<SUBMISSION>
<ACCESSION-NUMBER>0001041061-04-000246
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20040612
<FILING-DATE>20040720
<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>04921421
</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>TRICON GLOBAL RESTAURANTS INC
<DATE-CHANGED>19970627
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>GREAT AMERICAN RESTAURANT CO
<DATE-CHANGED>19970618
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q2q04.htm
<DESCRIPTION>SECOND QUARTER 2004, JUNE 12, 2004 FORM 10Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Form 10-Q</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 June 12, 2004</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&#146;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;Indicate by check mark  whether
the  registrant  is an  accelerated  filer (as defined in Rule 12b-2 of the
Exchange
Act). Yes&nbsp; <U>&nbsp;&times;&nbsp;&nbsp;&nbsp;&nbsp;</u>&nbsp;&nbsp;No&nbsp;
<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>


<P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares
outstanding of the Registrant&#146;s Common Stock as of
July 15, 2004 was 290,567,629 shares.</P>


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

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




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN="2" NOWRAP="Nowrap">Page No.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=93% ALIGN=LEFT>Part I.  Financial Information</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1 - Financial Statements</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Condensed Consolidated Statements of Income - Quarters and Years to date</TD><TD ALIGN=LEFT>&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;ended June 12, 2004 and June 14, 2003</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Condensed Consolidated Statements of Cash Flows - Years to date ended</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&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;June 12, 2004 and June 14, 2003</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>


<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Condensed Consolidated Balance Sheets - June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&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;and December 27, 2003</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>

<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Condensed Consolidated Financial Statements</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 2 - Management&#146;s Discussion and Analysis of Financial Condition</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19</TD>
        <TD ALIGN=LEFT>&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;&nbsp;&nbsp;&nbsp;and Results of Operations</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>

<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 3 - Quantitative and Qualitative Disclosures about Market Risk</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 4 - Controls and Procedures</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Independent Accountants&#146; Review Report</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>37</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Part II. Other Information and Signatures</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1 - Legal Proceedings</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>38</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 2 - Changes in Securities, Use of Proceeds and Issuer Purchases</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>38</TD>
        <TD ALIGN=LEFT>&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;&nbsp;&nbsp;&nbsp;of Equity Securities</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 4 - Submission of Matters to a Vote of Security Holders</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>38</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 6 - Exhibits and Reports on Form 8-K</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>39</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signatures</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>41</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR><BR><BR>
<p align=center>2</p>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


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

<P><B>CONDENSED CONSOLIDATED STATEMENTS OF INCOME</B><BR>
YUM! BRANDS, INC. AND SUBSIDIARIES<BR>
 (in millions, except per share data)</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=55% ALIGN=LEFT><B>Revenues</b></TD>
     <TD WIDTH=3% 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=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>Company sales</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1,846</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1,723</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;3,593</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;3,320</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>231</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>213</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>454</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>418</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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 revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,936</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4,047</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,738</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;&nbsp;Food and paper</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>588</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>532</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,128</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,024</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Payroll and employee benefits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>493</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>473</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>973</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>923</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Occupancy and other operating expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>495</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>462</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>966</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>892</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>1,576</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,467</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,067</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,839</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>234</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>208</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>471</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>411</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>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>13</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15</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>(10</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(8</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(22</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Wrench litigation</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AmeriServe and other charges (credits)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>1,802</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,716</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,529</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,301</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Operating Profit</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>275</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>220</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>518</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>437</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Interest expense, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>32</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>84</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Income Before Income Taxes and Cumulative Effect of</b></TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;<B>Accounting  Change</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>243</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>451</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>353</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Income tax provision</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>65</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>56</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>131</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>113</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Income Before Cumulative Effect of Accounting Change</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>122</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>320</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>240</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Cumulative effect of accounting change, net of tax</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>(1</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Net Income</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;122</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;320</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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><B>Basic Earnings Per Common Share</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.61</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1.10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.82</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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><B>Diluted Earnings Per Common Share</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.40</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1.05</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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><b>Dividends Declared Per Common Share</b></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<HR SIZE=1 NOSHADE>
<P>See accompanying Notes to Condensed Consolidated Financial Statements.</P>
<HR SIZE=1 NOSHADE>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>3</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P><B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</b><BR>
YUM! BRANDS, INC. AND SUBSIDIARIES<BR>
(in millions)</p>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></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>$&nbsp;320</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Adjustments to reconcile net income to net cash provided by operating activities:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Cumulative effect of accounting change, net of tax</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>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>195</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>181</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Wrench litigation</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35</TD>
        <TD ALIGN=LEFT>&nbsp;</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>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(27</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>19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</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>(14</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(11</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Inventories</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(6</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(3</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>(21</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(25</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>(64</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(107</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>(66</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>39</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>(171</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(107</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>390</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>364</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>(221</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(221</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>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>11</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>(5</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(22</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Short-term investments</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(27</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Sales of property, plant and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>(198</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(208</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Revolving Credit Facility activity</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(27</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Repayments of long-term debt</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>Short-term borrowings-three months or less, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(48</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Repurchase shares of common stock</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(294</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(82</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>102</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>(199</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(129</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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 Rates on Cash and Cash Equivalents</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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 (Decrease) Increase in Cash and Cash Equivalents</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(9</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>34</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>192</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>130</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;183</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;164</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>


<HR SIZE=1 NOSHADE>
<p>See accompanying Notes to Condensed Consolidated Financial Statements.</p>
<HR SIZE=1 NOSHADE>




<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>4</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


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


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2>&nbsp;</TH>
     <TH COLSPAN=1>6/12/2004<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>12/27/2003<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>


<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></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>$&nbsp;&nbsp;&nbsp;&nbsp;183</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;192</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>42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Accounts and notes receivable, less allowance: $19 in 2004 and $25 in 2003</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>150</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Inventories</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>73</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>67</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>98</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>96</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>109</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>65</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>165</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>165</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Advertising cooperative assets, restricted</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>73</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>56</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;<b>Total Current Assets</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>921</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>806</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>3,251</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,280</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Goodwill</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>526</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>521</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>352</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>357</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>178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>184</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>455</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>472</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;<b>Total Assets</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;5,683</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;5,620</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><b>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><b>Current Liabilities</B></TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Accounts payable and other current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD>
          <TD ALIGN=RIGHT>$&nbsp;1,097</TD>
<TD>&nbsp;</TD>
<TD align=right>$&nbsp;1,157</td>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Dividends payable</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>29</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</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>164</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>238</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>379</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Advertising cooperative liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>73</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>56</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;<b>Total Current Liabilities</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,742</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,461</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>1,669</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,056</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>999</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>983</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;<b>Total Liabilities</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4,410</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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></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; 290 shares and 292 shares issued in</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;2004 and 2003, respectively</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>783</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>916</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Retained earnings</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>705</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>414</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Accumulated other comprehensive income (loss)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(215</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(210</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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;<b>Total Shareholders&#146; Equity</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,273</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,120</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;<b>Total Liabilities and Shareholders&#146; Equity</B></TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;5,683</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;5,620</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>


<HR SIZE=1 NOSHADE>
<p>See accompanying Notes to Condensed Consolidated Financial Statements.</p>
<HR SIZE=1 NOSHADE>


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<BR><BR><BR>
<P ALIGN=center>5</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>






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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><b>1.</B></TD>
<TD WIDTH=97%><P ALIGN=LEFT><b>Financial
Statement Presentation</B></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<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 27, 2003 (&#147;2003 Form 10-K&#148;).  Except as disclosed  herein,  there has been no
material change in the information  disclosed in the notes to our Consolidated Financial
Statements included in the 2003 Form 10-K.</P>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<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 the worldwide  operations of KFC, Pizza Hut, Taco Bell, Long John
Silver&#146;s  (&#147;LJS&#148;) and A&amp;W All-American  Food Restaurants  (&#147;A&amp;W&#148;)  (collectively  the &#147;Concepts&#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>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<P>We participate in various  advertising  cooperatives  with our franchisees and
licensees.  In certain of these  cooperatives we possess majority voting rights,  and
thus control the  cooperatives.  We have  previously  reported the related assets and
liabilities of those advertising  cooperatives we control in accounts and notes
 receivable,  prepaid expenses and other current assets and accounts payable and other
current  liabilities,  as appropriate.  We have now summed all assets and liabilities of
these  advertising  cooperatives and reported  the  amounts as  advertising  cooperative
 assets,  restricted  and  advertising  cooperative  liabilities  in the  Condensed
Consolidated  Balance Sheet as of June 12, 2004. We have reclassified those amounts in
the Condensed  Consolidated  Balance Sheet as of December 27, 2003 for comparative
 purposes. As the contributions to these cooperatives are designated and segregated
for advertising,  we act as an agent for the  franchisees  and  licensees  with  regard to
these  contributions.  Thus,  in  accordance  with  Statement  of Financial  Accounting
 Standards (&#147;SFAS&#148;) No. 45, &#147;Accounting for Franchise Fee Revenue,&#148; we do not reflect,
 and have not reflected in the past, franchisee and licensee contributions to these
cooperatives in our Condensed Consolidated Statements of Income.</P>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<P>In our opinion,  the accompanying  Financial  Statements include all adjustments
 considered  necessary to present fairly, when read in conjunction  with our 2003 Form
10-K, our financial  position as of June 12, 2004, and the results of our operations and
cash flows for the quarters and years to date ended June 12, 2004 and June 14,  2003.
 Our results of  operations  for these  interim  periods are not necessarily indicative
of the results to be expected for the full year.</P>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<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>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>6</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><b>2.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><b>Stock-Based
Employee Compensation</B></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para" FSL="Workstation" -->
<P>The Company accounts for its stock-based  employee  compensation  plans under the
recognition and measurement  principles of Accounting Principles  Board Opinion No. 25,  &#147;Accounting
for Stock Issued to Employees,&#148;  and related  Interpretations.  No stock-based  employee
compensation  cost is  reflected  in net income,  as all options  granted  under those
plans had an exercise  price equal to the market price of the underlying  common stock on
the date of grant.  The following table  illustrates the effect on net income and
earnings per share if the Company  had applied the fair value  recognition  provisions
 of  Statement  of  Financial  Accounting  Standards  No. 123 &#147;Accounting for Stock-Based
Compensation&#148; (&#147;SFAS 123&#148;) to stock-based employee compensation.</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=55% ALIGN=LEFT>Net Income, as reported</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;178</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;122</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;320</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;239</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Deduct: Total stock-based employee compensation</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>expense determined under fair value based method for</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>all awards, net of related tax effects</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(10</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(9</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(18</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(18</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Net Income, pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;168</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;113</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;302</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;221</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Basic Earnings per Common Share</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;As reported</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.61</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.82</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.39</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.76</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Diluted Earnings per Common Share</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;As reported</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.40</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.05</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.55</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.37</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.99</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.73</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>3.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Recently
Adopted Accounting Pronouncements</B> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have adopted  Financial  Accounting  Standards  Board (&#147;FASB&#148;)  Interpretation  No.
46 (revised  December 2003),  &#147;Consolidation  of Variable  Interest  Entities,  an
 interpretation  of ARB No. 51&#148; (&#147;FIN 46&#148;).  FIN 46 addresses  the  consolidation  of an
entity whose equity holders either (a) have not provided  sufficient  equity at risk to
allow the entity to finance its own activities or (b) do not possess certain
 characteristics of a controlling  financial interest.  FIN 46 requires the consolidation
of such an entity, known as a variable  interest entity (&#147;VIE&#148;),  by the primary
 beneficiary of the entity.  The primary  beneficiary is the entity, if any, that is
obligated  to absorb a majority of the risk of loss from the VIE&#146;s  activities,  entitled
 to receive a majority of the VIE&#146;s  residual returns, or both.  FIN 46 excludes from its
scope businesses (as defined by FIN 46) unless certain conditions exist.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The principal entities in which we possess a variable interest include franchise
 entities,  including our  Unconsolidated  Affiliates, which operate our restaurants.  We
do not possess any ownership  interests in franchise  entities except for our investments
in various Unconsolidated  Affiliates  accounted  for under the equity  method.
 Additionally,  we generally do not provide  financial  support to franchise entities in
a typical franchise relationship.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We also possess  variable  interests in certain  purchasing  cooperatives we have
formed along with  representatives  of the franchisee groups of each of our Concepts.
 These purchasing  cooperatives were formed for the purpose of purchasing certain
 restaurant  products and equipment in the U.S. Our equity  ownership in</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>7</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P>each cooperative
is generally  proportional to our percentage  ownership of the U.S. system units for the
Concept.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As a result of the adoption of FIN 46 we have not consolidated any franchise entities,
purchasing cooperatives or other entities.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>4.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>New
Accounting Pronouncements Not Yet Adopted</b></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>On December 8, 2003,  the Medicare  Prescription  Drug,  Improvement  and
 Modernization  Act of 2003 (the &#147;Act&#148;),  which  introduces a Medicare  prescription
 drug  benefit,  as well as a federal  subsidy to sponsors of retiree  health care
benefit  plans that provide a benefit that is at least  actuarially  equivalent to the
Medicare  benefit,  was enacted.  On May 19, 2004,  the FASB issued  Financial Staff
 Position No.  106-2,  &#147;Accounting  and  Disclosure  Requirements  Related to the
Medicare  Prescription  Drug,  Improvement  and Modernization  Act of 2003&#148; (&#147;FSP 106-2&#148;)
to discuss  certain  accounting and disclosure  issues raised by the Act. FSP 106-2
addresses accounting for the federal subsidy for the sponsors of single employer defined
benefit  postretirement  healthcare plans and disclosure requirements  for  plans  for
which  the  employer  has not yet been  able to  determine  actuarial  equivalency.
 Except  for  certain nonpublic  entities,  FSP 106-2 is effective for the first interim
or annual period  beginning  after June 15, 2004 (the quarter ending December 25, 2004
for the Company).</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have not yet concluded whether the prescription drug benefits provided under our
postretirement  plan are actuarially  equivalent to the Medicare  benefit as necessary to
qualify for the subsidy.  The reported net periodic benefit costs of our  postretirement
 plan in the  accompanying  Financial  Statements and Notes to the Financial  Statements
do not reflect the effects of the Act.  Adoption of FSP 106-2 could require  revisions to
previously  reported  information.  While we may be eligible for benefits  under the Act
based on the prescription  drug benefits  provided in our  postretirement  plan, we do
not believe such benefits will have a material  impact on our Financial Statements.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>5.</b></TD>
<TD WIDTH=97%><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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></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>$&nbsp;178</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;122</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;320</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;239</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>290</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>293</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>290</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>293</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;0.61</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;0.42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1.10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;0.82</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>290</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>293</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>290</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>293</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>49</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>55</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>51</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>51</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Shares assumed purchased with proceeds of dilutive</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;share equivalents</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(35</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(44</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(36</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(41</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>304</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>304</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>305</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>303</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;0.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;0.40</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1.05</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;0.79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Unexercised  employee  stock options to purchase  approximately  0.3 million and 0.5
million shares of our Common Stock for the quarter and year to date ended June 12, 2004,
 respectively,  were not included in the</P>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>8</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P> computation of diluted EPS because their
exercise prices were greater than the average market price of our Common Stock during the
quarter and year to date ended June 12, 2004.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Unexercised  employee  stock options to purchase  approximately  2.6 million and 7.7
million shares of our Common Stock for the quarter and year to date ended June 14, 2003,
 respectively,  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
quarter and year to date ended June 14, 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>During the year to date ended June 12, 2004, we have granted  employee stock options
to purchase  approximately 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 $35.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>6.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><b>Comprehensive
Income</b></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Comprehensive income was as follows:</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
<TH COLSPAN=1></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>$&nbsp;178</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;122</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;320</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;239</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Foreign currency translation adjustment arising</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;during the period</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(49</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>29</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(5</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>35</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Changes in fair value of derivatives, net of tax</TD><TD ALIGN=LEFT>&nbsp;</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>
     <TD ALIGN=RIGHT>(10</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Reclassification of derivative losses to net income,</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;net of tax</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>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;129</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;151</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;315</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;274</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>7.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Items
Affecting Comparability of Net Income</b></P></TD>
</TR>
</TABLE>
<BR>


