Wendy's 2011 Annual Report Download - page 81

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(1) Summary of Significant Accounting Policies
Corporate Structure
The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company”)
(formerly, through July 4, 2011, Wendy’s/Arby’s Group, Inc.) is the parent company of its 100% owned subsidiary
holding company, Wendy’s Restaurants, LLC (formerly, through July 4, 2011, Wendy’s/Arby’s Restaurants, LLC).
On July 4, 2011, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”) completed the sale of 100% of the common
stock of its then wholly owned subsidiary, Arby’s Restaurant Group, Inc. (“Arby’s”). See Note 2 for more information
on the sale of Arby’s. After this sale, the principal 100% owned subsidiary of Wendy’s Restaurants is Wendy’s
International, Inc. (“Wendy’s”) and its subsidiaries. Wendy’s franchises and operates company-owned Wendy’s®
quick service restaurants specializing in hamburger sandwiches throughout the United States of America (“U.S.”).
Wendy’s also has franchised restaurants in 27 foreign countries and U.S. territories. At January 1, 2012, Wendy’s
operated and franchised 1,417 and 5,177 restaurants, respectively.
The Wendy’s Company and Wendy’s Restaurants (together, the “Companies”) manage and internally report
their business geographically. The operation and franchising of Wendy’s restaurants in North America (defined as the
U.S. and Canada) comprises virtually all of our current operations and represents a single reportable segment. The
revenues and operating results of Wendy’s restaurants outside of North America (including through our joint venture
in Japan as discussed in Note 8) are not material. References herein to The Wendy’s Company corporate
(“Corporate”) represent The Wendy’s Company parent company only functions and their effect on the Company’s
consolidated results of operations and financial condition.
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) and include all of each Companies’
subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Companies participate in two national advertising funds established to collect and administer funds
contributed for use in advertising and promotional programs for company-owned and franchised stores. The revenue,
expenses and cash flows of such advertising funds are not included in the Companies’ consolidated statements of
operations or consolidated statements of cash flows because the contributions to these advertising funds are designated
for specific purposes, and the Companies act as an agent, in substance, with regard to these contributions. The assets
and liabilities of these funds are reported as “Advertising funds restricted assets” and “Advertising funds restricted
liabilities.”
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ materially from those estimates.
Fiscal Year
The Companies’ fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to
December 31 and are referred to herein as (1) “the year ended January 1, 2012” or “2011,” which consisted of 52
weeks, (2) “the year ended January 2, 2011” or “2010,” which consisted of 52 weeks and (3) “the year ended
January 3, 2010” or “2009,” which consisted of 53 weeks.
Cash Equivalents
All highly liquid investments with a maturity of three months or less when acquired are considered cash
equivalents. The Companies’ cash equivalents principally consist of cash in bank, money market and mutual fund
money market accounts and are primarily not in Federal Deposit Insurance Corporation insured accounts.
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