Wendy's 2011 Annual Report Download - page 48

allocation (including long-lived assets) for the merger with Wendy’s and (2) a reduction in depreciation related to
Wendy’s previously impaired long-lived assets. These decreases were partially offset by increases in the amortization of
software and related costs capitalized in connection with the establishment of the shared services center.
Impairment of Long-Lived Assets
Change
2011 2010
Restaurants, primarily properties at underperforming locations ........... $(13.4) $ 2.9
Total Wendy’s Restaurants .................................. (13.4) 2.9
Corporate, aircraft ............................................. — (2.2)
Total The Wendy’s Company ................................ $(13.4) $ 0.7
The decline in impairment in 2011 was primarily due to the level of impairment charges taken in prior periods
on properties at underperforming locations. Wendy’s impairment charges in 2011 and 2010 primarily reflected
impairment charges on restaurant level assets resulting from a continued decline in operating performance of certain
restaurants and additional charges for capital improvements in restaurants impaired in prior years which did not
subsequently recover.
The increase in charges for impairment of Wendy’s long-lived assets in 2010 was primarily the result of a
continued decline in operating performance of certain restaurants. Additionally, The Wendy’s Company recorded
impairment charges in 2009 related to one of its corporate aircraft, which did not recur in 2010.
Transaction Related and Other Costs
During 2011, the Companies incurred “Transaction related and other costs” aggregating $44.5 million, which
included costs related to the sale of Arby’s and the related announcements (in July and December 2011) that the
Companies’ Atlanta headquarters and restaurant support center would be relocated to Ohio. Costs incurred by
Wendy’s Restaurants during 2011 included: (1) $20.8 million and $7.9 million for severance costs and the vesting of
previously issued stock awards related to three senior executives and for other employees, respectively, (2) $8.5 million
primarily for an employee retention program which had been established in connection with the sale of Arby’s,
(3) bonus costs of $3.1 million, (4) $2.1 million for certain professional fees, and (5) $2.1 million of other costs.
Additionally, The Wendy’s Company incurred $1.2 million of other costs.
Interest Expense
Change
2011 2010
Wendy’s debt ................................................ $(7.6) $(10.5)
Wendy’s interest rate swaps ...................................... 2.3 (5.0)
Term Loan .................................................. 1.8 2.6
Senior Notes ................................................. 0.2 28.9
Amortization of deferred financing costs ............................ 0.2 (6.5)
Other ...................................................... (1.1) 2.4
Total Wendy’s Restaurants .................................. (4.2) 11.9
Corporate debt ............................................... (0.1) (0.5)
Other ...................................................... — 0.1
Total The Wendy’s Company ................................ $(4.3) $ 11.5
The decrease in interest expense in 2011 was primarily due to (1) the redemption of the Wendy’s 6.25% senior
notes in the 2010 second quarter and (2) the lower effective interest rate of the Term Loan as compared to the prior
Arby’s credit agreement. This decrease in interest expense was partially offset by (1) a $1.9 million gain on the
cancellation of the interest rate swaps related to the Wendy’s 6.25% senior notes in connection with their redemption
in the 2010 second quarter and (2) higher weighted average principal amounts outstanding during 2011 under the
Term Loan than were outstanding during 2010 for similar borrowings under the prior Arby’s credit agreement during
the first half of 2010 and the Term Loan during the second half of 2010.
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