Pizza Hut 2010 Annual Report Download - page 106

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Research and Development (“R&D”)
The Company’s subsidiaries operate R&D facilities in Louisville, Kentucky (KFC); Dallas, Texas (Pizza Hut and YRI);
and Irvine, California (Taco Bell) and in several locations outside the U.S., including Shanghai, China. The Company
expensed $33 million, $31 million and $34 million in 2010, 2009 and 2008, respectively, for R&D activities. From time
to time, independent suppliers also conduct research and development activities for the benefit of the YUM system.
Environmental Matters
The Company is not aware of any federal, state or local environmental laws or regulations that will materially affect its
earnings or competitive position, or result in material capital expenditures. However, the Company cannot predict the
effect on its operations of possible future environmental legislation or regulations. During 2010, there were no material
capital expenditures for environmental control facilities and no such material expenditures are anticipated.
Government Regulation
U.S. Division. The Company and its U.S. Division are subject to various federal, state and local laws affecting its
business. Each of the Concepts’ restaurants in the U.S. must comply with licensing and regulation by a number of
governmental authorities, which include health, sanitation, safety and fire agencies in the state and/or municipality in
which the restaurant is located. In addition, each Concept must comply with various state and federal laws that regulate
the franchisor/franchisee relationship. To date, no Concept has been significantly affected by any difficulty, delay or
failure to obtain required licenses or approvals.
The Company and each Concept are also subject to federal and state laws governing such matters as employment and pay
practices, overtime, tip credits and working conditions. The bulk of the Concepts’ employees are paid on an hourly basis
at rates related to the federal and state minimum wages.
The Company and each Concept are also subject to federal and state child labor laws which, among other things, prohibit
the use of certain “hazardous equipment” by employees younger than 18 years of age. Neither the Company nor any
Concept has been materially adversely affected by such laws to date.
The Company and each Concept, as applicable, continue to monitor their facilities for compliance with the Americans
with Disabilities Act (“ADA”) in order to conform to its requirements. Under the ADA, the Company or the relevant
Concept could be required to expend funds to modify its restaurants to better provide service to, or make reasonable
accommodation for the employment of, disabled persons.
International and China Divisions. The Company’s restaurants outside the U.S. are subject to national and local laws and
regulations which are similar to those affecting U.S. restaurants, including laws and regulations concerning labor, health,
sanitation and safety. The restaurants outside the U.S. are also subject to tariffs and regulations on imported commodities
and equipment and laws regulating foreign investment. International compliance with environmental requirements has
not had a material adverse effect on the Company’s results of operations, capital expenditures or competitive position.
Form 10-K