Wendy's 2010 Annual Report Download

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2010 ANNUAL REPORT
EXPANDING OUR
GLOBAL PRESENCE
ARUBA
BAHAMAS
CANADA
CAYMAN ISLANDS
COSTA RICA
CURACAO
DOMINICAN REPUBLIC
EL SALVADOR
GUAM
GUATEMALA
HONDURAS
INDONESIA
JAMAICA
MALAYSIA
MEXICO
NEW ZEALAND
PANAMA
PHILIPPINES
PUERTO RICO
QATAR
SINGAPORE
TRINIDAD & TOBAGO
TURKEY
UNITED ARAB EMIRATES
UNITED STATES
U.S. VIRGIN ISLANDS
VENEZUELA

Table of contents

  • Page 1
    2010 ANNUAL REPORT E X PA N D I NG O U R GLOBAL PRESENCE ARUBA BAHAMAS CANADA CAYMAN ISLANDS COSTA RICA CURACAO DOMINICAN REPUBLIC EL SALVADOR GUAM GUATEMALA HONDURAS INDONESIA JAMAICA MALAYSIA MEXICO NEW ZEALAND PANAMA PHILIPPINES PUERTO RICO QATAR SINGAPORE TRINIDAD & TOBAGO TURKEY UNITED ARAB ...

  • Page 2
    ... and value products that are made with real 1 and fresh ingredients. We also invested in initiatives such as the launch of our new breakfast menu and restaurant remodels, and we added to our pipeline for international expansion by signing significant new development agreements. WENDY'S UPGRADING...

  • Page 3
    ...quarter of 2010, our Board of Directors authorized a 33% increase in our quarterly cash dividend, which further demonstrates a commitment to enhancing value for our stockholders. Looking ahead, 2011 will be a transition year as we complete the strategic alternatives process for Arby's, develop plans...

  • Page 4
    ... should not be considered as alternative measures of operating profit or net income (loss). The Company's presentation of EBITDA and adjusted EBITDA is not intended to replace the presentation of the Company's financial results in accordance with GAAP. Wendy's/Arby's Group, Inc. 2010 Annual Report

  • Page 5
    ...issued and outstanding. Wendy's/ Arby's Restaurants, LLC's sole member is Wendy's/Arby's Group, Inc. There is no aggregate market value for Wendy's/Arby's Restaurants, LLC member's interest as of February 25, 2011. Wendy's/Arby's Restaurants, LLC meets the conditions set forth in General Instruction...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    ...on the Companies' businesses; • competition, including pricing pressures, aggressive marketing and the potential impact of competitors' new unit openings on sales of Wendy's® and Arby's® restaurants; • consumers' perceptions of the relative quality, variety, affordability and value of the food...

  • Page 8
    ...supplies of food, equipment and other products to Wendy's and Arby's restaurants at competitive rates and in adequate amounts, and the potential financial impact of any interruptions in such distribution; • availability and cost of insurance; • adverse weather conditions; • availability, terms...

  • Page 9
    ... at a value of $6.57 per share which represented the average closing market price of Triarc Class A common stock two days before and after the merger announcement date of April 24, 2008. Wendy's shareholders held approximately 80%, in the aggregate, of Wendy's/Arby's outstanding Class A common stock...

  • Page 10
    ... restaurants, 1,394 were operated by Wendy's and 5,182 by a total of 490 franchisees. See "Item 2. Properties" for a listing of the number of company-owned and franchised locations in the United States and in foreign countries and United States territories. The revenues from our restaurant business...

  • Page 11
    ..., assets and certain Wendy's purchasing employees to QSCC in the first quarter of 2010. Pursuant to the terms of the Co-op Agreement, Wendy's was required to pay $15.5 million to QSCC over an 18 month period through May 2011 in order to provide funding for start-up costs, operating expenses and cash...

  • Page 12
    ... companies and food outlets, primarily through the quality, variety, convenience, price, and value perception of food products offered. The number and location of units, quality and speed of service, attractiveness of facilities, effectiveness of marketing and new product development by Wendy...

  • Page 13
    ...company and franchise restaurants to test conformance to our sanitation, food safety, and operational requirements. Wendy's has the right to terminate franchise agreements if franchisees fail to comply with quality standards. Acquisitions and Dispositions of Wendy's Restaurants Wendy's has from time...

  • Page 14
    ... 2, 2011, Wendy's had 136 company-owned and 232 franchised restaurants in Canada and 325 franchised restaurants in 22 other countries and U.S. territories. Wendy's is aggressively pursuing international development opportunities. Since the second quarter of 2009, new development agreements have...

  • Page 15
    ... operated by Arby's and 2,505 by a total of 460 franchisees. See "Item 2. Properties" for a listing of the number of company-owned and franchised locations in the United States and in foreign countries. The revenues from the Arby's restaurant business are derived from two principal sources: sales...

  • Page 16
    ... Companies' North America operations, Wendy's/Arby's Restaurants transferred certain contracts, assets and certain Wendy's/Arby's Restaurants purchasing employees to SSG in the second quarter of 2010. Wendy's/Arby's Restaurants had committed to pay approximately $5.2 million of SSG expenses, which...

  • Page 17
    ... at various times from 2011 to 2020, while international trademarks and service marks have various durations of 10 to 15 years. Arby's generally intends to renew trademarks and service marks that are scheduled to expire. Seasonality Arby's restaurant operations are not significantly impacted by...

  • Page 18
    ... rate paid by United States Arby's franchisees was approximately 3.6% in each of 2010, 2009 and 2008. Franchised restaurants are required to be operated under uniform operating standards and specifications relating to the selection, quality and preparation of menu items, signage, decor, equipment...

  • Page 19
    ...all marketing/media plans. Arby's performs these tasks subject to the approval of AFAC's Board of Directors. Under the Canadian Management Agreement, Arby's is obligated to pay for the general and administrative costs of AFAC, other than the cost of an annual audit of AFAC and certain other expenses...

  • Page 20
    ...renewal term subject to certain conditions. The franchisee pays to Arby's a monthly royalty of 4% of sales, as defined in the agreement, from the operation of the restaurant. The agreement also typically requires that the franchisee pay Arby's a franchise fee. The standard franchise fee is currently...

  • Page 21
    ...which they no longer have any operations, or properties that we or our subsidiaries have sold to third parties, but for which we or our subsidiaries remain liable or contingently liable for any related environmental costs. Our company-owned Wendy's and Arby's restaurants have not been the subject of...

