Wendy's 2010 Annual Report Download - page 121

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)
Uncertain Tax Positions
As of January 2, 2011, Wendy’s/Arby’s and Wendy’s/Arby’s Restaurants had unrecognized tax benefits of
$36,434 and $26,249, respectively, of which, if resolved favorably would reduce income tax expense by $25,200 and
$17,100, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
Wendy’s/Arby’s
2010 2009 2008
Beginning balance ........................................ $39,118 $38,421 $12,266
Additions:
Wendy’s unrecognized tax benefits at the merger date (a) . . — — 24,916
Tax positions related to the current year ............... 19 6,627 996
Tax positions of prior years ......................... 4,921 1,857 4,362
Reductions:
Tax positions of prior years ......................... (4,419) (4,241) (2,982)
Settlements ..................................... (416) (1,407) (578)
Lapse of statute of limitation ........................ (2,789) (2,139) (559)
Ending balance .......................................... $36,434 $39,118 $38,421
Wendy’s/Arby’s Restaurants
2010 2009 2008
Beginning balance ........................................ $28,414 $31,717 $ 5,846
Additions:
Wendy’s unrecognized tax benefits at the merger date (a) . . — — 24,916
Tax positions related to the current year ............... 19 613 996
Tax positions of prior years ......................... 4,921 1,651 2,357
Reductions:
Tax positions of prior years ......................... (3,900) (2,383) (1,466)
Settlements ..................................... (416) (1,045) (372)
Lapse of statute of limitations ....................... (2,789) (2,139) (560)
Ending balance .......................................... $26,249 $28,414 $31,717
(a) The amount included in the tables above for 2008 of $24,916 has been corrected from the prior year presentation
of $16,816; such revision had no impact on the Companies’ Consolidated Financial Statements.
During 2011, we believe it is reasonably possible we will reduce unrecognized tax benefits by up to $7,022,
primarily as a result of the completion of certain state tax audits.
During 2010, 2009 and 2008, Wendy’s/Arby’s recognized $1,004, $(414) and $390 of interest (reductions)
expense and $425, $(888) and $1,307 of penalty (reductions) expense, respectively, related to uncertain tax positions.
Wendy’s/Arby’s has approximately $5,005 and $4,262 accrued for interest and $1,451 and $1,026 accrued for
penalties as of January 2, 2011 and January 3, 2010, respectively.
During 2010, 2009 and 2008, Wendy’s/Arby’s Restaurants recognized $940, $(315) and $792 of interest
(reductions) expense and $425, $(535) and $954 of penalty (reductions) expense, respectively, related to uncertain tax
positions. Wendy’s/Arby’s Restaurants has approximately $4,741 and $4,062 accrued for interest and $1,204 and
$779 accrued for penalties as of January 2, 2011 and January 3, 2010, respectively.
115