Pizza Hut 2014 Annual Report Download - page 159

PART II
ITEM 8 Financial Statements and Supplementary Data
The Company believes it is reasonably possible its unrecognized tax The Company has settled audits with the IRS through fiscal year
benefits may decrease by approximately $5 million in the next 2008. Our operations in certain foreign jurisdictions remain subject to
12 months, including approximately $3 million which, if recognized examination for tax years as far back as 2004, some of which years
upon audit settlement or statute expiration, would affect the 2015 are currently under audit by local tax authorities. In addition, the
effective tax rate. Each of these positions is individually insignificant. Company is subject to various U.S. state income tax examinations, for
which, in the aggregate, we had significant unrecognized tax benefits
The Company’s income tax returns are subject to examination in the at December 27, 2014, each of which is individually insignificant.
U.S. federal jurisdiction and numerous foreign jurisdictions.
The accrued interest and penalties related to income taxes at December 27, 2014 and December 28, 2013 are set forth below:
2014 2013
Accrued interest and penalties $5 $64
During 2014, 2013 and 2012, a net expense of $11 million, net the Company received a RAR from the IRS for fiscal years 2007 and
expense of $18 million and net benefit of $3 million, respectively, for 2008 proposing a similar adjustment. The valuation issue impacted
interest and penalties was recognized in our Consolidated Statements tax returns for fiscal years 2004 through 2013.
of Income as components of its income tax provision. On July 31, 2014, the Company reached a final agreement with the
IRS Appeals Division regarding the valuation issue. As a result of this
agreement, we closed out our 2004 - 2006 and 2007 - 2008 audit
Internal Revenue Service Adjustments cycles and made cash payments to the IRS of $200 million, which
On June 23, 2010, the Company received a Revenue Agent Report were effectively fully reserved, to settle all issues for these audit
(‘‘RAR’’) from the Internal Revenue Service (the ‘‘IRS’’) relating to its cycles. The agreement also resolves the valuation issue for all later,
examination of our U.S. federal income tax returns for fiscal years impacted years. While additional cash payments related to the
2004 through 2006. The IRS proposed an adjustment to increase the valuation issue will be required upon the closure of the examinations
taxable value of rights to intangibles used outside the U.S. that YUM of fiscal years 2009 - 2013, the amounts will not be significant.
transferred to certain of its foreign subsidiaries. On January 9, 2013,
Reportable Operating Segments
See Note 1 for a description of our operating segments.
Revenues
2014 2013 2012
China $ 6,934 $ 6,905 $ 6,898
KFC Division(a) 3,193 3,036 3,014
Pizza Hut Division(a) 1,148 1,147 1,510
Taco Bell Division(a) 1,863 1,869 2,109
India 141 127 102
$ 13,279 $ 13,084 $ 13,633
Operating Profit; Interest Expense, Net;
and Income Before Income Taxes
2014 2013 2012
China(b) $ 713 $ 777 $ 1,015
KFC Division 708 649 626
Pizza Hut Division 295 339 320
Taco Bell Division 480 456 435
India (9) (15) (1)
Unallocated restaurant costs(c)(d) (1) — 16
Unallocated and corporate expenses(c)(e) (189) (207) (271)
Unallocated Closures and impairment expense(c)(f) (463) (295) —
Unallocated Other income (expense)(c)(g) (10) (6) 76
Unallocated Refranchising gain (loss)(c)(m) 33 100 78
Operating Profit 1,557 1,798 2,294
Interest expense, net(c)(h) (130) (247) (149)
Income Before Income Taxes $ 1,427 $ 1,551 $ 2,145
YUM! BRANDS, INC. - 2014 Form 10-K 65
NOTE 17
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Form 10-K