<P><U>Facility actions</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Facility actions consists of the following 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 close and stores we intend to continue to use in the business.</UL><BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>Quarter ended June 12, 2004<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=63% ALIGN=LEFT>Refranchising net (gains) losses(b)</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp; (1</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;3</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store closure costs(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(4</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(5</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store impairment charges</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>9</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>Quarter ended June 14, 2003<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=64% ALIGN=LEFT>Refranchising net (gains) losses</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(3</TD>
        <TD WIDTH=7% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;3</TD>
        <TD WIDTH=7% ALIGN=LEFT></TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;-</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store closure costs(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=left>)
</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store impairment charges</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=RIGHT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;6</TD>
        <TD ALIGN=LEFT></TD></TR>
<TR>
     <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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=7>Year to date ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=64% ALIGN=LEFT>Refranchising net (gains) losses(c)</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;7</TD>
        <TD WIDTH=7% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4</TD>
        <TD WIDTH=7% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;11</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store closure costs(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(4</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(5</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store impairment charges</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>13</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>Year to date ended June 14, 2003<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=64% ALIGN=LEFT>Refranchising net (gains) losses(b)</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(6</TD>
        <TD WIDTH=7% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;13</TD>
        <TD WIDTH=7% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;7</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store closure costs(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Store impairment charges</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;18</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>The
income in store  closure  costs for the quarters and years to date ended June 12, 2004
and June 14, 2003 is primarily  the      result of gains from the sale of properties on
which we formerly operated restaurants.</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(b)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>International
 includes a $4 million  and $10 million  write down on our Puerto Rico  business in the
quarter to date ended June 12, 2004 and the year to date ended June 14, 2003, respectively.</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(c)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>U.S.
includes an $8 million write down on restaurants we have offered to sell at amounts lower
than their carrying amounts.</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The  following  table  summarizes  the carrying  values of the major  classes of
assets held for sale at June 12, 2004 and December 27, 2003.  U.S.  amounts  primarily
 represent land on which we previously  operated  restaurants  and are net of impairment
 charges of $5 million and $2 million,  at June 12, 2004 and December 27, 2003,
 respectively.  International  amounts relate  primarily to our Puerto Rico  business,
 which we have written down by  approximately  $21 million since it was  designated  held
for sale in the quarter ended December 28, 2002.  The carrying  values of  liabilities
 of the Puerto Rico business  that we anticipate  would be assumed by a buyer, were not
significant at June 12, 2004 or at December 27, 2003.</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></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>$&nbsp;&nbsp;16</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;68</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;84</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Goodwill</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Assets classified as held for sale</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;16</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;82</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;98</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>10</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>December 27, 2003<HR WIDTH=100% SIZE=1 COLOR=BLACK 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 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></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>$&nbsp;&nbsp;&nbsp;9</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;73</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;82</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Goodwill</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Assets classified as held for sale</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;87</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;96</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The following  table  summarizes  Company sales and restaurant  profit related to
stores held for sale at June 12, 2004, or disposed of through  refranchising  or closure
during 2004 and 2003. The operations of such stores  classified as held for sale as of
June 12, 2004 or June 14, 2003 or disposed of in the quarters and years to date ended
June 12, 2004 or June 14, 2003,  which meet the  conditions  of SFAS No. 144,  &#147;Accounting
for the Impairment or Disposal of Long-Lived Assets&#148; (&#147;SFAS 144&#148;), 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>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT>Stores held for sale at June 12, 2004:</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT></TD>
        <TD WIDTH=4% 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;Sales</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;48</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;43</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;91</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;86</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>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>17</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>17</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Stores disposed of in 2004 and 2003:</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>$&nbsp;&nbsp;3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;26</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;54</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>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Wrench Litigation</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>An  insignificant  amount of expense was  recorded as Wrench  litigation  for the
 quarter  and year to date ended June 12,  2004.  The amounts  recorded  as Wrench
 litigation  for the  quarter and year to date ended June 14,  2003,  reflect  the
amounts  awarded to the plaintiff and estimated pre-judgment interest.  See Note 13 for a
discussion of Wrench litigation.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>AmeriServe and Other Charges (Credits) </U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>AmeriServe Food  Distribution  Inc.  (&#147;AmeriServe&#148;)  was the primary  distributor of
food and paper supplies to our U.S. 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. During the AmeriServe bankruptcy  reorganization  process, we took
a number of actions to ensure  continued  supply to our system.  Those  actions  resulted
in  significant  expense for the Company,  primarily  recorded in 2000.  Under the POR we
are entitled to proceeds from certain  residual  assets,  preference  claims and other
legal  recoveries of the estate.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We  classify  expenses  and  recoveries  related to  AmeriServe,  as well as certain
 other  items,  as  AmeriServe  and other  charges (credits).  Income of $14 million was
recorded as AmeriServe  and other  charges  (credits) for both the quarter and year to
date ended June 12, 2004.  The amount  primarily  resulted from cash  recoveries  related
to the  AmeriServe  bankruptcy  reorganization  process. Expense of $2 million was
 recorded as  AmeriServe  and</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>11</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>

<P> other  charges  (credits)  for both the quarter and year to
date ended June 14, 2003.  The amount primarily consisted of integration costs related to
our acquisition of Yorkshire Global Restaurants, Inc.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>8.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Debt</b></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Our primary bank credit  agreement  comprises a $1 billion senior  unsecured
 Revolving  Credit Facility (the &#147;Credit  Facility&#148;) which matures on June 25, 2005.  The
Credit  Facility is  unconditionally  guaranteed by our  principal  domestic
 subsidiaries  and contains financial  covenants  relating to  maintenance  of leverage
 and fixed  charge  coverage  ratios.  The Credit  Facility  also  contains affirmative
 and negative  covenants  including,  among other things,  limitations on certain
 additional  indebtedness,  guarantees of indebtedness,  level of cash dividends,
 aggregate non-U.S.  investment and certain other transactions as defined in the
agreement.  We were in compliance with all debt covenants at June 12, 2004.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Under the terms of the Credit Facility,  we may borrow up to the maximum borrowing
limit,  less outstanding  letters of credit. At June 12, 2004,  our unused  Credit
 Facility  totaled $706 million,  net of  outstanding  letters of credit of $294
 million.  There were no borrowings  outstanding  under the Credit Facility at June 12,
2004. The interest rate for borrowings  under the Credit Facility ranges from 1.0% to
2.0% 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 0.50%.  The exact spread over LIBOR or the Alternate Base Rate, as
applicable,  will depend upon our performance  under specified  financial  criteria.
 Interest on any outstanding  borrowings under the Credit Facility is payable at least
quarterly.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Included in short-term  borrowings at June 12, 2004 are $350 million of Senior
 Unsecured Notes with a May 2005 maturity date (&#147;the May 2005 Notes&#148;).  The May 2005
Notes were included in long-term  debt at December 27, 2003.  Additionally,  short-term
 borrowings at June 12, 2004 now includes a derivative  adjustment of $17 million related
to the pay-variable  interest rate swaps designated as a hedge of the May 2005 Notes.
 The derivative  adjustment  related to these swaps was included in long-term debt,
 along with the May 2005 Notes, at December 27, 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>During the quarter  ended June 12, 2004, we entered into  additional  pay-variable
 interest  rate swaps with notional  amounts of $850 million.  The swaps were  entered
into with  financial  institutions  and have reset dates and  critical  terms that match
those of $75 million,  $375  million  and $400  million  in  long-term  debt  under our
 2008,  2011 and 2012  fixed-rate  Senior  Unsecured  Notes, respectively.  Accordingly,
 the swaps are  accounted  for as hedges of these  portions  of our debt.  Considering
 the impact of these swaps, at June 12, 2004 approximately 50% of our long-term debt is
at variable interest rates.</P>

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<P>Interest  expense on  short-term  borrowings  and long-term  debt was $36 million and
$44 million for the quarters  ended June 12, 2004 and June 14,  2003,  respectively,  and
$74  million  and $88  million  for the years to date  ended June 12,  2004 and June 14,
 2003, respectively.</P>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>12</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>






