Pizza Hut 2008 Annual Report Download - page 137

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Item 2. Properties.
As of year end 2008, the Company owned more than 1,500 units and leased land, building or both in more than 5,800
units worldwide. These units are further detailed as follows:
•The Company owned more than 1,100 units and leased land, building or both in more than 2,100 units in the U.S.
• The International Division owned more than 400 units and leased land, building or both in more than 1,100 units.
• The China Division leased land, building or both in more than 2,600 units.
Company restaurants in the U.S. which are not owned are generally leased for initial terms of 15 or 20 years and generally
have renewal options; however, Pizza Hut delivery/carryout units in the U.S. generally are leased for significantly shorter
initial terms with short renewal options. Company restaurants in the International Division which are not owned have
initial lease terms and renewal options that vary by country. Company restaurants in the China Division are generally
leased for initial terms of 10 to 15 years and generally do not have renewal options. Historically, the Company has either
been able to renew its China Division leases or enter into competitive leases at replacement sites without significant
impact on our operations, cash flows or capital resources. The Company currently does not have a significant number of
units that it leases or sub-leases to franchisees.
Pizza Hut and YRI lease their corporate headquarters and a research facility in Dallas, Texas. Taco Bell leases its
corporate headquarters and research facility in Irvine, California. YRI owns KFC’s, LJS’s, A&W’s and YUM’s corporate
headquarters and a research facility in Louisville, Kentucky. In addition, YUM leases office facilities for certain support
groups in Louisville, Kentucky. The China Division leases their corporate headquarters and research facilities in
Shanghai, China. Additional information about the Company’s properties is included in the Consolidated Financial
Statements and footnotes in Part II, Item 8, pages 53 through 106.
The Company believes that its properties are generally in good operating condition and are suitable for the purposes for
which they are being used.
Item 3. Legal Proceedings.
The Company is subject to various claims and contingencies related to lawsuits, real estate, environmental and other
matters arising in the normal course of business. The Company believes that the ultimate liability, if any, in excess of
amounts already provided for these matters in the Consolidated Financial Statements, is not likely to have a material
adverse effect on the Company’s annual results of operations, financial condition or cash flows. The following is a brief
description of the more significant of the categories of lawsuits and other matters we face from time to time. Descriptions
of specific claims and contingencies appear in Note 21, Contingencies, to the Consolidated Financial Statements included
in Part II, Item 8.
Form 10-K