Items Affecting Comparability of Net Income and Cash Flows (Tables)

We recorded the following assets acquired and liabilities assumed upon acquisition of Little Sheep as a result of our purchase price allocation:



Current assets, including cash of $44	$	109
Property, plant and equipment	64
Goodwill	376
Intangible assets, including indefinite-lived trademark of $404	421
Other assets	35
Total assets acquired	1,005

Deferred taxes	105
Other liabilities	60
Total liabilities assumed	165
Redeemable noncontrolling interest	59
Other noncontrolling interests	16
Net assets acquired	$	765

The following table summarizes the 2013 and 2012 activity related to reserves for remaining lease obligations for closed stores.



	Beginning Balance		Amounts Used		New Decisions	Estimate/Decision Changes	CTA/ Other	Ending Balance
2013 Activity	$	27	(11	)	1	4	—	$	21
2012 Activity	$	34	(14	)	3	3	1	$	27

Refranchising (gain) loss [Member]

The Refranchising (gain) loss by reportable segment is presented below. We do not allocate such gains and losses to our segments for performance reporting purposes.



	Refranchising (gain) loss
	2013			2012			2011
China	$	(5	)	$	(17	)	$	(14	)
YRI ^(a)	(4		)	61			69
U.S.^(b)	(91		)	(122		)	17
India	—			—			—
Worldwide	$	(100	)	$	(78	)	$	72

(a)

During the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom ("UK"). The franchise agreement for these stores allows the franchisee to pay continuing franchise fees in the initial years of the agreement at a reduced rate. We agreed to allow the franchisee to pay these reduced fees in part as consideration for their assumption of lease liabilities related to underperforming stores that we anticipate they will close that were part of the refranchising. We recognize the estimated value of terms in franchise agreements entered into concurrently with a refranchising transaction that are not consistent with market terms as part of the upfront refranchising (gain) loss. Accordingly, upon the closing of this refranchising we recognized a loss of $53 million representing the estimated value of these reduced continuing fees. The associated deferred credit is being amortized into YRI's Franchise and license fees and income through 2016. This upfront loss largely contributed to a $70 million Refranchising loss we recognized during 2012 as a result of this refranchising. Also included in that loss was the write-off of $14 million in goodwill allocated to the Pizza Hut UK reporting unit. The remaining carrying value of goodwill allocated to our Pizza Hut UK business of $87 million, immediately subsequent to the aforementioned write-off, was determined not to be impaired as the fair value of the Pizza Hut UK reporting unit exceeded its carrying amount. For the year ended December 28, 2013, the refranchising of the Pizza Hut UK dine-in restaurants decreased Company sales by 18% and increased Franchise and license fees and income and Operating Profit by 2% and 3%, respectively, for the YRI Division versus 2012.

During 2011, we recorded a $76 million charge in Refranchising (gain) loss as a result of our decision to refranchise or close all of our remaining Company-owned Pizza Hut UK dine-in restaurants, primarily to write down these restaurants' long-lived assets to their then estimated fair value. Impairment charges of Pizza Hut UK long-lived assets incurred as a result of this decision, including the charge mentioned in the previous sentence, reduced depreciation expense versus what would have otherwise been recorded by $13 million and $3 million for the years ended December 29, 2012 and December 31, 2011, respectively. These depreciation reductions were not allocated to the YRI segment resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate which it was prior to the impairment charges being recorded for these restaurants.

(b)

U.S. Refranchising (gain) loss in the years ended December 28, 2013 and December 29, 2012 is primarily due to gains on sales of Taco Bell restaurants. U.S. Refranchising (gain) loss in the year ended December 31, 2011 is primarily due to losses on sales of and offers to refranchise KFCs in the U.S. The non-cash impairment charges that were recorded related to our offers to refranchise these Company-owned KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $3 million and $10 million in the years ended December 29, 2012 and December 31, 2011, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants.

Closures and impairment (income) expenses

Store closure (income) costs and Store impairment charges by reportable segment are presented below. These tables exclude $295 million of Little Sheep impairment losses in 2013 and $80 million of net losses related to the LJS and A&W divestitures in 2011, which were not allocated to any segment for performance reporting purposes.



	2013
	China			YRI			U.S.		India		Worldwide
Store closure (income) costs^(a)	$	(1	)	$	(4	)	$	—	$	—	$	(5	)
Store impairment charges	31			3			5		2		41
Closure and impairment (income) expenses	$	30		$	(1	)	$	5	$	2	$	36



	2012
	China			YRI		U.S.		India		Worldwide
Store closure (income) costs^(a)	$	(4	)	$	12	$	—	$	—	$	8
Store impairment charges	13			7		9		—		29
Closure and impairment (income) expenses	$	9		$	19	$	9	$	—	$	37



	2011
	China			YRI		U.S.		India		Worldwide
Store closure (income) costs^(a)	$	(1	)	$	4	$	4	$	—	$	7
Store impairment charges	13			18		17		—		48
Closure and impairment (income) expenses	$	12		$	22	$	21	$	—	$	55


(a)	Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company-owned restaurant that was closed, lease reserves established when we cease using a property under an operating lease and subsequent adjustments to those reserves and other facility-related expenses from previously closed stores.