Pizza Hut 2008 Annual Report Download - page 182

60
Notes to Consolidated Financial Statements
(Tabular amounts in millions, except share data)
Note 1 – Description of Business
YUM! Brands, Inc. and Subsidiaries (collectively referred to as “YUM” or the “Company”) comprises the worldwide
operations of KFC, Pizza Hut, Taco Bell, Long John Silver’s (“LJS”) and A&W All-American Food Restaurants
(“A&W”) (collectively the “Concepts”). YUM is the world’s largest quick service restaurant company based on the
number of system units, with more than 36,000 units of which approximately 45% are located outside the U.S. in more
than 110 countries and territories. YUM was created as an independent, publicly-owned company on October 6, 1997
(the “Spin-off Date”) via a tax-free distribution by our former parent, PepsiCo, Inc., of our Common Stock (the “Spin-
off”) to its shareholders. References to YUM throughout these Consolidated Financial Statements are made using the first
person notations of “we,” “us” or “our.”
Through our widely-recognized Concepts, we develop, operate, franchise and license a system of both traditional and non-
traditional quick service restaurants. Each Concept has proprietary menu items and emphasizes the preparation of food
with high quality ingredients as well as unique recipes and special seasonings to provide appealing, tasty and attractive
food at competitive prices. Our traditional restaurants feature dine-in, carryout and, in some instances, drive-thru or
delivery service. Non-traditional units, which are principally licensed outlets, include express units and kiosks which
have a more limited menu and operate in non-traditional locations like malls, airports, gasoline service stations,
convenience stores, stadiums, amusement parks and colleges, where a full-scale traditional outlet would not be practical or
efficient. We also operate multibrand units, where two or more of our Concepts are operated in a single unit. In addition,
we continue to pursue the multibrand combination of Pizza Hut and WingStreet, a flavored chicken wings concept we
have developed.
YUM consists of six operating segments: KFC-U.S., Pizza Hut-U.S., Taco Bell-U.S., LJS/A&W-U.S., YUM Restaurants
International (“YRI” or “International Division”) and YUM Restaurants China (“China Division”). For financial
reporting purposes, management considers the four U.S. operating segments to be similar and, therefore, has aggregated
them into a single reportable operating segment. The China Division includes mainland China (“China”), Thailand and
KFC Taiwan, and the International Division includes the remainder of our international operations.
Note 2 – Summary of Significant Accounting Policies
Our preparation of the accompanying Consolidated Financial Statements in conformity with accounting principles
generally accepted in the United States of America requires us to make estimates and assumptions that affect reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these
estimates.
Principles of Consolidation and Basis of Preparation. Intercompany accounts and transactions have been eliminated.
Certain investments in businesses that operate our Concepts are accounted for by the equity method. Our lack of majority
voting rights precludes us from controlling these affiliates, and thus we do not consolidate these affiliates. Our share of
the net income or loss of those unconsolidated affiliates is included in other (income) expense. On January 1, 2008 we
began consolidating the entity that operates the KFCs in Beijing, China that was previously accounted for using the equity
method. See Note 5 for the impact on our Consolidated Financial Statements.
Form 10-K