  • Page 22
    ... our control. Our restaurant businesses derive earnings from sales at company-owned restaurants, franchise royalties received from franchised restaurants and franchise fees from franchise restaurant operators for each new unit opened. Growth in our restaurant revenues and earnings is significantly...

  • Page 23
    ...other fees that were at least 60 days past due. The financial condition of a number of Arby's franchisees was one of the factors that resulted in a net decrease of 44 and 31 in the number of franchised restaurants for fiscal 2010 and 2009, respectively. During those periods 96 and 74 franchised Arby...

  • Page 24
    ... board of directors, and the management agreement may be terminated for any reason by Arby's upon one year's prior notice or by AFA upon six months prior notice. See "Item 1. Business-The Arby's Restaurant System-Advertising and Marketing." In addition, local cooperatives run by operators of Arby...

  • Page 25
    ... food-away-from-home spending could hurt our revenues, results of operations, business and financial condition. If company-owned and franchised restaurants are unable to adapt to changes in consumer preferences and trends, company-owned and franchised restaurants may lose customers and the resulting...

  • Page 26
    ... have introduced lower cost, value meal menu options. Our revenues and those of our franchisees may be hurt by this product and price competition. Moreover, new companies, including operators outside the quick service restaurant industry, may enter our market areas and target our customer base. For...

  • Page 27
    ... care benefits) or other factors would adversely impact our cost of sales and operating expenses. In addition, each brand's success depends on its ability to attract, motivate and retain qualified employees, including restaurant managers and staff. If either brand is unable to do so, our results of...

  • Page 28
    ... for these losses could result in materially different amounts of expense under these programs, which could harm our business and adversely affect our results of operations and financial condition. Changes in legal or regulatory requirements, including franchising laws, accounting standards, payment...

  • Page 29
    ... the indebtedness. See Note 11 of the Financial Statements and Supplementary Data included in Item 8 herein, for further information regarding the Credit Agreement. Wendy's/Arby's Restaurants and its subsidiaries have a significant amount of debt outstanding. Such indebtedness, along with the other...

  • Page 30
    ... satisfy financial condition tests. There is no assurance that the Wendy's/Arby's Restaurants business will generate sufficient cash flow from operations or that future borrowings will be available under its credit facilities or from other sources in an amount sufficient to enable it to pay its debt...

  • Page 31
    ..., breakfast sales can cannibalize sales during other parts of the day and may have negative impacts on food and labor costs, advertising, and restaurant margins. Wendy's plans to expand its breakfast initiative in 2011. Capital investments will be required at company-owned restaurants that are...

  • Page 32
    ...'s/Arby's earnings, financial condition, cash requirements and such other factors as the Board of Directors may deem relevant from time to time. Because Wendy's/Arby's is a holding company, its ability to declare and pay dividends is dependent upon cash, cash equivalents and short-term investments...

  • Page 33
    ... to pay cash dividends and/or make loans or advances to Wendy's/Arby's Restaurants will be dependent upon their respective abilities to achieve sufficient cash flows after satisfying their respective cash requirements, including subsidiary-level debt service and revolving credit agreements, to...

  • Page 34
    ... formed by ARCOP and QSCC to manage and operate purchasing programs which combine the purchasing power of both Wendy's and Arby's company-owned and franchised restaurants to create buying efficiencies for certain non-perishable goods, equipment and services, subleases approximately 2,300 square feet...

  • Page 35
    ... location of company-owned and franchised restaurants as of January 2, 2011 is set forth below. State Wendy's Company Franchise Arby's Company Franchise... ...Missouri ...Montana ...Nebraska ...Nevada ...New Hampshire ...New Jersey ...New Mexico ...New York ...North Carolina ...North Dakota ......

  • Page 36
    ... under the settlement agreement, in addition to paying certain legal fees and expenses. In addition to the legal matter described above, we are involved in other litigation and claims incidental to our current and prior businesses. As of January 2, 2011, Wendy's/Arby's Restaurants had reserves for...

  • Page 37
    ... 2010. The quarterly cash dividend paid on December 15, 2010 was $0.02 per share of Common Stock. During its 2009 fiscal year, Wendy's/Arby's paid regular quarterly cash dividends of $0.015 per share of Common Stock. During the 2011 first quarter, Wendy's/Arby's declared dividends of $0.02 per share...

  • Page 38
    .... The shares were valued at the average of the high and low trading prices of Wendy's/ Arby's Common Stock on the vesting date of such awards. (2) On January 27, 2010, March 22, 2010 and May 27, 2010, Wendy's/Arby's Board of Directors authorized our management, when and if market conditions warrant...

  • Page 39
    ... Financial Data. (Wendy's/Arby's) January 2, 2011 Year Ended (1) January 3, December 28, December 30, 2010 2008(2) 2007(2) (In Millions, except per share amounts) December 31, 2006(2) Sales ...Franchise revenues ...Asset management and related fees ...Revenues ...Operating profit (loss) ...(Loss...

  • Page 40
    ... and in which Wendy's/Arby's investment was effectively redeemed on December 31, 2006, reported on a calendar year ending on December 31 through their respective sale or redemption dates. (2) Selected financial data reflects the changes related to the adoption of the following accounting standards...

  • Page 41
    ...Wendy's Merger. Introduction and Executive Overview Our Business We currently manage and internally report our operations as two business segments: the operation and franchising of Wendy's restaurants, including its wholesale bakery operations, and the operation and franchising of Arby's restaurants...

  • Page 42
    ... agreements provided for royalties of 4.0% of franchise revenues for the year ended January 2, 2011. Key Business Measures We track our results of operations and manage our business using the following key business measures: • Same-Store Sales We report Wendy's North America Restaurants same-store...

  • Page 43
    ...away from its principal investing segment to its asset management segment with its fee-based revenue streams. In addition, it stated that during the first quarter of 2008, its portfolio was adversely impacted by deterioration of the global credit markets and, as a result, it sold $2.8 billion of its...

  • Page 44
    ..., assets and certain Wendy's purchasing employees to QSCC in the first quarter of 2010. Pursuant to the terms of the Co-op Agreement, Wendy's was required to pay $15.5 million to QSCC over an 18 month period through May 2011 in order to provide funding for start-up costs, operating expenses and cash...

  • Page 45
    ... limited number of publicly-traded companies. In addition, the Equities Account sold securities short and invested in market put options in order to lessen the impact of significant market downturns. On June 10, 2009, Wendy's/Arby's and the Management Company entered into a withdrawal agreement (the...

