Items Affecting Comparability of Net Income and/or Cash Flows

Little Sheep Acquisition

On February 1, 2012 we acquired an additional 66% interest in Little Sheep Group Limited (“Little Sheep”) for $540 million, net of cash acquired of $44 million, increasing our ownership to 93%. The acquisition was driven by our strategy to build leading brands across China in every significant category. Prior to our acquisition of this additional interest, our 27% interest in Little Sheep was accounted for under the equity method of accounting. As a result of the acquisition we obtained voting control of Little Sheep, and thus we began consolidating Little Sheep upon acquisition. As required by GAAP, we remeasured our previously held 27% ownership in Little Sheep, which had a recorded value of $107 million at the date of acquisition, at fair value based on Little Sheep's traded share price immediately prior to our offer to purchase the business and recognized a non-cash gain of $74 million. This gain, which resulted in no related income tax expense, was recorded in Other (income) expense on our Condensed Consolidated Statement of Income during the quarter ended March 24, 2012 and was not allocated to any segment for performance reporting purposes.

Turkey Restaurant Acquisition

In April 2013, we acquired 65 KFC and 41 Pizza Hut restaurants from an existing franchisee in Turkey for $86 million of cash and a potential payment of up to $19 million to be made in 2016 based on results of the business through 2015.

We recognized $85 million of goodwill for the value expected to be generated from the acquisition, primarily through net unit development. The goodwill is not expected to be deductible for income tax purposes and has been allocated to the YRI operating segment.

The impact of consolidating this business on all line-items within our Condensed Consolidated Statement of Income was insignificant for the quarter and year to date ended June 15, 2013. The proforma impact on our results of operations if the acquisition had been completed as of the beginning of 2012 would not have been significant.

Refranchising (Gain) Loss

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.



	Quarter ended						Year to date
	6/15/2013			6/16/2012			6/15/2013			6/16/2012
China	$	(1	)	$	(2	)	$	(1	)	$	(4	)
YRI^(a)	(3		)	(2		)	(3		)	19
U.S.^(b)	(28		)	(9		)	(45		)	(54		)
India	—			—			—			—
Worldwide	$	(32	)	$	(13	)	$	(49	)	$	(39	)


(a)	During the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom ("UK"). During the year to date ended June 16, 2012 we recorded losses of $23 million due to the then planned refranchising of these restaurants.


(b)	In the quarters and years to date ended June 15, 2013 and June 16, 2012, U.S. Refranchising (gain) loss primarily relates to gains on the sales of Taco Bell restaurants.

Store Closure and Impairment Activity

Store closure (income) costs and Store impairment charges by reportable segment are presented below.



	Quarter ended June 15, 2013
	China			YRI		U.S.			India		Worldwide
Store closure (income) costs ^(a)	$	(2	)	$	—	$	(1	)	$	—	$	(3	)
Store impairment charges	8			—		1			—		9
Closure and impairment (income) expenses	$	6		$	—	$	—		$	—	$	6



	Quarter ended June 16, 2012
	China			YRI			U.S.			India		Worldwide
Store closure (income) costs ^(a)	$	(2	)	$	(2	)	$	(1	)	$	—	$	(5	)
Store impairment charges	4			1			4			—		9
Closure and impairment (income) expenses	$	2		$	(1	)	$	3		$	—	$	4



	Year to date ended June 15, 2013
	China			YRI		U.S.		India		Worldwide
Store closure (income) costs^(a)	$	(3	)	$	—	$	—	$	—	$	(3	)
Store impairment charges	11			—		1		1		13
Closure and impairment (income) expenses	$	8		$	—	$	1	$	1	$	10



	Year to date ended June 16, 2012
	China			YRI			U.S.			India		Worldwide
Store closure (income) costs^(a)	$	(2	)	$	(2	)	$	(2	)	$	—	$	(6	)
Store impairment charges	5			2			4			—		11
Closure and impairment (income) expenses	$	3		$	—		$	2		$	—	$	5


(a)	Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company 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.