Pizza Hut 2005 Annual Report Download - page 72

markets฀ based฀ on฀ operating฀ profit฀ in฀ 2005฀ are฀ China,฀
United฀Kingdom,฀Australia,฀Asia฀Franchise฀and฀Mexico.฀At฀
December฀31,฀ 2005,฀ we฀had฀investments฀in฀7฀unconsoli-
dated฀affiliates฀outside฀the฀U.S.฀which฀operate฀principally฀
KFC฀ and/or฀ Pizza฀Hut฀restaurants.฀ These฀ unconsolidated฀
affiliates฀operate฀in฀China,฀Japan฀and฀the฀United฀Kingdom.
We฀identify฀our฀operating฀segments฀based฀on฀manage-
ment฀responsibility.฀As฀noted฀in฀Note฀1,฀in฀2005฀we฀began฀
reporting฀information฀for฀our฀international฀business฀in฀two฀
separate฀operating฀segments฀as฀a฀result฀of฀changes฀in฀our฀
management฀reporting฀structure.฀The฀China฀Division฀includes฀
mainland฀China,฀Thailand,฀KFC฀Taiwan,฀and฀the฀International฀
Division฀includes฀the฀remainder฀of฀our฀international฀opera-
tions.฀Segment฀information฀for฀previous฀periods฀has฀been฀
restated฀to฀reflect฀this฀reporting.฀For฀purposes฀of฀applying฀
SFAS฀No.฀131,฀“Disclosure฀About฀Segments฀of฀An฀Enterprise฀
and฀ Related฀ Information”฀ (“SFAS฀ 131”)฀ in฀ the฀ U.S.,฀ we฀
consider฀LJS฀and฀A&W฀to฀be฀a฀single฀segment.฀We฀consider฀
our฀ KFC,฀ Pizza฀Hut,฀ Taco฀Bell฀ and฀ LJS/A&W฀ operating฀
segments฀in฀the฀U.S.฀to฀be฀similar฀and฀therefore฀have฀aggre-
gated฀them฀into฀a฀single฀reportable฀operating฀segment.
Revenues฀2005฀ 2004฀ 2003
United฀States฀ $฀5,929฀ $฀5,763฀ $฀5,655
International฀Division฀ ฀2,124฀ ฀2,128฀ ฀1,824
China฀Division(a)฀ ฀1,296฀ ฀1,120฀ ฀ 901
฀฀฀฀ $฀9,349฀ $฀9,011฀ $฀8,380
Operating฀Profit;฀฀
Interest฀Expense,฀Net;฀and฀
Income฀Before฀Income฀Taxes฀2005฀ 2004฀ 2003
United฀States฀ $฀ 760฀ $฀ 777฀ $฀ 812
International฀Division(b)฀฀ 372฀ ฀ 337฀ ฀ 280
China฀Division(b)฀฀ 211฀ ฀ 205฀ ฀ 161
Unallocated฀and฀corporate฀฀
฀ expenses฀ ฀ (246)฀ ฀ (204)฀ ฀ (179)
Unallocated฀other฀income฀฀
฀ (expense)(c)฀฀ 9฀ ฀ (2)฀ ฀ (3)
Unallocated฀facility฀actions(d)฀฀ 43฀ ฀ 12฀ ฀ 4
Wrench฀litigation฀income฀฀
฀ (expense)(e)฀฀ 2฀ ฀ 14฀ ฀ (42)
AmeriServe฀and฀other฀(charges)฀฀
฀ credits(e)฀฀ 2฀ ฀ 16฀ ฀ 26
Total฀operating฀profit฀ ฀1,153฀ ฀1,155฀ ฀1,059
Interest฀expense,฀net฀ ฀ (127)฀ ฀ (129)฀ ฀ (173)
Income฀before฀income฀taxes฀฀
฀ and฀cumulative฀effect฀of฀฀
฀ accounting฀change฀ $฀1,026฀ $฀1,026฀ $฀ 886
Depreciation฀and฀Amortization฀2005฀ 2004฀ 2003
United฀States฀ $฀ 266฀ $฀ 267฀ $฀ 240
International฀Division฀ ฀ 107฀ ฀ 99฀ ฀ 86
China฀Division฀ ฀ 82฀ ฀ 69฀ ฀ 60
Corporate฀ ฀ 14฀ ฀ 13฀ ฀ 15
฀฀฀฀ $฀ 469฀ $฀ 448฀ $฀ 401
Capital฀Spending฀2005฀ 2004฀ 2003
United฀States฀ $฀ 333฀ $฀ 365฀ $฀ 395
International฀Division฀ ฀ 96฀ ฀ 121฀ ฀ 135
China฀Division฀ ฀ 159฀ ฀ 118฀ ฀ 111
Corporate฀ ฀ 21฀ ฀ 41฀ ฀ 22
฀฀฀฀ $฀ 609฀ $฀ 645฀ $฀ 663
Identifiable฀Assets฀2005฀ 2004฀ 2003
United฀States฀ $฀3,118฀ $฀3,316฀ $฀3,279
International฀Division(f)฀฀1,437฀ ฀1,441฀ ฀1,334
China฀Division(f)฀฀ 746฀ ฀ 613฀ ฀ 546
Corporate(g)฀฀ 397฀ ฀ 326฀ ฀ 461
฀฀฀฀ $฀5,698฀ $฀5,696฀ $฀5,620
Long-Lived฀Assets(h)฀2005฀ 2004฀ 2003
United฀States฀ $฀2,800฀ $฀2,900฀ $฀2,880
International฀Division฀ ฀ 804฀ ฀ 904฀ ฀ 815
China฀Division(i)฀฀ 517฀ ฀ 436฀ ฀ 391
Corporate฀ ฀ 103฀ ฀ 99฀ ฀ 72
฀฀฀฀ $฀4,224฀ $฀4,339฀ $฀4,158
(a)฀Includes฀revenues฀of฀$1.0฀billion,฀$903฀million฀and฀$703฀million฀in฀mainland฀
China฀for฀2005,฀2004฀and฀2003,฀respectively.
