<SUBMISSION>
<ACCESSION-NUMBER>0001041061-02-000019
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020907
<FILING-DATE>20021017
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>YUM BRANDS INC
<CIK>0001041061
<ASSIGNED-SIC>5812
<IRS-NUMBER>133951308
<STATE-OF-INCORPORATION>NC
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-13163
<FILM-NUMBER>02791345
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1441 GARDINER LANE
<CITY>LOUISVILLE
<STATE>KY
<ZIP>40213
<PHONE>5028748300
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1900 COLONEL SANDERS LANE
<CITY>LOUISVILLE
<STATE>KY
<ZIP>40213
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>GREAT AMERICAN RESTAURANT CO
<DATE-CHANGED>19970618
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>TRICON GLOBAL RESTAURANTS INC
<DATE-CHANGED>19970627
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q3q02.htm
<DESCRIPTION>YUM! BRANDS, INC. FORM 10Q, THIRD QUARTER 2002
<TEXT>
<HTML>
<head>
<title>Form 10Q, Third Quarter 2002</title>
</head>
<body>

<HR ALIGN=LEFT WIDTH=100% SIZE=5 NOSHADE>

<H2 ALIGN="CENTER"><font size="5">UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION</font></H2>

<P ALIGN=CENTER>Washington, D. C. 20549</p>

<HR Size="1" width="15%" align="center" noshade>

<H2 ALIGN="CENTER"><font size="5">FORM 10-Q</font></H2>

<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="bottom">
<td align="left" colspan="2"><b>(Mark One)</B></td></tr>
<tr valign="top">
<td align="left" width="3%"><b>[X]&nbsp;&nbsp;</b></td>
<td width="97%"><p align="justify"><b>QUARTERLY  REPORT  PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 <BR></b>for the
quarterly  period ended September 7, 2002</p></td>
</tr>
</table>

<br>

<P ALIGN="CENTER">OR</p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left" width="3"><b>[&nbsp;&nbsp;]&nbsp;&nbsp;</b></td>
<td width="97%"><p align="left"><b>TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></p></td>
</tr>
</table>

<br>

<p align="center"><b>For the transition period from ____________ to
_________________</b></p>

<br>

<P ALIGN="CENTER"><b>Commission file number 1-13163</b></p>

<HR SIZE=1 WIDTH=15% ALIGN=CENTER NOSHADE>

<H2 ALIGN="CENTER"><font size="5"><b>YUM! BRANDS, INC.</b></font></h2>

<h4 align="center"><font size="2">(Exact name of registrant as
specified in its charter)</font></h4>

<table width="100%">
<tr valign="bottom">
<td width="35%" align="center"><u>North Carolina</u></td>
<td width="1%">&nbsp;&nbsp;</td>
<td width="64%" align="center"><u>13-3951308</u></td></tr>
<tr valign="top">
<td align="center">(State or other jurisdiction of<br>
         incorporation or organization)</td>
<td width="20%">&nbsp;&nbsp;</td>
<td align="center">(I.R.S. Employer<br>Identification No.)</td></tr>
<tr>
<td width="20%">&nbsp;&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;</td></tr>
<tr valign="bottom">
<td align="center" colspan="2">1441 Gardiner Lane, Louisville, Kentucky</td>
<td align="center">40213</td></tr>
<tr valign="bottom">
<td align="center" colspan="2">(Address of principal executive offices)</td>
<td align="center">(Zip Code)</td></tr>
<tr>
<td>&nbsp;&nbsp;&nbsp;</td>
<td width="20%">&nbsp;&nbsp;</td>
<td>&nbsp;&nbsp;</td></tr>
<tr valign="bottom">
<td Align="center" colspan="3">&nbsp;&nbsp;&nbsp;Registrant's telephone
number, including area code:&nbsp;&nbsp;&nbsp;&nbsp;(502) 874-8300</td></tr>
</table>

<br><br>

<P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark
whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.&nbsp;&nbsp;Yes&nbsp;<u>&nbsp;&times;&nbsp;</u>
&nbsp;No&nbsp;<u>&nbsp;&nbsp;&nbsp;</u></P>

<P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares outstanding of the Registrant's Common Stock as of
October 15, 2002 was 295,538,670 shares.</P>


<HR ALIGN=LEFT WIDTH=100% SIZE=5 NOSHADE>
<BR><BR>





<p align=center><b>YUM! BRANDS, INC.<BR><BR>
INDEX</b></P><BR><BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH>Page No.<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="90%" ALIGN="LEFT">Part I.  Financial Information</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1 - Financial Statements</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link1">Condensed Consolidated Statements of Income - 12 and 36 weeks ended September 7, 2002,</A></TD>
     <TD ALIGN="RIGHT">3&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link1">and September 8, 2001</A></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link2">Condensed Consolidated Statements of Cash Flows - 36 weeks ended September 7, 2002 and</A></TD>
     <TD ALIGN="RIGHT">4&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link2">September 8, 2001</A></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link3">Condensed Consolidated Balance Sheets as of  September 7, 2002 and December 29, 2001</A></TD>
     <TD ALIGN="RIGHT">5&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link4">Notes to Condensed Consolidated Financial Statements</A></TD>
     <TD ALIGN="RIGHT">6&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link5">Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations</A></TD>
     <TD ALIGN="RIGHT">19&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link6">Item 3 - Quantitative and Qualitative Disclosures About Market Risk</A></TD>
     <TD ALIGN="RIGHT">33&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link7">Item 4 - Disclosure Controls</A></TD>
     <TD ALIGN="RIGHT">35&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#link8">Independent Accountants' Review Report</A></TD>
     <TD ALIGN="RIGHT">36&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><A HREF="#link9">Part II. Other Information and Signatures</A></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1 - Legal Proceedings</TD>
     <TD ALIGN="RIGHT">37&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 6 - Exhibits and Reports on Form 8-K</TD>
     <TD ALIGN="RIGHT">37&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signatures</TD>
     <TD ALIGN="RIGHT">39&nbsp;</TD></TR>
</TABLE>


<BR><BR>
<P ALIGN=CENTER>2</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P><B>PART I - FINANCIAL INFORMATION</b></P>
<P><B>Item 1.  Financial Statements</b></P>

<P><B><A NAME="link1">CONDENSED CONSOLIDATED STATEMENTS OF INCOME</A></b><BR>
YUM! BRANDS, INC. AND SUBSIDIARIES<BR>
 (in millions, except per share data - unaudited)</P><BR><BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
     <TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT"><B>Revenues</B></TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1,705</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1,449</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;4,702</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;4,191</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Franchise and license fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">210</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">191</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">594</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">560</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,915</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,640</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5,296</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4,751</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Costs and Expenses, net</B></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company restaurants</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Food and paper</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">517</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">457</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,438</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,309</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Payroll and employee benefits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">457</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">391</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,274</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,152</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Occupancy and other operating expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">450</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">388</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,224</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,125</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,424</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,236</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3,936</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3,586</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">General and administrative expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">219</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">177</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">616</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">540</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Franchise and license expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">31</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">45</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other (income) expense</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(7</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(6</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(20</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(15</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(9</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(25</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unusual items (income) expense</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(4</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(24</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total costs and expenses, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,657</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,409</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4,571</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4,129</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><B>Operating Profit</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">258</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">231</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">725</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">622</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>Interest expense, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">45</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><b>Income Before Income Taxes</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">195</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">613</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">510</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR>Income tax provision</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">66</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">71</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">202</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">182</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><b>Net Income</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;147</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;124</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;411</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;328</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><b>Basic Earnings Per Common Share</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;0.49</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;0.42</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;1.39</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;1.11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><b>Diluted Earnings Per Common Share</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;0.47</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;0.40</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;1.32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;1.08</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>

</TABLE>

<BR>

<p>See accompanying Notes to Condensed Consolidated Financial Statements.</p><BR><BR>


<BR><BR>
<P ALIGN=CENTER>3</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<p><b><A NAME="link2">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</A></B><BR>
YUM! BRANDS, INC. AND SUBSIDIARIES<BR>
(in millions - unaudited)<BR></p>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="81%" ALIGN="LEFT"><b>Cash Flows - Operating Activities</B></TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Net Income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;411</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;328</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Adjustments to reconcile net income to net cash provided by operating</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;activities:</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">244</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">243</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(25</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Unusual items (income) expense</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(7</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(6</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities and deferred credits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(10</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(22</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Other non-cash charges and credits, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">21</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Changes in operating working capital, excluding effects of acquisitions and</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;dispositions:</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Accounts and notes receivable</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">34</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">91</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Inventories</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(5</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(5</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other current liabilities</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(26</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(55</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">93</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">86</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Net change in operating working capital</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">118</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Net Cash Provided by Operating Activities</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">835</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">634</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Cash Flows - Investing Activities</B></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Capital spending</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(461</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(360</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Proceeds from refranchising of restaurants</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">67</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">73</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisition of Yorkshire Global Restaurants, Inc.</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(275</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisition of restaurants from franchisees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(13</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(102</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Short-term investments</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(3</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Sales of property, plant and equipment</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">33</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">15</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">35</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Net Cash Used in Investing Activities</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(650</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(341</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Cash Flows - Financing Activities</B></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Proceeds from Senior Unsecured Notes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">398</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">842</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Revolving Credit Facility activity, by original maturity</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Three months or less, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">79</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(872</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Proceeds from long-term debt</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Repayments of long-term debt</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(498</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(256</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Short-term borrowings-three months or less, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(25</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">119</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Repurchase shares of common stock</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(161</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(98</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Employee stock option proceeds</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">110</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(15</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(10</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Net Cash Used in Financing Activities</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(112</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(242</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Effect of Exchange Rate on Cash and Cash Equivalents</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Net Increase in Cash and Cash Equivalents</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">76</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">51</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Cash and Cash Equivalents - Beginning of Period</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">110</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">133</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><b>Cash and Cash Equivalents - End of Period</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;186</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;184</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>


<BR><BR>

<HR SIZE=1 NOSHADE>
<p>See accompanying Notes to Condensed Consolidated Financial Statements.</P>
<BR><BR>
<p align=center>4</p>
<HR SIZE=1 NOSHADE>
<BR><BR>



<p><b><A NAME="link3">CONDENSED CONSOLIDATED BALANCE SHEETS</A></B><BR>
YUM! BRANDS, INC. AND SUBSIDIARIES<BR>
(in millions)</p>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">12/29/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">(unaudited)</TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="81%" ALIGN="LEFT"><B>ASSETS</b></TD>
     <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Current Assets</b></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Cash and cash equivalents</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;186</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;110</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Short-term investments, at cost</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">39</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">35</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Accounts and notes receivable, less allowance: $46 in 2002 and $77 in 2001</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">163</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">175</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Inventories</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">63</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">56</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Assets classified as held for sale</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">44</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Prepaid expenses and other current assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">77</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">92</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Deferred income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">83</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">79</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">619</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">591</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Property, plant and equipment, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,922</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,737</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Goodwill, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">301</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">59</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Intangible assets, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">104</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">399</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Investments in unconsolidated affiliates</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">219</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">993</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">389</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;5,158</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;4,388</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</b></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Current Liabilities</b></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Accounts payable and other current liabilities</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1,031</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;995</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Income taxes payable</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">256</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">114</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Short-term borrowings</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">138</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">696</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Total Current Liabilities</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,425</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,805</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Long-term debt</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,317</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,552</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other liabilities and deferred credits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">883</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">927</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4,625</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4,284</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>Shareholders&#146; Equity</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Preferred stock, no par value, 250 shares authorized; no shares issued</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Common stock, no par value, 750 shares authorized; 296 shares and 293 shares</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;issued in 2002 and 2001, respectively</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,095</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,097</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Accumulated deficit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(375</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(786</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Accumulated other comprehensive income (loss)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(187</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(207</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Shareholders&#146; Equity</b></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">533</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">104</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Shareholders&#146; Equity</B></TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;5,158</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;4,388</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>

</TABLE>

<BR><BR>


<HR SIZE=1 NOSHADE>
<P>See accompanying Notes to Condensed Consolidated Financial Statements.</P>
<BR><BR>
<p align=center>5</P>
<HR SIZE=1 NOSHADE><BR><BR>




<P><B><A NAME="link4">NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</A></b><BR>
(Tabular amounts in millions, except per share data)<BR>
(Unaudited)</p><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>1.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B>Financial
Statement Presentation</b> </P></TD>
</TR>
</TABLE>
<BR>

<P>We have prepared our accompanying  unaudited  Condensed  Consolidated  Financial  Statements
(&#147;Financial  Statements&#148;) in  accordance with the rules and  regulations of the
Securities and Exchange  Commission for interim  financial  information.  Accordingly,
they do not  include all of the  information  and  footnotes  required by  accounting
principles  generally  accepted in the United States of America for complete financial
statements.  Therefore,  we suggest that the accompanying  Financial  Statements be read
in conjunction with the Consolidated  Financial Statements and notes thereto included in
our  annual  report on Form 10-K for the fiscal year ended  December 29, 2001 (&#147;2001
Form 10-K&#148;).  Except as disclosed  herein,  there has been no material  change in
the  information  disclosed in the notes to our Financial  Statements
included in the 2001 Form 10-K. </P>

<P>On May 16, 2002,  Tricon Global  Restaurants,  Inc. changed its name to YUM!  Brands,
Inc. in order to better reflect our  expanding  portfolio of brands. In addition,  on the
same day Tricon  Restaurants  International  changed its name to YUM!  Restaurants
International.</P>

<P>Our Financial  Statements include YUM! Brands, Inc. and its wholly owned subsidiaries
(collectively  referred to as &#147;YUM&#148; or the  &#147;Company&#148;).  The
Financial  Statements  include our worldwide  operations of KFC,  Pizza Hut, Taco Bell
and, since  May 7, 2002, Long John Silver&#146;s (&#147;LJS&#148;) and A&amp;W All-American
Food Restaurants  (&#147;A&amp;W&#148;), which were added when we acquired  Yorkshire  Global
Restaurants,  Inc.  (&#147;YGR&#148;).  References to YUM throughout  these notes to our
Financial  Statements are made using the first person notations of &#147;we,&#148; &#147;us&#148; or
&#147;our.&#148;</P>

<P>Our preparation of the accompanying  Financial  Statements in conformity with
accounting  principles generally accepted in  the United States of America  requires us
to make estimates and  assumptions  that affect  reported  amounts of assets and
liabilities,  disclosure of contingent  assets and liabilities at the date of the
Financial  Statements,  and the reported  amounts of revenues and expenses during the
reporting period.  Actual results could differ from the estimates.</P>

<P>In our opinion, the accompanying  Financial  Statements include all adjustments
considered  necessary to present fairly,  when read in conjunction  with our 2001 Form
10-K, our financial  position as of September 7, 2002, and the results of our  operations
for the 12 and 36 weeks ended  September  7, 2002 and  September 8, 2001 and cash flows
for the 36 weeks ended  September  7, 2002 and  September  8, 2001.  Our results of
operations  for these  interim  periods  are not  necessarily  indicative of the results
to be expected for the full year.</P>

<P>We have  reclassified  certain items in the  accompanying  Financial  Statements and
Notes to the Financial  Statements in  order to be comparable with the current
classifications.  These  reclassifications  had no effect on previously  reported  net
income.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>2.</b></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B><A NAME="link12">Acquisition
of YGR</A></b> </P></TD>
</TR>
</TABLE>
<BR>

<P>On May 7, 2002,  YUM completed its  acquisition  of YGR. As of the date of the
acquisition,  YGR consisted of 742 and 496  company and  franchise  LJS units,
respectively,  and 127 and 742  company  and  franchise  A&amp;W units,  respectively.  In
addition,  133  multibranded  LJS/A&amp;W restaurants  were  included in the LJS unit totals.
This  acquisition  was made to  facilitate meeting our strategic objective of achieving
growth through  multi-branding,  where two or more of our Concepts  are operated in a
single restaurant unit.</P>

