Pizza Hut 2014 Annual Report Download - page 103

PART I
ITEM 1A Risk Factors
our operating results and financial condition. This includes potential
Tax matters, including changes in tax changes in tax laws or the interpretation of tax laws arising out of the
rates, disagreements with taxing Base Erosion Profit Shifting project initiated by the Organization for
Economic Co-operation and Development.
authorities and imposition of new taxes
could impact our results of operations Our business may be adversely impacted
and financial condition. by general economic conditions.
A significant percentage of our profit is earned outside the U.S. and
taxed at lower rates than the U.S. statutory rates. Historically, the cash Our results of operations are dependent upon discretionary spending
we generate outside the U.S. has principally been used to fund our by consumers, which may be affected by general economic conditions
international development. However, if the cash generated by our globally or in one or more of the markets we serve. Some of the factors
U.S. business is not sufficient to meet our need for cash in the U.S., that impact discretionary consumer spending include unemployment,
we may need to repatriate a greater portion of our international disposable income and consumer confidence. These and other
earnings to the U.S. in the future. We are required to record U.S. macroeconomic factors could have an adverse effect on our sales,
income tax expense in our financial statements at the point in time profitability or development plans, which could harm our financial
when our management determines that such funds are not condition and operating results.
permanently invested outside the U.S. This could cause our
worldwide effective tax rate to increase materially. The retail food industry in which we
We are subject to income taxes as well as non-income based taxes, operate is highly competitive.
such as payroll, sales, use, value-added, net worth, property,
withholding and franchise taxes in both the U.S. and various foreign The retail food industry in which we operate is highly competitive with
jurisdictions. We are also subject to regular reviews, examinations respect to price and quality of food products, new product
and audits by the Internal Revenue Service and other taxing development, advertising levels and promotional initiatives, customer
authorities with respect to such income and non-income based taxes service, reputation, restaurant location, and attractiveness and
inside and outside of the U.S. These reviews could include challenges maintenance of properties. If consumer or dietary preferences
of our methodologies for transfer pricing. If the IRS or another taxing change, or our restaurants are unable to compete successfully with
authority disagrees with our tax positions, we could face additional tax other retail food outlets in new and existing markets, our business
liability, including interest and penalties. Payment of such additional could be adversely affected. We also face growing competition as a
amounts upon final settlement or adjudication of any disputes could result of convergence in grocery, deli and restaurant services,
have a material impact on our results of operations and financial including the offering by the grocery industry of convenient meals,
position. including pizzas and entrees with side dishes. In addition, in the retail
food industry, labor is a primary operating cost component.
In addition, we are directly and indirectly affected by new tax Competition for qualified employees could also require us to pay
legislation and regulation and the interpretation of tax laws and higher wages to attract a sufficient number of employees, which could
regulations worldwide. Changes in such legislation, regulation or adversely impact our profit margins.
interpretation could increase our taxes and have an adverse effect on
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 2014 fiscal year and that remain unresolved.
YUM! BRANDS, INC. - 2014 Form 10-K 9
ITEM 1B
13MAR201516053226
Form 10-K