  • Page 46
    ... by Wendy's/Arby's Restaurants. The Liquidation Services Agreement, which expires June 30, 2011, required Wendy's/Arby's to pay the Management Company a fee of $0.9 million in two installments in June 2009 and 2010, which is being amortized over the term of the agreement and included in "General and...

  • Page 47
    ... years ended January 2, 2011, January 3, 2010, and December 28, 2008 (dollars in millions, except company-owned average unit volumes which are in thousands): (Wendy's/Arby's) 2010 Amount Change 2009 Amount Change 2008 Amount Revenues: Sales ...Franchise revenues ...Costs and expenses: Cost of sales...

  • Page 48
    (Wendy's/Arby's Restaurants) 2010 Amount Change 2009 Amount Change 2008 Amount Revenues: Sales ...Franchise revenues ...Costs and expenses: Cost of sales ...General and administrative ...Depreciation and amortization ...Goodwill impairment ...Impairment of long-lived assets ...Facilities relocation...

  • Page 49
    ...Corporate ...Total other operating expense, net Wendy's/Arby's ...Operating profit (loss), net: Wendy's (a), (b) ...Arby's ...Shared services center ...Total operating profit (loss), net Wendy's/Arby's Restaurants ...Corporate ...Total operating profit (loss), net Wendy's/Arby's ... 2010 2009 2008...

  • Page 50
    ...2008 ...Opened ...Closed ...Net purchased from (sold by) franchisees ...Restaurant count at January 3, 2010 ...Opened ...Closed ...Net (sold to) purchased by franchisees ...Restaurant count at January 2, 2011 ...Total restaurant count at January 2, 2011 ...Company-owned 2010 2009 Fourth Quarter 2008...

  • Page 51
    ... in the year ended January 2, 2011 from new stores opened during fiscal 2009 and 2010. The increase in sales in 2009 was primarily due to the Wendy's Merger. Wendy's North America companyowned same-store sales for 2009, excluding the impact of fewer restaurants serving breakfast in 2009 as compared...

  • Page 52
    ... The increase in franchise revenues in 2009 was primarily due to the Wendy's Merger. Franchise revenues for the 53rd week in 2009 for Wendy's and Arby's were approximately $4.8 million and $1.3 million, respectively. Wendy's North America franchised restaurant same-store sales for 2010 were impacted...

  • Page 53
    ... impact of the 53rd week in 2009 on cost of sales was not material. General and Administrative 2010 Change Wendy's/Arby's Restaurants Corporate Wendy's/ Arby's Wendy's/Arby's support services costs ...Purchasing co-op start-up costs ...Integration costs related to the Wendy's Merger ...Legal fees...

  • Page 54
    ... of Arby's franchise receivables, and (6) a 2009 increase in fees related to the 2005 Arby's management services agreement with Wendy's/Arby's as compared to a net credit in fees in the prior year due to the reimbursement of certain costs from Wendy's/Arby's to Wendy's/Arby's Restaurants...

  • Page 55
    ... fiscal years presented. 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...

  • Page 56
    ... the repayment of the Wendy's/Arby's Restaurants prior senior secured term loan as discussed below in "Liquidity and Capital Resources-Long-term Debt-Credit Agreement." Investment Income (Expense), Net (Wendy's/Arby's) 2010 Change 2009 DFR Notes ...Withdrawal Fee ...Recognized net gains ...Interest...

  • Page 57
    ... sale of cost method investments. The Withdrawal Fee relates to the fee paid to the Management Company for the Equities Sale as discussed in "Introduction and Executive Overview-Related Party Transactions-Equities Account." Other Than Temporary Losses on Investments (Wendy's/Arby's) 2010 Change 2009...

  • Page 58
    ... decline in value of our investment in the common stock of DFR and related declared dividend as described in "Introduction and Executive Overview-Deerfield". Income from Discontinued Operations, Net of Income Taxes (Wendy's/Arby's) Change 2010 2009 Income from discontinued operations before income...

  • Page 59
    ... franchisees' financial difficulties and the closure of franchised restaurants. Cost of Sales We expect that the factors described above which affected cost of sales for company-owned restaurants in 2010 for the Wendy's and Arby's brand will continue to impact cost of sales in 2011. In addition...

  • Page 60
    ... certain outstanding 2008 lease payments which did not recur in 2010. Wendy's/Arby's Restaurants' comparative operating cash flow was also impacted by an increase in amounts accrued in 2010 versus 2009 for Federal and state income taxes under a tax sharing agreement with Wendy's/Arby's, partially...

  • Page 61
    ...accrued during the 2009 fourth quarter related to funding start-up costs and other operating expenses for the QSCC without similar accruals in 2008, and (4) amounts paid in 2008 under key executive agreements assumed in the Wendy's Merger. These changes were partially offset by the net impact of the...

  • Page 62
    ...income tax payments in 2009 as compared to 2008. Wendy's/Arby's Restaurants' net increase in comparative operating cash flow was also impacted by (1) an increase in amounts accrued in 2009 versus 2008 for Federal and state income taxes under a tax sharing agreement with Wendy's/Arby's, combined with...

  • Page 63
    ... dividends and fees. Based upon current levels of operations, the Companies expect that cash flows from operations and available cash will provide sufficient liquidity to meet operating cash requirements for at least the next 12 months. Capitalization Year End 2010 Wendy's/Arby's Restaurants Wendy...

  • Page 64
    ... due in 2011, and (3) pay fees and expenses related to the Credit Agreement. The remaining Term Loan proceeds were used for working capital and other general corporate purposes. The Companies recognized a loss on early extinguishment of debt of $26.2 million in the second quarter of 2010 related to...

  • Page 65
    ... covenants for the next 12 months. A significant number of the underlying leases in the Arby's restaurants segment for sale-leaseback obligations and capitalized lease obligations, as well as operating leases, require or required periodic financial reporting of certain subsidiary entities within...

  • Page 66
    ...2, 2011: 2011 2012-2013 Fiscal Years 2014-2015 After 2015 Total Long-term debt (a) ...Sale-leaseback obligations (b) ...Capitalized lease obligations (b) ...Operating leases (c) ...Purchase obligations (d) ...Other (e) ...Total Wendy's/Arby's Restaurants ...Corporate long-term debt (a) ...Corporate...

  • Page 67
    ...remainder of 2011 at the same rate as declared in our 2011 first quarter, Wendy's/Arby's's total cash requirement for dividends for all of 2011 would be approximately $33.5 million based on the number of shares of its Common Stock outstanding at February 25, 2011. Wendy's/Arby's currently intends to...

