1、Financial HigHligHts (In millions, except for per share amounts)Year-end 2008 2007 % B/(W) changeCompany sales $ 9,843 $ 9,100 8 Franchise and license fees 1,436 1,316 9 Total revenues $ 11,279 $ 10,416 8 Operating profit $ 1,506 $ 1,357 11 Net income $ 964 $ 909 6 Diluted earnings per common share
2、$ 1.96 $ 1.68 17 Cash flows provided by operating activities $ 1,521 $ 1,551 (2) average U.s. sales per system Unit (a) (In thousands) Year-end 2008 2007 2006 2005 2004 5-year growth (b)KFC $ 967 $ 994 $ 977 $ 954 $ 896 2%Pizza Hut 854 825 794 810 794 3%Taco Bell 1,241 1,120 1,176 1,168 1,069 4%(a)
3、Excludes license units. (b) Compounded annual growth rate. contentsDear Partners .13Winning Big in China! .45Building Strong Brands Everywhere .67Improving US Brand Positions .89Driving Long-Term Shareholder Value.10Going for Breakthrough .11 aboUt tHe paper Used For tHis report The inks used in the
4、 printing of this report contain an average of 25% - 35% vegetable oils from plant derivatives, a renewable resource. They replace petroleum based inks as an effort to also reduce volatile organic compounds (VOCs).The cover and first 12 pages of this report were printed using FSC-certified paper mad
5、e with 50% recycled content including 24% post-consumer waste.dear partners, Im sure you would agree that a company gets the best results and the best people when it is in pursuit of greatness. After all, when given a choice, who in the world really wants to wake up every day, go to work and muddle
6、in mediocrity when you have a chance to be a part of something special. Thats why Im proud to report that our people are pumped up about pUtting tHe pieces in place to become tHe deFining global company tHat Feeds tHe World.david c. novaK cHairman and cHieF eXecUtive oFFicer yUm! brands, inc.Now I a
7、lso know this all could sound like a pipe dream if you didnt have a track record and the resources to achieve it. So Im pleased to report that our confidence that we can achieve such a bold goal stems from the substance I will share with you in this report and begins with a track record of doing wha
8、t we say, or as I like to say at Yum!, walking the talk.Thats why Im especially humbled to tell you on behalf of our dedicated teams and franchisees around the world, that we achieved 14% Earnings Per Share (EPS) growth for 2008. Thats the seventh straight year weve achieved at least 13% growth and
9、once again exceeded our +10% annual EPS growth target. In so doing, we grew worldwide system sales +7% and same store sales +3%, contributing to what is now 21 consecutive quarters of same store sales growth. Perhaps even more importantly, we strengthened our claim as the number one retail developer
10、 of new units outside the United States by opening a record 1,495 units, the eighth straight year weve opened more than 1,000 new units. With this quality growth, we generated cash from operations of over $1.5 billion and returned an all time high of nearly $2 billion to our shareholders through sha
11、re repurchases and dividends. Im especially pleased we achieved these results in a year tainted by unprecedented commodity inflation, a slowing economy, declining consumer confidence and the collapse of the financial markets. Performance in tough times like these reinforces the underlying power of o
12、ur global portfolio of leading brands to deliver consistent double digit EPS growth because of their universal appeal, convenience and affordability. Nevertheless, our stock took a tumble like the rest of the market, declining 21% in 2008 although we significantly outperformed the broader market as
13、measured by the S&P 500 which was down 41%. Stepping back, over the past decade we have truly become a global company with 55% of our total revenue and nearly 60% of our operating profits coming from outside the United States, versus 24% of total revenue and 20% of operating profit when we started o
14、ur company in 1997. When we combine this with the inarguable fact that we operate in more than 110 countries, have over one million team members and have such recognized brands, we believe we are in the scalable and enviable position to build a global company that sets the standard for others to fol
