Pizza Hut 2007 Annual Report Download - page 81

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Selected Financial Data
YUM! Brands, Inc. and Subsidiaries
(in millions, except per share and unit amounts) Fiscal Year
2007 2006 2005 2004 2003
Summary of Operations
Revenues
Company sales $ 9,100 $ 8,365 $ 8,225 $ 7,992 $ 7,441
Franchise and license fees 1,316 1,196 1,124 1,019 939
Total 10,416 9,561 9,349 9,011 8,380
Closures and impairment expenses(a) (35) (59) (62) (38) (40)
Refranchising gain (loss)(a) 11 24 43 12 4
Operating profit(b) 1,357 1,262 1,153 1,155 1,059
Interest expense, net 166 154 127 129 173
Income before income taxes and cumulative effect of
accounting change 1,191 1,108 1,026 1,026 886
Income before cumulative effect of accounting change 909 824 762 740 618
Cumulative effect of accounting change, net of tax(c) —— — — (1)
Net income 909 824 762 740 617
Basic earnings per common share 1.74 1.51 1.33 1.27 1.05
Diluted earnings per common share 1.68 1.46 1.28 1.21 1.01
Cash Flow Data
Provided by operating activities $ 1,567 $ 1,299 $ 1,233 $ 1,186 $ 1,099
Capital spending, excluding acquisitions 742 614 609 645 663
Proceeds from refranchising of restaurants 117 257 145 140 92
Repurchase shares of Common Stock 1,410 983 1,056 569 278
Dividends paid on common shares 273 144 123 58 —
Balance Sheet
Total assets $ 7,242 $ 6,368 $ 5,797 $ 5,696 $ 5,620
Long-term debt 2,924 2,045 1,649 1,731 2,056
Total debt 3,212 2,272 1,860 1,742 2,066
Other Data
Number of stores at year end
Company 7,625 7,736 7,587 7,743 7,854
Unconsolidated Affiliates 1,314 1,206 1,648 1,662 1,512
Franchisees 24,297 23,516 22,666 21,858 21,471
Licensees 2,109 2,137 2,376 2,345 2,362
System 35,345 34,595 34,277 33,608 33,199
U.S. Company same store sales growth(d) (3)% — 4% 3% —
International Division system sales growth(e)
Reported 15% 7% 9% 14% 13%
Local currency(f) 10% 7% 6% 6% 5%
China Division system sales growth(e)
Reported 31% 26% 13% 23% 23%
Local currency(f) 24% 23% 11% 23% 23%
Shares outstanding at year end(g) 499 530 556 581 583
Cash dividends declared per common share(g) $ 0.45 $ 0.4325 $ 0.2225 $ 0.15 $ —
Market price per share at year end(g) $ 38.54 $ 29.40 $ 23.44 $ 23.14 $ 16.82
Fiscal years 2007, 2006, 2004 and 2003 include 52 weeks and fiscal year 2005 includes 53 weeks.
Fiscal years 2007, 2006 and 2005 include the impact of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123R (Revised 2004), “Share Based
Payment,” (“SFAS 123R”). This resulted in a $37 million, $39 million and $38 million decrease in net income, for 2007, 2006 and 2005, respectively. This translates to a
decrease of $0.07 to both basic and diluted earnings per share for 2007 and 2006, and a decrease of $0.07 and $0.06 to basic and diluted earnings per share, respectively,
for 2005. If SFAS 123R had been effective for prior years presented, both reported basic and diluted earnings per share would have decreased $0.06 for 2004 and 2003
consistent with previously disclosed pro-forma information.
The selected financial data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto.
(a) See Note 5 to the Consolidated Financial Statements for a description of Closures and Impairment Expenses and Refranchising Gain (Loss) in 2007, 2006 and 2005.
(b) Fiscal years 2007, 2006, 2005, 2004 and 2003 included $11 million income, $1 million income, $4 million income, $30 million income and $16 million expense, respec-
tively, related to Wrench litigation and AmeriServe. The Wrench litigation relates to a lawsuit against Taco Bell Corporation, which was settled in 2004, including financial
recoveries from settlements with insurance carriers. Amounts related to AmeriServe are the result of cash recoveries related to the AmeriServe bankruptcy reorganization
process for which we incurred significant expense in years prior to those presented here (primarily 2000). AmeriServe was formerly our primary distributor of food and paper
supplies to our U.S. stores.
(c) Fiscal year 2003 includes the impact of the adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses the financial accounting and reporting
for legal obligations associated with the retirement of long-lived assets and the associated asset retirement costs.
(d) U.S. Company same-store sales growth only includes the results of Company owned KFC, Pizza Hut and Taco Bell restaurants that have been open one year or more. U.S.
same store sales for Long John Silver’s and A&W restaurants are not included given the relative insignificance of the Company stores for these brands and the limited impact
they currently have and will have in the future, on our U.S. same store sales, as well as our overall U.S. performance.
(e) International Division and China Division system sales growth includes the results of all restaurants regardless of ownership, including Company owned, franchise,
unconsolidated affiliate and license restaurants. Sales of franchise, unconsolidated affiliate and license restaurants generate franchise and license fees for the Company
(typically at a rate of 4% to 6% of sales). Franchise, unconsolidated affiliate and license restaurant sales are not included in Company sales we present on the Consolidated
Statements of Income; however, the fees are included in the Company’s revenues. We believe system sales growth is useful to investors as a significant indicator of the
overall strength of our business as it incorporates all our revenue drivers, Company and franchise same store sales as well as net unit development. Additionally, we began
reporting information for our international business in two separate operating segments (the International Division and the China Division) in 2005 as a result of changes
in our management structure. Segment information for periods prior to 2005 has been restated to reflect this reporting.
(f) Local currency represents the percentage change excluding the impact of foreign currency translation. These amounts are derived by translating current year results at prior
year average exchange rates. We believe the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign
currency fluctuations.
(g) Adjusted for the two for one stock split on June 26, 2007. See Note 3 to the Consolidated Financial Statements.