  • Page 68
    ...months, and Arby's restaurant revenues are somewhat lower in our first quarter. Because our businesses are moderately seasonal, results for any future quarter will not necessarily be indicative of the results that may be achieved for any other quarter or for the full fiscal year. Critical Accounting...

  • Page 69
    ... financial statements: • Goodwill impairment: The Companies operate in two business segments consisting of two restaurant brands: (1) Wendy's restaurant operations and (2) Arby's restaurant operations. In 2010, the Arby's segment included company-owned restaurants and franchise reporting...

  • Page 70
    ... our Wendy's and Arby's company-owned restaurant assets, their intangible assets, which include trademarks, franchise agreements, favorable leases and reacquired rights under franchise agreements, and certain prepaid assets. As of January 2, 2011, the net carrying value of Wendy's restaurant segment...

  • Page 71
    ... the impact on our earnings and cash flows. Our policy is to maintain a target, over time and subject to market conditions, of between 50% and 75% of "Long-term debt" as fixed rate debt. As of January 2, 2011, Wendy's/Arby's and Wendy's/Arby's Restaurants longterm debt, including current portion...

  • Page 72
    ... financial position or results of operations. Equity Market Risk Our objective in managing our exposure to changes in the market value of our investments is to balance the risk of the impact of these changes on their earnings and cash flows with their expectations for long-term investment returns...

  • Page 73
    ... Value Non-current equity investment ...Interest rate swaps ...Long-term debt, excluding capitalized lease and sale-leaseback obligations-variable rate ...Long-term debt, excluding capitalized lease and sale-leaseback obligations-fixed rate: Wendy's/Arby's Restaurants ...Corporate ...Wendy's/Arby...

  • Page 74
    ... Risk Non-current equity investment ...Interest rate swaps ...Long-term debt, excluding capitalized lease and sale-leaseback obligations-variable rate ...Long-term debt, excluding capitalized lease and sale-leaseback obligations-fixed rate: Wendy's/Arby's Restaurants ...Corporate ...Wendy's/Arby...

  • Page 75
    ... 2, 2011, January 3, 2010, and December 28, 2008 ...Consolidated Statements of Cash Flows for the years ended January 2, 2011, January 3, 2010, and December 28, 2008 ...Wendy's/Arby's Restaurants, LLC and subsidiaries Report of Independent Registered Public Accounting Firm ...Consolidated Balance...

  • Page 76
    ... Notes ...Co-op Agreement ...Corporate ...Credit Agreement ...Credit Facility ...Deerfield ...Deerfield Sale ...Determination Date ...DFR ...DFR Notes ...Early Withdrawal ...Eligible Arby's Employees ...Equities Account ...Equities Sale ...Equity Plans ...Former Executives ...Foundation ...GAAP...

  • Page 77
    ... Term Footnote Where Defined Lease Guarantees ...Legacy Assets ...Liquidation Services Agreement ...LIBOR ...Management Company ...New CBA ...New Services Agreement ...Package Options ...Parent ...Preferred Stock ...Prior Plans ...QSCC ...Rent Holiday ...RSAs ...RSUs ...RTM ...RTM Acquisition...

  • Page 78
    ... Wendy's/Arby's Group, Inc. and subsidiaries (the "Company") as of January 2, 2011 and January 3, 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended January 2, 2011. Our audits also included the financial...

  • Page 79
    ... Financial Statements and Supplementary Data WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands) January 2, 2011 January 3, 2010 ASSETS Current assets: Cash and cash equivalents ...Accounts and notes receivable ...Inventories ...Prepaid expenses and other current...

  • Page 80
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Per Share Amounts) Year Ended January 3, 2010 January 2, 2011 December 28, 2008 Revenues: Sales ...Franchise revenues ...Costs and expenses: Cost of sales ...General and administrative ......

  • Page 81
    ... Foreign Additional Held Available- Currency Common Paid-in Accumulated in for-Sale Translation Unrecognized Stock Capital Deficit Treasury Securities Adjustment Pension Loss Total Balance at December 28, 2008 ...$47,042 $2,753,141 $(357,541) $(15,944) Comprehensive income: Net income ...- - 5,062...

  • Page 82
    ... loss ...Cash dividends ...Accrued dividends on nonvested restricted stock ...Distribution of Deerfield Capital Corp. common stock ...Share-based compensation expense ...Wendy's International Inc. merger-related transactions: Conversion of Class B common stock to Class A common stock ...Value...

  • Page 83
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended January 3, December 28, 2010 2008 January 2, 2011 Cash flows from continuing operating activities: Net (loss) income ...$ (4,325) $ 5,062 $(479,741) Adjustments to reconcile net (loss) ...

  • Page 84
    ...,969) (101,914) (106,989) Non-cash capitalized lease and certain sales-leaseback obligations ...$ 5,775 $ 6,370 $ 8,430 Non-cash transactions: Value of equity consideration issued in merger with Wendy's Common stock ...Stock options ...Assumption of debt ... N/A N/A N/A N/A $2,476,197 N/A $ 18,296...

  • Page 85
    ...wholly owned subsidiary of Wendy's/Arby's Group, Inc.) (the "Company") as of January 2, 2011 and January 3, 2010, and the related consolidated statements of operations, invested equity, and cash flows for each of the three years in the period ended January 2, 2011. These financial statements are the...

  • Page 86
    WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Information) January 2, 2011 January 3, 2010 ASSETS Current assets: Cash and cash equivalents ...Accounts and notes receivable ...Inventories ...Prepaid expenses and other current assets ......

  • Page 87
    WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands) Year Ended January 3, 2010 January 2, 2011 December 28, 2008 Revenues: Sales ...Franchise revenues ...Costs and expenses: Cost of sales ...General and administrative ...Depreciation and ...

  • Page 88
    ... Wendy's/ Cash Translation Unrecognized Deficit Arby's Flow Hedges Adjustment Pension Loss Member Interest Other Capital Total Balance at December 30, 2007 ...Wendy's International Inc. merger consideration, net of tax benefits ...Comprehensive loss: Net loss ...Change in unrealized loss on cash...

  • Page 89
    WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended January 3, December 28, 2010 2008 January 2, 2011 Cash flows from continuing operating activities: Net (loss) income ...$ (2,638) $ 9,649 $(365,086) Adjustments to reconcile net (loss) ...

