Wendy's 2009 Annual Report Download - page 51

Depreciation and Amortization
2009 2008
Change
(In Millions)
Wendy’s restaurants, primarily properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $104.2 $23.8
Arby’s restaurants, primarily properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.0) 4.3
Asset management......................................................... — (4.9)
General corporate.......................................................... 2.8 (1.1)
$102.0 $22.1
The 2009 and 2008 increases were primarily related to the increase in long-lived assets as a result of the
Wendy’s Merger. The 2009 increase was also affected by a $6.5 million one-time increase in depreciation as a
result of refinements to the Wendy’s purchase price allocation (including long-lived assets) which was recorded
in the 2009 first quarter and by an increase in the amortization of capitalized software related to the Wendy’s
Merger integration and the establishment of the shared services center in Atlanta, Georgia. These 2009
increases were partially offset by the reduction in depreciation of Arby’s long-lived assets for which we have
recorded impairment charges. The 2008 increase was also affected by the increase in long-lived assets as a result
of the California Restaurant Acquisition and other new and remodeled units partially offset by a decrease in
depreciation and amortization charges from our asset management business as a result of the Deerfield Sale.
Goodwill Impairment
We operate in two business segments consisting of two restaurant brands: (1) Wendy’s restaurants and (2)
Arby’s restaurants. Each segment includes reporting units for Company-owned restaurants and franchise
operations for purposes of measuring goodwill impairment.
We performed our annual goodwill impairment test in the fourth quarters of each of the fiscal years
presented. As a result of our testing, we concluded that the fair value of the Wendy’s reporting units in 2009
and 2008 and the Arby’s franchise reporting unit in all three years exceeded their respective carrying amounts.
In 2008, as a result of the acceleration of the general economic and market downturn as well as continued
decreases in Arby’s same store sales, we concluded that the carrying amount of the Arby’s Company-owned
restaurant reporting unit exceeded its fair value. Accordingly, we recorded impairment charges of $460.1
million in 2008. As of the end of 2009 and 2008, we did not have any goodwill recorded for our Arby’s
Company-owned restaurants reporting units. There was no impairment of the Arby’s Company-owned
restaurants reporting unit in 2007.
Impairment of Other Long-Lived Assets
2009 2008
Change
(In Millions)
Arby’s restaurants, primarily properties at underperforming locations . . . . . . . . . . . . $48.5 $ 5.4
Wendy’s restaurants, primarily properties at underperforming locations . . . . . . . . . . 21.9 1.6
Asset management.......................................................... — (4.5)
General corporate, aircraft ................................................... (7.5) 9.6
$62.9 $12.1
The increases in charges for the impairment of other long-lived assets was primarily the result of the
deterioration in operating performance of certain Wendy’s (in 2009 only) and Arby’s restaurants (for all years
presented). We also recorded impairment on one of our corporate aircraft held-for-sale in 2008 and, to a lesser
extent, in 2009. The increases in 2008 were partially offset by the impairment in 2007 of other long-lived
assets in our asset management business which did not recur as a result of the Deerfield Sale.
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