<BR><BR>
<P ALIGN=CENTER>6</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P>We paid approximately  $275 million in cash and assumed  approximately $48 million of
bank indebtedness in connection with  the  acquisition  of YGR.  The bank  indebtedness
was paid off prior to the end of the second  quarter  of 2002.  We also  assumed
approximately $168 million in present  value of future rent  obligations  related to
sale-leaseback  agreements  entered into by YGR prior to 2001 involving  approximately
350 LJS units.  As a result of liens held by the  buyer/lessor  on certain  personal
property within the units, the  sale-leaseback  agreements have been accounted for as
financings and  are reflected as debt in our Financial  Statements  and the related
assets remain on our Condensed  Consolidated  Balance  Sheet.  This obligation plus
approximately $11 million of capital lease  obligations  assumed have been reflected on
our  Condensed Consolidated  Balance Sheet as of September 7, 2002 as Short-term
borrowings ($2 million) and Long-term  debt  ($177 million).</P>

<P>We have  retained  a third  party  valuation  expert to assist us in the  valuation
of  assets  acquired.  We  anticipate  completion of this  valuation and a  preliminary
purchase  price  allocation  prior to December 28, 2002,  the end of our  fiscal year. As
of September 7, 2002,  approximately  $523 million of purchase  price to be allocated is
included in Other  assets  on the  Condensed  Consolidated  Balance  Sheet.  Purchase
price  to be  allocated  includes  the  cash  paid and  liabilities  assumed as described
in the previous  paragraph,  as well as a working capital deficit of $21 million assumed
upon  acquisition.  We have estimated the effects of the allocation on earnings in the
Condensed  Consolidated  Statements  of Income for the 12 and 36 weeks ended  September
7, 2002.  We do not believe that  completion  of the  allocation  will  result in
material differences from the estimates included in our Condensed Consolidated Statements
of Income.</P>


<P>If the acquisition had been completed as of the beginning of the periods  indicated
below,  pro forma company sales,  and  franchise  and license  fees for the 12 weeks
ended  September 8, 2001,  and for the 36 weeks ended  September 7, 2002 and  September
8, 2001 would have been as follows:</P>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
      <TR VALIGN="BOTTOM">
     <TD WIDTH="43%" ALIGN="LEFT">Company sales</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="11%" ALIGN="RIGHT">$1,574</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="11%" ALIGN="RIGHT">$4,911</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="11%" ALIGN="RIGHT">$4,574</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Franchise and license fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">197</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">603</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">576</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>

<BR>


<P>The  estimated impact of the  acquisition  on net  income  and  diluted  earnings  per share for
these  periods  would not have been  material.</P>

<P>The pro forma  information  is not  necessarily  indicative  of the results of
operations  had the  acquisition  actually  occurred at the beginning of each of these
periods nor is it necessarily indicative of future results.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>3.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B><A NAME="link13">Recently
Adopted Accounting Pronouncements</A></b> </P></TD>
</TR>
</TABLE>
<BR>

<P><U>Goodwill and Intangible Assets</U></P>

<P>The Company has adopted Statement of Financial  Accounting  Standards  (&#147;SFAS&#148;)
No. 141,  &#147;Business  Combinations&#148; (&#147;SFAS  141&#148;).  SFAS 141 requires
the use of the purchase  method of  accounting  for all business  combinations  and
modifies the  application  of the  purchase  accounting  method.  SFAS 141 also
specifies  criteria to be used in  determining  whether  intangible  assets  acquired in
a purchase  method business  combination  must be recognized and reported  separately
from  goodwill.  Prior to the  adoption of SFAS 141,  the  Company&#146;s  business
combinations  primarily  consisted  of acquiring  restaurants  from our  franchisees  and
have been  accounted  for using the  purchase  method of  accounting.  The primary
intangible asset to which we generally  allocated value in these business  combinations
was reacquired  franchise  rights.  We have  determined  that  reacquired  franchise
rights do not meet the criteria of SFAS 141 to be recognized as an asset  apart from
goodwill.  Accordingly,  on December 30, 2001 we reclassified  reacquired  franchise
rights to goodwill in the  amount of $241 million, net of related deferred tax
liabilities of $53 million.</P>

<BR><BR>
<P ALIGN=CENTER>7</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P>The Company has also adopted SFAS No. 142,  &#147;Goodwill and Other Intangible  Assets&#148; (&#147;SFAS
142&#148;).  SFAS 142 eliminates the  requirement to amortize goodwill and
indefinite-lived  intangible assets,  addresses the amortization of intangible assets
with a defined  life,  and addresses  impairment  testing and  recognition  for goodwill
and  indefinite-lived  intangible  assets.  SFAS 142 applies to goodwill and  intangible
assets  arising from  transactions  completed  before and after its  effective  date.  As
a result of adopting SFAS 142, we ceased  amortization  of goodwill and  indefinite-lived
intangible  assets  beginning  December  30,  2001.  Additionally,  in  accordance  with
the  requirements  of SFAS 142, we  completed  separate  transitional  impairment  tests
of goodwill and  indefinite-lived  intangible  assets,  as of December 30, 2001,  which
indicated that there was no impairment.</P>

<P>The following  table provides a  reconciliation  of reported net income to adjusted
net income as though SFAS 142 had been  effective for the 12 and 36 weeks ended September
8, 2001:</P>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">12 Weeks Ended 9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Amount<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Basic EPS<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Diluted EPS<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="45%" ALIGN="LEFT">Reported net income</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$124</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$0.42</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">$0.40</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Add back amortization expense (net of tax):</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Goodwill</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">0.02</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">0.02</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Adjusted net income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$130</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$0.44</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$0.42</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">36 Weeks Ended 9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Amount<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Basic EPS<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Diluted EPS<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="57%" ALIGN="LEFT">Reported net income</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$328</TD>
        <TD WIDTH="7%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">$1.11</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">$1.08</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Add back amortization expense (net of tax):</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Goodwill</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">0.06</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">0.06</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Adjusted net income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$345</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1.17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1.14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>


<P>The changes in the carrying amount of goodwill on a quarter-to-date and year-to-date
basis in 2002 are as follows:</P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">United States<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT">Balance as of June 15, 2002</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">$&nbsp;169</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$129</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$298</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisitions, disposals and other, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Balance as of September 7, 2002(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;167</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$134</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$301</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">United States<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="51%" ALIGN="LEFT">Balance as of December 29, 2001</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">$&nbsp;&nbsp;21</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;&nbsp;38</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;&nbsp;59</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Reclassification of reacquired franchise rights(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">145</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">96</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">241</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisitions, disposals and other, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Balance as of September 7, 2002(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$167</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$134</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$301</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Amounts
reported net of deferred tax liabilities of $27 million for the U.S. and $26 million for
International. </P></TD>
</TR>
</TABLE>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Balances
do not  include any  goodwill  that will be recorded  upon the  completion  of the YGR
purchase  price  allocation. </P></TD>
</TR>
</TABLE>
<BR>

<P>Indefinite-lived  intangible  assets as of  September 7, 2002  totaled $31 million and
consisted of acquired  trademarks.  Amortizable  intangible assets at September 7, 2002
totaled $73 million,  net of accumulated  amortization of $76 million,  and consisted
primarily of franchise  contract  rights.  Amortization  expense for the 12 and 36 weeks
ended September 7,  2002  was  approximately  $1  million  and $3  million,
respectively.  On an</p>

<BR><BR>
<P ALIGN=CENTER>8</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>annual  basis,  amortization  expense  will  approximate $4 million
for each of the next five years.  This amount excludes  amortization of any intangibles
that might  be established in connection with the acquisition of YGR.</P>

<P><U>Impairment or Disposal of Long-Lived Assets</U></P>

<P>Effective  December 30, 2001, the Company adopted SFAS No. 144,&#147;Accounting for
the Impairment or Disposal of Long-Lived Assets&#148; (&#147;SFAS 144&#148;).  SFAS 144
retained  many of the  fundamental  provisions  of SFAS No. 121, &#147;Accounting  for
the  Impairment  of  Long-Lived  Assets and for  Long-Lived  Assets to Be  Disposed  Of&#148; (&#147;SFAS
121&#148;),  but  resolved  certain  implementation  issues  associated  with that
Statement.  The adoption of SFAS 144 did not have a material  impact on the  Company&#146;s
consolidated results of operations.</P>

<P>SFAS 144 also  requires the results of  operations  of a component  entity that is
classified as held for sale or has been  disposed  of be  reported  as  discontinued
operations  in the  Condensed  Consolidated  Statements  of Income if certain  conditions
are met. These  conditions  include  elimination of the operations and cash flows of the
component  entity from  the ongoing  operations of the Company and no significant
continuing  involvement by the Company in the operations of the  component  entity after
the disposal  transaction.  The results of operations of stores meeting both these
conditions that  were  disposed of in the 12 and 36 weeks ended  September 7, 2002 or
classified as held for sale at September 7, 2002 were  not material for the 12 and 36
weeks ended September 7, 2002 or September 8, 2001.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>4.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B><A NAME="link11">New
Accounting Pronouncements Not Yet Adopted</A></b> </P></TD>
</TR>
</TABLE>
<BR>

<P>In August 2001, the Financial  Accounting  Standards Board (&#147;FASB&#148;) issued
SFAS No. 143,  &#147;Accounting for Asset Retirement  Obligations&#148; (&#147;SFAS 143&#148;),
which will be effective for the Company  beginning  fiscal year 2003.  SFAS 143 addresses
the  financial  accounting and reporting for obligations  associated with the retirement
of tangible  long-lived assets and the  associated  asset  retirement  costs.  We have
not yet  determined  the  impact  of  adopting  SFAS  143 on the  Company&#146;s
Financial Statements.</P>

<P>In June 2002, the FASB issued SFAS No. 146,  &#147;Accounting  for Costs  Associated
with Exit or Disposal  Activities&#148; (&#147;SFAS  146&#148;).  This  statement
addresses  significant  issues  regarding the  recognition,  measurement,  and reporting
of costs  associated  with exit or  disposal  activities,  and  nullifies  Emerging
Issues Task Force  Issue No.  94-3,  &#147;Liability  Recognition  for Certain  Employee
Termination  Benefits  and Other Costs to Exit an Activity  (including  Certain  Costs
Incurred in a  Restructuring).&#148; Costs  addressed by SFAS 146 include  costs to
terminate a contract that is not a capital  lease,  costs  of  involuntary  employee
termination  benefits  pursuant  to a  one-time  benefit  arrangement,  costs to
consolidate  facilities,  and  costs to  relocate  employees.  This  statement  will be
effective  for  exit or  disposal  activities  that are  initiated  after  December  31,
2002.  We do not expect the adoption of SFAS 146 to have a material  impact on our
consolidated results of operations, cash flows or financial position.</P>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>5.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B> Two-for-One
Common Stock Split</b> </P></TD>
</TR>
</TABLE>
<BR>

<P>On May 7,  2002,  the  Company  announced  that its Board of  Directors  approved  a
two-for-one  split of the  Company's  outstanding  shares of Common  Stock.  The stock
split was  effected in the form of a stock  dividend  and  entitled  each  shareholder
of record at the  close of  business  on June 6, 2002 to  receive  one share for every
outstanding  share of  Common Stock held on the record date.  The stock  dividend  was
distributed  on June 17,  2002,  with  approximately  149  million  shares of common
stock  distributed.  All per share and share amounts in the  accompanying  Financial
Statements  and Notes to the Financial Statements have been adjusted to reflect the stock
split.</P>

<BR><BR>
<P ALIGN=CENTER>9</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>6.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><b> Earnings
Per Common Share (&#147;EPS&#148;)</b> </P></TD>
</TR>
</TABLE>
<BR>





<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="LEFT">Net income</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;147</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;124</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;411</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;328</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><U>Basic EPS</U></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Weighted-average common shares outstanding</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">297</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">294</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">296</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">294</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Basic EPS</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;0.49</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;0.42</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1.39</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1.11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><U>Diluted EPS</u></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Weighted-average common shares outstanding</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">297</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">294</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">296</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">294</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Shares assumed issued on exercise of dilutive share</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;equivalents</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">55</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">54</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">58</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">54</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Shares assumed purchased with proceeds of dilutive share</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;equivalents</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(40</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(42</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(42</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(44</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Shares applicable to diluted earnings</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">312</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">306</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">312</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">304</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Diluted EPS</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;0.47</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;0.40</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1.32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1.08</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<P>Unexercised  employee stock options to purchase  approximately 1 million shares of our
Common Stock for both the 12 and 36  weeks ended  September 7, 2002 were not included in
the  computation  of diluted EPS because  their  exercise  prices were  greater than the
average market price of our Common Stock during the 12 and 36 weeks ended September 7,
2002.</P>

<P>Unexercised  employee stock options to purchase  approximately  6.3 million and 7.0
million shares of our Common Stock for  the 12 and 36 weeks ended  September 8, 2001,
respectively,  were not included in the  computation of diluted EPS because  their
exercise  prices were greater  than the average  market price for our Common Stock during
the 12 and 36 weeks ended  September 8, 2001.</P>

<P>During the 36 weeks ended  September 7, 2002,  we granted  employee  stock options to
purchase  approximately  6.5 million  shares  of our  Common  Stock  at an  exercise
price  equal  to the  average  market  price  on the  date of  grant.  The
weighted-average exercise price of these options was approximately $25 per share.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>7.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B>Comprehensive
Income</b> </P></TD>
</TR>
</TABLE>
<BR>

<P>Comprehensive income was as follows:</P>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="64%" ALIGN="LEFT">Net income</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$147</TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;124</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;411</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;328</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Foreign currency translation adjustment arising during</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;the period</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(3</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">19</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(8</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Foreign currency translation adjustment included</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;in net income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Changes in fair value of derivatives</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(9</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Reclassification of derivative (gains) losses  to net</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(7</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total comprehensive income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$174</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;121</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;431</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;323</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<BR><BR>
<P ALIGN=CENTER>10</P>
<HR NOSHADE SIZE=1>
<BR><BR>




<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>8.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B><A NAME="link10">Items
Affecting Comparability of Net Income</A></b> </P></TD>
</TR>
</TABLE>
<BR>

<P><U>Facility Actions Net Loss (Gain)</U></P>

<P>Facility actions net loss (gain) consists of the following three components:</P>

<UL><LI>Refranchising net (gains) losses;<BR>
<LI>Store closure costs; and<BR>
<LI>Impairment of  long-lived  assets for stores we intend to continue to use in the business and stores we intend to
         close.</ul>

<P>The following table summarizes the impact of facility actions net loss (gain):</P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">12 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
 <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
 <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="64%" ALIGN="LEFT">Refranchising net (gains) losses(a)</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;-</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;(3</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;(3</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store closure costs</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store impairment charges(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR><BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">12 Weeks Ended 9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
   </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="LEFT">Refranchising net (gains) losses (a)</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(13</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(1</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(14</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store closure costs</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store impairment charges</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(9</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$&nbsp;-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(9</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">36 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="LEFT">Refranchising net (gains) losses (a)</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(4</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(5</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(9</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store closure costs</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store impairment charges(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;19</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">36 Weeks Ended 9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
 </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="LEFT">Refranchising net (gains) losses (a)</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(42</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(7</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(49</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store closure costs</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store impairment charges</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net loss (gain)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(25)</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(25</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a)</TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
initial  franchise  fees of $4 million  and $3 million  for the 12 weeks  ended
September  7, 2002 and  September  8,  2001,  respectively,  and $5 million  and $6
million  for the 36 weeks  ended  September  7, 2002 and  September 8, 2001, respectively. </P></TD>
</TR>
</TABLE>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Store
impairment  charges  for the  International  segment  for the 12 and 36  weeks  ended
September  7,  2002  primarily  includes the  impairment  of our Pizza Hut Germany
market which we anticipate  refranchising.  Pizza Hut Germany  does not yet meet the SFAS 144
criteria to be held for sale. </P></TD>
</TR>
</TABLE>
<BR>