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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>9.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Reportable
Operating Segments</b></P></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>Revenues</U></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH><TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>United States</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;1,349</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;1,328</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;2,646</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;2,580</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>728</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>608</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,401</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,158</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;&nbsp;&nbsp;2,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1,936</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4,047</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;3,738</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>Operating Profit</U></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>United States</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;199</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;204</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;371</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;367</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>109</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>88</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>183</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>(44</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(34</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(92</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(69</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Unallocated facility actions(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(11</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(7</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Wrench litigation(b)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(35</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(35</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AmeriServe and other (charges) credits(b)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>14</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>275</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>220</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>518</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>437</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>(32</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(42</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(67</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(84</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Income before income taxes and cumulative</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;effect of accounting change</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;243</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;451</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;353</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>Identifiable Assets</U></TH>
     <TH COLSPAN=4></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>12/27/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=58% ALIGN=LEFT>United States</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=LEFT>$&nbsp;&nbsp;&nbsp;3,273</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=LEFT>$&nbsp;&nbsp;&nbsp;3,279</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>International</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,030</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,880</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Corporate(c)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=right>380</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=right>461</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT>&nbsp;</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></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$&nbsp;&nbsp;&nbsp;5,683</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$&nbsp;&nbsp;&nbsp;5,620</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT>&nbsp;</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></TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>Long-Lived Assets(d)</U></TH>
     <TH COLSPAN=4></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>12/27/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=58% ALIGN=LEFT>United States</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;2,840</TD>
        <TD WIDTH=4% ALIGN=LEFT></TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;2,880</TD>
        <TD WIDTH=2% ALIGN=LEFT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>International</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>
     <TD ALIGN=RIGHT>1,212</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,206</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Corporate</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>
     <TD ALIGN=RIGHT>77</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>72</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT></TD><TD></TD>
     <TD ALIGN=RIGHT></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>&nbsp;</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;4,129</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;4,158</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT>&nbsp;</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></TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Unallocated
 facility  actions  comprises  refranchising  gains (losses) which are not allocated to
the U.S. or  International              segments for performance reporting purposes.</P></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(b)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>See
Note 7 for a discussion of AmeriServe and other charges (credits) and Wrench litigation.</P></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(c)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Primarily
includes deferred tax assets,  property,  plant and equipment,  net, related to our
office facilities and fair value              of interest rate swaps.</P></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(d)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Includes
property, plant and equipment, net; goodwill; and intangible assets, net.</P></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>13</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>10.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Pension and Postretirement Medical Benefits</b></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Pension Benefits</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We sponsor noncontributory  defined benefit pension plans covering substantially all
full-time U.S. salaried employees,  certain hourly employees and certain  international
 employees.  The most significant of these plans, the YUM Retirement Plan (the &#147;Plan&#148;),
 is funded while  benefits  from the other plan are paid by the Company as  incurred.
 During  2001,  the Plan was amended  such that any salaried employee hired or rehired by
YUM after  September 30, 2001 is not eligible to  participate in the Plan.  Benefits are
based on years of service and earnings or stated amounts for each year of service.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Postretirement Medical Benefits</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Our  postretirement  plan  provides  health care  benefits,  principally  to U.S.
 salaried  retirees and their  dependents.  This plan includes  retiree cost sharing
 provisions.  During 2001, the plan was amended such that any salaried  employee hired or
rehired by YUM after  September 30, 2001 is not eligible to  participate  in this plan.
 Employees  hired prior to September 30, 2001 are eligible for benefits if they meet age
and service requirements and qualify for retirement benefits.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Components of Net Periodic Benefit Cost</U></P>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Pension Benefits<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Pension Benefits<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
    <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=52% ALIGN=LEFT>Service cost</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;8</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;6</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;15</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;12</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Interest cost</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>18</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>16</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected return on plan assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(10</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(7</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(19</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Amortization of prior service cost</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>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Recognized actuarial loss</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Net periodic benefit cost</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;13</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;25</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Other Postretirement<BR>
Benefits<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Other Postretirement<BR>
Benefits<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     </TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
    <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=52% ALIGN=LEFT>Service cost</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;-</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;-</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Interest cost</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>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected return on plan assets</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Amortization of prior service cost</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Recognized actuarial loss</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>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Net periodic benefit cost</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>14</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Contributions</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As disclosed in our 2003 Form 10-K,  we are not required to make  contributions  to
the Plan in 2004. No  contributions  have been made to the Plan during the quarter or
year to date ended June 12, 2004.  While we may make  discretionary  contributions to the
Plan during the year, we do not currently intend to do so.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>11.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Share
Repurchase Program</b> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In May 2004,  our Board of  Directors  authorized a share  repurchase  program.  This
 program  authorizes  us to  repurchase,  through November 2005, up to $300 million
 (excluding  applicable  transaction  fees) of our outstanding  Common Stock. As of June
12, 2004, no repurchases of shares had been made under this program.  Based on market
 conditions and other  factors,  repurchases  may be made from time to time in the open
market or through privately negotiated transactions at the discretion of the Company.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In November 2003, our Board of Directors  authorized a share  repurchase  program.
 This program  authorized us to repurchase,  through May 2005, up to $300 million
 (excluding  applicable  transaction  fees) of our  outstanding  Common Stock.  As of
June 12, 2004,  this share repurchase  program was substantially  completed.  During the
year to date ended June 12, 2004, we repurchased  approximately 8.1 million shares for
approximately $294 million at an average price per share of approximately $36 under this
program.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In November 2002, our Board of Directors  authorized a share repurchase  program.
 This program  authorized us to repurchase up to $300 million  (excluding  applicable
 transaction  fees) of our outstanding  Common Stock.  This share  repurchase  program
was completed in 2003.  During the year to date ended June 14, 2003, we repurchased
 approximately  3.3 million shares for  approximately $82 million at an average price per
share of approximately $25 under this program.</P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><B>12.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Supplemental
Cash Flow Data</b></P></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=80% ALIGN=LEFT>Cash Paid for:</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;Interest</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;90</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>196</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>99</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;Capital lease obligations incurred to acquire assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%><b>13.</b></TD>
<TD WIDTH=97%><P ALIGN=LEFT><B>Guarantees,
Commitments and Contingencies</b></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Lease Guarantees and Contingencies</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As a result of (a)  assigning  our interest in  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,  we are contingently  liable on certain lease  agreements.  These
leases have varying terms, the latest of which expires in 2030. As of June 12, 2004 and
December 27, 2003,  the  potential  amount of  undiscounted  payments we could be
required to make in the event of  non-payment  by the primary  lessee was $375 million
and $393 million,  respectively.  The present  value of these  potential payments
 discounted at our pre-tax cost of debt at June 12, 2004 was $298 million.  Our
 franchisees are the primary lessees under the vast majority of these leases.  We
generally have  cross-default  provisions with these  franchisees  that would put them in
default of their  franchise  agreement in the event of  non-payment  under the</p>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>15</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<p> lease.  We believe  these  cross-default  provisions  significantly reduce the risk that we will be
required to make payments  under these  leases.  Accordingly,  the liability  recorded
for our exposure under such leases at June 12, 2004 and December 27, 2003 was not
material.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Guarantees Supporting Financial Arrangements of Franchisees, Unconsolidated
Affiliates and Other Third Parties</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>At June 12, 2004 and December 27, 2003, we had provided  approximately  $32 million of
partial  guarantees of two franchisee loan pools related  primarily  to the  Company&#146;s
 historical  refranchising  programs  and,  to a lesser  extent,  franchisee  development
 of new restaurants.  In support of these  guarantees,  we have posted $32 million of
letters of credit.  We also  provide a standby  letter of credit of $23 million under
which we could  potentially  be required to fund a portion of one of the franchisee  loan
pools.  The total loans  outstanding  under these loan pools were  approximately  $113
 million at June 12, 2004.  Any funding  under the  guarantees  or letters of credit
 would be  secured  by the  franchisee  loans and any  related  collateral.  We  believe
 that we have  appropriately provided for our estimated  probable  exposures under these
 contingent  liabilities.  These  provisions were primarily  charged to net refranchising
loss (gain).  New loans are not currently being added to either loan pool.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have  guaranteed  certain lines of credit and loans of  unconsolidated  affiliates
 totaling $29 million and $28 million at June 12, 2004 and December 27, 2003,
 respectively.  Our  unconsolidated  affiliates  had total  revenues of over $390 million
and $740 million, respectively,  for the quarter and year to date ended June 12, 2004,
and assets of  approximately  $800 million and debt of $44 million at June 12, 2004.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have also  guaranteed  certain lines of credit,  loans and letters of credit of
third parties  totaling $7 million and $8 million at June 12, 2004 and  December  27,
 2003,  respectively.  If all such lines of credit and  letters of credit  were fully
drawn down,  the maximum  contingent  liability  under these  arrangements  would be
 approximately  $24 million and $25 million as of June 12, 2004 and December 27, 2003,
respectively.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have varying  levels of recourse  provisions  and  collateral  that  mitigate the
risk of loss  related to our  guarantees  of these financial arrangements of
unconsolidated  affiliates and other third parties.  Accordingly,  our recorded liability
as of June 12, 2004 and December 27, 2003 is not significant.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Insurance Programs</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We are self-insured for a substantial portion of our current and prior coverage
including workers&#146;  compensation,  employment practices liability,  general liability and
automobile liability as well as property losses  (collectively,  &#147;property and casualty
losses&#148;).  To mitigate the cost of our exposures for certain  property and casualty
 losses,  we make annual  decisions to  self-insure  the risks of loss up to defined
 maximum per  occurrence  retentions  on a line by line basis or to combine  certain
lines of coverage into one loss pool with a single  self-insured  aggregate  retention.
 The Company then purchases  insurance  coverage,  up to a certain  limit,  for losses
that exceed the  self-insurance  per  occurrence  or  aggregate  retention.  The  insurers&#146;  maximum
 aggregate  loss limits are significantly  above our  actuarially  determined  probable
 losses;  therefore,  we believe the  likelihood  of losses  exceeding  the insurers&#146; maximum
aggregate loss limits is remote.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Due to the inherent  volatility of  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</p>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>16</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<p>  quarterly  and annual net income.  We believe that we have recorded  reserves for property and casualty losses at a
level which has  substantially  mitigated the potential  negative impact of adverse
developments and/or volatility.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Change of Control Severance Agreements </U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The Company has severance  agreements  with certain key  executives  (the  &#147;Agreements&#148;)
 that are renewable on an annual basis.  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,  a  proportionate  bonus at the  higher of
target or actual performance,  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 June 12, 2004,  payments
of  approximately  $29 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>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Litigation</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We are subject to various claims and  contingencies  related to lawsuits,  taxes,
 environmental  and other matters  arising out of the normal course of business.  In
addition,  like certain other large retail employers,  the Company has been faced in
certain states with allegations of purported class-wide wage and hour violations.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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  alleged that
Taco Bell Corp.  misappropriated  certain ideas and concepts used in its  advertising
 featuring a Chihuahua.  The  plaintiffs  sought 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 was returned to District Court for trial
which began on May 14, 2003 and on June 4, 2003 the jury  awarded $30  million to the
 plaintiffs.  Subsequently,  the  plaintiffs&#146;  moved to amend the judgment to include
pre-judgment  interest and post-judgment  interest and Taco Bell filed its post-trial
motion for judgment as a matter of law or a new trial.  On September  9, 2003,  the
District  Court denied Taco Bell&#146;s  motion and granted the  plaintiff&#146;s motion to amend
the judgment.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In view of the jury  verdict  and  subsequent  District  Court  ruling,  we  recorded
a charge of $42  million in 2003.  We continue to believe that the Wrench  plaintiffs&#146;  claims
are without  merit and have  appealed the verdict to the Sixth  Circuit  Court of
Appeals. Post-judgment  interest  will  continue to accrue  during the appeal  process.
 We have  included the  liability  related to the Wrench judgment and related interest as
accounts payable and other current liabilities in our Condensed Consolidated Balance
Sheets.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>On July 9, 2003,  we filed suit against Taco Bell&#146;s  former  advertising  agency in
the United  States  District  Court for the Central District of California seeking
 reimbursement for any final award that may be ultimately  affirmed by the appeals courts
and costs that we have incurred in defending this matter.  We are also seeking
reimbursement from our insurance carriers.</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>17</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Obligations to PepsiCo, Inc. After Spin-off</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In connection with our October 6, 1997 spin-off from PepsiCo,  Inc. (&#147;PepsiCo&#148;) (the &#147;Spin-off&#148;),
 we entered into separation and other related  agreements  (the  &#147;Separation  Agreements&#148;)
 governing  the Spin-off  and our  subsequent  relationship  with  PepsiCo.  These
agreements provide certain indemnities to PepsiCo.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Under the terms of these  agreements,  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
June 12, 2004, PepsiCo remains liable for  approximately  $70 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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Included in the indemnities  described above are contingent  liabilities on lease
agreements of certain non-core  businesses of PepsiCo which  were sold  prior to the
 Spin-off.  Two of these  businesses,  Chevys  Mexican  Restaurant  and Hot 'n Now filed
for  bankruptcy protection in October 2003 and January 2004,  respectively.  We believe
that we have appropriately  provided for our estimated probable exposure under these
 indemnities and we do not expect any necessary, future  adjustments to recorded reserves
to have a material impact on our Financial  Statements.  Any related  expenses have been
recorded as AmeriServe and other charges  (credits) in our  Consolidated Income Statement.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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 tax 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 June 12, 2004, there have not been any determinations  made by PepsiCo
where we would have reached a different determination.</P>

