Wendy's 2010 Annual Report Download - page 41

$15.8 million of income tax benefit related to the above charge, and a $12.8 million previously unrecognized
prior year contingent tax benefit related to certain severance obligations to certain of Wendy’s/Arby’s former
executives.
(9) Reflects a significant charge recorded during 2006 as follows: $9.0 million charged to loss from continuing
operations and net loss representing a $14.1 million loss on early extinguishments of debt related to conversions
or effective conversions of Wendy’s/Arby’s 5% convertible notes due 2023 and prepayments of term loans under
Wendy’s/Arby’s senior secured term loan facility, partially offset by an income tax benefit of $5.1 million related
to the above charge.
(Wendy’s/Arby’s Restaurants)
Omitted pursuant to General Instruction I of Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Wendy’s/
Arby’s Group, Inc. (“Wendy’s/Arby’s”) and Wendy’s/Arby’s Restaurants, LLC (“Wendy’s/Arby’s Restaurants”)
should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere
within this report. Certain statements we make under this Item 7 constitute “forward-looking statements” under the
Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements and
Projections” in “Part 1” preceding “Item 1—Business.” You should consider our forward-looking statements in light
of the risks discussed under the heading “Risk Factors” in Item 1A above, as well as our consolidated financial
statements, related notes, and other financial information appearing elsewhere in this report and our other filings with
the Securities and Exchange Commission.
Except where otherwise indicated, this discussion relates 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
(“Corporate”) represents Wendy’s/Arby’s parent company functions only and their effect on the consolidated results
of operations and financial condition.
Wendy’s/Arby’s is the parent company of its 100% owned subsidiary holding company Wendy’s/Arby’s
Restaurants. Wendy’s/Arby’s Restaurants is the parent company of Wendy’s International, Inc. (“Wendy’s”) and
Arby’s Restaurant Group, Inc. (“Arby’s”), which are the owners and franchisors of the Wendy’s®and Arby’s®
restaurant systems, respectively. On September 29, 2008, Wendy’s/Arby’s (formerly Triarc Companies, Inc. or
“Triarc”) completed the merger (the “Wendy’s Merger”) with Wendy’s described below under “Introduction and
Executive Overview—Merger with Wendy’s International, Inc.”
Wendy’s/Arby’s Restaurants sole asset at formation consisted of the contribution by Wendy’s/Arby’s of its
investment in Wendy’s. In March 2009, Wendy’s/Arby’s contributed its longstanding investment in Arby’s to
Wendy’s/Arby’s Restaurants. Wendy’s/Arby’s Restaurants has no operations other than those of Wendy’s and Arby’s
and their respective subsidiaries.
The Wendy’s Merger was completed on the first day of our 2008 fourth quarter and the results of operations of
Wendy’s are included in our results beginning in the fourth quarter of 2008. The results of operations discussed
below for 2008 are not indicative of future results due to the consummation of the 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. As of January 2, 2011, the Wendy’s restaurant system was comprised of 6,576 restaurants, of
which 1,394 were owned and operated by the Companies. As of January 2, 2011, the Arby’s restaurant system was
comprised of 3,649 restaurants, of which 1,144 were owned and operated by the Companies. The 2,538 Wendy’s and
Arby’s company-owned restaurants are located principally in the United States and to a lesser extent in Canada (the
“North America Restaurants”). In January 2011, we announced that we are exploring strategic alternatives for Arby’s,
including a sale of the brand.
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