  • Page 90
    ... investing and financing activities: Total capital expenditures ...Cash capital expenditures ...Non-cash capitalized lease and certain sales-leaseback obligations ...Non-cash transactions: Value of equity consideration issued in merger with Wendy's Common stock ...Stock options ...Assumption of debt...

  • Page 91
    .... The operations of Wendy's and Arby's each represent a reportable business segment. Except where otherwise indicated, these notes relate to the consolidated financial statements for both Wendy's/ Arby's and Wendy's/Arby's Restaurants (the "Companies"). References herein to Wendy's/Arby's corporate...

  • Page 92
    ...WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Cash Equivalents All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Companies...

  • Page 93
    ... the cost of an acquired entity over the fair value of the acquired net assets, is not amortized. For goodwill purposes, Wendy's includes two reporting units comprised of its (i) North America company-owned and franchise restaurants and (ii) international operations; Arby's reporting units represent...

  • Page 94
    ... as capital contributions from Wendy's/Arby's. Wendy's/Arby's Restaurants has not granted any of its member interests as share-based compensation. The Companies measure the cost of employee services received in exchange for an award of equity instruments, which include grants of employee stock...

  • Page 95
    ...as revenue upon the termination of the related commitments to open new franchised restaurants. Rental income from locations owned by the Companies and leased to franchisees is recognized on a straight-line basis over the respective operating lease terms. Cost of Sales Cost of sales includes food and...

  • Page 96
    ... term and a gain or loss recognized. Management makes certain estimates and assumptions regarding each new lease agreement, lease renewal, and lease amendment, including, but not limited to, property values, market rents, property lives, discount rates, and probable term, all of which can impact...

  • Page 97
    ... liability related to the merger: (Increase)/decrease in: Current assets Accounts and notes receivable ...Prepaid expenses and other current assets ...Investments ...Properties ...Other intangible assets Trademark ...Franchise agreements ...Favorable leases ...Computer software ...Deferred costs and...

  • Page 98
    ... statements of operations for the year ended December 28, 2008 to give effect to the Wendy's Merger and the Conversion as if they had been consummated as of the beginning of 2007: 2008 As Reported As Adjusted Revenues: Sales ...Franchise revenues ...Total revenues ...(Wendy's/Arby's) Operating loss...

  • Page 99
    ... away from its principal investing segment to its asset management segment with its fee-based revenue streams. In addition, it stated that during the first quarter of 2008, its portfolio was adversely impacted by deterioration of the global credit markets and, as a result, it sold $2,800,000 of its...

  • Page 100
    ... "Investment income (expense), net." (4) Income (Loss) Per Share (Wendy's/Arby's) Basic income (loss) per share for 2010 and 2009 was computed by dividing net income (loss) by the weighted average number of common shares outstanding. Prior to the Wendy's Merger, the Company had Class B common stock...

  • Page 101
    ... ...Net loss ... $(421,599) 1,378 $(420,221) $ (60,359) 839 $ (59,520) (5) Cash and Receivables (Wendy's/Arby's Restaurants) Year End 2010 2009 Cash and cash equivalents Cash ...Cash equivalents ...Restricted cash equivalents Current (1) Trust for termination costs for former Wendy's executives...

  • Page 102
    ... expenses and other current assets." (2) Included in "Deferred costs and other assets." (3) Corporate cash was $313,746 and $52,092 at 2010 and 2009, respectively. (4) Corporate cash equivalents were $76 and $763 at 2010 and 2009, respectively. (Wendy's/Arby's Restaurants) 4,247 $ 6,242 Year End...

  • Page 103
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) (Wendy's/Arby's) Year End 2010 2009 Accounts and Notes Receivable Current Accounts receivable: ...

  • Page 104
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) (6) Pledged assets The following is a summary of assets pledged as collateral for certain debt: Year End 2010 Wendy's /Arby's Restaurants Wendy's /Arby's Corporate Cash and cash equivalents ...Accounts and notes receivable...

  • Page 105
    ... 28, 2008, respectively, in Canadian dollars. The summary balance sheet financial information does not distinguish between current and long-term assets and liabilities: Year End January 2, January 3, 2011 2010 Balance sheet information: Properties ...Cash and cash equivalents ...Accounts receivable...

  • Page 106
    ...$ 2,212 (8) Properties Year End 2010 Wendy's/Arby's Restaurants Corporate Wendy's/Arby's Owned: Land ...Buildings and improvements ...Office, restaurant and transportation equipment ...Leasehold improvements ...Leased (a): Capitalized leases ...Sale-leaseback assets ...Accumulated depreciation and...

  • Page 107
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Year End 2009 Wendy's/Arby's Restaurants Corporate Wendy's/Arby's Owned: Land ...Buildings and improvements ...Office, restaurant and transportation equipment ...Leasehold improvements ...Leased (a): Capitalized leases ...Sale...

  • Page 108
    ... WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) The following is a summary of the components of other intangible assets: Year End 2010 Accumulated Amortization Year End 2009 Accumulated...

  • Page 109
    ...AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) (10) Accrued Expenses Year End 2010 Wendy's/Arby's Restaurants Corporate Wendy's/Arby's Accrued compensation and related benefits...

  • Page 110
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Aggregate annual maturities of long-term debt, excluding the effect of purchase accounting adjustments, discounts and interest rate swaps, as of January 2, 2011 were as follows: Fiscal Year Wendy's/Arby's Restaurants Corporate...

  • Page 111
    ... be due in 2011, and (3) pay fees and expenses related to the Credit Agreement. The remaining Term Loan proceeds were used for working capital and other general corporate purposes. The Companies recognized a loss on early extinguishment of debt of $26,197 in the second quarter of 2010 related to the...

  • Page 112
    ... values is required were as follows: Year End 2010 Wendy's/Arby's Restaurants Corporate Wendy's/Arby's Financial assets Carrying Amount: Cash and cash equivalents ...Restricted cash equivalents: Current ...Non-current ...Non-current cost investments ...Interest rate swaps ...Fair Value: Cash and...

  • Page 113
    ... Per Share Amounts) Year End 2009 Wendy's/Arby's Restaurants Corporate Wendy's/Arby's Financial assets Carrying Amount: Cash and cash equivalents ...Restricted cash equivalents: Current ...Non-current ...Short-term investment ...DFR Notes receivable ...Non-current cost investments ...Interest rate...

