Wendy's 2008 Annual Report Download - page 100

(1) Summary of Significant Accounting Policies
Principles of Consolidation
Effective September 29, 2008, in conjunction with the merger (the “Wendy’s Merger”) with Wendy’s
International, Inc. (“Wendy’s”) the corporate name of Triarc Companies, Inc. (“Triarc”) changed to
Wendy’s/Arby’s Group, Inc. (“Wendy’s/Arby’s” and, together with its subsidiaries, the “Company” or “We”).
The merger is being accounted for using the purchase method of accounting in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 141, Business Combinations. In accordance with this standard,
we have concluded that Wendy’s/Arby’s is the acquirer for financial accounting purposes. Accordingly, the
consolidated financial statements include the accounts of Wendy’s subsequent to September 29, 2008. The
principal subsidiaries of the Company as of December 28, 2008 are Wendy’s and Arby’s Restaurant Group,
Inc. (“ARG”). ARG is a wholly-owned subsidiary that owns Arby’s, LLC (“Arby’s”), Sybra, LLC (“Sybra”) and
Arby’s Restaurant, LLC (“Arby’s Restaurant”). Sybra and Arby’s Restaurant own the entities comprising the
RTM Restaurant Group (“RTM”), which was acquired by the Company in 2005 (the “RTM Acquisition”).
Deerfield & Company, LLC (“Deerfield”) was also a principal subsidiary of the Company until it was sold
(the “Deerfield Sale”) on December 21, 2007. As of January 3, 2005, the Company owned, through Triarc
Deerfield Holdings, LLC (“TDH”), a then wholly owned subsidiary, a 63.6% capital interest and a 61.5%
profits interest in Deerfield. Deerfield owns Deerfield Capital Management LLC (“Deerfield Capital”). On
November 10, 2005, pursuant to an equity arrangement approved by the Company, certain members of
Triarc’s then current management subscribed for equity interests (the “Deerfield Equity Interests”) in TDH,
each of which consisted of a capital interest portion and a profits interest portion. The Deerfield Equity
Interests had the effective result of reducing the Company’s 61.5% interest in the profits of Deerfield to as low
as 52.3%, depending on the level of Deerfield profits. As defined in the TDH equity arrangement, the
Deerfield Sale is an event of dissolution. As a result, TDH was liquidated and its remaining assets distributed
during 2008 to its members as calculated in accordance with the equity arrangement.
The 2006 consolidated financial statements also include the accounts of Deerfield Opportunities Fund,
LLC (the “Opportunities Fund”) and the DM Fund, LLC (the “DM Fund”) in which the Company owned
a 67% capital interest through the dates of the Company’s effective redemptions of its investments on
September 29, 2006 and December 31, 2006, respectively.
The Company’s other subsidiaries as of December 28, 2008 that are referred to in these notes to
consolidated financial statements include National Propane Corporation (“National Propane”); SEPSCO, LLC
(“SEPSCO”); Citrus Acquisition Corporation which owns 100% of Adams Packing Association, Inc. (“Adams”);
Madison West Associates Corp. which owns 80.1% of 280 BT Holdings LLC (“280 BT”); and Jurl Holdings,
LLC (“Jurl”) (see Note 27).
The Company consolidates local Arby’s advertising cooperatives for which the Company has a greater than
50% voting interest (43 cooperatives as of December 28, 2008). The Company also participates in three
national advertising funds established to collect and administer funds contributed for use in advertising and
promotional programs for Company-owned and franchised stores. In accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 45, “Accounting for Franchisee Fee Revenue” (“SFAS 45”), the revenue,
expenses and cash flows of all such advertising funds are not included in the Company’s Consolidated
Statements of Operations or Consolidated Statements of Cash Flows because the contributions to these
advertising funds are designated for specific purposes, and the Company acts as an, in substance, agent with
regard to these contributions. The restricted assets and liabilities are reported as “Advertising fund restricted
assets” and “Advertising fund restricted liabilities”, respectively on the Company’s Consolidated Balance Sheets
as of December 28, 2008.
All intercompany balances and transactions have been eliminated in consolidation. See Note 3 for further
disclosure of the acquisitions and dispositions referred to above.
92
Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)