Wendy's 2008 Annual Report Download - page 173

do not believe that the outcome of these legal and environmental matters will have a material adverse effect on
our consolidated financial position or results of operations.
(29) Advertising Costs and Funds
Since the Wendy’s Merger, the Company participates in three national advertising funds (the “Advertising
Funds”) established to collect and administer funds contributed for use in advertising and promotional
programs. Contributions to the Advertising Funds are required from both company-owned and franchise
restaurants and are based on a percentage of restaurant sales. In addition to the contributions to the various
Advertising Funds, company-owned and franchise restaurants make additional contributions for local and
regional advertising programs. These include AFA Service Corporation (“AFA”), an independently controlled
advertising cooperative for Arby’s Company-owned and franchised stores, as well as separate Wendy’s U.S. and
Canadian Advertising Funds.
In accordance with SFAS No. 45, “Accounting for Franchisee Fee Revenue”, the revenue, expenses and
cash flows of the Advertising Funds are not included in our 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
assets held by these Advertising Funds are considered restricted. The restricted assets and related restricted
liabilities are identified on our Consolidated Balance Sheets.
Restricted assets and related liabilities of the Advertising Funds at December 28, 2008 are as follows:
2008
Cash and cash equivalents. . ....................................................... $29,270
Accounts and notes receivable ..................................................... 39,976
Other assets ..................................................................... 11,893
Total assets ................................................................. $81,139
Accounts payable................................................................. 32,220
Accrued expenses and other current liabilities ....................................... 54,457
Member’s deficit ................................................................. (5,538)
Total liabilities and deficit ................................................... $81,139
Wendy’s U.S. advertising fund has a revolving line of credit of $25,000. The Company is not the
guarantor of the debt. The advertising fund facility was established to fund the advertising fund operations.
There are no borrowings outstanding as of December 28, 2008.
AFA has a $3,500 line of credit. The availability under the AFA line of credit as of December 28, 2008
was $3,000. The Company is not the guarantor of the debt.
The Company’s advertising expenses in 2008, 2007 and 2006 totaled $110,849, $79,270 and $78,619,
respectively.
(30) Business Segments
Subsequent to the Wendy’s Merger, we manage and internally report our operations in two segments: (1)
the operation and franchising of Wendy’s restaurants and (2) the operation and franchising of Arby’s
restaurants. Prior to the Wendy’s Merger and the Deerfield Sale (see Note 3), we managed and internally
reported our operations as two business segments: (1) the operation and franchising of Arby’s restaurants and
(2) asset management (“Asset Management”). We evaluate segment performance and allocate resources based on
each segment’s operating profit (loss).
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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)