned refranchising of the Pizza Hut UK business (f) (2 ) (23 )
Losses and other costs relating to the LJS and A&W divestitures (g) (1 ) (69 )
Other Special Items   7     3     10     5  
Total Special Items Income (Expense) 14 (6 ) 115 (71 )
Tax Benefit (Expense) on Special Items   (2 )   2     (9 )   26  
Special Items Income (Expense), net of tax $ 12   $ (4 ) $ 106   $ (45 )
Average diluted shares outstanding   477     484     478     485  
Special Items diluted EPS $ 0.02   $ (0.01 ) $ 0.22   $ (0.09 )
 
Reconciliation of Operating Profit Before Special Items to Reported Operating Profit
Operating Profit Before Special Items $ 459 $ 425 $ 1,003 $ 891
Special Items Income (Expense)   14     (6 )   115     (71 )
Reported Operating Profit $ 473   $ 419   $ 1,118   $ 820  
 
Reconciliation of EPS Before Special Items to Reported EPS
Diluted EPS Before Special Items $ 0.67 $ 0.66 $ 1.43 $ 1.29
Special Items EPS   0.02     (0.01 )   0.22     (0.09 )
Reported EPS $ 0.69   $ 0.65   $ 1.65   $ 1.20  
 
Reconciliation of Effective Tax Rate Before Special Items to Reported Effective Tax Rate
Effective Tax Rate Before Special Items 23.9 % 16.7 % 25.9 % 22.1 %
Impact on Tax Rate as a result of Special Items   (0.2 )%   (0.3 )%   (2.0 )%   (1.4 )%
Reported Effective Tax Rate   23.7 %   16.4 %   23.9 %   20.7 %
 
 

YUM! Brands, Inc. Segment Results (amounts in millions) (unaudited)
                       
Quarter Ended 6/16/12 China YRI

UnitedStates
India

CorporateandUnallocated
Consolidated
Total revenues $ 1,556   $ 770   $ 818   $ 24   $   $ 3,168  
 
Company restaurant expenses 1,295 509 520 20 (5 ) 2,339
General and administrative expenses 81 102 116 6 41 346
Franchise and license expenses 2 11 13 26
Closures and impairment (income) expenses 2 (1 ) 3 4
Refranchising (gain) loss (13 ) (13 )
Other (income) expense   (6 )   (1 )               (7 )
  1,374     620     652     26     23     2,695  
Operating Profit (loss) $ 182   $ 150   $ 166   $ (2 ) $ (23 ) $ 473  
 
 
 
 
Quarter Ended 6/11/11 China YRI

UnitedStates
India

CorporateandUnallocated
Consolidated
Total revenues $ 1,180   $ 735   $ 883   $ 18   $   $ 2,816  
 
Company restaurant expenses 935 479 620 14 (3 ) 2,045
General and administrative expenses 67 91 102 6 42 308
Franchise and license expenses 1 12 22 (1 ) (1 ) 33
Closures and impairment (income) expenses 3 7 9 19
Refranchising (gain) loss 5 5
Other (income) expense   (8 )       (2 )       (3 )   (13 )
  998     589     751     19     40     2,397  
Operating Profit (loss) $ 182   $ 146   $ 132   $ (1 ) $ (40 ) $ 419  
 

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

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