Wendy's 2008 Annual Report Download - page 154

(18) Impairment of other long-lived assets
The following is a summary of our impairment of other long-lived assets losses by business segment:
2008 2007 2006
Arby’s Restaurants business segment:
Impairment of Company-owned restaurants:
Properties ................................................. $ 6,906 $1,717 $2,433
Favorable leases ............................................ 521 — 1,034
Franchise agreements ....................................... 510 84 146
T.J. Cinnamons brand & other .............................. 65 822 416
8,002 2,623 4,029
Wendy’s Restaurants business segment:
Impairment of surplus properties:.............................. 1,578 — —
Asset management segment:
Impairment of internally developed financial model ............. — 3,024 —
Impairment of asset management contracts ..................... — 1,113 1,525
Impairment of non-compete agreements ........................ — 285 —
— 4,422 1,525
General corporate—aircraft ...................................... 9,623 — —
Total impairment of long-lived assets .......................... $19,203 $7,045 $5,554
The Arby’s Company-owned restaurants impairment losses in each year predominantly reflected (1)
impairment charges on all restaurant level assets resulting from the deterioration in operating performance of
certain restaurants and (2) additional charges for capital improvements in restaurants impaired in a prior year
which did not subsequently recover.
The T.J. Cinnamons brand impairment losses resulted from the Company’s assessment of the brand which
offers, through franchised and Company-owned restaurants, a product line of gourmet cinnamon rolls, coffee
rolls, coffees and other related products. These impairment assessments resulted from (1) the corresponding
reduction in anticipated T.J. Cinnamons unit growth and (2) lower than expected revenues and an overall
decrease in management’s focus on the T.J. Cinnamons brand prior to 2006.
The Wendy’s Company-owned restaurants impairment losses reflect write-downs in the carrying value of
surplus properties and properties held for sale.
The charges related to the impairment of the asset management contracts reflected the write-off of their
value resulting from early termination of CDOs and the related reduction of the Company’s asset management
fees to be received and, in 2007 a CDO which no longer had any projected cash flows. In addition to the
impairment of asset management contracts, the 2007 charge is also related to (1) anticipated losses on the sale
of an internally developed financial model (see Note 27) and (2) impairment losses related to the early
termination of non-compete agreements in connection with the Deerfield Sale.
We are in the process of disposing of one of our Company-owned aircraft. As a result, we have classified
this asset as held-for-sale included in “Properties” on the accompanying consolidated balance sheet at December
28, 2008 and recorded a general corporate impairment charge to reflect its fair value as a result of an appraisal
related to the potential sale.
All of these impairment losses represented the excess of the carrying value over the fair value of the
affected assets and are included in “Impairment of other long-lived assets” in the accompanying Consolidated
Statements of Operations. The fair values of impaired assets discussed above for the Arby’s restaurants segment
and the asset management segment were estimated to be the present values of the anticipated cash flows
associated with each related Company-owned asset. The fair values of the impaired assets discussed above for
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)