Pizza Hut 2015 Annual Report Download - page 113

YUM! BRANDS, INC.-2015 Form10-K 5
Form 10-K
PART I
ITEM 1ARisk Factors
Financial Information about Geographic Areas
Financial information about our significant geographic areas is incorporated herein by reference from the related Consolidated Financial Statements in
Part II, Item 8.
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
Risks Related to Our Business and Industry
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 and salmonella,
occur or may occur within our system from time to time. In addition, food
safety issues such as food tampering, contamination and adulteration occur
or may occur within our system from time to time. 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 product liability
claims, litigation and damages. 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, or 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 overall
financial results are heavily dependent on our results in China, and our
business is significantly exposed to risks there. These risks include changes
in economic conditions (including consumer spending, unemployment
levels and wage and commodity inflation), consumer preferences, taxation
(including income and non-income based tax rates and laws) and the
regulatory environment, as well as increased media scrutiny of our business
and industry 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.
An increase in the value of the U.S. Dollar relative to the Chinese Renminbi
could have an adverse effect on our 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.
Although we have announced our intention to separate our China business
through a spin-off to existing shareholders, following the spin-off the new
China entity will be our largest franchisee or licensee, and we will therefore
continue to be exposed to many of the foregoing risks even after the
completion of the proposed spin-off.
Health concerns arising from outbreaks of
viruses or other diseases may have an
adverse effect on our business.
Outbreaks of avian flu occur from time to time around the world, and
these outbreaks could reach pandemic levels. Public concern over avian
flu generally may cause fear about the consumption of chicken, eggs
and other products derived from poultry, which could cause customers
to consume less poultry and related products. This would likely result
in lower revenues and profits. Avian flu outbreaks could also adversely