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

<p><b>Item 2.  Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</b></p>

<p><b>Introduction</B></p>

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<P>YUM! Brands,  Inc. and Subsidiaries  (collectively  referred to as &#147;YUM&#148; or the &#147;Company&#148;)
 comprises the worldwide  operations of KFC, Pizza Hut, Taco Bell, Long John Silver&#146;s (&#147;LJS&#148;)
and A&amp;W All-American  Food Restaurants  (&#147;A&amp;W&#148;)  (collectively  &#147;the Concepts&#148;) and is
the world&#146;s  largest  quick service  restaurant  (&#147;QSR&#148;)  company based on the number of
system units.  LJS and A&amp;W were added when YUM acquired  Yorkshire Global  Restaurants,
 Inc. (&#147;YGR&#148;) on May 7, 2002. With 12,536  international  units, YUM is the second
largest QSR company outside the U.S.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Through  its  Concepts,  YUM  develops,  operates,  franchises  and  licenses  a
system of both  traditional  and  non-traditional  QSR restaurants.  Traditional  units
feature dine-in,  carryout and, in some instances,  drive-thru or delivery  services.
 Non-traditional units,  which are  typically  licensed  outlets,  include  express
 units and kiosks  which  have a more  limited  menu and  operate in non-traditional
 locations  like malls,  airports,  gasoline  service  stations,  convenience  stores,
 stadiums,  amusement  parks and colleges, where a full-scale traditional outlet would
not be practical or efficient.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The retail food industry,  in which the Company  competes,  is made up of
supermarkets,  supercenters,  warehouse  stores,  convenience stores,  coffee shops,
 snack bars,  delicatessens  and  restaurants  (including the QSR segment),  and is
intensely  competitive  with respect to food quality,  price,  service,  convenience,
 location and concept.  The industry is often  affected by changes in consumer tastes;
 national,  regional or local economic  conditions;  currency  fluctuations;  demographic
trends;  traffic patterns;  the type, number and location of competing  food retailers
and products;  and  disposable  purchasing  power.  Each of the Concepts  compete with
international,  national and regional  restaurant  chains as well as locally-owned
 restaurants,  not only for customers,  but also for management and hourly personnel,
suitable real estate sites and qualified franchisees.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The Company is focused on five long-term measures  identified as essential to our
growth and progress.  These five measures and related key performance indicators are as
follows:</P>

<ul><li>International expansion<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International system-sales growth (local currency)<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of new international restaurant openings<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net international unit growth</ul>

<ul><li>Multibrand innovation and expansion<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of multibrand restaurant locations<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of multibrand units added<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of franchise multibrand units added</UL>

<ul><li>Portfolio of category-leading U.S. brands<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. blended same-store sales growth<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. system-sales growth</Ul>

<ul><li>Global franchise fees<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New restaurant openings by franchisees<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Franchise fee growth</UL>


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





<ul><li>Strong cash generation and returns<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash generated from all sources<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash generated from all sources after capital spending<BR>
         &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restaurant margins</UL>


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<P>Our progress against these measures is discussed throughout the Management&#146;s
Discussion and Analysis (&#148;MD&amp;A&#148;).</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The  following  MD&amp;A  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 27,
2003 (&#147;2003 Form 10-K&#148;).</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>All Note  references  herein refer to the  accompanying  Notes to the Financial
 Statements.  Tabular amounts are displayed in millions except per share and unit count
amounts, or as otherwise specifically identified.</P>

<p><b>Significant Known Events, Trends or Uncertainties Expected to Impact 2004 Comparisons with 2003</B></p>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The following  factors impacted  comparability  of operating  performance for the
quarter and year to date ended June 12, 2004 or could impact comparisons for the
remainder of 2004.  Certain of these factors were previously discussed in our 2003 Form
10-K.</P>

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<P><U>New Accounting Pronouncements Not Yet Adopted</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>See Note 4.</P>

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<P><U>Canada Unconsolidated Affiliate Dissolution</U></P>

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<P>As  previously  disclosed  in our 2003 Form 10-K,  on November 10, 2003 we  dissolved
 our  unconsolidated  affiliate  that  previously operated 733  restaurants in Canada.
 We owned 50% of this  unconsolidated  affiliate  prior to its  dissolution  and
accounted for our interest under the equity method.  Of the restaurants  previously
 operated by the  unconsolidated  affiliate,  we now operate the vast majority  of Pizza
 Huts and Taco  Bells,  while  almost  all KFCs are  operated  by  franchisees.  As a
result  of  operating  certain restaurants  that were  previously  operated by the
 unconsolidated  affiliate,  our Company sales,  restaurant  profit and general and
administrative  expenses will increase and our franchise  fees will decrease.
 Additionally,  other income will increase as we recorded a loss from our  investment in
the Canadian  unconsolidated  affiliate in 2003.  The overall impact on net income is not
expected to be material.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As a result of our dissolution of our Canada Unconsolidated  Affiliate,  Company sales
increased $36 million,  franchise fees decreased $2 million,  restaurant  profit
 increased  $2 million,  general and  administrative  expenses  increased  $2 million and
other  income increased $2 million for the quarter ended June 12, 2004 compared to the
quarter ended June 14, 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As a result of the dissolution of our Canada Unconsolidated  Affiliate,  Company sales
increased $71 million,  franchise fees decreased $4 million,  restaurant  profit
 increased  $3 million,  general and  administrative  expenses  increased  $5 million and
other  income increased $6 million  for the year to date ended June 12, 2004 compared to
the year to date ended June 14, 2003.</P>



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



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<P><U>Amendment of Sale-Leaseback Agreements</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>On August 15, 2003 we amended two  sale-leaseback  agreements  assumed in our 2002
acquisition of YGR such that the amended  agreements qualified for  sale-leaseback
 accounting.  Restaurant  profit  decreased by $2 million and $4 million for the quarter
and year to date ended June 12, 2004,  respectively,  compared to the same periods in
2003 as a result of the two amended agreements being accounted for as operating leases
 subsequent to the amendment.  Interest expense  decreased by $3 million and $5 million
for the quarter and year to date ended June 12, 2004,  respectively.  We estimate the
full year impact of these  amendments to be a decrease in  restaurant  profit of $5
million and a decrease in interest expense of $6 million.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Avian Flu</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In several  Asian  markets,  avian flu impacted  retail sales  trends at KFC early in
the quarter  ended June 12, 2004.  Sales in these Asian markets,  including China, have
recovered.  We took various steps, including discounting and alternative product
offerings,  that helped us to  mitigate  the  effects  of avian flu on our  business.
 The impact of the avian flu on  revenues  and  profits  cannot be objectively
 quantified due to the assumptions  required as to the cause of business trends
throughout the quarter.  However, we do not believe that the impact was material to our
results for the quarter ended June 12, 2004.</P>

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<P><U>Puerto Rico Business Held for Sale</U></P>

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<P>Our Puerto Rico  business has been held for sale since the fourth  quarter of 2002.
 While a sale of the Puerto Rican  business has not yet  occurred,  we continue to
believe  that it is probable  that a sale will occur  during 2004.  Sales and  restaurant
 profit of the Puerto Rican business were $187 million and $34 million, respectively, for full year 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Commodity Inflation</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The increased cost of certain  commodities  negatively  impacted our U.S. margins for
the quarter and year to date ended June 12, 2004. While we have taken certain actions to
mitigate further effects of commodity  inflation,  we expect continued inflation in 2004.
Higher commodity costs,  particularly in cheese and meat prices,  negatively  impacted
U.S.  restaurant  margins by approximately  230 and 140 basis points for the quarter and
year to date ended June 12, 2004,  respectively.  We currently  estimate that higher
 commodity  costs (particularly in meats,  cheese and oil) will negatively  impact U.S.
 restaurant  margins by more than 200 basis points in the quarter ending September 4,
2004.  We have incorporated this potential unfavorable impact into our operating plans
and outlook.</P>

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<P><U>AmeriServe and Other Charges (Credits)</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Income of $14 million was  recorded as  AmeriServe  and other  charges  (credits)  for
both the quarter and year to date ended June 12, 2004.  The amount  primarily  resulted
from  recoveries  related to the AmeriServe  bankruptcy  reorganization  process.
 Expense of $2 million was recorded as AmeriServe  and other charges  (credits) for both
the quarter and year to date ended June 14, 2003.  The amount primarily  consisted of
 integration  costs related to our  acquisition  of YGR. See Note 7 for a discussion  of
 AmeriServe  and other charges (credits).</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Wrench Litigation</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>An insignificant  amount of expense was recorded for the quarter and year to date
ended June 12, 2004,  reflecting  interest related to the Wrench  litigation.  The
amounts  recorded as Wrench  litigation  for the quarter</p>



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


<p> and year to date ended June 14,
2003  reflect the amounts awarded to the plaintiff and estimated pre-judgment interest.
 See Note 13 for a discussion of Wrench litigation.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Store Portfolio Strategy</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>From time to time we sell Company  restaurants  to existing and new  franchisees
 where  geographic  synergies can be obtained or where their  expertise can generally be
leveraged to improve our overall  operating  performance,  while retaining  Company
 ownership of key U.S. and International  markets.  Such  refranchisings  reduce our
reported revenues and restaurant profits and increase the importance of system sales
growth as a key performance measure.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The following table summarizes our refranchising activities:</P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=58% ALIGN=LEFT>Number of units refranchised</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>11</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>62</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>14</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>67</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>$&nbsp;&nbsp;6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Refranchising net losses, pre-tax(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Refranchising
 net losses for the  quarter to date  ended  June 12,  2004 and the year to date ended
June 14,  2003  primarily      included  charges  to write  down  our  Puerto  Rico
 business,  which is held for  sale,  to its then  estimate  of fair  value.
     Refranchising  losses for the year to date ended June 12, 2004 also include charges
to write down certain U.S.  restaurants  which      we have offered to sell at amounts
lower than their carrying values. </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In addition to our refranchising  program, from time to time we close restaurants that
are poor performing,  we relocate restaurants to a new site within the same trade area or
we  consolidate  two or more of our existing  units into a single unit  (collectively,  &#147;store
closures&#148;).</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The following table summarizes Company store closure activities:</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>Number of units closed</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>116</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>42</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>185</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>101</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>$&nbsp;&nbsp;(5</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(5</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;(2</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Impairment charges for stores to be closed</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The income in store  closure  costs for the quarters and years to date ended June 12,
2004 and June 14, 2003 is primarily the result of gains from the sale of properties on
which we previously operated restaurants.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The impact on operating  profit  arising from  refranchising  and Company store
 closures is the net of (a) the estimated  reduction in restaurant  profit,  which
 reflects  the  decrease  in Company  sales,  and general and  administrative  expenses  (&#147;G&amp;A&#148;) 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 2003 and are no longer  operated
by us at June 12, 2004. The amounts do not include  results from new  restaurants  that
we opened in connection  with a relocation of an existing unit or any incremental impact
upon consolidation of two or more of our existing units into a single unit.</P>