<BR><BR>
<P ALIGN=CENTER>11</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>The following  table  summarizes the carrying values of the major classes of assets
held for sale at September 7, 2002 and  December 29, 2001. The carrying  values of
liabilities  held for sale at September 7, 2002 and December 29, 2001 were not
significant.  Carrying  values  at  September  7,  2002  primarily  represent  land  on
which  we  previously  operated  restaurants.  The carrying  values in  International  at
December 29, 2001  principally  include our  Singapore  business,  which we sold during
the third quarter at a price approximately equal to its carrying value.</P>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">September 7, 2002<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="68%" ALIGN="LEFT">Property, plant and equipment, net</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$6</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$1</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$7</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Assets classified as held for sale</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">December 29, 2001<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="68%" ALIGN="LEFT">Property, plant and equipment, net</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$8</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$32</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$40</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Assets classified as held for sale</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$44</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<P>The following table  summarizes  Company sales and restaurant  profit related to
stores held for sale at September 7, 2002  or disposed of through  refranchising  or
closure  during 2002 and 2001.  As discussed in Note 3, the  operations  of such  stores
classified as held for sale as of September 7, 2002 or disposed of in the 12 and 36 weeks
ended  September 7, 2002  which meet the  conditions of SFAS 144 for reporting as
discontinued  operations  were not  material.  Restaurant  profit  represents  Company
sales  less the cost of food and  paper,  payroll  and  employee  benefits  and
occupancy  and other  operating expenses.</P>


<BR>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="4">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="62%" ALIGN="LEFT">Stores held for sale at September 7, 2002:</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Restaurant profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Stores disposed of in 2002 and 2001:</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$77</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$83</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$277</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Restaurant profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">23</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD COLSPAN="2"></TD>
     <TD COLSPAN="2"></TD>
     <TD COLSPAN="2"></TD>
     <TD COLSPAN="2"></TD></TR>
</TABLE>


<P><U>Unusual Items</U></P>

<P>Unusual  items  income of $4  million  and $24  million  in the third  quarter  and
year-to-date  of 2002,  respectively,  primarily  resulted  from  recoveries  related  to
the  AmeriServe  Food  Distribution  Inc.  (&#147;AmeriServe&#148;)  bankruptcy
reorganization  process  partially  offset by costs to defend  certain wage and hour
litigation,  and  integration  costs  related to the acquisition of YGR.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>9.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B> Debt</b> </P></TD>
</TR>
</TABLE>
<BR>

<P>On June 25, 2002, we closed on a new $1.4 billion senior  unsecured  Revolving  Credit
Facility  (the &#147;New  Credit  Facility&#148;).  The New Credit
Facility  replaced the existing bank credit  agreement which was comprised of a senior
unsecured Term Loan Facility and a $1.75 billion senior unsecured Revolving Credit
Facility  (collectively  referred to as  the &#147;Old Credit  Facilities&#148;)  that
were scheduled to mature on October 2, 2002. The</p>


<BR><BR>
<P ALIGN=CENTER>12</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P> New Credit  Facility  matures on June 25, 2005. We used the initial  borrowings  under the New Credit  Facility to repay the
indebtedness  under the Old Credit  Facilities.</P>

<P>The New Credit Facility is  unconditionally  guaranteed by our principal  domestic
subsidiaries  and contains other terms  and provisions (including representations,
warranties,  covenants, conditions and events of default) similar to those set  forth in
the Old Credit  Facilities.  Specifically,  the New Credit  Facility  contains  financial
covenants  relating to  maintenance of leverage and fixed charge coverage ratios.  The
New Credit Facility also contains  affirmative and negative  covenants  including,  among
other things,  limitations on certain  additional  indebtedness,  guarantees of
indebtedness,  cash dividends, aggregate non-U.S. investment and certain other
transactions as defined in the agreement.</P>

<P>At September 7, 2002, our unused New Credit Facility  totaled $1.0 billion,  net of
outstanding  letters of credit of $0.2  billion.  The  interest  rate for  borrowings
under the New Credit  Facility  ranges  from 1.00% to 2.00% over the London  Interbank
Offered Rate  (&#147;LIBOR&#148;) or 0.00% to 0.65% over an Alternate  Base Rate,  which
is the greater of the Prime Rate  or the Federal  Funds  Effective  Rate plus 1%. The
exact spread over LIBOR or the  Alternate  Base Rate,  as  applicable,  will depend upon
our  performance  under  specified  financial  criteria.  At  September  7, 2002,  the
weighted  average  contractual  interest  rate on  borrowings  outstanding  under the New
Credit  Facility  was 2.9%.  Interest is payable at  least quarterly.</P>

<P>During the third  quarter,  we  capitalized  debt issuance  costs of  approximately
$9 million  related to the New Credit  Facility.  These costs will be amortized into
interest expense over the life of the New Credit Facility.</P>

<P>On June 25,  2002,  we also issued $400  million of 7.70%  Senior  Unsecured  Notes
due July 1, 2012  (the  &#147;Notes&#148;) under a shelf registration
statement previously filed with the Securities and Exchange Commission,  which is more
fully  discussed in the 2001 Form 10-K.  The net proceeds  from the issuance of the Notes
were used to repay  indebtedness  under the New Credit  Facility.  Interest  is payable
January 1 and July 1 of each year,  commencing  on January 1, 2003.  We capitalized debt
issuance costs of approximately $5 million related to the Notes during the quarter.</P>

<P>As discussed in Note 2, upon the  acquisition  of YGR, we assumed  approximately  $168
million in present  value of future  rent obligations related to certain  sale-leaseback
agreements entered into by YGR prior to 2001 involving  approximately  350 LJS units.  As
a result of liens  held by the  buyer/lessor  on  certain  personal  property  within
the  units,  the  sale-leaseback  agreements have been accounted for as financings and
are reflected as debt in our Financial  Statements as  of September 7, 2002.  Rental
payments made under these  agreements  will be made on a monthly basis through 2019 with
an  effective interest rate of approximately 11%.</P>

<P>The annual  maturities of long-term debt as of September 7, 2002,  excluding  capital
lease obligations of $85 million and  derivative instrument adjustments of $45 million,
are as follows:</P>

<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="50%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="1"><p align=left>Period ended<BR><U>September 7:</u></P></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT">2003</TD>
     <TD WIDTH="15%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">2004</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">2005</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">526</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">2006</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">204</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">2007</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Thereafter</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,456</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$2,195</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<BR><BR>
<P ALIGN=CENTER>13</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>Interest  expense on short-term  borrowings  and  long-term  debt was $48 million and
$118 million for the 12 and 36 weeks  ended September 7, 2002,  respectively,  and $39
million and $123 million for the 12 and 36 weeks ended September 8, 2001,  respectively.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>10.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B> Reportable
Operating Segments</b> </P></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="7">Revenues<HR WIDTH=100% SIZE=1 NOSHADE></TH>
  </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT">United States</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$1,322</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$1,126</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$3,656</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$3,320</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">International</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">593</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">514</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,640</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,431</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,915</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,640</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$5,296</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$4,751</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="7">Operating Profit; Interest Expense, Net;<BR>and Income Before Income Taxes<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT">United States</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;211</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;171</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;585</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;483</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">International</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">100</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">82</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">268</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">214</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unallocated and corporate expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(43</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(31</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(119</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(100</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unallocated other income (expense)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(1</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(1</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net (loss) gain</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(13</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(32</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unusual items income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">258</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">231</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">725</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">622</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Interest expense, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(45</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(36</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(112</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(112</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Income before income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;195</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;613</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;510</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD></TR>
</TABLE>


<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">Identifiable Assets<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">12/29/01<HR WIDTH=100% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT">United States</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$3,136</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$2,489</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">International</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,679</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,593</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Corporate(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">343</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">306</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$5,158</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$4,388</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>


<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">Long-Lived Assets(b)<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="RIGHT"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="RIGHT"></TH>
     <TH COLSPAN="1" ALIGN="RIGHT">12/29/01<HR WIDTH=100% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT">United States</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$2,282</TD>
        <TD WIDTH="9%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$2,195</TD>
        <TD WIDTH="2%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">International</TD><TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,020</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">955</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Corporate</TD><TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">45</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="RIGHT"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$3,327</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$3,195</TD>
        <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="RIGHT"></TD></TR>
</TABLE>



<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Primarily
includes deferred tax assets, fair value of derivative  instruments and Property,  Plant
and Equipment,  net, (principally related to our office facilities). </P></TD>
</TR>
</TABLE>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
Property, Plant and Equipment, net; Goodwill, net; and Intangible Assets, net. </P></TD>
</TR>
</TABLE>
<BR>

<BR><BR>
<P ALIGN=CENTER>14</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>11.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B> Share
Repurchase Program</b> </P></TD>
</TR>
</TABLE>
<BR>

<P>In  February  2001,  our  Board of  Directors  authorized  a share  repurchase
program.  This  program  authorizes  us to  repurchase,  through  February 14, 2003, up
to $300 million  (excluding  applicable  transaction  fees) of our outstanding  Common
Stock.  During  the 36 weeks  ended  September  7, 2002,  we  repurchased  approximately
5.3  million  shares for  approximately  $161 million at an average price per share of
approximately  $30.  During the 36 weeks ended  September 8,  2001,  we  repurchased
approximately  4.7  million  shares for  approximately  $98  million at an average  share
price of  approximately  $21. At  September  7, 2002,  approximately  $39  million
remained  available  for  repurchases  under this  program.  Based on market conditions
and other factors,  additional  repurchases may be made from time to time in the open
market or through privately negotiated transactions, at the discretion of the Company.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>12. </b></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B> Supplemental
Cash Flow Data</b> </P></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="84%" ALIGN="LEFT">Cash Paid for:</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="4%" ALIGN="RIGHT"></TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="4%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Interest</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;83</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$94</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">111</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">67</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Significant Non-Cash Investing and Financing Activities:</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Assumption of debt and capital leases related to the acquisition of YGR</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$227</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Assumption of negative working capital related to the acquisition of YGR</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">21</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Contribution of non-cash net assets to an unconsolidated affiliate</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">21</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Capital lease obligations incurred to acquire assets</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Assumption of liabilities in connection with an acquisition</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Fair market value of assets received in connection with a non-cash</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;acquisition</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>
<BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>13.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> <B>Commitments
and Contingencies</b> </P></TD>
</TR>
</TABLE>
<BR>

<P><U>Contingent Liabilities</U></P>

<P>We were  directly or indirectly  contingently  liable in the amounts of $354 million
and $353 million at September 7, 2002  and December 29, 2001,  respectively,  for certain
lease  assignments and  guarantees.  At September 7, 2002, $281 million  represented
contingent  liabilities  to lessors  arising from (a)  assigning our interest in and
obligations  under real  estate leases as a condition to the  refranchising  of certain
Company  restaurants;  (b)  contributing  certain  Company  restaurants to unconsolidated
affiliates;  and (c) guaranteeing  certain other leases.  The $281 million  represented
the  present value of the minimum payments  pursuant to the assigned leases,  excluding
any renewal option periods,  discounted  at our pre-tax cost of debt. On a nominal basis,
the  contingent  liability  resulting  from the assigned  leases is $399  million.</P>

<P>The contingent  liabilities also include  guarantees of approximately  $32.4 million
to support financial  arrangements of  certain  franchisees,  including  partial
guarantees  of  franchisee  loan  pools  related  primarily  to  the  Company&#146;s
refranchising  programs.  The total loans outstanding under these loan pools were
approximately $161 million at September  7, 2002.  In support of these  guarantees,  we
have posted $32.4  million of letters of credit.  We also provide a standby  letter of
credit  under  which we could  potentially  be  required  to fund a portion  (up to $25
million)  of one of the  franchisee  loan  pools.  Any  funding  under the  guarantees
or letters of credit  would be secured by  franchisee  loan  collateral.  We believe that
we have  appropriately  provided for our estimated  probable exposures under these
contingent  liabilities.  These provisions were primarily charged to refranchising
(gains) losses.</P>


<BR><BR>
<P ALIGN=CENTER>15</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>The remaining  contingent  liabilities  of $40 million  represent the  outstanding
balance of financial  arrangements  of  certain  unconsolidated  affiliates and third
parties for which we have provided guarantees.  These financial arrangements  primarily
include  lines of credit,  loans and letters of credit.  If all such lines of credit and
letters of credit were  fully drawn down, the maximum  contingent  liability under these
arrangements  would be  approximately  $47 million as of  September 7, 2002.</P>

<P><U>Insurance Programs</U></P>

<P>We are currently self-insured for a portion of our current and prior years&#146; workers&#146; compensation,
general liability and  automobile  liability  losses  (collectively,  &#147;casualty
losses&#148;) as well as property  losses and certain other insurable  risks.  To
mitigate  the cost of our  exposures  for certain  property and casualty  losses,  we
make annual  decisions to  either  retain the risks of loss up to certain  maximum  per
occurrence  or  aggregate  loss limits  negotiated  with our  insurance  carriers,  or to
fully insure those risks.  Since our October 6, 1997 spin-off from PepsiCo,  Inc.  (&#147;PepsiCo&#148;)
(the  &#147;Spin-off&#148;),  we have elected to retain the risks  subject to certain
insured  limitations.  Since August 1999,  we  have  bundled our risks for  casualty
losses,  property  losses and various  other  insurable  risks into one pool with a
single self-insured  retention and purchased  reinsurance coverage up to a specified
limit that is significantly above our  actuarially  determined  probable losses.  We are
self-insured for losses in excess of the reinsurance  limit. We believe  the likelihood
of losses exceeding the reinsurance  limit is remote.  We are also  self-insured for
healthcare  claims for  eligible  participating  employees  subject to certain
deductibles  and  limitations.  We have accounted for our retained  liabilities  for
property and casualty  losses and  healthcare  claims,  including  reported and incurred
but not reported  claims, based on information provided by independent actuaries.</P>

<P>Due to the inherent  volatility  of our  actuarially  determined  property and
casualty loss  estimates,  it is reasonably  possible  that we could  experience  changes
in estimated  losses  which could be material to our growth in quarterly  and  annual net
income.  We believe that we have  recorded  our reserves for property and casualty
losses at a level which has  substantially mitigated the potential negative impact of
adverse developments and/or volatility.</P>

<P><U>Change of Control Severance Agreements </U></P>

<P>In September  2000, the  Compensation  Committee of the Board of Directors  approved
renewing  severance  agreements with  certain key executives (the  &#147;Agreements&#148;).
These  Agreements are triggered by a termination,  under certain  conditions,  of the
executive&#146;s  employment  following a change in control of the Company, as defined in
the Agreements.  If triggered,  the  affected  executives  would  generally  receive
twice the amount of both their  annual base salary and their  annual  incentive  in a
lump sum,  outplacement  services  and a tax  gross-up  for any  excise  taxes.  These
Agreements  have a  three-year  term and  automatically  renew each  January 1 for
another  three-year  term unless the Company  elects not to  renew the  Agreements.  If
these  Agreements had been  triggered as of September 7, 2002,  payments of
approximately  $31  million  would  have been  made.  In the event of a change of
control,  rabbi  trusts  would be  established  and used to  provide payouts under
existing deferred and incentive compensation plans.</P>

<P><U>Litigation</U></P>

<P>On August 29, 1997, a class action lawsuit against Taco Bell Corp.,  entitled <U>Bravo,
et al. v. Taco Bell Corp.</u>  (&#147;Bravo&#148;),  was filed in the  Circuit  Court of the
State of Oregon of the County of  Multnomah.  The  lawsuit was filed by two former  Taco
Bell shift  managers  purporting to represent  approximately  17,000 current and former
hourly  employees  statewide.  The lawsuit alleges violations of state wage and hour
laws,  principally  involving unpaid wages including  overtime,  and  rest and meal
period violations,  and seeks an unspecified amount in damages.  Under Oregon class
action procedures,  Taco  Bell was  allowed an  opportunity  to &#147;cure&#148; the
unpaid  wage and hour  allegations  by opening a claims  process to all  putative  class
members prior to  certification  of the</p>

