Fitch Ratings Affirms Yum! Brands At 'BB+'; Rating Outlook Revised to Positive.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 11, 2003

Fitch Ratings has affirmed the 'BB+' rating for Yum! Brands, Inc.'s (YUM) senior unsecured notes and unsecured $1.2 billion bank credit facility. The Rating Outlook is changed to Positive.

The affirmation reflects YUM's steady operating performance, continued growth in international markets, and stable leverage. The change in the Outlook reflects the expectation for continued success with YUM's multibranding initiative, and for improved leverage as debt levels are reduced from cash flow.

Same-store sales in the U.S. grew 2% on a blended basis in 2002 (not including Long John Silver's and A&W). Taco Bell had the strongest same-store sales of all YUM's brands in 2002. The first quarter of 2003 was slightly negative, but this is compared to 8% growth in the same quarter in 2001. Same-store sales have declined at KFC for the past two quarters due to a challenging comparison with the prior year and minimal promotional news. The intensified competition in the pizza category has also caused same-store sales to decline at Pizza Hut in the first quarter of 2003. Internationally, YUM should continue to generate good growth from its expansion of KFC and Pizza Hut in markets such as the UK, China, Korea and Mexico.

YUM has generated solid performance to-date from multibranding with recently-acquired Yorkshire BrandsGlobal Restaurants' Long John Silver's and A&W restaurants. In 2002, almost half of YUM's multibranding included one of these two brands and Fitch expects this number to increase significantly in 2003. The continuation of multibranding is an important component of YUM's strategy for the saturated and highly competitive U.S. market. Given the strong initial results, Fitch expects YUM will be able to sustain modest same-store sales growth in the near-to-immediate term.

Financial leverage was steady in 2002 despite the cash acquisition of Yorkshire for $320 million. Adjusted leverage (defined as debt plus eight times rent divided by EBITDA plus rent) remained at 3.0 times in 2002, the same as in 2001. Fitch expects leverage will decline in 2003, as free cash flow is directed toward a mix of debt reduction and share repurchases.

YUM franchises, operates or licenses approximately 33,000 restaurants in more than 100 countries. Core brands include KFC, Taco Bell and Pizza Hut each of which is a leader in its respective segment. YUM acquired Yorkshire Global Restaurants, Inc. (Yorkshire), owner of Long John Silver's and A&W All-American Food Restaurants, in May 2002 for $320 million, including assumed debt. YUM was established as Tricon Global Restaurants, Inc. through a tax-free spin-off from PepsiCo, Inc. in 1997. YUM changed its name after the Yorkshire acquisition.