15、low which is to become The Defining Global Company that Feeds the World. to Us tHis means continUing to bUild and create:a FamoUs recognition cUltUre WHere everyone coUnts. We already serve as a best practice for other companies because of the way we use fun recognition to celebrate the achievement
16、of others and drive results. And our success starts with the fundamental belief that everyone at every level can truly make a difference. This belief inspires us all to do our very best. We intend to capitalize on our spirited work environment by using it as a magnet to attract and retain the best t
17、alent and make Customer Mania come alive in every person and in every store as we go for operational excellence. As it stands today, this culture is well established at our restaurant support centers and above store but is inconsistently executed at our restaurants where it counts most. A defining g
18、lobal company will have its customers recognizing its passion for making them happy and we will settle for nothing less.dynamic, vibrant brands everyWHere.We want our brands in every country to be always connecting with our customers, always reaching for new innovations and excellence, and always le
19、ading. To this end, we are in the process of cascading our Achieving Breakthrough Results (ABR) training to our managers around the world. The charge is to have an army of ABR “black belts” who achieve the kind of breakthroughs that will make headlines in our industry. We believe this is the most am
20、bitious training initiative ever conducted in our industry and will help us achieve more faster much in the same vein Six Sigma has done for manufacturing companies.a company WitH a HUge Heart.This means truly caring about others. This means opening doors and providing great career paths that allow
21、people to work their way up from the bottom to the top. That also means using our talent, time and imagination to save lives and improve our environment. Thats why we have partnered with the United Nations World Food Programme and have an annual hunger relief campaign that raised nearly $20 million
22、in cash and inkind contributions in 2008. Thats the equivalent of 80 million meals, saving nearly 1.8 million children from starvation. In addition, our team members donated five million volunteer hours to this incredible cause. Equally important is our commitment to health and nutrition, including
23、an online exercise program to help educate consumers about maintaining a balanced lifestyle. In China, our team has created an incredible 3-on-3 basketball tournament with 24,000 teams participating in 400 plus Chinese cities. The bottom line is we do lots of good in the communities we serve and to
24、learn more I ask you to check out our companys first Corporate Responsibility Report which is published online at Y. Great companies have always focused on more than making money and we are doing just that.resUlts, again and again.I think youd all agree the only way you can be recognized as “definin
25、g” is to continue to put the numbers on the board that make you a winner with your customers and shareholders. And admittedly, given the current state of the financial markets and economy, 2009 represents our most challenging year yet. In the response to the financial uncertainties posed by declinin
26、g investment values and rising unemployment, consumers have trimmed their discretionary spending to conserve cash and rebuild savings. As a consequence they are dining out less frequently and when they do go out to eat, they aggressively seek value. To succeed under these conditions restaurant conce
27、pts must launch a two pronged attack: offer superior value, and provide differentiated and relevant products. While its true that we enjoy some measure of insulation by virtue of our position in the lower end of the dining out space arguably capturing trade down business from higher end concepts tha
28、t are more exposed to an economic slowdownwe are not immune to the effects of a weakening economy. Therefore, to sustain our track record of success, we are sharpening our value offerings and providing innovative products that uniquely satisfy customer needs and leverage the capacity of our assets.