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



<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>Quarter ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT>Decreased sales</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(56</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(26</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(82</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Increased franchise fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Decrease in total revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(55</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(25</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(80</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=6>Year to date ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT>Decreased sales</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT>$&nbsp;&nbsp;(10</TD>
        <TD WIDTH=6% ALIGN=LEFT>9)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(54</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(16</TD>
        <TD WIDTH=2% ALIGN=LEFT>3)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Increased franchise fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Decrease in total revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(10</TD>
        <TD ALIGN=LEFT>6)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(52</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(15</TD>
        <TD ALIGN=LEFT>8)</TD></TR>
<TR>
     <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 the estimated impact on operating profit of refranchising and Company store closures:</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=5>Quarter ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT>Decreased restaurant profit</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(5</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(1</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(6</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Increased franchise fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Decreased G&amp;A expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>(Decreased) increased operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(4</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(3</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=5>Year to date ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>U.S.<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>International<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Worldwide<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT>Decreased restaurant profit</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(9</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(4</TD>
        <TD WIDTH=6% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;&nbsp;(13</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Increased franchise fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Decreased G&amp;A expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>(Decreased) increased operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(6</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(6</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>23</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


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


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1,846</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$1,723</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>7</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;3,593</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;3,320</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>8</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Franchise and license fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>231</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>213</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>454</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>418</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;2,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1,936</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;4,047</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;3,738</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Company restaurant profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;270</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;256</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;526</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;481</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>% of Company sales</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14.6</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.8</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>(0.2)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>14.7</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.2 </TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;275</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;220</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;518</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;437</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>18</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>32</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>84</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</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>65</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>56</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(16</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>131</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>113</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(16</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Income before cumulative effect of</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>accounting change</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>122</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>45</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>320</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>240</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>33</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Cumulative effect of accounting</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;change, net of tax</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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;178</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;122</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>45</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;320</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>33</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Diluted earnings per share(a)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;0.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;0.40</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>45</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;1.05</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;0.79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>33</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>See
Note 5 for the number of shares used in this calculation.</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Restaurant Unit Activity</B></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Unconsolidated<BR>
Affiliates<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchisees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Licensees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>Balance at Dec. 27, 2003</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>7,854</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>1,512</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>21,471</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>2,362</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>33,199</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>154</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>62</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>321</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>89</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>626</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Acquisitions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(13</TD>
        <TD ALIGN=LEFT>)</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>Refranchising</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14</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>(185</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(16</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(287</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(138</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(626</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(8</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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 June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7,817</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,552</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>21,506</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,310</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>33,185</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>65</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>100</TD>
        <TD ALIGN=LEFT>%</TD></TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>Worldwide Multibrand Restaurants</U></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchise<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>Balance at December 27, 2003</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>1,084</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>1,243</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>2,327</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Balance at June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,255</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,302</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,557</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>


<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The franchise  multibrand unit counts include both franchisee and unconsolidated
 affiliate  multibrand units.  Multibrand  conversions increase  the sales and points of
 distribution  for the second  brand added to a restaurant  but do not result in an
 additional  unit count.  Similarly, a new multibrand  restaurant,  while increasing
sales and points of distribution for two brands, results in just one additional unit
count.</P>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>24</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>For the year to date ended June 12, 2004, Company and franchise multibrand unit gross
additions were 187 and 70, respectively.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide System Sales Growth</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>System  sales  growth  includes  the  results  of  all  restaurants  regardless  of
 ownership,  including  Company-owned,   franchise, unconsolidated  affiliate and license
 restaurants.  Sales of franchise,  unconsolidated  affiliate  and license  restaurants
 generate franchise  and  license  fees for the Company  (typically  at a rate of 4% to
6% of sales).  Franchise,  unconsolidated  affiliate  and license restaurants sales are
not included in Company sales on the Consolidated  Statements of Income;  however,  the
fees are included in the Company&#146;s  revenues.  We believe system sales growth is useful
to investors as a significant  indicator of 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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Worldwide  system  sales  growth was 8% for the  quarter and year to date,  including
 a 3%  favorable  impact  from  foreign  currency translation.  Excluding the favorable
 impact on foreign  currency  translation,  the increases were driven by new unit
development and same store sales growth, partially offset by store closures.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Revenues</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Company  sales  increased  $123  million or 7% in the  quarter,  including a 2%
favorable  impact from  foreign  currency  translation. Company  sales  increased  $273
 million or 8% year to date,  including  a 2%  favorable  impact  from  foreign  currency
 translation. Excluding  the favorable  impact of foreign  currency  translation,  the
increases  were driven by new unit  development,  acquisitions (primarily units in Canada
which we now operate), and same store sales growth, partially offset by refranchising and
store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Franchise  and license  fees  increased  $18  million or 9% in the  quarter,
 including a 3%  favorable  impact from  foreign  currency translation.  Franchise  and
license  fees  increased  $36 million or 9% year to date,  including a 4%  favorable
 impact from  foreign currency  translation.  Excluding  the  favorable  impact of
 foreign  currency  translation,  the  increases  were  driven by new unit development
and same store sales growth,  partially offset by store closures and  acquisitions
 (primarily units in Canada which we now operate).</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Company Restaurant Margin</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
      <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TD WIDTH=28% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Food and paper</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1.0)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>31.4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(0.6)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Payroll and employee benefits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>27.4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.7</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>27.0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>27.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.8</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Occupancy and other operating</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.1</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>26.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Company restaurant margin</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14.6</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.8</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>(0.2)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>14.7</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.2</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR>
     <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>


<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant  margin as a percentage of sales decreased  approximately 20 basis points
in the quarter.  U.S.  restaurant margin decreased approximately 50 basis points and
International restaurant margin increased approximately 30 basis points.</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>25</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant margin as a percentage of sales increased  approximately 20 basis points
year to date. U.S.  restaurant margin was even with the prior year and International
restaurant margin increased approximately 40 basis points.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The changes in U.S. and International restaurant margin are discussed in the
respective sections.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide General and Administrative Expenses</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Worldwide  G&amp;A  expenses  increased  $26  million or 13% in the  quarter,  including a
1%  unfavorable  impact  from  foreign  currency translation.  The  increase  was
 primarily  driven by higher  compensation  related  costs and the  unfavorable  impact
of lapping the recovery of $3 million of legal fees during 2003. The increase was also
 partially  attributable  to expenses of $2 million  associated with operating the
restaurants we now own in Canada that were previously operated by our unconsolidated
affiliate.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Worldwide  G&amp;A  expenses  increased  $60  million  or 15% year to  date,  including  a
2%  unfavorable  impact  from  foreign  currency translation.  The increase was primarily
driven by higher  compensation  related costs,  expenses associated with the
implementation of new financial and human resource systems,  increased  reserves related
to potential  development  sites, and the unfavorable  impact of lapping the recovery of
$3 million of legal fees during 2003.  The increase was also partially  attributable  to
expenses of $5 million associated with operating the restaurants we now own in Canada
that were previously operated by our unconsolidated affiliate.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Franchise and License Expenses</B></P>

Worldwide  franchise  and  license  expenses  were flat for the  quarter.  The  favorable  impact of lapping a  biennial  International
franchise  convention  held in the quarter  ended June 14, 2003 was offset by an increase in  provisions  for  doubtful  franchise  and
license fee receivables.

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Worldwide  franchise and license  expenses  decreased $5 million or 36% year to date.
 The decrease was  attributable  to the favorable impact of lapping the biennial
 International  franchise  convention and the reversal in 2004 of previously  established
 reserves upon the completion of financial restructurings by certain Pizza Hut U.S.
franchisees.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Other (Income) Expense</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=52% ALIGN=LEFT>Equity income from investments in</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT></TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT></TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT></TD>
        <TD WIDTH=6% 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;unconsolidated affiliates</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(10</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(8</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(22</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(13</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Foreign exchange net loss (gain)</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>(1</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>Other (income) expense</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(10</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;(8</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(22</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;(14</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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>


<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Worldwide  other  income  increased  $2  million  or 27% for the  quarter,  including
 a 7%  favorable  impact  from  foreign  currency translation,  and $8 million or 52%
year to date, including a 9% favorable impact from foreign currency  translation.  The
increases in other income in the quarter and year to date are primarily  driven by the
dissolution of our  unconsolidated  affiliate in Canada which recorded a loss in the
quarter and year to date ended June 14, 2003.</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>26</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Facility Actions</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We recorded a net loss of $10 million and $6 million  from  facility  actions for the
 quarters  ended June 12, 2004 and June 14, 2003, respectively.  We recorded a net loss
of $19  million  and $15  million  for the years to date ended June 12,  2004 and June
14,  2003, respectively.  See the Store Portfolio  Strategy section for more detail of
our refranchising  and closure  activities and Note 7 for a summary of components of
facility actions by reportable operating segment.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Operating Profit</B></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=46% ALIGN=LEFT>United States</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;199</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;204</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>(3</TD>
        <TD WIDTH=3% ALIGN=LEFT>)</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;371</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;367</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>1</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>109</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>88</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>183</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30</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>(44</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(34</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(32</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(92</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(69</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(35</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>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Unallocated facility actions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</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>(11</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(7</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Wrench litigation</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(35</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(35</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AmeriServe and other (charges)</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;credits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>NM</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;275</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;220</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;518</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;437</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>18</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The changes in U.S. and International operating profit are discussed in the respective
sections.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Unallocated  and  corporate  expenses  increased  $10 million or 32% in the quarter.
 The  increase  was driven by higher  compensation related costs and the unfavorable
impact of lapping the recovery of $3 million of legal fees during 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Unallocated and corporate  expenses increased $23 million or 35% year to date. The
increase was driven by higher  compensation  related costs,  expenses associated with the
implementation of new financial and human resource systems,  and the unfavorable impact
of lapping the recovery of $3 million of legal fees during 2003.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Unallocated  facility actions  comprises  refranchising  gains (losses) which are not
allocated to U.S. or  International  segments for performance reporting purposes.  See
Note 7 for further discussion.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Worldwide Interest Expense, Net</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT>Interest expense</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;36</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;44</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>20</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;74</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$&nbsp;88</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=RIGHT>16</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>(4</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>51</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(7</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(4</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>45</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>$&nbsp;32</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;42</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;84</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Interest  expense  decreased $8 million or 20% in the quarter and decreased $14
million or 16% year to date.  The increases were driven by a reduction in our average
debt outstanding, partially as a result of the amended YGR sale-leaseback agreement.</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>27</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>
Worldwide Income Taxes</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03(a)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03(a)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>Income taxes</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;65</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;56</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;131</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;113</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Effective tax rate</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26.8</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>31.4</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>29.1</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>32.0</TD>
        <TD ALIGN=LEFT>%</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Amounts
do not include the income tax benefit of approximately $1 million on the $2 million
cumulative effect adjustment due      to the adoption of SFAS 143.</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The  decrease  in our  effective  tax rate for the  quarter  and year to date  ended
June 12,  2004 was driven by a number of  factors, including  the reversal of reserves
 associated  with audits that were settled.  This  decrease was  partially  offset by the
impact of lapping the benefit in 2003 of amending  certain  prior U.S.  income tax
returns to claim credit for foreign taxes paid in prior years. While we continue to claim
 credit for foreign  taxes paid in the current  year,  the amended  return  benefit
 recognized  in 2003 was non-recurring.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Results of Operations</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=39% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;1,208</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;1,193</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>1</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;2,374</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>$&nbsp;2,319</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>2</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>141</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>135</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>272</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>261</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1,349</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1,328</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;2,646</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;2,580</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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 profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;177</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;181</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;340</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;332</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>14.7</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>15.2</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>(0.5)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts</TD>
     <TD ALIGN=RIGHT>14.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;199</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;204</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;371</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;367</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Restaurant Unit Activity</B></P>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Unconsolidated<BR>
Affiliates(a)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchisees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Licensees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=36% ALIGN=LEFT>&nbsp;Balance at Dec. 27, 2003</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>5,094</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>6</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>13,566</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>2,156</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>20,822</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;New Builds</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>55</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>117</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>82</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>254</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;Acquisitions</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(8</TD>
        <TD ALIGN=LEFT>)</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>&nbsp;Refranchising</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(2</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</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>&nbsp;Closures</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(123</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(170</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(131</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(427</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;Other</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>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>&nbsp;Balance at June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5,032</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>13,510</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,104</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20,649</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>&nbsp;% 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>66</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>10</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>100</TD>
        <TD ALIGN=LEFT>%</TD></TR>
</table>
<BR>



