Pizza Hut 2011 Annual Report Download - page 107

3
PART I
Item 1. Business.
YUM! Brands, Inc. (referred to herein as “YUM”, the “Registrant” or the “Company”), was incorporated under the laws of the
state of North Carolina in 1997. The principal executive offices of YUM are located at 1441 Gardiner Lane, Louisville,
Kentucky 40213, and the telephone number at that location is [phone]. Our website address is http://www.yum.com.
YUM, together with its subsidiaries, is referred to in this Form 10-K annual report (“Form 10-K”) as the Company. The terms
“we,” “us” and “our” are also used in the Form 10-K to refer to the Company. Throughout this Form 10-K, the terms “restaurants,”
“stores” and “units” are used interchangeably. While YUM! Brands, Inc., referred to as the Company, does not directly own or
operate any restaurants, throughout this document we may refer to restaurants as being Company-operated.
(a) General Development of Business
In January 1997, PepsiCo announced its decision to spin-off its restaurant businesses to shareholders as an independent public
company. Effective October 6, 1997, PepsiCo disposed of its restaurant businesses by distributing all of the outstanding shares
of Common Stock of YUM to its shareholders. On May 16, 2002, following receipt of shareholder approval, the Company changed
its name from TRICON Global Restaurants, Inc. to YUM! Brands, Inc.
(b) Financial Information about Operating Segments
YUM consists of five operating segments: YUM Restaurants China ("China" or “China Division”), YUM Restaurants International
(“YRI” or “International Division”), Taco Bell U.S., KFC U.S. and Pizza Hut U.S. The China Division includes only mainland
China, and the International Division includes the remainder of our international operations. For financial reporting purposes,
management considers the three U.S. operating segments to be similar and, therefore, has aggregated them into a single reportable
operating segment (“U.S.”). In December 2011, the Company sold the Long John Silver's ("LJS") and A&W All-American Food
Restaurants ("A&W") brands to key franchisee leaders and strategic investors in separate transactions. Financial information prior
to these transactions reflects our ownership of these brands.
Operating segment information for the years ended December 31, 2011, December 25, 2010 and December 26, 2009 for the
Company is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in
Part II, Item 7, pages 21 through 47 and in the related Consolidated Financial Statements in Part II, Item 8, pages 48 through 93.
(c) Narrative Description of Business
General
YUM is the world’s largest quick service restaurant (“QSR”) company based on number of system units, with approximately
37,000 units in more than 120 countries and territories. Primarily through the three concepts of KFC, Pizza Hut and Taco Bell
(the “Concepts”), the Company develops, operates, franchises and licenses a worldwide system of restaurants which prepare,
package and sell a menu of competitively priced food items. Units are operated by a Concept or by independent franchisees or
licensees under the terms of franchise or license agreements. Franchisees can range in size from individuals owning just one
restaurant to large publicly traded companies. In addition, the Company owns non-controlling interests in Chinese entities who
operate in a manner similar to KFC franchisees, as well as a non-controlling interest in Little Sheep Group Limited ("Little Sheep"),
a casual dining concept headquartered in Inner Mongolia, China. On February 1, 2012, we acquired a controlling interest in Little
Sheep. See Notes 4 and 21 for details.
The China Division, based in Shanghai, China, comprises approximately 4,500 system restaurants, primarily Company-owned
KFCs and Pizza Huts. In 2011, the China Division recorded revenues of approximately $5.6 billion and Operating Profit of $908
million. The International Division, based in Dallas, Texas, comprises approximately 14,500 system restaurants, primarily
franchised KFCs and Pizza Huts, operating in over 120 countries outside the U.S. In 2011 YRI recorded revenues of approximately
$3.3 billion and Operating Profit of $673 million. We have approximately 18,000 system restaurants in the U.S. and recorded
revenues of approximately $3.8 billion and Operating Profit of $589 million in 2011.
Form 10-K