Wendy's 2011 Annual Report Download - page 89

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 Wendy’s Company)
Prior to 2007, The Wendy’s Company sold our interest in the companies comprising our former (1) premium
beverage and soft drink concentrate business segment and (2) utility and municipal services and refrigeration business
segment. The Wendy’s Company has accounted for all of these operations as discontinued operations. Our loss from
discontinued operations for 2009 included income from such discontinued operations of $1,546, which is net of an
income tax benefit of $875.
(3) Acquisitions and Other Dispositions
During the year ended January 1, 2012, Wendy’s acquired 19 Wendy’s franchised restaurants in five separate
acquisitions. The total consideration for these acquisitions before post closing adjustments was $12,270, consisting of
(1) $11,210 of cash, net of $66 of cash acquired, and (2) the issuance of a note payable of $1,060. The total
consideration was allocated to net tangible and identifiable intangible assets acquired, primarily properties, and
liabilities assumed based on their estimated fair values with the excess of $5,620 recognized as goodwill. During the
year ended January 1, 2012, Wendy’s also assumed the operations and management of four additional Wendy’s
franchised restaurants.
In connection with one of the 2011 acquisitions described above, Wendy’s terminated certain pre-existing
subleases it had with the franchisee. This pre-existing business relationship between parties to a business acquisition is
required to be valued, recognized as income or expense, and excluded from purchase accounting. The termination of
these unfavorable subleases as of the date of acquisition resulted in an expense of $2,689, which was offset by a gain of
$1,659 for the excess of the fair value of the net assets acquired over the consideration paid, both of which are
included in “Other operating expense, net.”
During the year ended January 1, 2012, Wendy’s received proceeds from dispositions of $6,113, consisting of
$3,275 from the sale of five company-owned Wendy’s restaurants to franchisees, $1,075 from the sale of land,
building and equipment related to the exercise of a purchase option by a franchisee, $909 from the sale of surplus
properties, and $854 related to other dispositions. These sales resulted in a net gain of $885, which is included as an
offset to “Depreciation and amortization.”
During the year ended January 2, 2011, Wendy’s received proceeds from dispositions of $3,405, consisting of
$1,231 from the sale of land and a building related to the exercise of a purchase option by a franchisee, $1,123 from
the sale of surplus properties, $821 from the sale of two company-owned Wendy’s restaurants, and $230 related to
other dispositions. These sales resulted in a net gain of $1,411, which is included as an offset to “Depreciation and
amortization.”
During the year ended January 3, 2010, Wendy’s received proceeds from dispositions of $9,785, consisting of
$5,045 from the sale of twelve Wendy’s units to a franchisee, $4,529 from the sale of surplus properties and $211
related to other dispositions. These sales resulted in a net gain of $3,114, which is included as an offset to
“Depreciation and amortization.”
Other acquisitions and dispositions by Wendy’s during the periods presented and by Arby’s for the periods
through July 3, 2011 were not significant.
(4) DFR Notes
(The Wendy’s Company)
In June 2010, pursuant to a March 2010 agreement between the Company and Deerfield Capital Corp.
(“DFR”), The Wendy’s Company received cash proceeds of $31,330, including interest, in consideration for the
repayment and cancellation of the series A senior notes that The Wendy’s Company received from DFR (the “DFR
Notes”) in December 2007 in connection with the sale of Deerfield & Company (the “Deerfield Sale”) to DFR. The
proceeds represented 64.1% of the $47,986 aggregate principal amount of the DFR Notes.
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