Pizza Hut 2010 Annual Report Download - page 113

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Item 1B. Unresolved Staff Comments.
The Company has received no written comments regarding its periodic or current reports from the staff of the Securities
and Exchange Commission that were issued 180 days or more preceding the end of its 2010 fiscal year and that remain
unresolved.
Item 2. Properties.
As of year end 2010, the Company’s Concepts owned more than 1,200 units and leased land, building or both in more
than 6,000 units worldwide. These units are further detailed as follows:
• The Company and its Concepts owned more than 900 units and leased land, building or both in more than 1,500
units in the U.S.
• The International Division owned more than 300 units and leased land, building or both in nearly 1,300 units.
• The China Division leased land, building or both in more than 3,200 units.
Concept 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 has approximately 1,000 units
worldwide that it leases or subleases to franchisees, principally in the U.S., U.K., Canada and Mexico.
The Pizza Hut and YRI corporate headquarters and a research facility in Dallas, Texas are owned by Pizza Hut. Taco Bell
leases its corporate headquarters and research facility in Irvine, California. The KFC, LJS, A&W and YUM corporate
headquarters and a research facility in Louisville, Kentucky are owned by YRI. 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 61 through 124.
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 19, Contingencies, to the Consolidated Financial Statements included
in Part II, Item 8.
Form 10-K