Wendy's 2013 Annual Report Download - page 108

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
• Statements of operations - Arby’s income from operations for the period from January 3, 2011 through
July 3, 2011 has been classified as discontinued operations. Net loss from discontinued operations for the
year ended January 1, 2012 also includes additional Arby’s expenses which were incurred as a result of the
sale and the loss on the disposal of Arby’s. Net (loss) income from discontinued operations for the years
ended December 29, 2013 and December 30, 2012 includes certain post-closing Arby’s related transactions.
• Statements of cash flows - Arby’s cash flows prior to its sale (for the period from January 3, 2011 through
July 3, 2011) have been included in and not separately reported from our cash flows. The consolidated
statements of cash flows for the year ended January 1, 2012 also includes the effects of the sale of Arby’s. The
statements of cash flows for the years ended December 29, 2013 and December 30, 2012 include the effect
of certain post-closing Arby’s related transactions.
Our consolidated statements of operations for periods through July 3, 2011 (prior to the sale of Arby’s) include
certain indirect corporate overhead costs in “General and administrative,” which, for segment reporting purposes, had
previously been allocated to Arby’s. These indirect corporate overhead costs do not qualify for classification within
discontinued operations and therefore are included in “General and administrative” in continuing operations. Interest
expense on Arby’s debt that was assumed by Buyer has been included in discontinued operations; however, interest
expense on the $650,000 credit agreement, which was not required to be repaid as a result of the sale, continued to be
included in “Interest expense” in continuing operations.
The following table presents Arby’s revenues and (loss) income from operations which have been reported in
discontinued operations:
Year Ended
2013 2012 2011
Revenues ............................................ $ — $ — $546,453
(Loss) income from discontinued operations, net of income taxes:
(Loss) income from discontinued operations before income
taxes .......................................... $(425) $ 907 $ 1,692
Benefit from (provision for) income taxes ................ 159 1,044 (930)
(266) 1,951 762
Loss on disposal of discontinued operations, net of income
taxes .......................................... — (442) (8,799)
Net (loss) income from discontinued operations ....... $(266) $1,509 $ (8,037)
Income from discontinued operations before income taxes for the year ended December 30, 2012 includes the
effect of reversals of certain tax accruals, retained by the Company in connection with the sale of Arby’s, including
sales tax reserves and interest and penalty accruals for uncertain tax positions, due to the lapse of certain statute of
limitations and favorable settlements. The benefit from income taxes for the year ended December 30, 2012 includes
approximately $580 of employment credits realized by the Company for 2011 through the date of the sale of Arby’s
and reversals of accruals for uncertain tax positions discussed above, partially offset by taxes on income from
discontinued operations. Loss on disposal of discontinued operations, net of income taxes, for the year ended
December 30, 2012, includes the after tax effect of amounts paid to the prior owner of an Arby’s location that was
transferred to Wendy’s Restaurants during 2012, as contemplated in the sale agreement, and as such, had no impact
on the total purchase price.
Included in income from discontinued operations before income taxes for the year ended January 1, 2012 are
(1) Arby’s income from operations for the period from January 3, 2011 through July 3, 2011 of $4,279, (2) $(2,112)
for certain sales and use tax liabilities pursuant to the indemnification provisions of the sale agreement, (3) incentive
compensation of $(704) as a result of the completion of the Arby’s sale, (4) the reversal of previously recognized
compensation costs of $529 due to the modification of the terms of stock awards which had been issued to Arby’s
employees and (5) $(300) for other Arby’s related costs.
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