Pizza Hut 2012 Annual Report Download - page 98

YUM! BRANDS, INC.-2012 Form10-K6
Form 10-K
PART I
ITEM 1ARisk Factors
The Company and each Concept are also subject to laws relating to
nutritional content, nutritional labeling, product safety and menu labeling. The
Company has not 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. The Company has not been
materially adversely affected by such laws to date.
International, China and India 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 information security, 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.
See Item 1A “Risk Factors” on page6 for a discussion of risks relating to
federal, state, local and international regulation of our business.
Employees
As of year end 2012, the Company and its Concepts employed approximately
523,000 persons, approximately 85percent of whom were part-time.The
Company believes that it provides working conditions and compensation
that compare favorably with those of its principal competitors.The majority
of employees are paid on an hourly basis.Some employees are subject to
labor council relationships that vary due to the diverse cultures in which
the Company operates.The Company and its Concepts consider their
employee relations to be good.
(C) Financial Information about Geographic Areas
Financial information about our signifi cant geographic areas (China Division, International Division, the U.S. and India) is incorporated herein by reference
from Selected Financial Data in Part II, Item 6, pages14 and 15 ; MD&A in Part II, Item 7, pages15 through 34 ; and in the related Consolidated Financial
Statements in Part II, Item 8, pages36 through 70 .
(D) Available Information
The Company makes available through the Investor Relations section of its
internet website at www.yum.com its annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports fi led or furnished pursuant to Section13(a) or 15(d) of the
Exchange Act, as soon as reasonably practicable after electronically fi ling
such material with the Securities and Exchange Commission (“SEC”).Our
Corporate Governance Principles and our Code of Conduct are also
located within this section of the website.The reference to the Company’s
website address does not constitute incorporation by reference of the
information contained on the website and should not be considered
part of this document.These documents, as well as our SEC fi lings, are
available in print to any shareholder who requests a copy from our Investor
Relations Department.
ITEM 1A Risk Factors
You should carefully review the risks described below as they identify
important factors that could cause our actual results to differ materially
from our forward-looking statements and historical trends.
Food safety and food-borne illness concerns
may have an adverse effect on our business.
Food-borne illnesses, such as E. coli, hepatitis A, trichinosis or salmonella,
and food safety issues have occurred in the past, and could occur in the
future.Any report or publicity linking us or one of our Concept restaurants,
including restaurants operated by our franchisees, to instances of food-
borne illness or other food safety issues, including food tampering or
contamination, could adversely affect our Concepts’ brands and reputations
as well as our revenues and profi ts.If a customer of our Concepts or
franchisees becomes ill from food-borne illnesses, we and our franchisees
may temporarily close some restaurants, which would decrease our
revenues.In addition, instances of food-borne illness, food tampering
or food contamination solely involving our suppliers or distributors or
solely at restaurants of competitors could adversely affect our sales as a
result of negative publicity about the foodservice industry generally.Such
instances of food-borne illness, food tampering and food contamination
may not be within our control.The occurrence of food-borne illnesses or
food safety issues could also adversely affect the price and availability of
affected ingredients, which could result in disruptions in our supply chain
and/or lower margins for us and our franchisees.
Our China operations subject us to risks
that could negatively affect our business.
A signifi cant and growing portion of our restaurants are located in China.As a
consequence, our fi nancial results are increasingly dependent on our results
in China, and our business is increasingly exposed to risks there.These risks
include changes in economic conditions (including consumer spending,
unemployment levels and wage and commodity infl ation), income and
non-income based tax rates and laws and consumer preferences, as well
as changes in the regulatory environment and increased competition.In
addition, our results of operations in China and the value of our Chinese
assets are affected by fl uctuations in currency exchange rates, which may
adversely affect reported earnings.There can be no assurance as to the
future effect of any such changes on our results of operations, fi nancial
condition or cash fl ows.