29、Whats more, we are confident that our considerable financial strength matches the staying power of our brands. In fact, we stand to gain from any near term industry consolidation. That said, we think its also more important than ever to focus on the keys to our long-term growth. And the good news fo
30、r us is we have four very clear growth strategies we are pursuing with urgency and purpose. Strategies that have served us well and put real meat on the bone in our quest to become tHe deFining global company tHat Feeds tHe World.3#1bUild leading brands across cHina inevery signiFicant category.With
31、 KFC and Pizza Hut, we have already established two of the most loved brands in the fast food and casual dining category and we are now successfully developing Pizza Hut Home Service. We are even creating our own Chinese quick service restaurant chain, East Dawning, tailored to the local favorites b
32、ased on the amazing insight that Chinese peoples favorite cuisine is, believe it or not, Chinese food!While the China economy has at least temporarily declined from its robust double digit growth to what is projected to be 6% growth in 2009, we continue to believe we are in the first inning of a nin
33、e inning ball game with a business that has already achieved tremendous scale (3,000+ units) and nearly a half billion dollars in profit. In fact, there is no question we are uniquely and competitively positioned to capitalize on what we believe will be and remains the biggest growth opportunity for
34、 the restaurant industry in the 21st century.Consider this, there are 300 million people in the U.S. and there are already over 600 million cell phone users in China out of a general population of 1.3 billion. There has been double digit personal income growth the past four years with over 18 millio
35、n people entering the cities each year. The market share for chain restaurants is less than 3% in China with plenty of room to grow. There is high purchase intent of Western brands and consumer demand for quality is growing sharply. Furthermore, China is our highest returning international business
36、with a cash payback on investments of approximately two years which is why we are investing our own capital to be primarily company owned and operated. As we have built the business, weve put in place a world class infrastructure to give us a long-term competitive advantage. We uniquely own our own
37、food distribution system that has allowed us to expand KFC into more than 500 cities in China and make Pizza Hut available in nearly 100 cities. We have one of the largest real estate and construction teams of any retailer in the world that opened over 500 traditional restaurants in 2008 as we gener
38、ated 7% same store sales growth in China. We have also developed target manufacturing capability for our proprietary dessert line of egg tarts and pizza dough making. And we continue to grow our people capability ahead of the business by recruiting and retaining talent with highly sought after and w
39、ell paying jobs. In fact, our China executive team and store operations are best in class in the Yum! world.4I often get asked the question of how big we think we can be in China. Our best long range forecast is over 20,000 restaurants. The way we look at it, KFC can be every bit as big as McDonalds
40、 is in the U.S., ultimately reaching 15,000+ units; Pizza Hut Casual Dining can equal the casual dining leader in the U.S., Applebees, achieving 2,000+ units; Pizza Hut Home Service can match category leading Dominos in the U.S., achieving 5,000+ units: and East Dawning is attacking the Chinese equi
41、valent to the hamburger category in the U.S., so who knows how high is up?I also often get asked the question: what can go wrong? Well, in the past five years, weve had challenges like dealing with SARS, the threat of Avian Flu, and an ingredient supply issue with each having significant short term
42、impact. In each case we bounced back stronger than before, and in fact, have generated 23% compounded annual profit growth rate in the China Division over the past five years. Now we have a slowing 6% GDP growth rate that still makes China the fastest growing major economy in the world. My hunch is
43、we can definitely perform well in this kind of an environment. And while we will most certainly have our future ups and downs, Im more convinced than ever that one day we will have more restaurants and profits in China than we do in the U.S., so we wouldnt trade places with anyone. Thats my story an
44、d Im sticking with it!CHINA DIVISION ONGOING GROWTH MODEL: 20% OPERATING PROFIT GROWTH; +20% SYSTEM SALES GROWTH IN MAINLAND CHINA.#2drive aggressive international eXpansion & bUildstrong brands everyWHere.Yum! Restaurants International (YRI), which operates in over 110 countries and territories out
45、side of China and the U.S., had its best year yet in 2008. YRI delivered same store sales growth of 4%, system sales growth of 10% and operating profit growth of 10%, resulting in record operating profit of over a half billion dollars. We have a high return franchising model with over 90% of our new
46、 restaurants being built by franchisees thus generating over $650 million in franchise fees, requiring minimal capital on our part. To date, we have not seen a slowdown in the development pace. And while KFC and Pizza Hut are already global brands, we have barely scratched the surface of our potenti
47、al to reach a combined population of five billion people. We opened a record 924 new traditional restaurants across six continents in 2008. Thats the eighth straight year weve opened more than 700 new restaurants at YRI, a big number in relation to any international business. Our ever increasing sca
48、le fuels growth as more restaurants and more sales lead to more marketing and an even stronger organization. This global infrastructure, coupled with our over 700 dedicated franchisees, is our single biggest competitive advantage at YRI. For this we are largely indebted to PepsiCo who, prior to our
49、spin-off in 1997, invested 40 years and billions of dollars to establish the global network weve turned into a nearly 13,000 unit powerhouse. The reality is it would take the same time and commitment for our competition to reach our size and scale, and frankly, we dont expect most U.S. competitors t
50、o have significant international businesses for a long time to come.Were focused on profitably driving international expansion in three global arenas franchise only markets, established company owned markets, and emerging, underdeveloped markets with huge populations.When you look at our core franch
