Our 1997 earnings were $314 million, excluding the impact of the fourth quarter unusual charge.  Operating Earnings Per Share were $1.34 for the core businesses, up a very strong 61 percent before the charge and facility actions.  Including these items, we reported a net loss of $111 million, or $(.73) per basic share.

You should know that we have the cash-generating capability that allows us to aggressively pursue attractive returns on the opportunities we face.  We generated more than $1.5 billion of cash flow from base operations and refranchising.  We will be able to invest in the ongoing needs of the business and build at a rate that will make us a great investment. 

We want to thank our nearly 350,000 employees, and numerous franchisees across our system, for their hard work,dedication
and commitment  to helping us make all of this significant progress during 1997.   We'd also like to especially acknowledge
our  new Board of Directors, the most able any company could hope for.  We couldn't have had a more extraordinary group
of people at our side as we created our new company.


Our operating base has been established and we're committed to "show you the money" going forward.  As we look ahead
over the long-term, Tricon is going to be a company that stands for growth.  Growth in earnings - growth in shareholder value -
and growth in share of market for all three of our brands.  We are committed to low double digit growth in operating profits,
before facility actions -above-industry growth in same store sales - and growth in Operating Earnings Per Share in the mid-teen

We enter 1998 with real confidence that we are heading for a strong year, and an even brighter future.  In the following pages, we'd like to give you a snapshot of the progress we've made at each of our businesses.   We hope you'll recognize we're establishing a different kind of company - one that leverages our newly-combined scale, is built on our RGM #1 culture, and will deliver consistent long-tern growth.  We know you'll come to the same conclusion we have about our three great brands and our new opportunities at Tricon:  Alone we're delicious - together we're YUM!   

On behalf of all of us at Tricon, in our restaurants and throughout our franchise system, YUM to you,

Andrall E. Pearson
Chairman and CEO

David C. Novak
Vice Chairman and President

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