Wendy's 2011 Annual Report Download - page 29

Wendy’s
Country/Territory Company Franchise
Argentina ................................................................... — 1
Aruba ...................................................................... — 3
Bahamas .................................................................... — 10
Cayman Islands .............................................................. — 2
Costa Rica .................................................................. — 10
Curacao .................................................................... — 1
Dominican Republic .......................................................... — 7
El Salvador .................................................................. — 14
Guam ...................................................................... — 3
Guatemala .................................................................. — 9
Honduras ................................................................... — 30
Indonesia ................................................................... — 27
Jamaica .................................................................... — 4
Japan ...................................................................... — 1
Malaysia .................................................................... — 8
Mexico ..................................................................... — 26
New Zealand ................................................................ — 17
Panama .................................................................... — 7
Philippines .................................................................. — 31
Puerto Rico ................................................................. — 74
Russia ..................................................................... — 5
Singapore ................................................................... — 10
Trinidad and Tobago .......................................................... — 2
United Arab Emirates ......................................................... — 9
Venezuela ................................................................... — 37
U. S. Virgin Islands ........................................................... — 2
International subtotal ........................................................ — 350
Grand total ............................................................. 1,417 5,177
Item 3. Legal Proceedings.
We are involved in litigation and claims incidental to our current and prior businesses. We provide reserves for
such litigation and claims when payment is probable and reasonably estimable. The Companies believe they have
adequate reserves for continuing operations for all of their legal and environmental matters. We cannot estimate the
aggregate possible range of loss due to most proceedings being in preliminary stages, with various motions either yet
to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases
seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement
discussions or judicial or arbitral decisions is thus inherently difficult. Based on our currently available information,
including legal defenses available to us, and given the aforementioned reserves and our insurance coverage, we do not
believe that the outcome of these legal and environmental matters will have a material effect on our consolidated
financial position or results of operations.
Wendy’s completed the initial public offering of Tim Hortons Inc. (“THI”) in March, 2006 and the spin-off of
THI in September, 2006. In connection with the initial public offering, Wendy’s and THI entered into a tax sharing
agreement that governed the rights and responsibilities of the parties with respect to taxes for periods up to the date of
the spin-off, including the allocation of tax attributes between the parties. In 2007, Wendy’s asserted a claim against
THI for approximately $1.0 million for a tax claim related to a competent authority adjustment. THI has disputed
this claim. In addition, THI has asserted claims for damages related to foreign tax credits THI allegedly should have
received in the spin-off in the aggregate amount of Canadian dollars $29.0 million. Wendy’s has disputed and
continues to dispute these claims. In 2011, THI invoked the dispute resolution provision of the tax sharing
agreement, which calls for binding mandatory arbitration. In February, 2012, THI submitted a notice of claim, which
makes the same claims THI has asserted under the tax sharing agreement, to Wendy’s under the master separation
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