Pizza Hut 2010 Annual Report Download - page 131
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34
Refranchisings reduce our reported revenues and restaurant profits and increase the importance of system sales growth as
a key performance measure. Additionally, G&A expenses will decline over time as a result of these refranchising
activities. The timing of G&A declines will vary and often lag the actual refranchising activities as the synergies are
typically dependent upon the size and geography of the respective deals. G&A expenses included in the tables below
reflect only direct G&A that we no longer incurred as a result of stores that were operated by us for all or some portion of
the respective previous year and were no longer operated by us as of the last day of the respective current year.
The following table summarizes our worldwide refranchising activities:
2010 2009 2008
N
umber of units refranchised 949 613 775
R
efranchising proceeds, pre-tax $ 265 $ 194 $ 266
R
efranchising (gain) loss, pre-tax $ 63 $ (26
) $ (5)
The impact on Operating Profit arising from refranchising is the net of (a) the estimated reductions in restaurant profit,
which reflects the decrease in Company sales, and G&A expenses and (b) the increase in franchise fees from the
restaurants that have been refranchised. The tables presented below reflect the impacts on Total revenues and on
Operating Profit from stores that were operated by us for all or some portion of the respective previous year and were no
longer operated by us as of the last day of the respective current year. In these tables, Decreased Company sales and
Decreased Restaurant profit represents the amount of sales or restaurant profit earned by the refranchised restaurants
during the period we owned them in the prior year but did not own them in the current year. Increased Franchise and
license fees represents the franchise and license fees from the refranchised restaurants that were recorded by the Company
in the current year during periods in which the restaurants were Company stores in the prior year.
Form 10-K