<BR><BR>
<P ALIGN=CENTER>16</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P> class.  In this cure process,  Taco Bell has paid out less than $1  million.  On January 26, 1999,  the Court  certified a class of all
current and former shift managers and crew members who  claim one or more of the  alleged
violations.  A trial date of November  2, 1999 was set.  However,  on November 1, 1999,
the Court issued a proposed  order  postponing  the trial and  establishing a pre-trial
claims  process.  The final order  regarding the claims process was entered on January
14, 2000.  Taco Bell moved for  certification  of an immediate  appeal  of the
Court-ordered  claims  process  and  requested  a stay of the  proceedings.  This motion
was denied on February 8,  2000.  Taco Bell  appealed  this decision to the Supreme Court
of Oregon and the Court denied Taco Bell&#146;s Writ of Mandamus  on March 21, 2000. A
Court-approved  notice and claim form was mailed to  approximately  14,500 class  members
on January  31, 2000. The Court ordered pre-trial claims process went forward,  and
hearings to determine  potential damages were held  for claimants  employed or previously
employed in four selected Taco Bell units.  After the initial hearings  relating to
these four units,  the damage claims  hearings were  discontinued.  Trial began on
January 4, 2001. On March 9, 2001,  the  jury reached  verdicts on the  substantive
issues in this matter.  A number of these  verdicts  were in favor of the Taco  Bell
position;  however,  certain  issues  were  decided  in favor of the  plaintiffs.  In
April  2002,  a jury  trial to  determine  the  damages of 93 of those  claimants  found
that Taco Bell  failed to pay for  certain  meal  breaks  and/or  off-the-clock  work for
86 of the 93 claimants.  However,  the total amount of hours awarded by the jury was
substantially  less than that  sought by the  claimants.  In July and  September  2002,
the court ruled on several  post-trial  motions,  including  fixing the total number of
potential  claimants at 1,031  (including  the 93 claimants  for which  damages have
already been  determined)  and holding that claimants who prevail are entitled to
prejudgment  interest and penalty wages.  The court has indicated  that it will likely
schedule a damages  trial for the remaining 938 claimants  sometime in 2003.  Taco Bell
intends to appeal the April 2002 damages verdict, as well as the March 2001 liability
verdict.</P>


<P>We have provided for the estimated  costs of the Bravo  litigation,  based on a
projection of eligible  claims  (including  claims filed to date, where applicable),  the
cost of each eligible claim,  including the estimated legal fees incurred by  plaintiffs,
and the results of settlement  negotiations in this and other wage and hour litigation
matters.  Although the  outcome of this case  cannot be  determined  at this  time,  we
believe  the  ultimate  cost of this case in excess of the  amounts  already  provided
will not be material to our annual  results of operations,  financial  condition or cash
flows.  Any provisions have been recorded as unusual items.</P>

<P>On January 16, 1998, a lawsuit  against Taco Bell Corp.,  entitled  <U>Wrench LLC,
Joseph  Shields and Thomas Rinks v. Taco  Bell Corp.</u>  (&#147;Wrench&#148;)  was filed in
the United States  District Court for the Western  District of Michigan.  The lawsuit
alleges that Taco Bell Corp.  misappropriated  certain ideas and concepts used in its
advertising  featuring a Chihuahua.  Plaintiffs seek to recover monetary damages under
several theories,  including breach of  implied-in-fact  contract,  idea
misappropriation,  conversion and unfair  competition.  On June 10, 1999, the District
Court granted  summary  judgment in  favor of Taco Bell Corp.  Plaintiffs  filed an
appeal  with the U.S.  Court of Appeals for the Sixth  Circuit  (the &#147;Court  of
Appeals&#148;),  and oral  arguments  were held on September 20, 2000.  On July 6, 2001,
the Court of Appeals  reversed the  District  Court&#146;s  judgment in favor of Taco
Bell Corp.  and  remanded  the case to the  District  Court.  Taco Bell Corp.
unsuccessfully  petitioned  the Court of Appeals for  rehearing en banc,  and its
petition for writ of  certiorari  to the  United States  Supreme  Court was denied on
January 21, 2002.  The case has now  officially  been returned to the District  Court,
where the Wrench  plaintiffs will be allowed to bring their claims to trial.  The trial
is currently  scheduled to  begin on March 4, 2003.</P>

<P>We believe that the Wrench plaintiffs&#146; claims are without merit and are
vigorously  defending the case.  However,  in view  of the inherent  uncertainties  of
litigation,  the outcome of the case cannot be predicted at this time.  Likewise,  the
amount of any potential loss cannot be reasonably estimated.</P>

<P><U>Obligations to PepsiCo, Inc. After Spin-off</U></P>

<P>In connection with the Spin-off,  we entered into separation and other related
agreements (the  &#147;Separation  Agreements&#148;)  governing the Spin-off  transaction
and our  subsequent  relationship  with PepsiCo.  These  agreements  provide  certain
indemnities to PepsiCo.</P>


<BR><BR>
<P ALIGN=CENTER>17</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>The Separation  Agreements provided for, among other things, our assumption of all
liabilities  relating to the restaurant  businesses,  including California Pizza Kitchen,
Chevys Mexican Restaurant,  D&#146;Angelo&#146;s Sandwich Shops, East Side Mario&#146;s
and Hot &#146;n Now  (collectively  the &#147;Non-core  Businesses&#148;,  which were
disposed of in 1997),  and our  indemnification  of  PepsiCo with respect to these
liabilities. These liabilities were not significant as of September 7, 2002.</P>

<P>In  addition,  we have  indemnified  PepsiCo  for any costs or losses it incurs  with
respect  to all  letters of credit,  guarantees and contingent  liabilities  relating to
our businesses under which PepsiCo remains liable.  As of September 7,  2002,  PepsiCo
remains  liable for  approximately  $81 million on a nominal  basis related to these
contingencies.  This  obligation  ends at the time  PepsiCo is released,  terminated  or
replaced by a qualified  letter of credit.  We have not  been required to make any
payments under this indemnity.</P>

<P>Under the Separation  Agreements,  PepsiCo  maintains full control and absolute
discretion with regard to any combined or  consolidated  tax  filings for  periods
through  October 6, 1997.  PepsiCo  also  maintains  full  control  and  absolute
discretion  regarding any common tax audit issues.  Although PepsiCo has  contractually
agreed to, in good faith, use its  best efforts to settle all joint  interests in any
common audit issue on a basis  consistent  with prior  practice,  there  can be no
assurance  that  determinations  made by PepsiCo would be the same as we would reach,
acting on our own behalf.  Through  September  7,  2002,  there  have not been any
determinations  made by  PepsiCo  where we would  have  reached a  different
determination.</P>

<P>We also agreed to certain  restrictions  on our actions to help ensure that the
Spin-off  maintained its tax-free  status.  These  restrictions,  which were generally
applicable to the two-year period  following  October 6, 1997,  included among  other
things,  limitations  on any  liquidation,  merger or  consolidation  with another
company,  certain  issuances and  redemptions  of our Common  Stock,  our  granting of
stock  options  and our sale,  refranchising,  distribution  or other  disposition  of
assets.  If we failed to abide by these  restrictions  or to obtain waivers from PepsiCo
and, as a result,  the Spin-off  fails to qualify as a tax-free  reorganization,  we may
be obligated to indemnify  PepsiCo for any resulting  tax liability,  which could be
substantial.  No payments under these  indemnities have been required or are expected to
be  required.  Additionally,  PepsiCo is  entitled  to the  federal  income tax  benefits
related to the  exercise  after the  Spin-off of vested PepsiCo  options held by our
employees.  We expense the payroll taxes related to the exercise of these  options as
incurred.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%"><B>14.</b> </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"><B><A NAME="link14">AmeriServe
Bankruptcy Reorganization Process</A></b> </P></TD>
</TR>
</TABLE>
<BR>

<P>AmeriServe  was the principal  distributor  of food and paper  supplies to our stores
when it filed for  protection  under  Chapter 11 of the U.S.  Bankruptcy  Code on January
31,  2000. A plan of  reorganization  for  AmeriServe  (the &#147;POR&#148;) was
approved on November 28, 2000,  which  resulted in, among other  things,  the  assumption
of our  distribution  agreement,  subject to certain amendments, by McLane Company, Inc.</P>

<P>During the AmeriServe  bankruptcy  reorganization  process,  we took a number of
actions to ensure continued supply to our  system.  Those  actions  resulted in a
cumulative  net unusual items  expense of $149 million  through  December 29, 2001,
which was principally recorded in the year ended December 30, 2000.</P>

<P>Under the POR we are entitled to the proceeds from certain  residual assets and
preference  claims of the estate which are  generally  recorded as unusual  items income
when they are realized.  For the 12 and 36 weeks ended  September 7, 2002, we  recorded
$7 million and $31 million of net recoveries under the POR as unusual items income.</P>

<BR><BR>
<P ALIGN=CENTER>18</P>
<HR NOSHADE SIZE=1>
<BR><BR>




<P><B><A NAME="link5">Item 2.  Management&#146;s Discussion and Analysis</A><BR>
of Financial Condition and Results of Operations</b></p>

<P><B>Introduction</b></P>

<P>On May 16, 2002,  Tricon Global  Restaurants,  Inc. changed its name to YUM!  Brands,
Inc. in order to better reflect our  expanding  portfolio of brands. In addition,  on the
same day Tricon  Restaurants  International  changed its name to YUM!  Restaurants
International.</P>

<P>YUM!  Brands,  Inc. and Subsidiaries  (collectively  referred to as &#147;YUM,&#148; or
the &#147;Company&#148;) is comprised of the worldwide  operations of A&amp;W All-American
Food Restaurants  (&#147;A&amp;W&#148;), KFC, Long John Silver&#146;s  (&#147;LJS&#148;),  Pizza
Hut and Taco Bell (the  &#147;Concepts&#148;).  LJS and A&amp;W were added when we acquired
Yorkshire Global  Restaurants,  Inc. (&#147;YGR&#148;) on May 7, 2002. We are  the  world&#146;s
largest  quick  service  restaurant  (&#147;QSR&#148;)  company  based on the number of
system  units.  The  following  Management&#146;s  Discussion and Analysis  (&#147;MD&amp;A&#148;) should
be read in conjunction  with the unaudited  Condensed  Consolidated  Financial
Statements  (&#147;Financial  Statements&#148;),  the  Cautionary  Statements  and our
annual report on Form 10-K for the  fiscal year ended December 29, 2001 (&#147;2001 Form
10-K&#148;).  All Note  references  herein refer to the  accompanying  notes to  the
Financial Statements.</P>

<P>Throughout MD&amp;A, we make reference to ongoing  operating profit which represents
operating profit excluding the impact of  facility  actions net loss (gain) and unusual
items  (income)  expense.  See <A HREF="#link10">Note 8</A> for a discussion of these  exclusions.  We use
ongoing  operating  profit as a key  performance  measure of our results of  operations
for purposes of evaluating  performance  internally  and as the base to  forecast  future
performance.  Ongoing  operating  profit  is not a  measure  defined by  accounting
principles  generally  accepted in the United  States of America and should not be
considered  in  isolation or as a substitute for measures of performance in accordance
with accounting  principles  generally  accepted in  the United States of America.</P>

<P>All references to per share and share amounts in the following MD&amp;A have been adjusted
to reflect the  two-for-one  common  stock split distributed on June 17, 2002 to
shareholders of record as of June 6, 2002.</P>

<P><B>New Accounting Pronouncements Not Yet Adopted</b></P>

<P>See <A HREF="#link11">Note 4</A>.</P>

<P><B>Significant Known Events, Trends or Uncertainties Expected to Impact 2002 Comparisons with 2001</b></P>

<P>The following  factors impacted  comparability of operating  performance for the
quarter and year-to-date  ended September  7, 2002 to the quarter and  year-to-date
ended  September 8, 2001 or could impact  comparisons for the remainder of 2002.  Certain
of these factors were previously discussed in our 2001 Form 10-K.</P>

<P><U>Acquisition</U></P>

<P>On May 7, 2002,  the  Company  completed  its  acquisition  of YGR,  the parent
company of LJS and A&amp;W. See <A HREF="#link12">Note 2</A> for a  discussion of the acquisition.</P>

<P>As of the date of the  acquisition,  YGR consisted of 742 and 496 company and
franchise LJS units,  respectively,  and 127  and 742 company and franchise A&amp;W units,
respectively.  In addition,  133 multibranded  LJS/A&amp;W restaurants were included  in the
LJS unit  totals.  We expect the  acquisition  of YGR to increase  full year 2002
worldwide  revenues  and ongoing  operating  profit by approximately  5% and 2%,
respectively.  Except as discussed in certain sections of MD&amp;A, the impact  of the
acquisition on our results of operations in the quarter and year-to-date was not
significant.</P>


<BR><BR>
<P ALIGN=CENTER>19</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P><U>Unusual Items</U></P>

<P>We had unusual  items income of $4 million in the third  quarter of 2002,  and unusual
items income of $24 million and $2  million year-to-date for 2002 and 2001, respectively.
See <A HREF="#link10">Note 8</A> for a discussion of our unusual items (income) expense.</P>

<P><U>Store Portfolio Strategy</U></P>

<P>Since 1995,  we have been  strategically  reducing  our share of total  system  units
by selling  Company  restaurants  to  existing  and new  franchisees  where their
expertise  can  generally  be  leveraged  to improve  our  overall  operating
performance,  while retaining Company ownership of key U.S. and International markets.
This  portfolio-balancing  activity  reduces our reported  revenues and restaurant
profits,  increasing  the  importance of system sales as a key  performance  measure.  We
substantially completed our U.S. refranchising program in 2001.</P>

<P>The following table summarizes our refranchising activities:</P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="62%" ALIGN="LEFT">Number of units refranchised</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">94</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">37</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">141</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">193</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Refranchising proceeds, pre-tax</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$43</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;67</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;73</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Refranchising gains (losses), pre-tax(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$14</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;49</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>


<BR><BR>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
$12 million of  previously  deferred  refranchising  gains for the 12 and 36 weeks ended
September  8,  2001. </P></TD>
</TR>
</TABLE>
<BR>

<P>In addition to our  refranchising  program,  we have been closing  restaurants  over
the past several  years.  Restaurants  closed include poor  performing  restaurants,
restaurants  that are relocated to a new site within the same trade area or  U.S. Pizza
Hut delivery units consolidated with a new or existing dine-in traditional store within
the same trade area.</P>

<P>The following table summarizes Company store closure activities:</P>


 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
 </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=100% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="62%" ALIGN="LEFT">Number of units closed</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">58</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">67</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">143</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">168</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Store closure costs</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Impairment charges for stores to be closed</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>


<P>The impact on ongoing  operating  profit  arising  from  refranchising  and Company
store  closures is the net of (a) the  estimated  reduction in Company sales,  restaurant
profit and general and  administrative  expenses and (b) the estimated  increase in
franchise fees from the stores  refranchised.  The amounts  presented below reflect the
estimated  impact from  stores that were  operated by us for all or some portion of the
comparable  period in 2001 and are no longer  operated by  us as of September 7, 2002.</P>

<BR><BR>
<P ALIGN=CENTER>20</P>
<HR NOSHADE SIZE=1>
<BR><BR>



<P>The following table summarizes the estimated impact on revenue of refranchising and
Company store closures:</P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="7">12 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="58%" ALIGN="LEFT">Reduced sales</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(46</TD>
        <TD WIDTH="7%" ALIGN="LEFT">)</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(26</TD>
        <TD WIDTH="7%" ALIGN="LEFT">)</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(72</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Increased franchise fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Reduction in total revenues</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(45</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$(25</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$(70</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR><BR>



<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="7">36 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1" ALIGN="CENTER">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="CENTER"></TH>
     <TH COLSPAN="1" ALIGN="CENTER">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1" ALIGN="LEFT"></TH>
     <TH COLSPAN="1" ALIGN="CENTER">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="52%" ALIGN="LEFT">Reduced sales</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(160</TD>
        <TD WIDTH="5%" ALIGN="LEFT">)</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(50</TD>
        <TD WIDTH="5%" ALIGN="LEFT">)</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$(210</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Increased franchise fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Reduction in total revenues</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(157</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$(48</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$(205</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>


<P>The following  table  summarizes  the estimated  impact on ongoing  operating  profit
of  refranchising  and Company store  closures:</P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">12 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="64%" ALIGN="LEFT">Decreased restaurant margin</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$(4</TD>
        <TD WIDTH="7%" ALIGN="LEFT">)</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$(1</TD>
        <TD WIDTH="7%" ALIGN="LEFT">)</TD>
     <TD WIDTH="5%" ALIGN="RIGHT">$(5</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Increased franchise fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Decreased G&amp;A</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Decrease in ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(3</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$&nbsp;1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(2</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<BR><BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="5">36 Weeks Ended 9/07/02<HR WIDTH=100% SIZE=1 NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">U.S.<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">International<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Worldwide<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="63%" ALIGN="LEFT">Decreased restaurant margin</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(16</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(2</TD>
        <TD WIDTH="6%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$(18</TD>
        <TD WIDTH="2%" ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Increased franchise fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Decreased G&amp;A</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Decrease in ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(12</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$&nbsp;1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$(11</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