(b)฀Includes฀equity฀income฀of฀unconsolidated฀affiliates฀of฀$21฀million,฀$25฀million฀
and฀$11฀million฀in฀2005,฀2004฀and฀2003,฀respectively,฀for฀the฀International฀
Division.฀Includes฀equity฀income฀of฀unconsolidated฀affiliates฀of฀$30฀million,฀
$32฀million,฀and฀$33฀million฀in฀2005,฀2004฀and฀2003,฀respectively,฀for฀the฀
China฀Division.
(c)฀Includes฀a฀one-time฀net฀gain฀of฀approximately฀$11฀million฀associated฀with฀the฀
sale฀of฀our฀Poland/Czech฀Republic฀business.฀See฀Note฀7.
(d)฀Unallocated฀facility฀actions฀comprises฀refranchising฀gains฀(losses)฀which฀are฀
not฀allocated฀to฀the฀U.S.,฀International฀Division฀or฀China฀Division฀segments฀for฀
performance฀reporting฀purposes.
(e)฀See฀Note฀4฀for฀a฀discussion฀of฀AmeriServe฀and฀other฀(charges)฀credits฀and฀
Note฀4฀and฀Note฀21฀for฀a฀discussion฀of฀Wrench฀litigation.
(f)฀ Includes฀investment฀in฀unconsolidated฀affiliates฀of฀$117฀million,฀$143฀million฀
and฀$136฀million฀for฀2005,฀2004฀and฀2003,฀respectively,฀for฀the฀International฀
Division.฀ Includes฀ investment฀ in฀ unconsolidated฀ affiliates฀ of฀ $56฀million,฀
$51฀million฀and฀$45฀million฀for฀2005,฀2004฀and฀2003,฀respectively,฀for฀the฀
China฀Division.
(g)฀Primarily฀ includes฀deferred฀tax฀assets,฀property,฀plant฀and฀ equipment,฀net,฀
related฀to฀our฀office฀facilities,฀and฀cash.
(h)฀Includes฀property,฀plant฀and฀equipment,฀net;฀goodwill;฀and฀intangible฀assets,฀net.
(i)฀ Includes฀long-lived฀assets฀of฀$430฀million,฀$342฀million฀and฀$287฀million฀in฀
Mainland฀China฀for฀2005,฀2004฀and฀2003,฀respectively.
See฀ Note฀4฀for฀ additional฀operating฀segment฀ disclosures฀
related฀to฀impairment,฀store฀closure฀costs฀and฀the฀carrying฀
amount฀of฀assets฀held฀for฀sale.
21.฀GUARANTEES,฀COMMITMENTS฀AND฀
CONTINGENCIES
Lease฀Guarantees฀and฀Contingencies฀ As฀a฀result฀of฀(a)฀as-
signing฀our฀interest฀in฀obligations฀under฀real฀estate฀leases฀as฀a฀
condition฀to฀the฀refranchising฀of฀certain฀Company฀restaurants;฀
(b)฀contributing฀certain฀Company฀restaurants฀to฀unconsoli-
dated฀affiliates;฀and฀(c)฀guaranteeing฀certain฀other฀leases,฀we฀
are฀frequently฀contingently฀liable฀on฀lease฀agreements.฀These฀
leases฀have฀varying฀terms,฀the฀latest฀of฀which฀expires฀in฀2031.฀
As฀of฀December฀31,฀2005฀and฀December฀25,฀2004,฀the฀poten-
tial฀amount฀of฀undiscounted฀payments฀we฀could฀be฀required฀
to฀make฀in฀the฀event฀of฀non-payment฀by฀the฀primary฀lessee฀
was฀$374฀million฀and฀$365฀million,฀respectively.฀The฀present฀
value฀of฀these฀potential฀payments฀discounted฀at฀our฀pre-tax฀
76.฀ ฀ ฀ |฀ ฀ ฀ Yum!฀Brands,฀Inc.