TWST: Would you begin with a very brief historical sketch of the company and a picture of the things you're doing at the present time?
Mr. Jerzyk: We were spun off from PepsiCo in 1997, as three restaurant brands: Taco Bell, Pizza Hut and KFC. In the early days we were spun off with quite a bit of debt, nearly $5 billion. Fortunately, our business generated so much cash we were able to pay down a lot of that debt and get to an investment-grade rating relatively quickly. In the early part of the past decade, we reached investment-grade rating, and we started to pay a dividend in 2004. We have increased the dividend every year since then. We also started buying back our stock and returning a fair amount of cash to our shareholders.
Recently, we have been very focused on adding sales layers, which are new incremental sales-growth programs, to better utilize our restaurant assets. We are getting some benefits from that now in various parts of our business around the world and expect to continue the strategy in the future.
The biggest thing that we have been focused on since the spin-off is building our international presence. Since our spin-off from PepsiCo, we have established ourselves as a powerful global company going from 22% of profits coming from outside the U.S. in 1998 to more than 65% in 2010. There has been a tremendous amount of capital expenditures and organizational focus around our international development, which has resulted in Yum! (YUM) becoming the largest U.S. retail developer in China and the largest restaurant company in emerging markets. Yum! has definitely established itself as a leading consumer company with a significant international presence with our KFC and Pizza Hut brands.
TWST: What is the outlook for your industry in general right now and for Yum! Brands in particular?
