Fair Value Disclosures

9 Months Ended

Sep. 08, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

Recurring Fair Value Measurements

The following table presents the fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.  No transfers among the levels within the fair value hierarchy occurred during the year to date ended September 8, 2012.

	Fair Value
	Level	9/8/2012		12/31/2011
Foreign Currency Forwards, net	2	$	27	$	2
Interest Rate Swaps, net	2	26		32
Other Investments	1	17		15
Total		$	70	$	49

The fair value of the Company’s foreign currency forwards and interest rate swaps were determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based upon observable inputs.   The other investments include investments in mutual funds, which are used to offset fluctuations in deferred compensation liabilities where employees have chosen to invest in phantom shares of a Stock Index Fund or Bond Index Fund.  The other investments are classified as trading securities in Other assets in our Condensed Consolidated Balance Sheets and their fair value was determined based on the closing market prices of the respective mutual funds as of September 8, 2012 and December 31, 2011.

Non-Recurring Fair Value Measurements

(Gains) losses recognized from all non-recurring fair value measurements during the quarters and years to date ended September 8, 2012 and September 3, 2011:

	Quarter ended
	September 8, 2012			September 3, 2011
Restaurant-level impairment (Level 3)	$	—		$	6
Refranchising related impairment - Pizza Hut UK (Level 3) (a)	—			74
Refranchising related impairment - other (Level 3) (a)	4			20
A&W and LJS Impairment (Level 2) (a)	—			16
Total	$	4		$	116
	Year to date
	September 8, 2012			September 3, 2011
Restaurant-level impairment (Level 3)	$	6		$	21
Refranchising related impairment - Pizza Hut UK (Level 3) (a)	—			74
Refranchising related impairment - Pizza Hut UK (Level 2) (a)	20			—
Refranchising related impairment - other (Level 3) (a)	4			27
A&W and LJS impairment (Level 2) (a)	—			82
Gain on Little Sheep acquisition (Level 2) (a)	(74		)	—
Total	$	(44	)	$	204

(a) See Note 4 for further discussions of Refranchising (gain) loss, including our decision to refranchise Company operated Pizza Hut dine-in restaurants in the UK, the acquisition of Little Sheep and the LJS and A&W divestitures.

Refranchising related impairment results from writing down the assets of restaurants or restaurant groups offered for refranchising, including certain instances where a decision has been made to refranchise restaurants that are deemed to be impaired. The fair value measurements used in our impairment evaluation were based on estimates of the sales prices we anticipated receiving from a buyer for the restaurant or restaurant groups (Level 3) or actual bids received from potential buyers (Level 2).

Restaurant-level impairment charges are recorded in Closures and impairment (income) expenses and resulted primarily from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. The fair value measurements used in these impairment evaluations were based on discounted cash flow estimates using unobservable inputs. The remaining net book value of these assets measured at fair value during the quarters and years to date ended September 8, 2012 and September 3, 2011 subsequent to these impairments is not significant.

At September 8, 2012 the carrying values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximated their fair values because of the short-term nature of these instruments.  The Company’s debt obligations, excluding capital leases, were estimated to have a fair value of $3.3 billion (Level 2), compared to their carrying value of $2.8 billion.  We estimated the fair value of debt using market quotes and calculations based on market rates.