<P><U>Franchisee Financial Condition</U></P>

<P>Like others in the QSR industry,  from time to time, some of our franchise  operators
experience  financial  difficulties  with respect to their franchise operations.</P>

<P>Depending upon the facts and  circumstances  of each situation,  and in the absence of
an improvement in the  franchisee&#146;s  business trends,  there are a number of
potential  resolutions of these financial issues.  These include a sale of some or  all
of the operator&#146;s  restaurants to us or a third party, a restructuring  of the
operator&#146;s  business  and/or  finances,  or, in the more unusual  cases,  bankruptcy
of the  operator.  It is our practice to  proactively  work with  financially  troubled
franchise operators in an attempt to positively resolve their issues.</P>

<P>Since 2000, certain of our franchise  operators,  principally in the Taco Bell system
have experienced  varying degrees of  financial  problems.  Through September 30, 2002,
restructurings  have been completed for  approximately  1,580 Taco Bell  franchise
restaurants.  In  connection  with  these  restructurings,  Taco  Bell  has  acquired
144  restaurants  for  approximately  $73 million.  In addition to these  acquisitions,
Taco Bell has purchased 47 restaurants  from franchisees  for  approximately  $25 million
and  simultaneously  leased the  restaurants  back to these  franchisees  under
long-term  leases.  As part of the  restructurings,  Taco Bell  committed</p>

<BR><BR>
<P ALIGN=CENTER>21</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P>to fund approximately  $39  million  of future  franchise  capital  expenditures,  principally
through leasing  arrangements,  approximately  $10 million of which has been spent to
date.</P>


<P>In the fourth quarter of 2000, Taco Bell also  established a $15 million loan program
to assist certain  franchisees.  All  fundings had been  advanced by the end of the first
quarter of 2001,  and the resulting  notes  receivable  are primarily  included in Other
assets.</P>

<P>We believe that the general  improvement in business trends at Taco Bell has helped
alleviate  financial  problems in the  Taco Bell  franchise  system  which were due to
past  downturns  in sales.  As  described  in the U.S.  revenues  section,  Company
same-store sales growth at Taco Bell has increased 9% during 2002.  Company  same-store
sales growth at Taco Bell  also increased 8% in the fourth quarter of 2001.  Generally,
franchisees have experienced  similar growth over these time  frames.  Accordingly,
though we continue to monitor this  situation,  we expect the cost of  restructurings  of
Taco Bell  franchise restaurants to be less in 2002 than in 2001.</P>

<P>The Company  charged  expenses of $1 million and $3 million in the third  quarter of
2002 and 2001,  respectively,  and $3  million and $16 million  year-to-date in 2002 and
2001,  respectively,  to ongoing  operating profit related to allowances  for  doubtful
Taco Bell  franchise  and  license fee  receivables.  These costs are  reported  as
franchise  and license  expenses.  On  an  ongoing  basis,  we  assess  our  exposure
from  franchise-related  risks,  which  include  estimated  uncollectibility  of
franchise and license  receivables,  contingent lease liabilities,  guarantees to support
third party  financial  arrangements  of  franchisees  and potential  claims by
franchisees.  The  contingent  lease  liabilities  and  guarantees are more fully
discussed in the Contingent  Liabilities  section of Note 13.  Although the ultimate
impact of  these  franchise  financial  issues  cannot be predicted  with  certainty at
this time,  we have  provided for our current  estimate of the  probable  exposure as of
September  7, 2002.  It is  reasonably  possible  that there will be  additional  costs;
however,  these costs are not  expected to be material to  quarterly or annual  results
of  operations,  financial  condition or cash flows.</P>

<P><U>AmeriServe Bankruptcy Reorganization Process</U></P>

<P>See  Note 14 and  our  2001  Form  10-K  for a  discussion  of the  impact  of the
AmeriServe  Food  Distribution,  Inc.  (&#147;AmeriServe&#148;) bankruptcy reorganization
process on the Company.</P>

<P><U>Pension Plan Funded Status</U></P>

<P>Certain of our employees are covered under  noncontributory  defined benefit pension
plans.  The most significant of these  plans was amended in 2001 such that employees
hired after  September 30, 2001 are no longer  eligible to  participate.  As  disclosed
in our 2001 Form 10-K, as of our 2001 measurement date, these plans had a projected
benefit  obligation of $420  million and a fair value of plan assets of $291  million.
As a result of the overall  decline in market  interest  rates,  we will use a lower
discount  rate to measure our projected  benefit  obligation as of our 2002  measurement
date.  This  will result in an increase to our  projected  benefit  obligation.  At the
same time,  stock market  declines have reduced  the fair value of our plan assets. As a
result of the higher projected benefit  obligation,  and, to a lesser degree,  the
decline  in the fair  value of our plan  assets,  we expect our  pension  plan
underfunding  to  increase  as of our 2002  measurement  date.  Though we have not yet
determined  the exact amount of such  underfunding,  we currently  estimate the  amount
of underfunding will increase  approximately $100 million.  We do not believe the
underfunded status of the pension  plan will  materially  affect our  results of
operations,  financial  position  or cash flows and have  incorporated  the  estimated
future  impact into our financial  projections  and plans.  Moreover,  given the
sensitivity  of the projected  benefit  obligation to changes in discount rates,  future
increases in market interest rates may significantly  reduce our  pension plan
underfunding.</P>

<P>Additionally,  as a result of the  underfunded  status  of the plan,  we will  likely
be  required  to record a charge to  shareholders&#146; equity.  As previously
disclosed,  as of our 2001 measurement date we had recorded a charge of $38 million  to
equity.  Although we have not yet  determined  the exact  amount of the  additional
charge we will</p>

<BR><BR>
<P ALIGN=CENTER>22</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P>record in 2002, we anticipate  that it will be less than the  increase in the  underfunding.  By  comparison,  our  shareholders&#146; equity has  increased by
more than $400 million during the 36 weeks ended September 7, 2002.</P>

<P>In response to recent stock market performance, we lowered our expected return on plan
assets from 10.0% to 8.5% for  purposes of determining our 2002 pension expense.  The
impact of this assumption change will increase our 2002 pension  expense by approximately
$5 million.  We have recorded a pro-rata portion of this expense through September 7,
2002.</P>

<p><b>Worldwide Results of Operations</B></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="31%" ALIGN="LEFT">Revenues</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1,705</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,449</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">18</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;4,702</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$4,191</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Franchise and license fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">210</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">191</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">594</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">560</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total revenues</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;1,915</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,640</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;5,296</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$4,751</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;281</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">31</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;766</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;605</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;% of Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.4</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.7</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">1.7 </TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD>
     <TD ALIGN="RIGHT">16.3</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.4</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">1.9 </TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;267</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;222</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">20</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;733</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;595</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">23</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Facility actions net (loss) gain</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(13</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(32</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unusual items income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">258</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">231</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">725</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">622</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Interest expense, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">45</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(23</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Income tax provision</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">66</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">71</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">202</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">182</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(11</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Net income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;147</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;124</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">19</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;411</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;328</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Diluted earnings per share(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;0.47</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;0.40</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;1.32</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;1.08</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">22</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>

<BR><BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> See
Note 6 for the number of shares used in this calculation.  See <A HREF="#link13">Note 3</A> for a discussion of
the pro-forma  impact of SFAS 142 on diluted earnings per common share (&#147;EPS&#148;)
in 2001. </P></TD>
</TR>
</TABLE>
<BR>





<p><b>Worldwide Restaurant Unit Activity</B></p>


<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Company<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
    <TH COLSPAN="1">Unconsolidated<BR>Affiliates<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Franchisees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Licensees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Total<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT">Balance at December 29, 2001</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">6,435</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">2,000</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">19,263</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">2,791</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">30,489</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">New Builds</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">316</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">87</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">444</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">89</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">936</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisitions(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">902</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">38</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,167</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,107</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Refranchising</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(141</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(11</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">152</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Closures</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(143</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(26</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(418</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(259</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(846</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(8</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Balance at September 7, 2002</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">7,361</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,091</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">20,611</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,621</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">32,684</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">% of Total</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">23</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">63</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">8</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">100</TD>
        <TD ALIGN="LEFT">%</TD></TR>
</TABLE>
<BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
units that existed at the date of the acquisition of YGR on May 7, 2002. </P></TD>
</TR>
</TABLE>
<BR>


<BR><BR>
<P ALIGN=CENTER>23</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<p><b>Worldwide System Sales</B></p>

<P>System sales  represents  the combined sales of Company,  unconsolidated  affiliates,
franchise and license  restaurants.  Sales of unconsolidated  affiliates and franchise
and license  restaurants result in franchise and license fees for us but  are not
included in the Company sales figure we present on the Condensed  Consolidated
Statements of Income.  However, we  believe  that system  sales is useful to  investors
as a  significant  indicator  of our  Concepts&#146; market share and the  overall
strength of our business as it incorporates  all of our revenue  drivers,  company and
franchise same store sales  as well as net unit development.</P>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
          <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT">System Sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$5,930</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$5,267</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">13</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$16,631</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$15,360</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">8</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>
<BR>


<P>System  sales  increased  $663  million  or 13% in  the  quarter,  after  a 1%
favorable  impact  from  foreign  currency  translation.  Excluding the favorable  impact
of both foreign currency  translation and the YGR acquisition,  system sales  increased
6%. The increase  resulted from new unit  development  and same store sales  growth,
partially  offset by store  closures.</P>

<P>System  sales  increased  $1,271  million  or 8%  year-to-date,  after  a 1%
unfavorable  impact  from  foreign  currency  translation.  Excluding the impact from
foreign  currency  translation  and the favorable  impact of the YGR  acquisition,
system  sales  increased  6%. The increase  resulted  from new unit  development  and
same store sales  growth,  partially  offset by store closures.</P>

<p><b>Worldwide Revenues</B></p>

<P>Company  sales  increased  $256  million  or 18% in the  quarter,  after  a 1%
favorable  impact  from  foreign  currency  translation.  Excluding the favorable impact
of both foreign currency  translation and the YGR acquisition,  Company sales  increased
7%. The increase  resulted  from new unit  development  and same store sales growth.  The
increase was partially  offset by store closures and refranchising.</P>

<P>Franchise  and license  fees  increased  $19  million or 11% in the  quarter,  after a
1%  favorable  impact from  foreign  currency  translation.  Excluding the  favorable
impact of both foreign  currency  translation  and the YGR  acquisition,  franchise  and
license fees  increased  6%. The  increase was driven by same store sales growth and new
unit  development,  partially offset by store closures.</P>


<P>Company  sales  increased  $511  million or 12%  year-to-date.  The  impact  from
foreign  currency  translation  was not  significant.  Excluding the favorable  impact of
the YGR  acquisition,  Company sales increased 8%. The increase  resulted  from new unit
development  and same  store  sales  growth.  The  increase  was  partially  offset by
store  closures  and  refranchising.</P>

<P>Franchise and license fees increased $34 million or 6% year-to-date,  after a 1%
unfavorable  impact from foreign currency  translation.  Excluding  the impact of foreign
currency  translation  and the  favorable  impact of the YGR  acquisition,  franchise
and license fees  increased  5%. The  increase was driven by same store sales growth and
new unit  development,  partially offset by store closures.</P>


<BR><BR>
<P ALIGN=CENTER>24</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<p><b>Worldwide Company Restaurant Margin</B></p>

<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
<TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="55%" ALIGN="LEFT">Company sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="2%" ALIGN="LEFT">%</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Food and paper</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">31.6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">31.2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Payroll and employee benefits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">27.0</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">27.1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">27.5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Occupancy and other operating expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26.5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26.7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26.0</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">26.9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.4</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.7</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">16.3</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.4</TD>
        <TD ALIGN="LEFT">%</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>

<P>Restaurant  margin as a  percentage  of sales  increased  approximately  170 basis
points in the  quarter.  The  increase  included the  favorable  impact of  approximately
50 basis points from the adoption of SFAS No. 142  &#147;Goodwill  and Other  Intangible
Assets&#148; (&#147;SFAS 142&#148;),  partially  offset by the unfavorable  impact of
approximately 40 basis points from the  YGR acquisition.  U.S.  restaurant margin
increased  approximately  140 basis points and  International  restaurant margin
increased approximately 240 basis points.</P>

<P>Restaurant margin as a percentage of sales increased  approximately 190 basis points
year-to-date.  The increase included  the favorable impact of  approximately 50 basis
points from the adoption of SFAS 142,  partially offset by the unfavorable  impact of
approximately 20 basis points from the YGR  acquisition.  U.S.  restaurant  margin
increased  approximately  160  basis points and International restaurant margin increased
approximately 250 basis points.</P>

<p><b>Worldwide General and Administrative Expenses</B></P>

<P>Worldwide general and  administrative  (&#147;G&amp;A&#148;) expenses increased $42
million or 25% in the quarter and $76 million or 14%  year-to-date.  Excluding the
unfavorable  impact of the YGR  acquisition,  G&amp;A expenses  increased 16% in the
quarter and  10%  year-to-date.  The  increase  was  primarily  driven by higher
compensation-related  costs.  Increased  spending  on  leadership  conferences  for
domestic  restaurant  general  managers  and  International  senior  management  teams
also  contributed to the year-to-date increase.</P>

<p><B>Worldwide Franchise and License Expenses</B></p>

<P>Franchise  and  license  expenses  increased  $1  million  or  10%  in  the  quarter
and  decreased  $14  million  or 30%  year-to-date.  The  year-to-date  decrease was
primarily  attributable  to lower  provisions  for doubtful  franchise and  license fee
receivables  and lower franchise  support costs,  primarily at Taco Bell. In addition,
the decrease was also  due to lapping a biennial International franchise convention held
in 2001.</P>

<p><B>Worldwide Other (Income) Expense</B></P>

<P>Other (income)  expense is comprised of equity  (income) loss from  investments in
unconsolidated  affiliates and foreign  exchange net (gain) loss.</P>

<P>Other (income)  expense  increased $1 million or 27% in the quarter and $5 million or
37%  year-to-date.  The year-to-date  increase included a favorable impact of
approximately $2 million from the adoption of SFAS 142.</P>


<BR><BR>
<P ALIGN=CENTER>25</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P><B>Worldwide Facility Actions Net Loss (Gain)</B></P>

<P>We recorded  facility  actions net loss of $13  million and $32 million for the 12 and
36 weeks ended  September  7, 2002,  respectively,  and  facility  actions net gain of $9
million and $25  million for the 12 and 36 weeks ended  September  8,  2001,
respectively.  See the Store Portfolio  Strategy section for detail of our refranchising
and closure activities and  Note 8 for a summary of facility actions net loss (gain).</P>


<P><B>Worldwide Ongoing Operating Profit</B></p>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
    <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
    <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
    <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
    <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
    <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
   <TR VALIGN="BOTTOM">
     <TD WIDTH="33%" ALIGN="LEFT">United States</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;211</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;171</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">24</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;585</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">$&nbsp;483</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">21</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">International</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">100</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">82</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">22</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">268</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">214</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unallocated and corporate expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(43</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(31</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(44</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(119</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(100</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(19</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Unallocated other income (expense)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(1</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(1</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">NM</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;267</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;222</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">20</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;733</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;595</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">23</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>
<BR>

<P>Quarter and year-to-date U.S. and International ongoing operating profit are discussed
in the respective sections.</P>

<P>Unallocated and corporate expenses increased $12 million or 44% in the quarter and $19
million or 19% year-to-date.  The  increase was primarily due to higher
compensation-related costs.</P>

<p><B>Worldwide Interest Expense, Net</B></p>


<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="33%" ALIGN="LEFT">Interest expense</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;48</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;39</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">(21</TD>
        <TD WIDTH="5%" ALIGN="LEFT">)</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;118</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">$&nbsp;123</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">4</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Interest income</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(3</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(3</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(2</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(6</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(11</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(48</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Interest expense, net</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;45</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(23</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">$&nbsp;112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;112</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>
<BR>

