Wendy's 2008 Annual Report Download - page 76

quarter will not necessarily be indicative of the results that may be achieved for any other quarter or for the full
fiscal year.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2007, FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS
141(R)”), and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment
of ARB No. 51” (“SFAS 160”). These statements change the way companies account for business combinations
and noncontrolling interests by, among other things, requiring (1) more assets and liabilities to be measured at
fair value as of the acquisition date, including a valuation of the entire company being acquired where less than
100% of the company is acquired, (2) an acquirer in preacquisition periods to expense all acquisition-related
costs, (3) changes in acquisition related deferred tax balances after the completion of the purchase price
allocation be recognized in the statement of operations as opposed to through goodwill and (4) noncontrolling
interests in subsidiaries initially to be measured at fair value and classified as a separate component of
stockholders’ equity. These statements are to be applied prospectively beginning with our 2009 fiscal year.
However, upon adoption, SFAS 160 requires entities to apply the presentation and disclosure requirements
retrospectively for all periods presented. Both standards prohibit early adoption. In addition, in April 2008, the
FASB issued FASB Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”
(“FSP FAS 142-3”). In determining the useful life of acquired intangible assets, FSP FAS 142-3 removes the
requirement to consider whether an intangible asset can be renewed without substantial cost or material
modifications to the existing terms and conditions and, instead, requires an entity to consider its own historical
experience in renewing similar arrangements. FSP FAS 142-3 also requires expanded disclosure related to the
determination of intangible asset useful lives. This staff position is effective for financial statements issued for
fiscal years beginning in our 2009 fiscal year and may impact any intangible assets we acquire. The application
of SFAS 160 will require reclassification of our minority interests from a liability to a component of
stockholders’ equity in our consolidated financial statements beginning in our 2009 fiscal year. The effect of
this reclassification will not be material to our consolidated balance sheet. Further, all of the statements
referred to above could have a significant impact on the accounting for any future acquisitions starting with
our 2009 fiscal year. The impact will depend upon the nature and terms of such future acquisitions, if any.
These statements will not have an effect on our accounting for the Wendy’s Merger except for any potential
adjustments to deferred taxes included in the allocation of the purchase price after such allocation has been
finalized.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities” (“SFAS 161”). SFAS 161 requires companies with derivative instruments to disclose information
that should enable financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) and how these items affect a
company’s financial position, results of operations and cash flows. SFAS 161 affects only these disclosures and
does not change the accounting for derivatives. SFAS 161 is to be applied prospectively beginning with the
first quarter of our 2009 fiscal year. We do not expect SFAS 161 to have a material effect on disclosures in our
consolidated financial statements.
Outlook for 2009
Sales
Our net sales will increase significantly for 2009 compared to 2008 as a result of the Wendy’s Merger;
however, we expect same store sales growth to be negatively impacted by current economic factors. In 2009,
the Arby’s marketing strategy will emphasize Arby’s sliced roasted meat products, including the launch of the
Roastburger; however, given the recent declining economic trends, we cannot determine what impact these
marketing initiatives will have on Arby’s sales. Wendy’s same-store sales for 2009 are expected to be favorably
impacted by continued operational improvement, premium product introductions and a comprehensive menu
pricing strategy. Offsetting factors include an uncertain economic environment, a more aggressive marketing
focus on value menu offerings and a reduction in the number of stores serving breakfast while refining this
daypart strategy. We presently plan to open approximately 5 new Arby’s Company-owned and 10 new
Wendy’s Company-owned restaurants during 2009 and close 11 Arby’s Company-owned and 8 Wendy’s
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