  • Page 114
    ...due to the short-term maturities of the cash equivalents or restricted cash equivalents. (b) Fair value of these investments was based entirely on statements of account received from investment managers or investees which were principally based on quoted market or broker/dealer prices. To the extent...

  • Page 115
    ... related to the Wendy's and Arby's restaurant segments. See Note 17 for more information on the impairment of our long-lived assets. January 2, 2011 Fair Value Measurements Level 1 Level 2 Level 3 2010 Total Losses Properties ...Other intangible assets ...Wendy's/Arby's Restaurants ...Properties...

  • Page 116
    ...by the Companies related to derivative activity during each of the periods presented below: 2010 2009 2008 Interest (income) expense: Interest rate swaps (a) ...Term Loan Swap Agreements (b) ...Total Wendy's/Arby's Restaurants ...Aircraft term loan swap agreement ...Investment (income) expense, net...

  • Page 117
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Wendy's/Arby's Restaurants 2009 2008 2010 Domestic ...Foreign ... $(33,305) 15,882 $(17,423) $(12,718) 14,305 $ 1,587 $(430,634) 2,427 $(428,207) The benefit from (provision for) income taxes from continuing operations...

  • Page 118
    ...Wendy's/Arby's Year End 2010 2009 Wendy's /Arby's Restaurants Year End 2010 2009 Deferred tax assets: Operating and capital loss carryforwards ...Tax credit carryforwards ...Accrued compensation and related benefits ...Unfavorable leases ...Other ...Valuation allowances ...Total deferred tax assets...

  • Page 119
    ... WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) operating loss carryforwards. Valuation allowances (decreased) increased ($181) and $12,494 in 2010 and 2009, respectively, principally related...

  • Page 120
    ... Except Per Share Amounts) Wendy's/Arby's Restaurants 2010 2009 2008 Income tax benefit (provision) at the U.S. Federal statutory rate ...State income taxes (provision) benefit, net of U.S. Federal income tax effect ...Previously unrecognized state net operating losses, net of related valuation...

  • Page 121
    ...578) (559) $38,421 Wendy's/Arby's Restaurants 2010 2009 2008 Beginning balance ...Additions: Wendy's unrecognized tax benefits at the merger date (a) . . Tax positions related to the current year ...Tax positions of prior years ...Reductions: Tax positions of prior years ...Settlements ...Lapse of...

  • Page 122
    ...Treasury Stock 2009 Common Stock 2008 Common Stock Class B Number of shares at beginning of year ...Net effect of Class B conversion ...Stock issuance related to Wendy's Merger ...Common shares issued: Upon exercises of stock options, net . . Upon grant of restricted stock and for director's fees...

  • Page 123
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Wendy's. Pursuant to the merger agreement, each outstanding Wendy's option as of the merger date was ...

  • Page 124
    ... be outstanding based on historical exercise trends for similar grants. The expected volatility is based on the historical market price volatility of the classes of common stock for the related options granted during the years. The expected dividend yield represents Wendy's/Arby's annualized average...

  • Page 125
    ... the 2010 Plan, Wendy's/Arby's grants performance-based awards to certain officers and key employees. The vesting of these awards is contingent upon meeting a defined operational goal (a performance condition) or Common Stock share prices (a market condition). The fair value of performance condition...

  • Page 126
    ... benefit recognized in Wendy's/Arby's Restaurants consolidated statements of operations were as follows: 2010 2009 2008 Compensation expense related to Wendy's/Arby's stock options ...Compensation expense related to Restricted Shares ...Compensation expense related to Market Condition Performance...

  • Page 127
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) As of January 2, 2011, there was $15,814 of total unrecognized compensation cost related to non-vested sharebased compensation grants for Wendy's/Arby's Restaurants. The unrecognized expense for Wendy's/Arby's Restaurants...

  • Page 128
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) 2009 Balance December 28, 2008 Balance January 3, 2010 Total Incurred to Date Provisions Payments Wendy's restaurant segment: Cash obligations: Severance costs ...Total Wendy's restaurant segment ...Arby's restaurant...

  • Page 129
    ...and on market value with respect to land (Level 3 inputs). (18) Investment Income (Expense), Net (Wendy's/Arby's) 2010 2009 2008 Interest income ...Distributions, including dividends ...Gain on DFR Notes ...Realized gains, net ...Unrealized losses, net ...Fee on early withdrawal of Equities Account...

  • Page 130
    ...profit sharing contributions, the Companies provided compensation expense in 2010, 2009 and 2008 as follows: 2010 2009 2008 Wendy's/Arby's Restaurants ...Corporate ...Wendy's/Arby's ...Pension Plans $12,467 - $12,467 $11,796 898 $12,694 $4,616 213 $4,829 Wendy's had two domestic defined benefit...

  • Page 131
    ... the fair value of the assets of the respective plan. Wendy's/Arby's recognized $221, $243, and $121 in benefit plan expenses included in "General and administrative" in 2010, 2009, and 2008, respectively, of which $64, $68, and $42 was recorded by Wendy's/Arby's Restaurants related to the Eligible...

  • Page 132
    ...AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Rental expense under operating leases consists of the following components: 2010 Wendy's/Arby's Restaurants Corporate Wendy's/Arby...

  • Page 133
    ... for closed locations. Properties leased by the Companies to third parties under capitalized leases and operating leases as of January 2, 2011 and January 3, 2010 include: Year End 2010 2009 Land ...Buildings and improvements ...Office, restaurant and transportation equipment ...Accumulated...

  • Page 134
    ... various parties were outstanding as of January 2, 2011: Year End 2010 Wendy's ...Arby's ...Wendy's/Arby's Restaurants ...Corporate ...Wendy's/Arby's ... $24,777 7,660 32,437 669 $33,106 However, our management does not expect any material loss to result from these letters of credit because we do...

  • Page 135
    ... of "Cost of Sales" costs. The unamortized amounts of upfront fees are included in "Deferred income" and usage that exceeds estimated amounts are included in "Accounts and notes receivable." Beverage purchases made by the Companies under these various agreements during 2010, 2009 and 2008 were...

  • Page 136
    ... assets and certain Wendy's/Arby's Restaurants purchasing employees to SSG in the second quarter of 2010. Wendy's/Arby's Restaurants had committed to pay approximately $5,145 of SSG expenses, which were expensed in 2010 and included in "General and administrative," and was to be paid over a 24 month...

  • Page 137
    ..., assets and certain Wendy's purchasing employees to QSCC in the first quarter of 2010. Pursuant to the terms of the Co-op Agreement, Wendy's was required to pay $15,500 to QSCC over an 18 month period through May 2011 in order to provide funding for start-up costs, operating expenses and cash...

