Pizza Hut 2008 Annual Report Download - page 12

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drive indUstry leading long-term
sHareHolder & FrancHisee valUe.
The good news is that at 20%, our Return On Invested Capital (ROIC) ranks us
high among other global companies. So, we’re going forward from a position of
real strength.
Any way you look at it, Yum! Brands is an incredible cash machine, with each
of our divisions generating free cash ow – or effectively funding their own
capital investments. As this capital is deployed to high-return opportunities –
for example, new restaurants in China, where the cash payback is approximately
two years – we expect total returns to remain strong. These returns will further
improve as we continue to refranchise restaurants, which will increase our
franchise fees – currently amounting to $1.4 billion – with minimal
capital investment.
We’re proud of the fact that for 2008 we were one of the few companies that
could make signicant capital investments (over $900 million), AND make great
investments in large scale buybacks (reducing outstanding shares by 9%) AND
pay a meaningful dividend (2.5% yield) AND grow EPS in the double digits. I think
it’s safe to say there are not that many companies that could do this.
SHAREHOLDER AND FRANCHISEE VALUE ONGOING MODEL:
MAINTAIN AN INDUSTRY LEADING RETURN ON INVESTED CAPITAL OF
20%; RETURN MEANINGFUL VALUE TO SHAREHOLDERS THROUGH SHARE
REPURCHASES AND A DIVIDEND PAY-OUT RATIO OF 35-40% OF NET INCOME.
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