<P>Interest expense increased $9 million or 21% in the  quarter.  Excluding  the
impact of the YGR  acquisition,  interest expense  decreased  11%.  The decrease was
driven by a reduction  in our average  debt  balances,  partially  offset by an  increase
in our average interest rate.</P>

<P>Interest expense  decreased $5 million or 4% year-to-date.  Excluding the impact of
the YGR acquisition,  interest expense  decreased 18%.  The decrease was driven by a
reduction in our average debt balance.</P>

<P><b>Worldwide Income Taxes</b></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="35%" ALIGN="LEFT">Reported</TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="6%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="6%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="6%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;66</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;71</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;202</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;182</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Effective tax rate</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">31.2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">36.6</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">33.0</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">35.7</TD>
        <TD ALIGN="LEFT">%</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Ongoing(a)</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Income taxes</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;69</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;61</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;201</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;159</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;Effective tax rate</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.6</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">32.7</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">32.3</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">32.8</TD>
        <TD ALIGN="LEFT">%</TD></TR>
</TABLE>

<BR><BR>
<P ALIGN=CENTER>26</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Excludes
the effects of facility actions net loss (gain) and unusual items (income) expense.  See
<A HREF="#link10">Note 8</A> for a  discussion of these items. </P></TD>
</TR>
</TABLE>
<BR>

<P>Beginning in the first quarter of 2002, we changed the  methodology we use in
allocating  taxes between  facility  actions  net loss (gain) and ongoing  operating
profit.  We believe that this revised  methodology is more appropriate  because of  the
substantial  decline in the magnitude of facility  actions net loss (gain)  relative to
ongoing  operating  profit in  2002.  This change only affects  intraperiod  allocation
of income  taxes  between  facility  actions net loss (gain) and  ongoing  operating
profit.  Accordingly,  it has no effect on net income for the quarter and year-to-date
and will have no  effect on either net income or the allocation of income taxes between
ongoing  operating  profit and facility  actions net  loss  (gain)  for the full  year.
The  impact of this  change  on our  ongoing  effective  tax rate for the  quarter  and
year-to-date was not significant.</P>

<P>The decrease in our ongoing  effective  tax rate for the quarter was  primarily
attributable  to  adjustments  related to  prior years and  recognition of a portion of
our excess foreign income tax credits  against our future U.S.  income tax  liability
for foreign  taxes paid in 2002.  The decrease in our  year-to-date  ongoing  effective
tax rate was primarily  attributable  to  recognition of a portion of our excess  foreign
income tax credits  against our future U.S.  income tax  liability for foreign taxes paid
in 2002.</P>

<P><b>U.S. Results of Operations</b></P>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
  </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT">Revenues</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,183</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;999</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">18</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$3,262</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$2,948</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Franchise and license fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">139</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">127</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">394</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">372</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total revenues</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,322</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,126</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$3,656</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$3,320</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;193</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;147</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;533</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;434</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">23</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">% of Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.8</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">1.4</TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD>
     <TD ALIGN="RIGHT">16.3</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.7</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">1.6</TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;211</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;171</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;585</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;483</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">21</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>


<P><B>U.S. Restaurant Unit Activity</b></p>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Company<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Unconsolidated<BR>Affiliates(a)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Franchisees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Licensees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Total<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="37%" ALIGN="LEFT">Balance at December 29, 2001</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">4,284</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">-</TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">12,733</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">2,545</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">19,562</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">New Builds</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">103</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">149</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">84</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">337</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisitions(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">899</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">998</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,897</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Refranchising</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(36</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Closures</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(91</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(215</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(236</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(542</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other(c)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(30</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(30</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Balance at September 7, 2002</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5,159</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">13,701</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,363</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">21,224</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">% of Total</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">65</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">11</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">100</TD>
        <TD ALIGN="LEFT">%</TD></TR>
</TABLE>

<BR><BR>



<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Represents
one Yan Can unit. </P></TD>
</TR>
</TABLE>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
units that existed at the date of the acquisition of YGR on May 7, 2002. </P></TD>
</TR>
</TABLE>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(c) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Represents
licensee units transferred from U.S. to International. </P></TD>
</TR>
</TABLE>


<BR><BR>
<P ALIGN=CENTER>27</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P><B>U.S. System Sales</b></P>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT">System Sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$3,900</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$3,464</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">13</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$10,917</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$10,074</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">8</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>


<P>System sales  increased  $436 million or 13% in the quarter and $843 million or 8%
year-to-date.  Excluding the favorable  impact of the YGR  acquisition,  system sales
increased 4% in the quarter and 5%  year-to-date.  The  increases  resulted  from same
store sales growth and new unit development, partially offset by store closures.</P>

<P><B>U.S. Revenues</b></p>

<P>Company  sales  increased  $184 million or 18% in the quarter.  Excluding  the
favorable  impact of the YGR  acquisition,  Company sales  increased 4%. The increase
resulted from new unit  development  and same store sales growth.  The increase  was
partially offset by store closures and refranchising.</P>

<P>For the quarter,  blended  Company  same store sales for KFC,  Pizza Hut and Taco Bell
were up 3% due to increases in both  transactions  and average guest check.  Same store
sales at Taco Bell increased 10%,  primarily driven by a 6% increase in  transactions.
Same  store  sales at KFC were flat with a 1%  increase  in average  guest  check  offset
by a decrease  in  transactions.  Same store sales at Pizza Hut  decreased  1% due to a
3% decrease in  transactions  partially  offset by an  increase in the average guest
check.</P>

<P>Franchise  and license  fees  increased  $12 million or 10% in the  quarter.
Excluding  the  favorable  impact of the YGR  acquisition,  franchise  and license  fees
increased  5%. The increase was driven by same store sales growth and new unit
development, partially offset by store closures.</P>

<P>Company  sales  increased  $314  million or 11%  year-to-date.  Excluding  the
favorable  impact of the YGR  acquisition,  Company sales  increased 5%. The increase
resulted from new unit  development  and same store sales growth.  The increase  was
partially offset by store closures and refranchising.</P>

<P>Year-to-date,  blended  Company  same store  sales for KFC,  Pizza Hut and Taco Bell
were up 3% due to an increase in both  transactions  and average  guest  check.  Same
store sales at Taco Bell  increased  9%  primarily  due to a 5% increase in
transactions.  Same store sales at KFC  increased 3% primarily  driven by a 2% increase
in the average  guest check.  Same  store  sales at Pizza Hut  decreased  1% due to a 3%
decrease  in  transactions  partially  offset by an  increase in the  average guest check.</P>

<P>Franchise  and  license  fees  increased  $22  million  or 6%  year-to-date.
Excluding  the  favorable  impact of the YGR  acquisition,  franchise  and license  fees
increased  3%. The increase was driven by same store sales growth and new unit
development, partially offset by store closures.</P>

<P><B>U.S. Company Restaurant Margin</b></P>
<BR>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="55%" ALIGN="LEFT">Company sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="2%" ALIGN="LEFT">%</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Food and paper</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">28.0</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">29.1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">28.1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">28.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Payroll and employee benefits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Occupancy and other operating expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25.3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25.3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">24.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25.6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.8</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">16.3</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.7</TD>
        <TD ALIGN="LEFT">%</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>


<BR><BR>
<P ALIGN=CENTER>28</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>Restaurant  margin as a  percentage  of sales  increased  approximately  140 basis
points in the  quarter.  The  increase  includes  the  favorable  impact of
approximately  50 basis  points from the  adoption of SFAS 142 which was  essentially
offset by the unfavorable  impact of the YGR  acquisition.  The remaining  increase was
primarily  driven by the favorable  impact of same store sales  growth on margin.  This
increase was  partially  offset by the  unfavorable  impact of higher  restaurant
operating costs.  Higher restaurant  operating costs primarily  resulted from higher
occupancy and other costs  and higher  labor  costs,  primarily  driven by wage  rates,
partially  offset by lower food and paper  costs,  primarily  cheese.</P>


<P>Restaurant margin as a percentage of sales increased  approximately 160 basis points
year-to-date.  The increase includes  the favorable impact of  approximately 50 basis
points from the adoption of SFAS 142,  partially offset by the unfavorable  impact of 25
basis  points  from the YGR  acquisition.  The  remaining  increase  was  primarily
driven by the  favorable  impact of same store sales  growth on margin.  This  increase
was  partially  offset by the  unfavorable  impact of higher  restaurant  operating
costs.  Higher  restaurant  operating costs primarily  resulted from higher labor costs,
primarily driven by wage rates, and higher  occupancy and other costs,  partially
offset by lower food and paper costs,  primarily  cheese.</P>

<P><b>U.S. Ongoing Operating Profit</b></P>

<P>Ongoing  operating profit  increased $40 million or 24% in the quarter,  including a
4% favorable impact from the adoption  of SFAS  142.  Excluding  the  favorable  impact
of both  SFAS  142 and the YGR  acquisition,  ongoing  operating  profit  increased 15%.
The increase was driven by same store sales growth.</P>

<P>Ongoing  operating  profit increased $102 million or 21%  year-to-date,  including a
4% favorable impact from the adoption  of SFAS  142.  Excluding  the  favorable  impact
of both  SFAS  142 and the YGR  acquisition,  ongoing  operating  profit  increased  15%.
The  increase  was driven by same store  sales  growth and lower  franchise  and  license
expenses.  The  increase  was  partially  offset by higher G&amp;A  expenses and
restaurant  operating  costs,  primarily  labor  costs.  The  increase  in G&amp;A
expenses  was  driven  by  higher  compensation-related  costs  and  increased  spending
on  leadership  conferences for restaurant general managers.</P>

<P><b>International Results of Operations</b></P>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT">Revenues</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$522</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$450</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,440</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,243</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Franchise and license fees</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">71</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">64</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">12</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">200</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">188</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Total revenues</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$593</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$514</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,640</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,431</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">15</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Company restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;88</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;66</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">35</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;233</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;171</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">% of Company sales</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.9</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.5</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">2.4</TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD>
     <TD ALIGN="RIGHT">16.2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">13.7</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">2.5 </TD>
        <TD ALIGN="LEFT">&nbsp;ppts.</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Ongoing operating profit</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$100</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;82</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">22</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;268</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;214</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>

<BR><BR>
<P ALIGN=CENTER>29</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P><B>International Restaurant Unit Activity</b></P>

<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Company<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Unconsolidated<BR>Affiliates<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Franchisees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Licensees<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Total<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT">Balance at December 29, 2001</TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">2,151</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">2,000</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">6,530</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">246</TD>
        <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="RIGHT">10,927</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">New Builds</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">86</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">295</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">599</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Acquisitions(a)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">38</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">169</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">210</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Refranchising</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(105</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(11</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">116</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Closures</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(52</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(26</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(203</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(23</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">(304</TD>
        <TD ALIGN="LEFT">)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Other(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">(8</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">3</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">28</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Balance at September 7, 2002</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,202</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,090</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">6,910</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">258</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">11,460</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">% of Total</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">19</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">18</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">61</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">100</TD>
        <TD ALIGN="LEFT">%</TD></TR>
</TABLE>
<BR>



<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Includes
units that existed at the date of the acquisition of YGR on May 7, 2002. </P></TD>
</TR>
</TABLE>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Primarily
represents licensee units transferred from U.S. to International. </P></TD>
</TR>
</TABLE>
<BR>




<P><b>International System Sales</b></p>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">% B/(W)<HR WIDTH=95% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT">System Sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$2,030</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$1,803</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">13</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$5,714</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">$5,286</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="9%" ALIGN="RIGHT">8</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD><TD></TD></TR>
</TABLE>




<P>System  sales  increased  $227  million  or 13% in  the  quarter,  after  a 3%
favorable  impact  from  foreign  currency  translation.  The increase  resulted from new
unit development and same store sales growth,  partially offset by  store
closures.</P>

<P>System  sales  increased  $428  million  or  8%  year-to-date,  after  a  2%
unfavorable  impact  from  foreign  currency  translation.  The increase  resulted  from
new unit  development  and same store sales growth,  partially  offset by store  closures.</P>





<P><B>International Revenues</b></P>

<P>Company  sales  increased  $72  million  or 16% in  the  quarter,  after  a 3%
favorable  impact  from  foreign  currency  translation.  Company sales increased $197
million or 16% year-to-date,  after a 1% favorable impact from foreign currency
translation.  The increases  primarily  resulted from new unit development,  partially
offset by refranchising,  primarily  the sale of the Singapore business in the third
quarter.</P>

<P>Franchise and license fees increased $7 million or 12% in the quarter,  after a 2%
favorable  impact from foreign currency  translation.  Franchise and license fees
increased $12 million or 7%  year-to-date,  after a 2%  unfavorable  impact from  foreign
currency  translation.  The increases were driven by new unit  development and same store
sales growth,  partially  offset by store closures.</P>


<BR><BR>
<P ALIGN=CENTER>30</P>
<HR NOSHADE SIZE=1>
<BR><BR>



<P><B>International Company Restaurant Margin</b></p>

<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="3">12 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="3">36 Weeks Ended<HR WIDTH=100% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/07/02<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">9/08/01<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="55%" ALIGN="LEFT">Company sales</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="5%" ALIGN="LEFT">%</TD>
     <TD WIDTH="6%" ALIGN="RIGHT">100.0</TD>
        <TD WIDTH="2%" ALIGN="LEFT">%</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Food and paper</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">35.6</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">37.0</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">36.2</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">37.1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Payroll and employee benefits</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">18.4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">18.5</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">18.7</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">19.4</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Occupancy and other operating expenses</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">29.1</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">30.0</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">28.9</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">29.8</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Restaurant margin</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">16.9</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">14.5</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">16.2</TD>
        <TD ALIGN="LEFT">%</TD>
     <TD ALIGN="RIGHT">13.7</TD>
        <TD ALIGN="LEFT">%</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>



<P>Restaurant  margin as a  percentage  of sales  increased  approximately  240 basis
points in the  quarter,  including  the  favorable  impact of  approximately  60 basis
points from the adoption of SFAS 142. The  remaining  increase was primarily  driven by
the favorable  impact of lower  restaurant  operating costs, the addition of higher
average margin units through  new unit development and the favorable impact of
refranchising the Singapore  business.  Lower restaurant  operating costs  primarily
resulted from lower food and paper costs, partially offset by higher labor costs.</P>

<P>Restaurant  margin  as a  percentage  of sales  increased  approximately  250 basis
points  year-to-date,  including  the  favorable  impact of  approximately  60 basis
points from the adoption of SFAS 142. The  remaining  increase was primarily  driven  by
the  favorable  impact of lower  restaurant  operating  costs and the  favorable  impact
of  refranchising  the  Singapore  business,  including  the  cessation  of  depreciation
of  approximately  $2 million  prior to its sale.  Lower  restaurant operating costs
primarily resulted from lower food and paper costs, partially offset by higher labor
costs.</P>

<P><B>International Ongoing Operating Profit</b></P>

<P>Ongoing operating profit increased $18 million or 22% in the quarter, including a 1%
favorable impact from foreign  currency translation.  Excluding the favorable impact of
foreign currency translation and the adoption of SFAS 142,  ongoing operating profit
increased 15%.  The increase was driven by new unit development, the favorable impact of
lower  restaurant operating costs and same store sales growth.  The increase
was partially offset by higher G&amp;A expenses, primarily compensation-related costs.</P>

<P>Ongoing  operating profit increased $54 million or 25% year-to-date,  after a 2%
unfavorable  impact from foreign currency  translation.  Excluding the impact of foreign
currency  translation  and the  favorable  impact from the adoption of SFAS  142,
ongoing  operating profit  increased 22%. The increase was driven by new unit
development,  the favorable impact of  lower  restaurant  operating costs and same store
sales growth.  The increase was partially offset by higher G&amp;A expenses,  primarily
compensation-related and conference costs.</P>

<P><B>Consolidated Cash Flows</b></p>

<P><B>Net cash  provided by operating  activities</b>  was $835 million  compared to $634
million in 2001.  Excluding  the impact of  the  Ameriserve  bankruptcy  reorganization
process,  cash provided by operating  activities was $806 million versus $527  million in
2001.  This increase was primarily driven by higher operating profit.</P>

