Wendy's 2010 Annual Report Download - page 91

WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
WENDY’S/ARBY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(1) Summary of Significant Accounting Policies
Corporate Structure
Wendy’s/Arby’s Group, Inc. (“Wendy’s/Arby’s” and, together with its subsidiaries, the “Company”) is a
Delaware corporation. On September 29, 2008, (the “Closing Date”), the Company completed the merger (the
“Wendy’s Merger”) with Wendy’s International, Inc. (“Wendy’s”) and our former corporate name Triarc Companies,
Inc. (“Triarc”) was changed to Wendy’s/Arby’s Group, Inc. Wendy’s/Arby’s is the parent company of its 100%
owned subsidiary holding company, Wendy’s/Arby’s Restaurants, LLC (“Wendy’s/Arby’s Restaurants”). The
principal 100% owned subsidiaries of Wendy’s/Arby’s Restaurants as of January 2, 2011 are Wendy’s and Arby’s
Restaurant Group, Inc. (“Arby’s”) and their subsidiaries. Wendy’s and Arby’s are the franchisors of the Wendy’s®and
Arby’s®restaurant systems. 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
(“Corporate”) represents Wendy’s/Arby’s parent company functions only and their effect on the consolidated results
of operations and financial condition.
In January 2011, Wendy’s/Arby’s announced that it is exploring strategic alternatives for Arby’s, including a
sale of the brand. This process is in its early phases and there is no assurance as to any particular outcome. To address
uncertainties for our employees created by this process, Wendy’s/Arby’s has implemented a retention program; the
payment of a portion of this program is conditioned on the sale of Arby’s. While the process is pending, Arby’s will
continue to execute its growth initiatives. Arby’s did not meet the financial accounting requirements to be classified as
held for sale or to be reported as discontinued operations as of January 2, 2011. As of January 2, 2011, the carrying
value of our Arby’s business (defined as total assets less all non-intercompany liabilities) was $164,000. (See Notes 9
and 27 for further segment information.)
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) and include all of each Companies’
subsidiaries. The accounts of Wendy’s are included subsequent to the Closing Date. All intercompany balances and
transactions have been eliminated in consolidation.
The Companies participate in three national advertising funds established to collect and administer funds
contributed for use in advertising and promotional programs for company-owned and franchised stores. The revenue,
expenses and cash flows of all such advertising funds are not included in the Companies’ consolidated statements of
operations or consolidated statements of cash flows because the contributions to these advertising funds are designated
for specific purposes, and the Companies act as an agent, in substance, with regard to these contributions. The assets
and liabilities of these funds are reported as “Advertising funds restricted assets” and “Advertising funds restricted
liabilities.”
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ materially from those estimates.
Fiscal Year
The Companies’ fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to
December 31 and are referred to herein as (1) “the year ended January 2, 2011” or “2010”, which consisted of 52
weeks, (2) “the year ended January 3, 2010” or “2009”, which consisted of 53 weeks and (3) “the year ended
December 28, 2008” or “2008”, which consisted of 52 weeks.
85