<!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(a)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Includes
3 Yan Can units.</P></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="Left"><U>U.S. Multibrand Restaurants</U></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchise<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>Balance at December 27, 2003</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>1,032</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>1,116</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>2,148</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Balance at June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,203</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,172</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,375</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>28</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>For the year to date ended June 12, 2004, Company and franchise multibrand unit gross
additions were 187 and 67, respectively.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. System Sales Growth</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>U.S.  system  sales  growth was 3% in the  quarter.  The  increase  was driven by new
unit  development  and same store  sales  growth, partially offset by store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>U.S.  system sales growth was 4% year to date. The increase was driven by same store
sales growth and new unit  development,  partially offset by store closures.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Revenues</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Company  sales  increased $15 million or 1% in the quarter and $55 million or 2% year
to date.  The  increases  were driven by new unit development, and same store sales
growth, partially offset by refranchising and store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Franchise and license fees  increased $6 million or 4% in the quarter and $11 million
or 4% year to date.  The increases were driven by new unit development and same store
sales growth, partially offset by store closures.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Same Store Sales</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>U.S. same store sales includes only Company  restaurants  that have been open one year
or more.  U.S.  blended same store sales include KFC, Pizza Hut and Taco Bell Company
owned  restaurants  only.  U.S. same store sales for Long John Silver&#146;s and A&amp;W  restaurants
 are not included. Following are the same store sales growth results by brand:</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=5>Quarter ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">Same Store<BR>
Sales<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Transactions<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">Average<BR>
Guest Check<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>KFC</TD>
     <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT>(5</TD>
        <TD WIDTH=6% ALIGN=LEFT>)%</TD>
     <TD WIDTH=4% ALIGN=RIGHT>(5</TD>
        <TD WIDTH=6% ALIGN=LEFT>)%</TD>
     <TD WIDTH=4% ALIGN=RIGHT>-</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Pizza Hut</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>%</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>Taco Bell</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>%</TD></TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=5>Year to date ended June 12, 2004<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">Same Store<BR> Sales<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Transactions<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">Average<BR>
Guest Check<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>KFC</TD>
     <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=RIGHT>(3</TD>
        <TD WIDTH=6% ALIGN=LEFT>)%</TD>
     <TD WIDTH=6% ALIGN=RIGHT>(3</TD>
        <TD WIDTH=4% ALIGN=LEFT>)%</TD>
     <TD WIDTH=6% ALIGN=RIGHT>-</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Pizza Hut</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>%</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>Taco Bell</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>%</TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>U.S.  blended same store sales  increased 2% in the quarter due to an increase in
average guest checks  partially  offset by a decrease in transactions.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>U.S. blended same store sales increased 3% year to date due to increases in average
guest checks and transactions.</P>



<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>29</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Company Restaurant Margin</B></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK 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>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=28% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Food and paper</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>28.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(1.5)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>29.4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>28.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(0.7)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Payroll and employee benefits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.5</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>30.9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31.3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.4</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Occupancy and other operating</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>25.3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.5</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>25.4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>25.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.3</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR>
     <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>Company restaurant margin</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14.7</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>15.2</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>(0.5)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>14.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>



<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant  margin as a percentage of sales decreased  approximately 50 basis points
in the quarter.  The decrease was driven by higher food and paper costs,  partially
offset by the impact of same store sales increases on restaurant  margin.  Higher food
and paper costs were primarily driven by increased commodity costs (principally cheese
and meat).</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant  margin as a  percentage  of sales was flat year to date.  The impact of
higher food and paper  costs was largely  offset by same store sales increases on
restaurant  margin. Higher food and paper costs were driven by increased  commodity
 costs  (principally cheese and meat).</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>U.S. Operating Profit</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Operating  profit  decreased  $5 million or 3% in the  quarter.  The  decrease  was
driven by the impact of higher  commodity  costs on restaurant profit, partially offset
by the impact of same store sales increases on restaurant profit and franchise and
license fees.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Operating  profit  increased  $4 million or 1% year to date.  The  increase  was
driven by the impact of same store sales  increases on restaurant profit and franchise
and license fees, partially offset by higher commodity costs and higher G&amp;A expenses.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>International Results of Operations</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=34% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$638</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$530</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>20</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$1,219</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>$1,001</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>22</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>90</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>78</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>16</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>182</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>157</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>16</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Revenues</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$728</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$608</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,401</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,158</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>21</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Company restaurant profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;93</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;75</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;186</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;149</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>25</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>14.5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.2</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.3</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>15.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.9</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.4</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR>
     <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>Operating profit</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$109</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;88</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>23</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;239</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;183</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD></TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>30</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>International Restaurant Unit Activity </B></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Unconsolidated<BR>
Affiliates<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchisees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Licensees<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>Balance at Dec. 27, 2003</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>2,760</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>1,506</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>7,905</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>206</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>12,377</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>99</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>62</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>204</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>372</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Acquisitions</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>)</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>Refranchising</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(12</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</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>(62</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(13</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(117</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(7</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(199</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(8</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(3</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(14</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <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 June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,785</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,549</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7,996</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>206</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12,536</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>22</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>64</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 CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" NOWRAP="Nowrap" ALIGN="Left"><U>International Multibrand Restaurants</U></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Company<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Franchise<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=62% ALIGN=LEFT>Balance at December 27, 2003</TD>
     <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>52</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>127</TD>
        <TD WIDTH=6% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>179</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Balance at June 12, 2004</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>52</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>130</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>182</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>For the year to date ended June 12, 2004, there were no Company  multibrand unit gross
additions and 3 franchise  multibrand unit gross additions.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>International System Sales Growth</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>International  system  sales growth  increased  15% for the quarter and 16% year to
date,  including  8% and 9% favorable  impacts from foreign  currency  translation  for
the quarter and year to date,  respectively.  Excluding  the favorable  impact of foreign
 currency translation, the increases were driven by new unit development and same store
sales growth, partially offset by store closures.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>International Revenues</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Company  sales  increased  $108 million or 20% in the  quarter,  including a 5%
favorable  impact from  foreign  currency  translation. Excluding the favorable  impact
of foreign  currency  translation,  the increase was driven by new unit  development  and
 acquisitions (primarily units in Canada which we now operate), partially offset by
refranchising and store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Franchise  and license  fees  increased  $12 million or 16% in the  quarter,
 including an 8%  favorable  impact from  foreign  currency translation.  Excluding  the
 favorable  impact of foreign  currency  translation,  the  increase  was driven by new
unit  development, partially offset by acquisitions (primarily units in Canada which we
now operate) and store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Company  sales  increased  $218  million or 22% year to date,  including a 6%
 favorable  impact  from  foreign  currency  translation. Excluding the favorable  impact
of foreign  currency  translation,  the increase was driven by new unit  development  and
 acquisitions (primarily units in Canada which we now operate), partially offset by
refranchising and store closures.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Franchise  and  license  fees  increased  $25 million or 16% year to date,  including
 a 9%  favorable  impact  from  foreign  currency translation.  Excluding the favorable
impact of foreign currency translation,  the increase was driven by new unit development
and same store sales growth, partially offset by acquisitions (primarily units in Canada
which we now operate) and store closures.</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>31</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>



<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>
International Company Restaurant Margin</B></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=3>Quarter<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Year to date<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/12/04<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>6/14/03<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN="1" NOWRAP="Nowrap">% B(W)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=28% ALIGN=LEFT>Company sales</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>100.0</TD>
        <TD WIDTH=3% ALIGN=LEFT>%</TD>
     <TD WIDTH=9% ALIGN=RIGHT>&nbsp;</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Food and paper</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35.1</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.6</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>35.3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.4</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Payroll and employee benefits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0.1</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>19.6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19.6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Occupancy and other operating</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.7</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30.3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(0.4)</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>29.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>29.8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <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>Company restaurant margin</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14.5</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.2</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.3</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD>
     <TD ALIGN=RIGHT>15.3</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>14.9</TD>
        <TD ALIGN=LEFT>%</TD>
     <TD ALIGN=RIGHT>0.4</TD>
        <TD ALIGN=LEFT>&nbsp;ppts.</TD></TR>
<TR>
     <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>


<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant  margin as a percentage of sales increased  approximately  30 basis points
in the quarter.  The increase was driven by lower food and paper costs  (principally  due
to supply chain savings  initiatives),  the impact of same store sales  increases on
restaurant margin and decreased other restaurant  operating costs.  The increase was
partially  offset by a 60 basis point  unfavorable  impact of operating  the  restaurants
 in  Canada,  which  is a  market  with  below  average  margins,  that  were  previously
 operated  by our unconsolidated affiliate.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Restaurant  margin  as a  percentage  of sales  increased  approximately  40 basis
 points  year to date  including  a 15 basis  points unfavorable  impact  from  foreign
 currency  translation.  The  increase  was driven by the impact of same store  sales
 increases  on restaurant  margin and lower food and paper costs  (principally  due to
supply chain savings).  The increase was partially  offset by a 70 basis point
 unfavorable  impact of operating the  restaurants in Canada,  which is a market with
below average  margins,  that were previously operated by our unconsolidated affiliate.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The impact from foreign  currency  translation  on margins as a  percentage  of sales
is a result of the  portfolio of markets  effect. International  margin percentages in
total are impacted  unfavorably when currencies  strengthen in markets with below average
margins. Those  markets  contributing  to the  unfavorable  impact of foreign  currency
 translation  on margin year to date have below  average margins largely due to their
higher labor costs.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>International Operating Profit</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Operating profit increased $21 million or 23% in the quarter,  including a 9%
favorable impact from foreign currency  translation.  The increase was driven by new unit
development, partially offset by higher general and administrative costs.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Operating profit increased $56 million or 30% year to date,  including a 9% favorable
 impact from foreign  currency  translation.  The increase was driven by new unit
 development,  the impact of same store sales increases on restaurant  profit and
franchise and license fees  and higher income from our investments in unconsolidated
affiliates, partially offset by higher G&amp;A costs.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Consolidated Cash Flows</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P><B>Net cash provided by operating  activities</b>  was $390 million  compared to $364 million
in 2003.  The increase was  primarily  driven by higher net income and the timing of
payment of accounts  payable and other  current  liabilities  compared to 2003.  The
 increase  was partially offset by higher income tax payments in 2004.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P><B>Net cash used in investing  activities</b> was $198 million  compared to $208 million in
2003.  Compared to 2003,  fewer  restaurants  were acquired while the timing of purchases
of short-term investments was a use of cash versus 2003.</P>