<P><B>Net cash used in investing  activities</b>  was $650 million  versus $341  million in
2001.  The increase is primarily  due to  the  acquisition of YGR and higher capital
spending in 2002,  partially  offset by the  acquisition of fewer  restaurants  from
franchisees in 2002.</P>


<BR><BR>
<P ALIGN=CENTER>31</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P><B>Net cash used in financing  activities</b>  was $112 million  versus $242  million in
2001.  The decrease is primarily  due to  lower debt  repayments  and higher  proceeds
from stock option  exercises  versus 2001,  partially  offset by higher stock
repurchases in 2002.</P>





<P><B>Financing Activities</b></p>

<P>On June 25,  2002,  we  closed  on a new $1.4  billion  senior  unsecured  Revolving
Credit  Facility  (the  &#147;New  Credit  Facility&#148;).  The New Credit  Facility
replaced  the  existing  bank  credit  agreement  which was  comprised  of a senior
unsecured Term Loan Facility and a $1.75 billion senior unsecured Revolving Credit
Facility  (collectively  referred to as  the &#147;Old Credit  Facilities&#148;)  that
were scheduled to mature on October 2, 2002. The New Credit  Facility  matures on June
25, 2005. We used the initial  borrowings  under the New Credit  Facility to repay the
indebtedness  under the Old Credit  Facilities.</P>

<P>The New Credit Facility is  unconditionally  guaranteed by our principal  domestic
subsidiaries  and contains other terms  and provisions (including representations,
warranties,  covenants, conditions and events of default) similar to those set  forth in
the Old Credit  Facilities.  Specifically,  the New Credit  Facility  contains  financial
covenants  relating to  maintenance of leverage and fixed charge  coverage  ratios.
Likewise,  the New Credit Facility  contains  affirmative and  negative  covenants
including,  among  other  things,  limitations  on certain  additional  indebtedness,
guarantees  of  indebtedness, cash dividends, aggregate non-U.S. investment and certain
other transactions as defined in the agreement.</P>

<P>At September 7, 2002, our unused New Credit Facility totaled $1.0 billion,
net of outstanding letters of credit  of $0.2  billion.  The interest  rate for
borrowings  under the New Credit  Facility  ranges from 1.00% to 2.00% over the  London
Interbank  Offered Rate (&#147;LIBOR&#148;) or 0.00% to 0.65% over an Alternate Base
Rate, which is the greater of the Prime  Rate or the  Federal  Funds  Effective  Rate
plus 1%.  The  exact  spread  over  LIBOR or the  Alternate  Base  Rate,  as  applicable,
will depend  upon our  performance  under  specified  financial  criteria.  Interest is  payable at least quarterly.</P>

<P>During the third  quarter,  we  capitalized  debt issuance  costs of  approximately
$9 million  related to the New Credit  Facility.  These costs will be amortized into
interest expense over the life of the New Credit Facility.</P>

<P>On June 25,  2002,  we also issued $400  million of 7.70%  Senior  Unsecured  Notes
due July 1, 2012  (referred  to as the  &#147;Notes&#148;) under a shelf registration
statement previously filed with the Securities and Exchange Commission,  which is more
fully  discussed in the 2001 Form 10-K.  The net proceeds  from the issuance of the Notes
were used to repay  indebtedness  under the New Credit  Facility.  Interest  is payable
January 1 and July 1 of each year,  commencing  on January 1, 2003.  We capitalized debt
issuance costs of approximately $5 million related to the Notes during the quarter.</P>

<P>As discussed in Note 2, we assumed  approximately  $168 million in future rent
obligations  upon the  acquisition  of YGR  related to certain  sale-leaseback
agreements  entered into by YGR prior to 2001 involving  approximately  350 LJS units.
As a result of liens held by the  buyer/lessor on certain  personal  property  within the
units,  the agreements have been  accounted  for as  financings  and are  reflected as
debt in our  Financial  Statements  as of  September 7, 2002.  Rental  payments  made
under these  agreements  will be made on a monthly  basis  through 2019 with an effective
interest rate of  approximately 11%.</P>

<P>We use  derivative  financial  instruments,  including  interest  rate  swaps,  to
lower  interest  expense and manage our  exposure to interest rate risk.  See our market
risk disclosure for further discussion of our interest rate risk.</P>

<P><B>Consolidated Financial Condition</b></p>

<P><B>Assets</b>  increased $0.8 billion,  or 18%, to $5.2 billion  primarily due to the
acquisition of YGR.  Unallocated  purchase  price of  approximately  $523 million
related to this  acquisition  is recorded in Other Assets at</p>

<BR><BR>
<P ALIGN=CENTER>32</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P>September 7, 2002. The decrease in the  allowance  for doubtful  accounts  from $77 million to $46 million was
primarily the result of recoveries  related to the AmeriServe  bankruptcy  reorganization
process (see <A HREF="#link14">Note 14</A>) and the write-off of  receivables  previously  fully  reserved.
The decrease in Assets  classified as  held-for-sale  is due to our sale of the Singapore
market during  the third quarter.</P>

<P><B>Liabilities</b>  increased  $0.3 billion,  or 8%, to $4.6 billion  primarily due to
additional  financing  associated  with the  acquisition  of YGR. As discussed  in Note
9, the  decrease in  short-term  borrowings  of $558  million is primarily  the  result
of the  replacement of our Old Credit  Facilities  that were to expire in October 2002
with the New Credit Facility  that will expire in 2005.  The increase in current  income
taxes payable was  primarily  the result of a  reclassification  from other liabilities
and deferred credits for taxes that are now expected to be paid within the next twelve
months.</P>

<P><B>Liquidity</b></p>

<P>Operating in the QSR industry allows us to generate  substantial  cash flows from the
operations of our company stores and  from our  franchise  operations.  Franchise
operations  require  us to make a limited  investment  in  operating  assets.  Typically,
our cash flows also  include a  significant  amount of  discretionary  capital  spending.
Though a decline in  revenues could  adversely  impact our cash flows from  operations,
we believe our operating cash flows and our ability to  adjust  discretionary  capital
spending and borrow funds will allow us to meet our cash  requirements for the remainder
of  2002 and beyond.</P>


<P>Significant contractual obligations and payments as of September 7, 2002 due by year
include:</P>


<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="1">Less than 1<BR>Year<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">1-3 Years<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">4-5 Years<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Thereafter<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH>
     <TH COLSPAN="1">Total<HR WIDTH=95% SIZE=1 NOSHADE></TH>
     <TH COLSPAN="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="38%" ALIGN="LEFT">Long-term debt(a)</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;2</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;529</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">$208</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">$1,456</TD>
        <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">$2,195</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Short-term borrowings</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">126</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">126</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Debt excluding capital leases</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">128</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">529</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">208</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,456</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,321</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Operating leases(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">253</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">461</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">367</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">1,041</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">2,122</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Capital leases(b)</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">13</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">25</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">17</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">106</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">161</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Franchisee financing</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;obligations</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">19</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">10</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">-</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">29</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Contractual obligations</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$413</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$1,025</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$592</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$2,603</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">$4,633</TD>
        <TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>

<BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Excludes
a fair value  adjustment  of $45 million  included in debt related to interest rate swaps
that hedge the  fair value of a portion of our debt. </P></TD>
</TR>
</TABLE>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> These
obligations,  which are shown on a nominal basis,  relate to operating and capital leases
for approximately  4,800 restaurants. </P></TD>
</TR>
</TABLE>
<BR>


<P><B><A NAME="link6">Item 3.&nbsp;&nbsp;Quantitative and Qualitative Disclosures About Market Risk</A></b></p>

<P>The Company is exposed to financial  market risks  associated with interest  rates,
foreign  currency  exchange rates and  commodity  prices.  In the normal course of
business and in accordance with our policies,  we manage these risks through a  variety
of  strategies,  which include the use of derivative  financial and commodity
instruments to hedge our underlying  exposures.  Our policies  prohibit the use of
derivative  instruments  for trading  purposes,  and we have  procedures in  place to
monitor and control their use.</P>


<BR><BR>
<P ALIGN=CENTER>33</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<P><U>Interest Rate Risk</U></P>

<P>Our  primary  market risk  exposure  is to changes in interest  rates,  principally
in the United  States.  We attempt to  minimize this risk and lower our overall
borrowing  costs through the  utilization of derivative  financial  instruments,
primarily  interest  rate  swaps.  These  swaps are  entered  into with  financial
institutions  and have reset dates and  critical  terms  that  match  those of the
underlying  debt.  Accordingly,  any change in market  value  associated  with  interest
rate swaps is offset by the opposite  market impact on the related debt.  Due to
decreased  borrowings  under our  New Credit  Facility  during the quarter,  we do not
believe  that certain  interest  payments  previously  hedged will be  made.
Accordingly,  we  terminated  interest  rate swaps with a notional  amount of $150
million  during the quarter.  An  insignificant  amount was reclassed from Accumulated
Other  Comprehensive  Income to Interest Expense as a result of this  termination.</P>

<P>At September 7, 2002 and December 29, 2001, a  hypothetical  100 basis point  increase
in short-term  interest rates would  result in a  reduction  of $5  million  and $4
million,  respectively,  in annual  income  before  taxes.  The  estimated  reductions
are based  upon the  unhedged  portion  of our  variable  rate debt and  assume no
changes  in the  volume or  composition  of debt.  In  addition,  the fair value of our
derivative  financial  instruments  at  September 7, 2002 and  December  29, 2001 would
decrease  approximately  $8 million and $5 million,  respectively.  The fair value of our
Senior  Unsecured  Notes at  September 7, 2002 and December  29, 2001 would  decrease
approximately  $96 million and $72 million,  respectively.  Fair value was determined by
discounting the projected cash flows.</P>


<P><U>Foreign Currency Exchange Rate Risk</U></P>

<P>International  ongoing operating profit  constitutes  approximately 31% of our
year-to-date 2002 ongoing operating profit,  excluding  unallocated  and  corporate
expenses.  In  addition,  the  Company&#146;s  net asset  exposure  (defined as foreign
currency assets less foreign currency  liabilities)  totaled  approximately $1 billion as
of September 7, 2002.  Operating  in  international  markets  exposes the Company to
movements in foreign  currency  exchange rates.  The Company&#146;s  primary  exposures
result from our  operations  in  Asia-Pacific  and Europe.  Changes in foreign  currency
exchange  rates would  impact the  translation  of our  investments in foreign
operations,  the fair value of our foreign  currency  denominated  financial  instruments
and our reported  foreign  currency  denominated  earnings and cash flows.  For the 36
weeks ended  September 7, 2002,  operating  profit would have decreased $26 million if
all foreign  currencies  had uniformly  weakened  10% relative to the U.S. dollar.  The
estimated reduction assumes no changes in sales volumes or local currency sales or input prices.</P>


<P>We attempt to minimize the exposure related to our investments in foreign  operations
by financing those  investments with  local  currency  debt when  practical.  In
addition,  we attempt to minimize  the  exposure  related to foreign  currency
denominated  financial  instruments  by  purchasing  goods and  services  from  third
parties  in local  currencies  when  practical.  Foreign currency denominated  financial
instruments consist primarily of intercompany  short-term  receivables  and  payables.
At times,  we utilize  forward  contracts to reduce our risk exposure  related to these
foreign  currency  denominated  financial  instruments.  The  notional  amount  and
maturity  dates of these  contracts  match  those of the  underlying  receivables  or
payables  such that our  foreign  currency  exchange  risk  related to these  instruments
is  eliminated.</P>

<P><U>Commodity Price Risk</U></P>

<P>We are subject to volatility in food costs as a result of market risk  associated
with commodity  prices.  Our ability to  recover  increased  costs  through  higher
pricing  is, at times,  limited  by the  competitive  environment  in which we  operate.
We manage our  exposure  to this risk  primarily  through  pricing  agreements  as well
as, on a limited  basis,  commodity  future and option  contracts.  Commodity  future and
option  contracts  outstanding  at  September  7, 2002 and  December 29, 2001, were not
significant to the Consolidated Financial Statements.</P>



<BR><BR>
<P ALIGN=CENTER>34</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P><B><A NAME="link7">Item 4.&nbsp;&nbsp;Disclosure Controls</A></b></p>

<P>Within ninety days prior to the filing of this quarterly  report,  an evaluation was
performed  under the  supervision and  with the  participation  of the Company&#146;s
management,  including the Chairman and Chief Executive  Officer (the &#147;CEO&#148;) and
Chief  Financial  Officer (the &#147;CFO&#148;),  of the  effectiveness  of the design
and  operation  of the  Company&#146;s  disclosure  controls and procedures.  Based on
that evaluation,  the Company&#146;s  management,  including the CEO and CFO, concluded
that  the Company&#146;s  disclosure controls and procedures were effective.  There have
been no significant changes in the Company&#146;s  internal controls or in other factors
that could significantly affect internal controls subsequent to the evaluation.</P>

<P><b>Cautionary Statements</b></p>

<P>From time to time,  in both  written  reports and oral  statements,  we present  &#147;forward-looking
statements&#148; within the  meaning of Section 27A of the  Securities  Act of 1933,  as
amended,  and Section 21E of the  Securities  Exchange  Act of  1934,  as amended.  The
statements  include  those  identified by such words as &#147;may,&#148; &#147;will,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;believe,&#148; &#147;plan&#148; and
other similar  terminology.  These  &#147;forward-looking  statements&#148; reflect our
current  expectations  regarding  future  events and operating and  financial
performance  and are based upon data  available at the time of the  statements.  Actual
results  involve  risks and  uncertainties,  including  both those  specific to the
Company and those  specific to the industry, and could differ materially from
expectations.</P>

<P>Company risks and uncertainties  include,  but are not limited to,  potentially
substantial tax contingencies  related to  the  Spin-off,  which,  if they occur,
require us to indemnify  PepsiCo,  Inc.;  our  substantial  debt  leverage and the
attendant  potential  restriction on our ability to borrow in the future, as well as our
substantial  interest expense and  principal repayment  obligations;  potential
unfavorable  variances between estimated and actual liabilities;  our ability  to secure
alternative  distribution  of products and  equipment  to our  restaurants  and our
ability to ensure  adequate  supply of  restaurant  products and  equipment in our
stores;  the ongoing  financial  viability  of our  franchisees  and  licensees;
volatility of  actuarially  determined  losses and loss estimates and adoption of new or
changes in accounting  policies and practices including pronouncements promulgated by
standard setting bodies.</P>

<P>Industry  risks and  uncertainties  include,  but are not limited to,  global and
local  business,  economic and political  conditions;  legislation and governmental
regulation;  competition;  success of operating initiatives and advertising and
promotional  efforts;  volatility of commodity costs;  increases in minimum wage and
other operating  costs;  availability  and cost of land and construction;  consumer
preferences,  spending patterns and demographic trends; political or economic
instability in local markets and changes in currency exchange and interest rates.</P>

<BR><BR>
<P ALIGN=CENTER>35</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<p align=center><A NAME="link8">Independent Accountants' Review Report</A></p><BR>

<P>The Board of Directors<BR>
YUM! Brands,  Inc.:</p>
<BR>

<P>We have reviewed the  accompanying  condensed  consolidated  balance sheet of YUM!
Brands,  Inc. and Subsidiaries  (&#147;YUM&#148;)  (formerly TRICON Global Restaurants,
Inc.) as of September 7, 2002 and the related condensed  consolidated  statements of
income for the twelve and thirty-six  weeks ended  September 7, 2002 and September 8,
2001 and the condensed  consolidated  statements  of cash flows for the  thirty-six
weeks  ended  September  7, 2002 and  September  8, 2001.  These  condensed  consolidated
financial statements are the responsibility of YUM&#146;s management.</P>

<P>We  conducted  our review in  accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A review of interim financial
information  consists principally of applying analytical review procedures to  financial
data and making  inquiries of persons  responsible  for financial and accounting
matters.  It is  substantially  less in scope than an audit conducted in accordance  with
auditing  standards  generally  accepted in the United States of  America,  the objective
of which is the  expression of an opinion  regarding  the financial  statements  taken as
a whole.  Accordingly, we do not express such an opinion.</P>

<P>Based on our review,  we are not aware of any material  modifications  that should be
made to the  condensed  consolidated  financial  statements referred to above for them to
be in conformity with accounting  principles generally accepted in the  United States of
America.</P>

