Multibranding - Yum!

Dear Partners, I’m pleased to report 2003 2003 was was a a year year where
where
we showed the underlying power of our global portfolio of
leading restaurant brands. With continued profitable international
expansion led by dynamic growth in China, combined
with strong momentum at Taco Bell in the United States, we
achieved 13% earnings per share growth prior to special items.
Table of Contents
Infc Dear Partners
7 Yum! Dynasty Model
8 Global Powerhouse
10 Yum! Restaurants International
continues to be our Growth Engine!
12 Brand Power x5
14 Taco Bell
Think Outside the the Bun
Bun
This growth was achieved in spite of a challenging worldwide environment which included war
in Iraq, SARS in Asia, and a generally soft economy the first half of the year. Highlights include
over $1 billion in operating profit, over $1 billion in cash from operating activities, and nearly
$1 billion in franchise fees. In so doing, we once again achieved one of the industry’s leading
returns on invested capital at 18%. After paying off $2.6 billion in debt the past six years, we
now have the power of an investment-grade quality balance sheet. Given this strong performance
and increasing financial strength, our share price climbed 42% in 2003, and our annual return
to shareholders is 14% since becoming a public company in 1997.
Going forward, we are quite confident we can continue to achieve our goals of growing our
earnings per share at least 10% each year. We have three powerfully unique growth opportunities
that differentiate us from our competition. After reading this report, I hope you’ll agree
that we are NOT YOUR ORDINARY RESTAURANT COMPANY.
Let me explain why we think so.
#1. Driving Profitable GLOBAL Growth
On the international front we have an undeniable competitive advantage and
undeniable growth opportunity with two global brands, KFC and Pizza Hut.
This year we set another record as we opened 1,108 new restaurants outside
the United States. That’s the third year in a row we’ve opened 1,000 or more.
Yum! Restaurants International is now our largest and fastest growing division, generating
$441 million in operating profit and 22% growth in 2003. To put this in perspective, the international
team contributed $172 million in 1997, excluding charges for facility actions.
The root of this exciting growth stems from the competitive advantage of the tremendous
infrastructure we already have in place. Today, we have strong local teams around the world,
operate in over 100 countries with established supply chains, and have nearly 600 international
franchisees.
16 Pizza Hut
Gather ’Round the Good Stuff
18 KF KFC KF C What’s Cookin’
20 Long John Silver’s/A&W
22 Power of of Choice
Choice
24 Customer Mania Power
26 100% 100% CHAMPS CHAMPS with with a a Yes!
Yes!
28 Running Running Great Great Restaurants
Restaurants
29 Yum! At-a-glance
30 Global Facts
31 Unit Information
32 Power of Results:
Yum! Financial Highlights
33 Financials
Inbc Power of Giving Back