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




<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P><B>Net cash used in financing  activities</b>  was $199 million  compared to $129 million in
2003. The change is primarily due to higher share repurchases,  partially  offset by
lower net short-term  debt repayments and higher  proceeds from stock option  exercises
 compared to 2003.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Consolidated Financial Condition</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Assets  increased $63 million or 1% to $5.7 billion in 2004.  The increase was
primarily due to the timing of  collections  of accounts receivable and an increase in
cash and short term investments  related to our international  operations.  The decrease
in the allowance for doubtful  accounts was the result of the  completion  of  financial
 restructurings  by certain  Pizza Hut U.S.  franchisees  which resulted in the reversal
of previously  established reserves and the transfer for certain amounts,  along with
related receivables,  to long-term notes receivable.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Liabilities  decreased $90 million or 2% to $4.4 billion in 2004.  The decrease was
primarily  driven by lower income taxes payable due to the excess of current year tax
payments made over the current year  provision  and a decrease in accounts  payable and
other current liabilities due to the timing of payments.  These decreases were partially
offset by the accrual of the dividend payable in 2004.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Liquidity and Capital Resources</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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,  which require a
limited YUM  investment.  In each of the last two fiscal years,  net cash provided by
operating activities  has  exceeded $1  billion.  These cash flows have  allowed us to
fund our  discretionary  spending,  while at the same time reducing  our  long-term  debt
 balances.  We expect  these  levels of net cash  provided by  operating  activities  to
continue in the foreseeable  future.  Our  discretionary  spending  includes  capital
 spending for new  restaurants,  acquisitions of restaurants from franchisees,
 repurchases  of shares of our common stock and dividends  paid to our  shareholders.
 Though a decline in revenues  could adversely impact our cash flows from operations,  we
believe our operating cash flows,  our ability to reduce  discretionary  spending, and
our borrowing capacity will allow us to meet our cash requirements in 2004 and beyond.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As a result of our strong cash position,  the Board of Directors approved the Company&#146;s
 first-ever quarterly cash dividend of $0.10 per share of common stock to be  distributed  on
August 6, 2004 to  shareholders  of record at the close of business on July 16, 2004.  On
an annual basis, the Company is targeting a payout ratio of 15% to 20% of net income.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Our primary bank credit  agreement  comprises a $1 billion senior  unsecured
 Revolving  Credit Facility (the &#147;Credit  Facility&#148;) which matures on June 25, 2005. At
June 12, 2004, our unused Credit  Facility  totaled $706 million,  net of  outstanding
 letters of credit of $294  million.  There were no  borrowings  outstanding  under the
Credit  Facility at June 12, 2004.  Our Credit  Facility  contains financial  covenants
 relating to  maintenance  of leverage  and fixed  charge  coverage  ratios.  The Credit
 Facility  also  contains affirmative  and negative  covenants  including,  among other
things,  limitations on certain  additional  indebtedness,  guarantees of indebtedness,
 level of cash dividends,  aggregate non-U.S.  investment and certain other transactions
as defined in the agreement.  We were in compliance  with all covenants at June 12, 2004,
 and do not  anticipate  that the covenants  will impact our ability to borrow under our
Credit Facility for its remaining term.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The remainder of our long-term debt primarily  comprises  Senior  Unsecured  Notes.
 Amounts  outstanding  under Senior Unsecured Notes were $1.85 billion at June 12, 2004.
At June 12, 2004,  $350 million of Senior  Unsecured  Notes are included in short-term
 borrowings due to their May 2005 maturity date. The remaining</P>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>33</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P>  Senior  Unsecured  Notes are included in long-term debt based on their  maturities. We currently  anticipate that
our cash flows provided by operating  activities will permit us to make a significant
portion of the $350 million payment for the May 2005 Senior Unsecured Notes without
borrowing additional amounts.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>As  previously  reported,  we estimate that capital  spending will be  approximately
 $770 million and  refranchising  proceeds will be approximately  $100 million in 2004.
At June 12, 2004, we had remaining  capacity to repurchase,  through November 21, 2005,
up to $300 million of our  outstanding  Common Stock  (excluding  applicable  transaction
 fees) under the $300 million share  repurchase  program authorized in May 2004.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Item 3.  Quantitative and Qualitative Disclosures About Market Risk</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Interest Rate Risk</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have a market risk exposure 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.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>During the quarter ended June 12, 2004, we entered into  pay-variable  interest rate
swaps with notional  amounts of $850 million.  The swaps were entered into with
 financial  institutions  and have reset dates and  critical  terms that match those of
$75 million,  $375 million  and $400  million  in  long-term  debt  under  our  2008,
 2011 and 2012  fixed-rate  Senior  Unsecured  Notes,  respectively. Accordingly,  the
 swaps  are  accounted  for as  hedges  of these  portions  of our  debt.  Considering
 the  impact  of these  swaps, approximately 50% of our long-term debt is at variable
interest rates at June 12, 2004.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>At June 12, 2004 and  December 27,  2003,  a  hypothetical  100 basis point  increase
in  short-term  interest  rates would result in a reduction of $10 million and $3
million,  respectively,  in annual  income before taxes.  The estimated  reductions  are
based upon the level of 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 June 12, 2004 and December 27, 2003 would decrease  approximately  $56
million and $5 million,  respectively. The fair value of our Senior  Unsecured Notes at
June 12, 2004 and December 27, 2003 would increase  approximately  $83 million and $87
million, respectively.  Fair value was determined by discounting the projected cash flows.</P>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Foreign Currency Exchange Rate Risk</U></P>

<P>International  operating profit  constitutes  approximately  39% of our year to date 2004 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  $1.4  billion as of June 12,  2004.  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,  the
Americas  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 year to date period ended June 12, 2004,  operating</p>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>34</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P>  profit would have  decreased  approximately  $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.

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We attempt to minimize the  exposure  related to our  investments  in foreign
 operations  by financing  those  investments  with local currency debt when  practical
and holding cash in local  currencies  when  possible.  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.
 Consequently,  foreign  currency  denominated  financial  instruments  consist
 primarily of  intercompany  short-term receivables  and  payables.  At times,  we
 utilize  forward  contracts  to reduce  our  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>

<!-- MARKER FORMAT-SHEET="Paragraph w/underline" FSL="Workstation" -->
<P><U>Commodity Price Risk</U></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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  entered into by the Company that were outstanding at June 12, 2004 and
December 27, 2003, were not significant to the Financial Statements.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Item 4. Controls and Procedures</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The Company has evaluated the  effectiveness  of the design and operation of its
disclosure  controls and procedures  pursuant to Rules 13a-15(e) and 15d-15(e)  under the
 Securities  Exchange Act of 1934 as of the end of the period  covered by this report.
 Based on the evaluation,  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;), the Company&#146;s  management,  including the CEO
and CFO, concluded that the Company&#146;s disclosure controls and procedures were effective
as of the end of the period covered by this report.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>There were no significant  changes with respect to the Company&#146;s  internal  controls
over financial  reporting or in other factors that could significantly affect internal
controls over financial reporting during the quarter ended June 12, 2004.</P>

<!-- MARKER FORMAT-SHEET="Para w/Bold" FSL="Workstation" -->
<P><B>Cautionary Statements</B></P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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;project,&#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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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.;  changes in effective  tax rates;  our</P>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>35</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<P> debt leverage and
the attendant potential  restriction  on our  ability  to  borrow in the  future;
 potential  unfavorable  variances  between  estimated  and  actual liabilities;  our
ability to secure  distribution  of products and equipment to our  restaurants  on
favorable  economic  terms and our ability to ensure adequate supply of restaurant
 products and equipment in our stores;  effects and outcomes of legal claims  involving
the Company;  the effectiveness of operating  initiatives and advertising and promotional
 efforts;  the ongoing financial viability of our  franchisees  and  licensees;  the
success of our  refranchising  strategy;  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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>Industry risks and uncertainties  include,  but are not limited to, economic and
political  conditions in the countries and territories where we operate,  including
effects of war and terrorist activities;  changes in legislation and governmental
regulation;  new product and concept development by us and/or our food industry
 competitors;  changes in commodity,  labor, and other operating costs;  changes in
competition in the food industry;  publicity which may impact our business and/or
industry;  severe weather  conditions;  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;  and the impact that any widespread  illness or general health concern
may have on our business and/or the economy of the countries in which we operate.</P>

<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR>
<P ALIGN=center>36</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>





<P align=center><U>Independent Accountants&#146; Review Report</U></P>
<BR><BR><BR>

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

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have reviewed the accompanying  condensed  consolidated  balance sheet of YUM!
Brands, Inc. and Subsidiaries  (&#147;YUM&#148;) as of June 12, 2004, the related  condensed
 consolidated  statements of income for the twelve and twenty-four  weeks ended June 12,
2004 and June 14, 2003,  and the related  condensed  consolidated  statements  of cash
flows for the  twenty-four  weeks ended June 12, 2004 and June 14, 2003.  These condensed
consolidated financial statements are the responsibility of YUM&#146;s management.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We conducted our review in accordance  with standards of the Public Company
 Accounting  Oversight Board (United  States).  A review of interim financial
 information consists  principally of applying analytical  procedures and making
inquiries of persons responsible for financial and accounting  matters.  It is
 substantially  less in scope than an audit conducted in accordance with the standards of
the Public  Company  Accounting  Oversight  Board (United  States),  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>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<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 U.S. generally accepted accounting principles.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>We have previously  audited,  in accordance with the standards of the Public Company
 Accounting  Oversight Board (United States),  the consolidated  balance  sheet of YUM as
of December  27,  2003,  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 10, 2004, we
expressed an unqualified opinion on those consolidated  financial  statements.  Our
report refers to the adoption of the provisions of the Financial  Accounting  Standards
Board&#146;s Statement of Financial  Accounting  Standards No. 142,  &#147;Goodwill and Other
 Intangible  Assets,&#148; in 2002. In our opinion,  the  information set forth in the
 accompanying  condensed  consolidated  balance sheet as of December 27, 2003, is fairly
stated,  in all material  respects,  in relation to the consolidated  balance sheet from
which it has been derived.</P>
<BR><BR><BR><BR>





<P>Louisville, Kentucky<BR>
July 12, 2004</p>

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



<P><B>PART II - Other Information and Signatures</b></P>


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

<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>

<P>Item 2.  Changes in Securities,  Use of Proceeds and Issuer Purchases of Equity Securities</P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=3%>(e)</TD>
<TD WIDTH=97%><P ALIGN=LEFT>Issuer
Purchases Of Equity Securities</P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>The following table provides  information as of June 12, 2004 with respect to shares
of Common Stock  repurchased by the Company during the quarter then ended:</P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="2" ALIGN="Left" NOWRAP="Nowrap">Fiscal Periods</TH>
     <TH COLSPAN="2" NOWRAP="Nowrap">Total number of<BR>
shares purchased</TH>
     <TH COLSPAN="2" NOWRAP="Nowrap">Average price<BR>
paid per share</TH>
     <TH COLSPAN="2" NOWRAP="Nowrap">Total number of<BR>
shares purchased as<BR>
part of publicly<BR>
announced plans or<BR>
programs</TH>
     <TH COLSPAN="2" NOWRAP="Nowrap">Approximate dollar value<BR>
of shares that may yet be<BR>
purchased under the plans<BR>
or programs</TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=18% ALIGN=LEFT>Period 4</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT></TD>
        <TD WIDTH=13% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>3/21/04 - 4/17/04</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,549,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$37.77</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,549,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;19,896,204</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<tr>
<td>&nbsp;</td>
</tr>


<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Period 5</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>4/18/04 - 5/15/04</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>508,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$38.67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>508,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;259,648</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>


<tr>
<td>&nbsp;</td>
</tr>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Period 6</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>5/16/04 - 6/12/04</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>$300,259,648</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Total</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,057,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$38.00</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,057,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$300,259,648</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In November 2003, our Board of Directors  authorized a share repurchase  program.
 This program  authorized us to repurchase,  through May 21, 2005, up to $300 million of
our outstanding  Common Stock (excluding  applicable  transaction  fees). All repurchases
of shares shown above occurred under this program.  As of June 12, 2004, this share
repurchase program was substantially completed.</P>

<!-- MARKER FORMAT-SHEET="Paragraph" FSL="Workstation" -->
<P>In May 2004, our Board of Directors  authorized a share repurchase  program.  This
program authorized us to repurchase through November 21,  2005,  up to $300 million of
our  outstanding  Common Stock  (excluding  applicable  transaction  fees).  As of June
12, 2004,  no repurchases of shares had been made under this program.</P>



