Wendy's 2011 Annual Report Download - page 107

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The reconciliation of income tax computed at the U.S. Federal statutory rate to reported income tax is set forth
below:
The Wendy’s Company
2011 2010 2009
Income tax (provision) benefit at the U.S. Federal statutory rate ...... $(8,554) $(4,745) $ 5,692
State income tax (provision) benefit, net of U.S. Federal income tax
effect ................................................. (2,251) (1,122) 2,177
Previously unrecognized state net operating losses, net of related
valuation allowance (a) ................................... — — 9,629
Foreign and U.S. tax effects of foreign operations (b) .............. 1,147 7,693 (188)
Canadian tax rate changes ................................... — — 2,000
Jobs tax credits, net ........................................ 1,914 2,044 2,591
Valuation allowance changes ................................. — — 1,165
Non-deductible expenses .................................... (622) (439) (1,006)
Adjustments related to prior year tax matters ..................... 1,881 983 (65)
Other, net ............................................... (43) 141 (355)
$(6,528) $ 4,555 $21,640
(a) In connection with the fourth quarter 2009 dissolution of our captive insurance company, the likelihood of
realization of certain previously unrecognized state net operating losses is no longer remote. Accordingly, an
$18,152 deferred tax asset and related $8,523 partial valuation allowance was recognized.
(b) Includes previously unrecognized benefit in 2010 of foreign tax credits, net of foreign income and withholding
taxes on the repatriation of foreign earnings.
Wendy’s Restaurants
2011 2010 2009
Income tax provision at the U.S. Federal statutory rate ............ $(13,157) $(6,345) $(1,910)
State income tax provision, net of U.S. Federal income tax effect ..... (6,227) (1,168) (3,474)
Previously unrecognized state net operating losses, net of related
valuation allowance (a) ................................... — — 9,629
Foreign and U.S. tax effects of foreign operations (b) .............. 1,147 7,693 (188)
Canadian tax rate changes .................................. — — 2,000
Jobs tax credits, net ....................................... 1,914 2,044 2,591
Valuation allowance changes ................................ — — (516)
Non-deductible expenses ................................... (58) (517) (444)
Adjustments related to prior year tax matters .................... (263) (178) (1,741)
Other, net .............................................. 22 141 106
$(16,622) $ 1,670 $ 6,053
(a) In connection with the fourth quarter 2009 dissolution of our captive insurance company, the likelihood of
realization of certain previously unrecognized state net operating losses is no longer remote. Accordingly, an
$18,152 deferred tax asset and related $8,523 partial valuation allowance was recognized.
(b) Includes previously unrecognized benefit in 2010 of foreign tax credits, net of foreign income and withholding
taxes on the repatriation of foreign earnings.
The Wendy’s Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process
(“CAP”). As part of CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior
to the filing of the tax return. As such, our December 28, 2008 and January 3, 2010 tax returns have been settled.
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