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13MAR201517272138
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
China Division
The China Division has 6,715 units, predominately KFC and Pizza Hut Casual Dining restaurants which are the leading quick service and casual
dining restaurant brands, respectively, in mainland China. Given our strong competitive position, a growing economy and a population of
approximately 1.4 billion in mainland China, the Company is focused on rapidly adding KFC and Pizza Hut Casual Dining restaurants and
accelerating the development of Pizza Hut Home Service (home delivery). Our ongoing earnings growth model in China includes low double-digit
percentage unit growth, mid-single digit same-store sales growth and moderate margin improvement, which we expect to drive annual Operating
Profit growth of 15%.
See the Results of Operations Summary above for discussion of items impacting China’s 2014 performance.
% B/(W) % B/(W)
2014 2013
2014 2013 2012 Reported Ex FX Reported Ex FX
Company sales $ 6,821 $ 6,800 $ 6,797 — 1 — (3)
Franchise and license fees and
income 113 105 101 7 7 4 2
Total revenues $ 6,934 $ 6,905 $ 6,898 — 1 — (3)
Restaurant profit $ 1,009 $ 1,050 $ 1,233 (4) (4) (15) (17)
Restaurant margin % 14.8% 15.4% 18.1% (0.6) ppts. (0.6) ppts. (2.7) ppts. (2.7) ppts.
G&A expenses $ 391 $ 357 $ 334 (9) (9) (7) (5)
Operating Profit $ 713 $ 777 $ 1,015 (8) (8) (23) (26)
2014 2013
System Sales Growth, reported 1% (1)%
System Sales Growth, excluding FX 1% (4)%
Same-Store Sales Growth (Decline)% (5)% (13)%
% Increase
(Decrease)
Unit Count 2014 2013 2012 2014 2013
Company-owned 5,417 5,026 4,547 8 11
Unconsolidated Affiliates 757 716 660 6 8
Franchise & License 541 501 519 8 (3)
6,715 6,243 5,726 8 9
2013 New Builds Closures Refranchised Acquired 2014
Company-owned 5,026 664 (195) (79) 1 5,417
Unconsolidated Affiliates 716 56 (14) (1) — 757
Franchise & License 501 17 (56) 80 (1) 541
Total 6,243 737 (265) — — 6,715
2012 New Builds Closures Refranchised Acquired 2013
Company-owned 4,547 664 (158) (28) 1 5,026
Unconsolidated Affiliates 660 66 (10) — — 716
Franchise & License 519 10 (55) 28 (1) 501
Total 5,726 740 (223) — — 6,243
20 YUM! BRANDS, INC. - 2014 Form 10-K
Form 10-K