Pizza Hut 2013 Annual Report Download - page 102

YUM! BRANDS, INC.-2013 Form10-K6
Form 10-K
PART I
ITEM 1ARisk Factors
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.
The Company is also subject to anti-bribery and anti-corruption laws and
regulations, which are the focus of increasing enforcement around the world.
See Item 1A “Risk Factors” below for a discussion of risks relating to
federal, state, local and international regulation of our business.
Employees
As of year end 2013, the Company and its Concepts employed approximately
539,000 persons, approximately 86 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.
Financial Information about Geographic Areas
Financial information about our significant 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 35; and in the related Consolidated Financial
Statements in Part II, Item 8, pages 36 through 71.
Available Information
The Company makes available through the Investor Relations section of its
internet website at http://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 filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act, as soon as reasonably practicable after electronically
filing such material with the Securities and Exchange Commission (“SEC”)
at http://www.sec.gov. These reports may also be obtained by visiting
the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC
20549 or by calling the SEC at 1 (800) SEC-0330.
Our Corporate Governance Principles and our Code of Conduct are
also located within the Investor Relations section of the Company’s
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 filings, are available in print free of charge
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, such as food tampering, contamination or
adulteration, 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 Concepts’ franchisees, to instances of food-
borne illness or food safety issues could adversely affect our Concepts’
brands and reputations as well as our revenues and profits and possibly
lead to litigation. If a customer of our Concepts becomes ill from food-borne
illnesses or as a result of food safety issues, restaurants in our system may
be temporarily closed, which would decrease our revenues. In addition,
instances or allegations of food-borne illness or food safety issues, real or
perceived, involving our restaurants, restaurants of competitors, suppliers
or distributors (regardless of whether we use or have used those suppliers
or distributors), or otherwise involving the types of food served at our
restaurants, could result in negative publicity that could adversely affect
our sales. 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 Concepts’ franchisees.
Our significant China operations subject us to
risks that could negatively affect our business.
A significant and growing portion of our restaurants are located, and our
revenues and profits originate, in China. As a consequence, our financial
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 inflation), 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
fluctuations 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, financial condition or cash flows.
In addition, any significant or prolonged deterioration in U.S.-China
relations could adversely affect our China business. Certain risks and
uncertainties of doing business in China are solely within the control of
the Chinese government, and Chinese law regulates the scope of our
foreign investments and business conducted within China. There are
also uncertainties regarding the interpretation and application of laws and
regulations and the enforceability of intellectual property and contract rights
in China. If we were unable to enforce our intellectual property or contract
rights in China, our business would be adversely impacted.