  • Page 138
    ... Chief Operating Officer of Wendy's/Arby's (the "Former Executives") and the Management Company used two Wendy's/Arby's corporate aircraft in exchange for payment of certain incremental flight and related costs of such aircraft. Those time share agreements expired during the second quarter of 2009...

  • Page 139
    ... and invested in market put options in order to lessen the impact of significant market downturns. On September 12, 2008, 251 shares of Wendy's common stock, which were included in the Equities Account, were sold to the Management Company at the closing market value as of the day the Company decided...

  • Page 140
    ...'s/Arby's: 2010 2009 2008 Dividends paid (r) ...Cost allocation to restaurant segments (s) ...Advances paid (t) ...Capital contributions received (t) ...Other transactions: Share-based compensation (u) ...Payments for Federal and state income tax (v) ...Expense (net credit) under management service...

  • Page 141
    ...'s/Arby's under a tax sharing agreement, as discussed in more detail in Note 13, which were settled in cash with Wendy's/Arby's. (w) Wendy's/Arby's Restaurants receives certain management services, including legal, accounting, tax, insurance, financial and other management services from Wendy's/Arby...

  • Page 142
    ... in 2010, 2009 and 2008 totaled $169,704, $182,008, and $110,849, respectively. (27) Business Segments The Companies manage and internally report their operations in two segments: (1) the operation and franchising of Wendy's restaurants and (2) the operation and franchising of Arby's restaurants. We...

  • Page 143
    ...ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) The following is a summary of the Companies' segment information: 2010 2009 2008 Revenues: Sales: Wendy's (1) ...Arby's ...Corporate eliminations ...Total...

  • Page 144
    ...ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) 2010 2009 2008 Wendy's/Arby's: Segment operating profit (loss) ...Unallocated items: Interest expense ...Loss on early extinguishment of debt ...Investment...

  • Page 145
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) Revenues and long-lived asset information by geographic area are as follows: U.S Canada Other International Total 2010 Revenues: Wendy's restaurants ...Arby's restaurants ...Corporate eliminations ...Consolidated revenue...

  • Page 146
    ... remainder of the Companies' fiscal quarters in 2010 and 2009 contained 13 weeks. (Wendy's/Arby's) April 4 (b) 2010 Quarter Ended July 4 (b) October 3 (b) January 2, 2011 (b) Revenues ...$837,447 $877,021 Cost of sales ...641,422 659,084 Operating profit ...26,333 72,663 Net (loss) income ...(3,400...

  • Page 147
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) (b) The operating profit was materially affected by impairment of long-lived assets in 2010. The impact...

  • Page 148
    ... WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) CONDENSED CONSOLIDATING BALANCE SHEET January 2, 2011 Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations Total ASSETS Current...

  • Page 149
    ... WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) CONDENSED CONSOLIDATING BALANCE SHEET January 3, 2010 Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations Total ASSETS Current...

  • Page 150
    ... Except Per Share Amounts) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the year ended January 2, 2011 Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations Total Revenues: Sales ...$ - Franchise revenues ...- - Costs and expenses: Cost of sales ...General and administrative...

  • Page 151
    ... Except Per Share Amounts) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the year ended December 28, 2008 Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations Total Revenues: Sales ...$ Franchise revenues ...Costs and expenses: Cost of sales ...General and administrative...

  • Page 152
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the year ended January 2, 2011 Parent Guarantor ...

  • Page 153
    WENDY'S/ARBY'S GROUP, INC. AND SUBSIDIARIES WENDY'S/ARBY'S RESTAURANTS, LLC AND SUBSIDIARIES COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the year ended January 3, 2010 Guarantor ...

  • Page 154
    ... FINANCIAL STATEMENTS-CONTINUED (In Thousands Except Per Share Amounts) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the year ended December 28, 2008 Guarantor Subsidiaries Nonguarantor Subsidiaries Parent Eliminations Total Cash flows from continuing operating activities: Net (loss...

  • Page 155
    ...control for Wendy's/Arby's and Wendy's/Arby's Restaurants, the management of each company believes that as of January 2, 2011, internal control over financial reporting of Wendy's/Arby's and Wendy's/Arby's Restaurants were effective. (Wendy's/Arby's) Our independent registered public accounting firm...

  • Page 156
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Wendy's/Arby's Group, Inc. Atlanta, Georgia We have audited the internal control over financial reporting of Wendy's/Arby's Group, Inc. and subsidiaries (the "Company") as of January 2, 2011, based on...

  • Page 157
    ... include loss protection on the sale of an executive's home), as well as a $130,000 moving bonus payable within 30 days of a sale of Arby's. If Mr. Hare voluntarily terminates his employment within 12 months of starting the relocation process he would be required to pay back benefits received under...

  • Page 158
    ...; Condensed Statements of Cash Flows (Parent Company Only)-for the fiscal years ended January 3, 2010, December 28, 2008 and December 30, 2007. All other schedules have been omitted since they are either not applicable or the information is contained elsewhere in "Item 8. Financial Statements and...

  • Page 159
    ...'s/Arby's Restaurants unless otherwise noted. EXHIBIT NO. DESCRIPTION 2.1 Agreement and Plan of Merger, dated as of April 23, 2008, by and among Triarc Companies, Inc., Green Merger Sub Inc. and Wendy's International, Inc., incorporated herein by reference to Exhibit 2.1 to Triarc's Current Report...

  • Page 160
    ...001-02207).** Form of Non-Employee Director Restricted Stock Award Agreement under the Wendy's/Arby's Group, Inc. Amended and Restated 2002 Equity Participation Plan, incorporated herein by reference to Exhibit 10.7 to Wendy's/Arby's Group's Form 10-Q for the quarter ended June 28, 2009 (SEC file no...

  • Page 161
    ... Long Term Performance Unit Award Agreement under the Wendy's/Arby's Group, Inc. 2010 Omnibus Award Plan, incorporated by reference to Exhibit 10.6 to Wendy's/Arby's Group's Form 10-Q for the quarter ended July 4, 2010 (SEC file no. 001-02207).** Form of Non-Employee Director Restricted Stock Award...

  • Page 162
    ... National Propane Corporation, Triarc Companies, Inc. and Nelson Peltz and Peter W. May, incorporated herein by reference to Exhibit 10.30 to Triarc's Annual Report on Form 10-K for the fiscal year ended January 3, 1999 (SEC file no. 001-02207). (Wendy's/Arby's only.) Indemnity Agreement, dated as...

