Pizza Hut 2010 Annual Report Download - page 3

David C. Novak

Yum! Brands, Inc.
To this end, we have clearly established an ability to deliver consistently
strong results, even in the extremely challenging economic and macro
environment we continue to face. As a matter of fact, in 2010 we achieved
17% Earnings Per Share (EPS) growth, excluding special items, representing
the ninth straight year that we exceeded our annual target of at least 10%.
In fact, 17% EPS growth is our best in the last decade and what makes this
even more impressive is that it was driven by a 15% increase in operating
prot prior to foreign currency translation, including gains across all three of
our business divisions.
As I look back on the past year, I’m really proud of what we accomplished.
We grew worldwide system sales by 4%, prior to foreign currency translation,
and once again proved to be one of the leading retail developers of units
outside the United States as we opened nearly 1,400 new units, the tenth
straight year we’ve opened more than 1,000 new units. At the same time,
we are making major progress building incremental dayparts and sales layers
in each of our businesses. We also improved worldwide restaurant margins
by 1.3 percentage points, and operating prots grew 15%, prior to foreign
currency translation and special items, generating $1.16 billion in net income
and nearly $2 billion in cash from operations. Importantly, we continued to
be an industry leader with Return on Invested Capital (ROIC) of 20%+. As a
result, our share price jumped 40% for the full year. Over the longer term,
we take special pride that our ve year average total return, including stock
appreciation and dividend reinvestment, is 18% versus the S&P average of
2%. Our strong cash ow generation, combined with our disciplined approach
with deploying capital, allowed us to increase our dividend 19%, to an annual
rate of $1.00 per share.
But the most important point I want you to take away from this letter is that
all our Company’s leaders and teams know what we accomplished in the past
is just that — yesterday’s newspaper. We clearly realize it’s up to us to write
new headlines of winning performance. And as you read this report, I think
you will have reason to share our belief that even though we’ve made a lot of
headway, we have barely scratched the potential of our opportunity and are
 And we are going all out to attack it.
Dear Partners,
I’m especially pleased to report 2010 was another year of signicant progress toward achieving our future back
vision to be THE DEFINING GLOBAL COMPANY THAT FEEDS THE WORLD. This is a goal that reects our
intentionality to lead the way in dening how to truly build a superlative global company, a company that sets
the example others want to emulate. Of course, a bold and admittedly audacious goal like this has to be backed
up by a track record of impressive performance. And, perhaps even more importantly, it has to be supported by
an increasing capability and the potential to keep it going.