+5%System Sales Growth**
$1.6 billionNet Income
Per Share Rate
+1,976Units*** *Excluding special items
**Prior to foreign currency translation
***Outside the U.S.
I’m pleased to report that in 2012 we delivered full-year EPS growth of 13% or $3.25 per share, excluding special items, marking the eleventh consecutive year we achieved at least 13% and exceeded our annual target of at least 10%. This kind of consistent performance puts us in an elite group of high-growth companies.
We set a new record for international development by opening nearly 2,000 new restaurants in 2012. We also grew worldwide system sales 5% and operating profit 12%, both prior to foreign currency translation and special items. We generated $1.6 billion in net income and almost $2.3 billion in cash from operations. And with our disciplined approach to capital deployment, we remained an industry leader with a Return on Invested Capital of 22%. Our strong cash flow generation allowed us to increase our dividend rate 18%, to an annual rate of $1.34 per share. Our share price increased 13% for the full year, on top of 20% in 2011. Looking back, we are extremely proud that our five year average annual shareholder return, including stock appreciation and dividend reinvestment, is 14% versus the S&P 500 average of 2%.
We are proud of our track record of consistency which we believe is a result of getting better and better at executing the same growth strategies we identified over a decade ago. So as tempting as it might be to unveil some new revolutionary thinking that will drive our company’s growth, I have to admit my message this year might be a bit boring: we’re simply going to STAY THE COURSE with our strategies to build the defining global company that feeds the world.
Yet when I step back and think about it, I’ve concluded and hope you agree, staying the course is actually good news for you as a long-term shareholder. For you see, we don’t have to dream up a dramatic new approach or totally revamp our business model because the strategies we have are working.
In fact, unlike other companies that have to scramble to find new paths for growth, we have enormous opportunities that are staring us in the face. That’s because we have powerful global brands with a proven high performance organization, capable and determined to rapidly expand around the world.
Every year in December we host our Investor and Analyst Day in New York. This meeting gives us the opportunity to “go public” with our goals and commitments as well as showcase our management talent from around the world. The theme of our 2012 meeting was “On the Ground Floor of Global Growth: China and a Whole Lot More.” No statement could better describe Yum! Brands.
We, of course, highlighted our 11-year track record but, even more importantly, the future growth prospects of our company. We have a portfolio of brands with leadership positions in China and other emerging markets, with a long runway for growth. We have an asset base of over 39,000 restaurants and we continue to make progress leveraging these assets further by building sales layers and expanding dayparts. Additionally, we invested over $1.1 billion in 2012 in the future growth of our business and expect to invest at least that same amount in 2013.
All of this adds up to a growing confidence in our business model.
As a matter of fact, we believe the best is yet to come as we pursue our objective to be the defining global company that feeds the world.
Let me highlight some of the reasons I’m confident we must STAY THE COURSE on our four growth strategies.