  • Page 163
    ... 4, 2010 (SEC file no. 001-02207). (Wendy's/Arby's only.) Form of Aircraft Time Sharing Agreement between Triarc Companies, Inc. and each of Trian Fund Management, L.P., Nelson Peltz, Peter W. May and Edward P. Garden, incorporated herein by reference to Exhibit 10.5 to Triarc's Current Report on...

  • Page 164
    ...Arby's Group's Annual Report on Form 10-K for the fiscal year ended December 28, 2008 (SEC file no. 001-02207).** Form of Indemnification Agreement between Arby's Restaurant Group, Inc. and certain directors, officers and employees thereof, incorporated herein by reference to Exhibit 10.40 to Triarc...

  • Page 165
    .... and its directors and certain officers and employees, incorporated herein by reference to Exhibit 10(b) of the Wendy's International, Inc. Form 10-Q for the quarter ended June 29, 2008 (SEC file no. 001-08116).** Tax Sharing Agreement, dated as of May 26, 2009, among Wendy's/Arby's Group, Inc. and...

  • Page 166
    ... by the undersigned, thereunto duly authorized. WENDY'S/ARBY'S GROUP, INC. (Registrant) Dated: March 3, 2011 By: /S/ ROLAND C. SMITH Roland C. Smith President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March...

  • Page 167
    WENDY'S/ARBY'S RESTAURANTS, LLC (Registrant) Dated: March 3, 2011 By: /S/ ROLAND C. SMITH Roland C. Smith President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 3, 2011 by the following persons on behalf ...

  • Page 168
    ...Arby's Group, Inc. (Parent Company Only) CONDENSED BALANCE SHEETS January 2, 2011 January 3, 2010 ASSETS Current assets: Cash and cash equivalents ...Amounts due from subsidiaries ...Deferred income tax benefit and other ...Total current assets ...Note receivable, related party, net ...Investments...

  • Page 169
    ...) Wendy's/Arby's Group, Inc. (Parent Company Only) CONDENSED STATEMENTS OF OPERATIONS (In Thousands) January 2, 2011 Year Ended January 3, December 28, 2010 2008 Income: Equity in (loss) income from continuing operations of subsidiaries ...Investment income (loss) ...Costs and expenses: General and...

  • Page 170
    ... I (Continued) Wendy's/Arby's Group, Inc. (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS January 2, 2011 Year Ended January 3, 2010 December 28, 2008 Cash flows from continuing operating activities: Net (loss) income ...Adjustments to reconcile net (loss) income to net cash provided by...

  • Page 171
    ...'s/Arby's Group, Inc. (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS - (Continued) January 2, 2011 Year Ended January 3, December 28, 2010 2008 Detail of cash flows related to investments: Operating investment adjustments: Income on collection of notes receivable ...Net recognized losses...

  • Page 172
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  • Page 173
    EXHIBIT 4.6 SUPPLEMENTAL INDENTURE dated as of December 3, 2010 among Wendy's/Arby's Restaurants, LLC, The Guarantor Party Hereto and U.S. Bank National Association, as Trustee 10.00% Senior Notes due 2016

  • Page 174
    ... dated as of December 21, 2009 (as so supplemented, the "Indenture"), relating to the Company's 10.00% Senior Notes due 2016 (the "Notes"); WHEREAS, as a condition to the Trustee entering into the Indenture and the purchase of the Notes by the Holders, the Company agreed pursuant to the Indenture to...

  • Page 175
    ... this Supplemental Indenture to be duly executed as of the date first above written. Wendy's/Arby's Restaurants, LLC, as Issuer By: /s/ Daniel T. Collins Name: Daniel T. Collins Title: Senior Vice President, Treasurer & Assistant Secretary Wendy's Restaurants of New York, LLC, as a Guarantor By...

  • Page 176
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  • Page 177
    EXHIBIT 21.1 WENDY'S/ARBY'S GROUP, INC. LIST OF SUBSIDIARIES AS OF January 2, 2011 Subsidiary State or Jurisdiction Under Which Organized Wendy's/Arby's Restaurants, LLC (formerly Wendy's International Holdings, LLC) Arby's Restaurant Group, Inc. RTM Acquisition Company, LLC Wendy's/Arby's Support ...

  • Page 178
    ... by Wendy's Restaurants of Canada Inc. Delaware Delaware Delaware Delaware Delaware Delaware New York Florida Delaware South Carolina (2) 99.7% capital interest owned by Wendy's/Arby's Group, Inc. (the "Company"). Certain members of management of the Company have been granted an equity interest...

  • Page 179
    ... 2, 2011, relating to the consolidated financial statements and financial statement schedule of Wendy's/Arby's Group, Inc. and the effectiveness of the Company's internal control over financial reporting appearing in this Annual Report on Form 10-K of Wendy's/ Arby's Group, Inc. for the year ended...

  • Page 180
    ... S-3 of Wendy's/Arby's Group, Inc. of our report dated March 3, 2011 relating to the financial statements of TIMWEN Partnership, which appears in this Annual Report on Form 10-K of Wendy's/Arby's Group, Inc. /s/ PricewaterhouseCoopers LLP Chartered Accountants, Licensed Public Accountants Toronto...

  • Page 181
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 182
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 183
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 184
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 185
    ... undersigned officers of Wendy's/Arby's Group, Inc., a Delaware corporation (the "Company"), does hereby certify, to the best of such officer's knowledge, that: The Annual Report on Form 10-K for the year ended January 2, 2011 (the "Form 10-K") of the Company fully complies with the requirements of...

  • Page 186
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  • Page 187
    .... and Wendy's International, Inc. Burger King Holdings, Inc. and CKE Restaurants, Inc. no longer have publicly traded stock and have thus been omitted from the Peer Group. Those companies were included in the Peer Group used in the Company's 2009 Annual Report. ** The stock price performance graph...

  • Page 188
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  • Page 189
    ... Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2011, a copy of which (including the SEC certifications) is included herein. Corporate Office Wendy's/Arby's Group, Inc. 1155 Perimeter Center West Atlanta, GA 30338 (678) 514-4500 www.wendysarbys.com Stockholder Information...

  • Page 190
    ... Social responsibility has been a key part of our heritage since the founding of both Wendy's and Arby's more than 40 years ago. With the commitment of our employees, franchisees, suppliers, customers and our stockholders, we are actively involved in supporting our signature programs through two...