<P>We have previously  audited,  in accordance with auditing  standards  generally
accepted in the United States of America,  the consolidated  balance sheet of YUM as of
December 29, 2001, and the related  consolidated  statements of income,  cash  flows and
shareholders&#146; equity (deficit) and comprehensive  income for the year then ended not
presented herein;  and in  our report dated  February 7, 2002,  except as to Note 12
which is as of February 22,  2002,  we expressed an  unqualified  opinion on those
consolidated  financial  statements.  In our  opinion,  the  information  set forth in
the  accompanying  condensed consolidated balance sheet as of December&nbsp;29,  2001, is
fairly presented,  in all material respects, in relation  to the consolidated balance
sheet from which it has been derived.</P>


<BR><BR>




<P>KPMG LLP<BR>
Louisville, Kentucky<BR>
October 7, 2002</p>
<BR><BR>

<BR><BR>
<P ALIGN=CENTER>36</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P><B><A NAME="link9">PART II - Other Information and Signatures</A></b></p>


<P><B>Item 1.  Legal Proceedings</b>

<blockquote>Information  regarding legal  proceedings is  incorporated  by reference from Note 13 to the Company&#146;s  Condensed
         Consolidated Financial Statements set forth in Part I of this report.</blockquote><BR>


<P>Item 6.  Exhibits and Reports on Form 8-K</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;Exhibit Index</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%"><U>EXHIBITS</U></TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT"> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">Exhibit 1.1 </TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Underwriting  Agreement,  dated June 25, 2002, between YUM! Brands and Salomon  Smith
Barney Inc.,  as  representative  for itself and the other  Underwriters  named therein,
which is incorporated  herein by reference from Exhibit 1.1 on  Form 8-K filed on July 2,
2002. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">Exhibit 4.1</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Officer&#146;s Certificate  establishing  YUM!  Brands&#146; 7.70% Senior Notes due July
1,  2012 as a series of  securities  under  the  Indenture  dated as of May 1,  1998
between YUM!  Brands and Bank One Trust  Company,  N.A.,  as successor in  interest to
The First National Bank of Chicago,  which is incorporated  herein  by reference from
Exhibit 4.1 on Form 8-K filed on July 2, 2002. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">Exhibit 4.2</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Form of 7.70% Senior Note due July 1, 2012  (included in Exhibit  4.1),  which  is
incorporated  herein by  reference  from  Exhibit 4.2 on Form 8-K filed on  July 2, 2002. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="13%">Exhibit 10.6</TD>
     <TD ALIGN="LEFT" WIDTH="1%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Credit  Agreement,  dated June 25, 2002 among YUM, the lenders party  thereto,  JP Morgan
Chase Bank, as  Administrative  Agent,  and Citicorp  USA,  Inc., as  Syndication  Agent,
which is  incorporated  herein by reference  from Exhibit  10.6 on Form 8-K filed on June
28, 2002. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">Exhibit 15</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Letter from KPMG LLP regarding Unaudited Interim Financial Information (Accountants'
Acknowledgment) </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="13%">Exhibit 99.1</TD>
     <TD ALIGN="LEFT" WIDTH="1%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Certification of the  Chairman  and Chief  Executive  Officer  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="13%">Exhibit 99.2</TD>
     <TD ALIGN="LEFT" WIDTH="1%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Certification of the Chief  Financial  Officer  pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of  the Sarbanes-Oxley Act of 2002 </P></TD>
</TR>
</TABLE>
<BR>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;Reports on Form 8-K</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%"></TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed
a Current  Report on Form 8-K dated June 25, 2002,  with respect to filing of certain
exhibits  in connection with the Registration  Statement on Form S-3 (File No.
333-42969)  declared  effective by  the  Securities  and Exchange  Commission  on
February 6, 1998 relating to an aggregate of $2 billion of  senior debt securities of
YUM! Brands, Inc. </P></TD>
</TR>
</TABLE>
<BR>


<BR><BR>
<P ALIGN=CENTER>37</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed
a Current  Report on Form 8-K dated June 28, 2002,  announcing the Company closed on a
new $1.4  billion  three-year  senior unsecured  revolving credit facility which replaced
its old senior unsecured  revolving  credit  facility and senior  unsecured  term loan
facility  which were scheduled to mature on  October 2, 2002. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed
a Current  Report  on Form 8-K dated  July 1,  2002,  confirming  our  second  quarter
ongoing  operating EPS at high end of forecasted range. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">&nbsp; </TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed
a Current  Report on Form 8-K dated July 23, 2002,  attaching our second quarter ended
June 15,  2002 earnings release. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed a Current  Report on Form 8-K dated August 12, 2002,  providing  sworn  personal  statements by
                  the Chairman and Chief Executive  Officer and the Chief Financial  Officer of the Company as required by
                  order of the Securities and Exchange Commission dated June 27, 2002 (File No. 4-460).</P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="12%">&nbsp;</TD>
     <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">We filed
a Current  Report on Form 8-K dated  August  15,  2002,  attaching  a press  release
reporting  July/August  sales for our portfolio of U.S. and  International  businesses;
raising ongoing  operating  EPS  guidance for the third  quarter;  and  announcing  the
certification  of the  Company&#146;s  financial  statements and other Securities and Exchange Commission filings on
August 12, 2002 by the Chairman and Chief Executive Officer and Chief Financial Officer. </P></TD>
</TR>
</TABLE>
<BR>



<BR><BR>
<P ALIGN=CENTER>38</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<p align=center>SIGNATURES</p><BR><BR>


<P>Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,  the
registrant has duly caused this report to be  signed on its behalf by the undersigned,
duly authorized officer of the registrant.</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">&nbsp;</td>
<TD><P ALIGN="LEFT"><U>YUM! BRANDS, INC.</u><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(Registrant)</TD></TR>
</TABLE>

<BR><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;October 17, 2002</td><TD><P ALIGN="LEFT"><u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brent A. Woodford&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u><BR>
Vice President and Controller<BR>
(Principal Accounting Officer)</TD></TR>
</TABLE>



<BR><BR>
<P ALIGN=CENTER>39</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P ALIGN=CENTER><B>CERTIFICATIONS</b></P>
<BR>


<P>I, David C. Novak, certify that:</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">1. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> I
have reviewed this quarterly report on Form 10-Q of YUM! Brands, Inc.; </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">2. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Based
on my knowledge,  this  quarterly  report does not contain any untrue  statement of a
material fact or omit  to state a material  fact  necessary to make the  statements
made,  in light of the  circumstances  under which such  statements were made, not
misleading with respect to the period covered by this quarterly report; </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">3. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Based
on my knowledge,  the financial  statements,  and other  financial  information  included
in this quarterly  report,  fairly  present in all material  respects the financial
condition,  results of operations and cash flows of  the registrant, as of, and for, the
periods presented in this quarterly report. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">4. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> The
registrant&#146;s  other certifying  officers and I are responsible for  establishing and
maintaining  disclosure  controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and we have: </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">designed
such  disclosure  controls  and  procedures  to  ensure  that  material  information
relating  to  the  registrant,  including  its  consolidated  subsidiaries,  is made
known to us by others  within  those  entities,  particularly during the period in which
this quarterly report is being prepared;  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">evaluated
the  effectiveness of the registrant&#146;s  disclosure  controls and procedures as of a
date within 90 days  prior to the filing date of this quarterly report (the &#147;Evaluation
Date&#148;); and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(c) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">presented
in this  quarterly  report our  conclusions  about the  effectiveness  of the  disclosure
controls and  procedures based on our evaluation as of the Evaluation Date;  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">5. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> The
registrant&#146;s  other certifying  officers and I have disclosed,  based on our most
recent  evaluation,  to the  registrant&#146;s  auditors and the audit  committee of the
registrant&#146;s  board of directors (or persons  performing  the  equivalent function): </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">all
significant  deficiencies in the design or operation of internal  controls which could
adversely  affect the  registrant&#146;s  ability  to record,  process,  summarize  and
report  financial  data and have  identified  for the  registrant&#146;s auditors any
material weaknesses in internal controls; and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">any
fraud,  whether or not material,  that involves  management or other employees who have a
significant role in  the registrant&#146;s internal controls; and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">6. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT">The
registrant&#146;s  other  certifying  officers and I have indicated in this quarterly
report whether or not there  were significant changes in internal controls or in other
factors that could  significantly  affect internal controls  subsequent to the date of
our most recent  evaluation,  including any  corrective  actions with regard to
significant  deficiencies and material weaknesses. </P></TD>
</TR>
</TABLE>
<BR>

<BR><BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;October 17, 2002</td><TD><P ALIGN="LEFT"><u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
David C. Novak&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u><BR>Chairman and Chief Executive Officer
</TD></TR>
</TABLE>

<BR><BR>
<BR><BR>


<BR><BR>
<P ALIGN=CENTER>40</P>
<HR NOSHADE SIZE=1>
<BR><BR>

<P>I, David J. Deno, certify that:</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">1. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> I
have reviewed this quarterly report on Form 10-Q of YUM! Brands, Inc.; </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">2. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Based
on my knowledge,  this  quarterly  report does not contain any untrue  statement of a
material fact or omit  to state a material  fact  necessary to make the  statements
made,  in light of the  circumstances  under which such  statements were made, not
misleading with respect to the period covered by this quarterly report; </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">3. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> Based
on my knowledge,  the financial  statements,  and other  financial  information  included
in this quarterly  report,  fairly  present in all material  respects the financial
condition,  results of operations and cash flows of  the registrant, as of, and for, the
periods presented in this quarterly report. </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">4. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> The
registrant&#146;s  other certifying  officers and I are responsible for  establishing and
maintaining  disclosure  controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and we have: </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(a) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">designed
such  disclosure  controls  and  procedures  to  ensure  that  material  information
relating  to  the  registrant,  including  its  consolidated  subsidiaries,  is made
known to us by others  within  those  entities,  particularly during the period in which
this quarterly report is being prepared;  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">evaluated
the  effectiveness of the registrant&#146;s  disclosure  controls and procedures as of a
date within 90 days  prior to the filing date of this quarterly report (the &#147;Evaluation
Date&#148;); and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(c) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">presented
in this  quarterly  report our  conclusions  about the  effectiveness  of the  disclosure
controls and  procedures based on our evaluation as of the Evaluation Date;  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">5. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> The
registrant&#146;s  other certifying  officers and I have disclosed,  based on our most
recent  evaluation,  to the  registrant&#146;s  auditors and the audit  committee of the
registrant&#146;s  board of directors (or persons  performing  the  equivalent function): </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(a)</TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">All
significant  deficiencies in the design or operation of internal  controls which could
adversely  affect the  registrant&#146;s  ability  to record,  process,  summarize  and
report  financial  data and have  identified  for the  registrant&#146;s auditors any
material weaknesses in internal controls; and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="9%">(b) </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="88%"><P ALIGN="LEFT">Any
fraud,  whether or not material,  that involves  management or other employees who have a
significant role in  the registrant&#146;s internal controls; and  </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">6. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> The
registrant&#146;s  other  certifying  officers and I have indicated in this quarterly
report whether or not there  were significant changes in internal controls or in other
factors that could  significantly  affect internal controls  subsequent to the date of
our most recent  evaluation,  including any  corrective  actions with regard to
significant  deficiencies and material weaknesses. </P></TD>
</TR>
</TABLE>
<BR>
<BR><BR>


<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;October 17, 2002</td><TD><P ALIGN="LEFT"><u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
David J. Deno&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u><BR>Chief Financial Officer
</TD></TR>
</TABLE>


<BR><BR>
<P ALIGN=CENTER>41</P>
<HR NOSHADE SIZE=1>
<BR><BR>


<p align=right><b>EXHIBIT 15</b></p><BR><BR>

<p align=center><b><u>Accountants&#146; Acknowledgment</U></b></P>


<P>The Board of Directors<BR>
YUM! Brands, Inc.:</P>
<BR>

<P>We hereby  acknowledge our awareness of the use of our report dated October 7, 2002 included  within the Quarterly  Report
on Form 10-Q of YUM! Brands,  Inc.  (formerly TRICON Global  Restaurants,  Inc.) for the twelve and thirty-six weeks ended
September 7, 2002, and incorporated by reference in the following Registration Statements:</p>





<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><p align=left><U>Description</U></p></TH>
     <TH COLSPAN="2"><p align=left><U>Registration Statement Number</u></P></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="57%" ALIGN="LEFT"><BR><B><U>Forms S-3 and S-3/A</u></B></TD>
     <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="38%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Direct Stock Purchase Program</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-46242</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">$2,000,000,000 Debt Securities</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-42969</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><b><u>Form S-8s</u></b></TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Restaurants Puerto Rico, Inc. Save-Up Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-85069</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Restaurant Deferred Compensation Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-36877, 333-32050</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">Executive Income Deferral Program</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-36955</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Long-Term Incentive Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-36895, 333-85073, 333-32046</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">SharePower Stock Option Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-36961</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Long-Term Savings Program</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-36893, 333-32048</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Brands, Inc. Restaurant General Manager</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Stock Option Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-64547</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">YUM! Brands, Inc. Long Term Incentive Plan</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">333-32052</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>


<P>Pursuant to Rule 436(c) of the  Securities Act of 1933,  such report is not considered a part of a registration  statement
prepared or certified by an accountant or a report  prepared or certified by an accountant  within the meaning of Sections
7 and 11 of the Act.</P>
<BR><BR><BR>



<P>KPMG LLP<BR>
Louisville, Kentucky<BR>
October 17, 2002</P>


<BR><BR><BR>
<HR SIZE=1 NOSHADE><BR><BR>


<p align=right>Exhibit 99.1</P><BR><BR>


<p align=center>CERTIFICATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER<BR>
PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</p><BR><BR>


<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of YUM!  Brands,
Inc. (the &#147;Company&#148;) on Form 10-Q for the quarter ended  September 7, 2002, as
filed with the Securities and Exchange  Commission on the date hereof (the  &#147;Periodic
Report&#148;),  I,  David C. Novak,  Chairman and Chief  Executive  Officer of the
Company,  certify,  pursuant to 18 U.S.C.  Section 1350, as  adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">1. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> the
Periodic  Report fully complies with the  requirements  of Section 13(a) or 15(d) of the
Securities  Exchange  Act of 1934; and </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">2. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> the
information  contained in the Periodic  Report  fairly  presents,  in all material
respects,  the financial  condition and results of operations of the Company. </P></TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Dated:&nbsp;&nbsp;<U>&nbsp;&nbsp;October 17, 2002&nbsp;&nbsp;</u></td>
<TD><P ALIGN="LEFT"><U>&nbsp;&nbsp;/s/&nbsp;&nbsp;David C. Novak&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<BR>Chairman and Chief Executive Officer</P></TD></TR>
</TABLE>
<BR><BR>

<HR SIZE=1 NOSHADE><BR><BR>

<p align=right>Exhibit 99.2</P><BR><BR>


<p align=center>CERTIFICATION OF CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
<BR><BR>


<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of YUM!  Brands,
Inc. (the &#147;Company&#148;) on Form 10-Q for the quarter ended  September 7, 2002, as
filed with the Securities and Exchange  Commission on the date hereof (the  &#147;Periodic
Report&#148;),  I,  David J. Deno, Chief Financial Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350, as adopted pursuant  to Section 906 of the
Sarbanes-Oxley Act of 2002, that:</P>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">1. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> the
Periodic  Report fully complies with the  requirements  of Section 13(a) or 15(d) of the
Securities  Exchange  Act of 1934; and </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="3%">2. </TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="94%"><P ALIGN="LEFT"> the
information  contained in the Periodic  Report  fairly  presents,  in all material
respects,  the financial  condition and results of operations of the Company. </P></TD>
</TR>
</TABLE>
<BR>
<BR><BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Dated:&nbsp;&nbsp;<U>October 17, 2002&nbsp;&nbsp;</u></td>
<TD><P ALIGN="LEFT"><U>/s/&nbsp;&nbsp;David J. Deno&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR> Chief Financial Officer</P></TD></TR>
</TABLE>

</BODY>
</HTML>




</TEXT>
</DOCUMENT>
</SUBMISSION>
