Pizza Hut 2008 Annual Report Download - page 219
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97
Note 20 – 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 108, 96, 16, 6 and
9 countries and territories outside the U.S., respectively. Our five largest international markets based on operating profit
in 2008 are China, Asia Franchise, Australia, United Kingdom, and Europe Franchise. At the end of fiscal year 2008, we
had investments in 4 unconsolidated affiliates in China which operate KFC restaurants. During 2008 the Company sold
its interest in its unconsolidated affiliate in Japan (See Note 5 for further discussion) and began consolidating one
previously unconsolidated affiliate in China (See Note 5).
We identify our operating segments based on management responsibility. The China Division includes mainland China,
Thailand, KFC Taiwan, and YRI includes the remainder of our international operations. 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 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
2008 2007 2006
U.S. $ 5,125 $ 5,197 $ 5,603
YRI(a) 3,026 3,075 2,320
China Division(a) 3,128 2,144 1,638
$ 11,279 $ 10,416 $ 9,561
Operating Profit; Interest Expense, Net; and
Income Before Income Taxes
2008 2007 2006
U.S. $ 694 $ 739 $ 763
YRI 528 480 407
China Division(b) 469 375 290
Unallocated and corporate expenses(c)(d) (307) (257) (229)
Unallocated Other income (expense)(d)(e) 117 9 7
Unallocated Refranchising gain (loss)(d) 5 11 24
Operating Profit 1,506 1,357 1,262
Interest expense, net (226) (166) (154)
Income Before Income Taxes $ 1,280 $ 1,191 $ 1,108
Depreciation and Amortization
2008 2007 2006
U.S. $ 231 $ 247 $ 259
YRI 158 161 115
China Division 151 117 95
Corporate 16 17 10
$ 556 $ 542 $ 479
Form 10-K