<P>Item 4.  Submission of Matters to a Vote of Security Holders</P>

<blockquote>         Our Annual Meeting of shareholders was held on May 20, 2004. At the meeting,  shareholders  elected three directors,  approved
         the Company&#146;s  Executive  Incentive  Compensation Plan,  ratified the appointment of KPMG LLP as our independent  auditors and
         rejected five shareholder proposals.</blockquote>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN="1" ALIGN="right">(a)</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Election of Directors</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>For</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Withheld</TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=8% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=LEFT>Robert Holland, Jr.</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>249,028,569</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=8% ALIGN=RIGHT>4,178,977</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>David C. Novak</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>243,964,788</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9,242,758</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Jackie Trujillo</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>242,303,926</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10,903,620</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE><BR>

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

<blockquote>         The following  directors  were not required to stand for  re-election at the meeting (the year in which each  director&#146;s  term
         expires is indicated in parenthesis):</blockquote>

<blockquote>         James Dimon (2005),  Massimo  Ferragamo  (2005),  J. David Grissom  (2006), Bonnie G. Hill (2006),  Kenneth G. Langone  (2006),
         Thomas M. Ryan (2005) and Robert J. Ulrich (2005).</blockquote>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=90%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=1>For</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Against</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Abstain</TH>
     <TH COLSPAN=1></TH>
     <TH COLSPAN=1>Non-Votes</TH>
     <TH COLSPAN=1></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=42% ALIGN=LEFT>(b)  Executive Incentive Compensation</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=11% ALIGN=RIGHT></TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=11% ALIGN=RIGHT></TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=11% ALIGN=RIGHT></TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=11% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>230,203,659</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20,813,048</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,190,839</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>(c)  Ratification of Independent</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auditors</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>240,115,345</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>11,522,661</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,569,540</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>-</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>(d)  Shareholder Proposal -</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smoke-free facilities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15,418,031</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>186,259,547</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19,898,868</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31,631,100</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposal -</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sustainability Report</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>65,891,308</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>134,251,052</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>21,434,186</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31,631,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposal - MacBride</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principles</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26,768,444</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>172,644,911</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>22,163,489</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31,630,702</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposal -</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Genetically Engineered Food</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14,545,228</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>187,613,448</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19,417,867</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31,631,003</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposal -</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Animal Welfare Standards</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>16,129,914</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>186,222,521</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>19,224,111</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>31,631,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=10%>(a) </TD>
<TD>&nbsp; </TD>
<TD WIDTH=85%>Exhibit
Index</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Hang Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp; </TD>
<TD WIDTH=10%>&nbsp;</TD>
<TD>&nbsp;</TD>
<TD WIDTH=85%><U>EXHIBITS</u></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Hang Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=4%>&nbsp; </TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD NOWRAP="Nowrap">Exhibit 15 </TD>
<td>&nbsp;</td>
<td>&nbsp;</td>
<TD WIDTH=80%>&nbsp;&nbsp;Letter from KPMG LLP regarding Unaudited Interim Financial Information (Independent Accountants&#146; Acknowledgment)</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=4%>&nbsp; </TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD NOWRAP="Nowrap">Exhibit 31.1</TD>
<td>&nbsp;</td>
<td>&nbsp;</td>
<TD WIDTH=80%>Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) of
                                            Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                                            Act of 2002.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=4%>&nbsp; </TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD NOWRAP="Nowrap">Exhibit 31.2</TD>
<td>&nbsp;</td>
<td>&nbsp;</td>
<TD WIDTH=80%>Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities
                                            Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                                            2002.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=4%>&nbsp; </TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD NOWRAP="Nowrap">Exhibit 32.1</TD>
<td>&nbsp;</td>
<td>&nbsp;</td>
<TD WIDTH=80%>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.</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=4%>&nbsp; </TD>
<TD WIDTH=6%>&nbsp;</TD>
<TD NOWRAP="Nowrap">Exhibit 32.2</TD>
<td>&nbsp;</td>
<td>&nbsp;</td>
<TD WIDTH=80%>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.
</TD>
</TR>
</TABLE>
<BR>


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

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<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>Reports
on Form 8-K </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=3%>&nbsp;</TD>
<TD ALIGN=LEFT WIDTH=3%>&nbsp; </TD>
<TD WIDTH=94%><P ALIGN=LEFT>We
filed a Current Report on Form 8-K dated March 26, 2004, attaching a press release
reporting Period 3 and                   first-quarter sales for our U.S. and
International businesses and discussing the expected impact of the avian flu on
                  our business. </P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=3%>&nbsp;</TD>
<TD ALIGN=LEFT WIDTH=3%>&nbsp;</TD>
<TD WIDTH=94%><P ALIGN=LEFT>We
filed a Current Report on Form 8-K dated April 21, 2004, attaching our earnings release
for the first-quarter                    ended March 20, 2004.</P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=3%>&nbsp;</TD>
<TD ALIGN=LEFT WIDTH=3%>&nbsp;</TD>
<TD WIDTH=94%><P ALIGN=LEFT>We
filed a Current Report on Form 8-K dated May 21, 2004, announcing the Board of Directors&#146; approval
of a dividend                   of $0.10 per share of common stock and approval of a new
$300 million share repurchase program. </P></TD>
</TR>
</TABLE>
<BR>
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<BR><BR><BR>
<P ALIGN=center>40</P>
<HR SIZE=1 NOSHADE>
<BR><BR><BR>


<p align=center>SIGNATURES</P>

<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;
(Registrant)</TD></TR>
</TABLE>

<BR><BR>



<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">

<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;July 19, 2004</td><TD>
<P ALIGN="LEFT"><u>/s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gregory N. Moore&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>
Senior Vice President and Controller<BR>
(Principal Accounting Officer)</TD></TR>
</TABLE>


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

<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Project" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif"><B>EXHIBIT 15</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<p align=center><B><U>Independent Accountants&#146; Acknowledgment</U></B></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT>The Board of Directors and Shareholders<BR>
YUM! Brands, Inc.: </P>

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<P>We hereby acknowledge our awareness
of the use of our report dated July 12, 2004 included within the Quarterly Report on
Form 10-Q of YUM! Brands, Inc. for the twelve and twenty-four weeks ended June 12, 2004, and
incorporated by reference in the following Registration Statements: </P>



<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN="2" ALIGN="Left"><U>Description</U> </TH>
     <TH COLSPAN="2" ALIGN="LEFT"><U>Registration Statement Number</U> </TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="57%" ALIGN="LEFT">&nbsp;</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 WIDTH=57% ALIGN=LEFT><U><B>Forms S-3 and S-3/A</B></U> </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 WIDTH=57% ALIGN=LEFT>&nbsp;</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 WIDTH=57% ALIGN=LEFT>&nbsp;</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><U><B>Form S-8s</B></U> </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! Brands 401(k) Plan</TD><TD ALIGN=LEFT>&nbsp; </TD>
     <TD ALIGN=LEFT>333-36893, 333-32048, 333-109300</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, 333-109299</TD><TD ALIGN=LEFT>&nbsp; </TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif">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. </FONT> </P>


<BR><BR><BR>
<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif">KPMG LLP<BR>
Louisville, Kentucky
<BR>July 15, 2004 </FONT> </P>

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




<p align=right>Exhibit 31.1</P>

<P align=center><B>CERTIFICATION</B></P>

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

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>1. </TD>
<TD WIDTH=95%>I
have reviewed this report on Form 10-Q of YUM! Brands, Inc.;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>2. </TD>
<TD WIDTH=95%>Based
on my knowledge, this 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 report;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>3. </TD>
<TD WIDTH=95%>Based
on my knowledge, the financial statements, and other financial information included in
this 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 report.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>4. </TD>
<TD WIDTH=95%>The
registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure      controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(a) </TD>
<TD WIDTH=95%>designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be      designed under our supervision, 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
report is being prepared;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(b) </TD>
<TD WIDTH=95%>evaluated
the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in
this report      our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period      covered by this report based on such
evaluation; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(c) </TD>
<TD WIDTH=95%>disclosed
in this report any change in the registrant&#146;s internal control over financial reporting
that occurred      during the registrant&#146;s most recent fiscal quarter that has materially
affected, or is reasonably likely to      materially affect, the registrant&#146;s internal
control over financial reporting; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>5. </TD>
<TD WIDTH=95%>The
registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal      control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of      directors (or persons
performing the equivalent function):</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(a) </TD>
<TD WIDTH=95%>all
significant deficiencies and material weaknesses in the design or operation of internal
control over      financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process,      summarize and report financial information;
and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(b) </TD>
<TD WIDTH=95%>any
fraud, whether or not material, that involves management or other employees who have a
significant role in      the registrant&#146;s internal controls over financial reporting.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;July 19, 2004</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>
<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR><P ALIGN=CENTER></P><HR SIZE=1 NOSHADE>
<BR>
<BR>
<BR>



<p align=right>Exhibit 31.2</P><BR>

<P align=center><b>CERTIFICATION</b></p>

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

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>1. </TD>
<TD WIDTH=95%>I
have reviewed this report on Form 10-Q  of YUM! Brands, Inc.;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>2. </TD>
<TD WIDTH=95%>Based
on my knowledge, this 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 report;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>3. </TD>
<TD WIDTH=95%>Based
on my knowledge, the financial statements, and other financial information included in
this 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 report.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>4. </TD>
<TD WIDTH=95%>The
registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure      controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(a) </TD>
<TD WIDTH=95%>designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be      designed under our supervision, 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
report is being prepared;</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(b) </TD>
<TD WIDTH=95%>evaluated
the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in
this report      our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period      covered by this report based on such
evaluation; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(c) </TD>
<TD WIDTH=95%>disclosed
in this report any change in the registrant&#146;s internal control over financial reporting
that occurred      during the registrant&#146;s most recent fiscal quarter that has materially
affected, or is reasonably likely to      materially affect, the registrant&#146;s internal
control over financial reporting; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>5. </TD>
<TD WIDTH=95%>The
registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal      control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of      directors (or persons
performing the equivalent function):</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(a) </TD>
<TD WIDTH=95%>all
significant deficiencies and material weaknesses in the design or operation of internal
control over      financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process,      summarize and report financial information;
and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>(b) </TD>
<TD WIDTH=95%>any
fraud, whether or not material, that involves management or other employees who have a
significant role in      the registrant&#146;s internal controls over financial reporting.</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;July 19, 2004</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>


<!-- MARKER FORMAT-SHEET="Page Number" FSL="Workstation" -->
<BR><BR><BR><P ALIGN=CENTER></P><HR SIZE=1 NOSHADE>
<BR>
<BR>
<BR>




<p align=right>Exhibit 32.1</p>

<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>


<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
Jun3 12, 2004, 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>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>1. </TD>
<TD WIDTH=90%>the
Periodic  Report fully complies with the  requirements  of Section 13(a) or 15(d) of the
Securities  Exchange               Act of 1934; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>2. </TD>
<TD WIDTH=90%>the
 information  contained in the Periodic  Report  fairly  presents,  in all material
 respects,  the financial               condition and results of operations of the
Company.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;July 19, 2004&nbsp;&nbsp;</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>



<P>A signed original of this written  statement  required by Section 906 has been provided to YUM!  Brands,  Inc. and will be
retained by YUM! Brands, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.</P>

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

<p align=right>Exhibit 32.2</p>

<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>


<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
Jun 12, 2004, 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>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>1. </TD>
<TD WIDTH=90%>the
Periodic  Report fully complies with the  requirements  of Section 13(a) or 15(d) of the
Securities  Exchange               Act of 1934; and</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>2. </TD>
<TD WIDTH=90%>the
 information  contained in the Periodic  Report  fairly  presents,  in all material
 respects,  the financial               condition and results of operations of the
Company.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
<TD WIDTH="45%">Date:&nbsp;&nbsp;&nbsp;&nbsp;July 19, 2004&nbsp;&nbsp;</td>
<TD><P ALIGN="LEFT"><U>&nbsp;&nbsp;/s/&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;&nbsp;&nbsp;</u>
<BR>Chief Financial Officer</P></TD></TR>
</TABLE>
<BR><BR>
<BR><BR><BR>


<P>A signed original of this written  statement  required by Section 906 has been provided to YUM!  Brands,  Inc. and will be
retained by YUM! Brands, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.</P>



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