YUM – U.S. COMMENTS FROM EARNINGS CALL

Same-store sales trends in Q4 to date are consistent with the overall trends in Q3 (same-store sales growth was -6%).  The company also expects U.S. restaurant margins to decline in the fourth quarter.  The company will be lapping its first quarter of positive margin growth in some time.  Management said that the U.S. division will not experience the same level of benefit from favorable commodity costs in Q4 as it did in Q3 and some pricing will also be rolling off during the quarter.  So, as we said earlier, there will be little follow through from the 18% reported operating profit growth in Q3.