Pizza Hut 2007 Annual Report Download - page 76

80 YUM! BRANDS, INC.
21.
Reportable Operating Segments
We are principally engaged in developing, operating, franchising
and licensing the worldwide KFC, Pizza Hut, Taco Bell, LJS and
A&W concepts. KFC, Pizza Hut, Taco Bell, LJS and A&W operate
throughout the U.S. and in 104, 96, 14, 6 and 10 countries and
territories outside the U.S., respectively. Our five largest inter-
national markets based on operating profit in 2007 are China,
United Kingdom, Asia Franchise, Australia and Mexico. At the
end of fiscal year 2007, we had investments in 6 unconsolidated
affiliates outside the U.S. which operate principally KFC and/or
Pizza Hut restaurants. These unconsolidated affiliates operate in
China and Japan. Subsequent to the fiscal year ended 2007 the
Company sold its interest in its unconsolidated affiliate in Japan
(See Note 5 for further discussion).
We identify our operating segments based on management
responsibility. The China Division includes mainland China, Thai-
land, KFC Taiwan, and the International Division includes the
remainder of our international operations. For purposes of apply-
ing 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 operating 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 aggregated them into a
single reportable operating segment.
Revenues
2007 2006 2005
United States $ 5,197 $ 5,603 $ 5,929
International Division(a) 3,075 2,320 2,124
China Division(a) 2,144 1,638 1,296
$ 10,416 $ 9,561 $ 9,349
Operating Profit;
Interest Expense, Net; and
Income Before Income Taxes
2007 2006 2005
United States $ 739 $ 763 $ 760
International Division(b) 480 407 372
China Division(b) 375 290 211
Unallocated and corporate expenses (257) (229) (246)
Unallocated other income (expense)(c) 97 13
Unallocated refranchising gain (loss)(d) 11 24 43
Total operating profit 1,357 1,262 1,153
Interest expense, net (166) (154) (127)
Income before income taxes $ 1,191 $ 1,108 $ 1,026
Depreciation and Amortization
2007 2006 2005
United States $ 247 $ 259 $ 266
International Division 161 115 107
China Division 117 95 82
Corporate 17 10 14
$ 542 $ 479 $ 469
Capital Spending
2007 2006 2005
United States $ 304 $ 329 $ 333
International Division 189 118 96
China Division 246 165 159
Corporate 32 21
$ 742 $ 614 $ 609
Identifiable Assets
2007 2006 2005
United States $ 2,884 $ 2,909 $ 3,118
International Division(e) 2,254 2,100 1,536
China Division(e) 1,116 869 746
Corporate(f) 988 490 397
$ 7,242 $ 6,368 $ 5,797
Long-Lived Assets(g)
2007 2006 2005
United States $ 2,595 $ 2,604 $ 2,800
International Division(h) 1,429 1,357 804
China Division(h) 757 595 517
Corporate 73 84 103
$ 4,854 $ 4,640 $ 4,224
(a) Includes revenues of $1.3 billion, $673 million and $483 million for entities in
the United Kingdom for 2007, 2006 and 2005, respectively. Includes revenues of
$1.9 billion, $1.4 billion and $1.0 billion in mainland China for 2007, 2006 and
2005, respectively.
(b) Includes equity income of unconsolidated affiliates of $4 million, $10 million and
$21 million in 2007, 2006 and 2005, respectively, for the International Division.
Includes equity income of unconsolidated affiliates of $47 million, $41 million,
and $30 million in 2007, 2006 and 2005, respectively, for the China Division.
(c) Includes net gains of approximately $6 million, $2 million and $11 million in
2007, 2006 and 2005, respectively, associated with the sale of our Poland/Czech
Republic business. See Note 9.
(d) Refranchising gain (loss) is not allocated to the U.S., International Division or China
Division segments for performance reporting purposes.
(e) Includes investment in unconsolidated affiliates of $63 million, $64 million and
$117 million for 2007, 2006 and 2005, respectively, for the International Division.
Includes investment in unconsolidated affiliates of $90 million, $74 million and
$56 million for 2007, 2006 and 2005, respectively, for the China Division.
(f) Primarily includes deferred tax assets, property, plant and equipment, net, related
to our office facilities and cash.
(g) Includes property, plant and equipment, net, goodwill, and intangible assets, net.
(h) Includes long-lived assets of $843 million, $813 million and $271 million for
entities in the United Kingdom for 2007, 2006 and 2005, respectively. Includes
long-lived assets of $651 million,$495 million and $430 million in mainland China
for 2007, 2006 and 2005, respectively.
See Note 5 for additional operating segment disclosures related
to impairment, store closure (income) costs and the carrying
amount of assets held for sale.