Wendy's 2008 Annual Report Download - page 140

2008 2007 2006
Income tax benefit (provision) computed at U.S. Federal
statutory rate ............................................. $203,306 $ (3,295) $(1,866)
State income taxes, net of U.S. Federal income tax effect . . . 6,884 (191) (1,335)
Tax benefit of foreign tax credits, net of tax on Foreign
earnings (a) .......................................... 9,241 — —
Impairment of non-deductible goodwill (see Notes 9
and 18).............................................. (99,696) — —
Loss on DFR common stock with no tax benefit (see
Notes 3 and 8) ....................................... (20,259) — —
Non-deductible expenses................................. (1,921) (2,338) (4,872)
Adjustments related to prior year tax matters (b) .......... (706) 2,574 (637)
Minority interests in income of consolidated subsidiaries.... 119 939 4,033
Previously unrecognized contingent benefit (c) ............. — 12,488 —
Other, net (d) .......................................... 2,326 (1,823) 65
$ 99,294 $ 8,354 $(4,612)
(a) Includes previously unrecognized benefit in 2008 of foreign tax credits net of foreign income and
withholding taxes on $23,985 repatriation of foreign earnings.
(b) Includes the effects of U.S. Federal and state tax examination settlements, statute of limitations lapses, and
changes in estimates used in calculating the income tax provision.
(c) Represents a previously unrecognized contingent tax benefit related to two deferred compensation trusts
(see Note 27).
(d) Includes a one-time tax charge in 2007 connected with the Company’s initiative to simplify its corporate
structure in addition to tax effects of dividend income exclusions and AFA income (loss) with no tax effect.
There were no individually significant items in 2008.
The Internal Revenue Service (“IRS”) is currently conducting an examination of the Company’s U.S.
Federal income tax return for the tax period ended December 28, 2008 as part of the Compliance Assurance
Program (“CAP”). Our December 28, 2008 U.S. Federal income tax return includes Wendy’s for all of 2008
and Wendy’s/Arby’s for the period September 30, 2008 to December 28, 2008. Wendy’s/Arby’s U.S. Federal
income tax returns for periods ending January 1, 2006 to September 29, 2008 are not currently under
examination. Wendy’s has been participating in the IRS’s CAP since the tax year ending December 31, 2006.
The Wendy’s Federal income tax returns for 2007 and prior years have been settled. The CAP program has
been extended by the IRS and Wendy’s for 2008. As part of the CAP program, tax returns are audited on a
contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The 2008
agreement with the IRS will include Wendy’s for all of 2008 and the Company for the period September 30,
2008 to December 28, 2008.
Certain of the Company’s state income tax returns from its 1998 fiscal year and forward remain subject to
examination. Various state income tax returns are currently under examination.
FIN 48
The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the adoption of FIN
48, the Company increased its liability for unrecognized tax benefits to $13,157, or an increase of $4,820.
Additionally, the Company recognized an increase in its liability for interest of $487 and penalties of $247
related to uncertain income tax positions, both partially offset by an increase in its deferred income tax benefit
of $3,200 and a reduction in the tax related liabilities of discontinued operations of $79, with the net effect of
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)