Wendy's 2013 Annual Report Download - page 45

Impairment of Long-Lived Assets
Change
2013 2012
Restaurants, primarily properties .................................... $(8.9) $6.6
Aircraft ....................................................... 3.7 1.6
$(5.2) $8.2
The changes in impairment charges during 2013 and 2012 were primarily due to the level of impairment
charges taken on properties at underperforming locations. Impairment charges primarily include 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.
During the first quarter of 2012, impairment losses of $1.6 million were recorded to reflect a company-owned
aircraft at fair value as a result of classifying the aircraft as held for sale. Subsequently, during the second quarter of
2012, the Company decided to lease the aircraft and as a result reclassified the aircraft to held and used. During 2013,
the Company decided to sell its company-owned aircraft and recorded an impairment charge of $5.3 million to reflect
the aircraft at fair value based on current market values.
Impairment of Goodwill
During the fourth quarter of 2013, we performed our annual goodwill impairment test, which resulted in
recording an impairment charge of $9.4 million, representing all of the goodwill recorded for our international
franchise restaurants reporting unit. We also concluded at that time that there was no impairment of goodwill for our
North America company-owned and franchise restaurants reporting unit.
Interest Expense
Change
2013 2012
Senior Notes ................................................ $(29.0) $(29.1)
6.20% Senior Notes ........................................... (2.5) —
Amortization of deferred financing costs ........................... (1.7) (2.0)
Term loans .................................................. 3.7 15.2
Interest rate swaps ............................................ 1.2 0.1
Other, net .................................................. (1.3) 0.3
$(29.6) $(15.5)
The decrease in interest expense during 2013 was primarily due to the purchase and redemption of the Wendy’s
Restaurants 10.00% Senior Notes due in 2016 (the “Senior Notes”) in May and July 2012, respectively, and the
redemption of the 6.20% Senior Notes in October 2013. This decrease in interest expense was partially offset by the
net effect of higher weighted average principal amounts outstanding and lower effective interest rates on the current
term loans compared to the prior term loan. The decrease in our effective interest rates on our current term loans
compared to the prior term loan is a result of the execution of the Credit Agreement in May 2012 and the Restated
Credit Agreement in May 2013. See “Liquidity and Capital Resources—Refinancings of the Credit Agreement and
Other Indebtedness” below for further discussion.
The decrease in interest expense during 2012 was primarily due to the purchase and redemption of the Senior
Notes in May and July 2012, respectively. This decrease in interest expense was partially offset by the effect of higher
comparative weighted average principal amounts outstanding under the term loans as partially offset by lower effective
comparative interest rates on the term loans.
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