Wendy's 2011 Annual Report Download - page 131

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(d) The operating profit was materially affected by impairment of long-lived assets in the third and fourth quarters of
2010. The impact of the impairment of long-lived assets on net income (loss) for the third and fourth quarters of
2010 was $12,908 and $3,037, respectively, after income tax benefits of $8,013 and $1,886, respectively.
(30) Guarantor/Non-Guarantor
(Wendy’s Restaurants)
Wendy’s Restaurants is the issuer of, and certain of its domestic subsidiaries have guaranteed amounts
outstanding under, the Senior Notes. Each of the guaranteeing subsidiaries is a direct or indirect 100% owned
subsidiary of Wendy’s Restaurants and each has fully and unconditionally guaranteed the Senior Notes on a joint and
several basis.
As a result of the closing of the sale of Arby’s on July 4, 2011 as described in Note 2, Arby’s and its subsidiaries
are no longer guaranteeing subsidiaries of the amounts outstanding under the Senior Notes. Accordingly, the
condensed consolidating financial statements presented below have been retroactively revised to reflect Arby’s and its
subsidiaries as non-guarantors for all periods presented. Information related to Arby’s has been reflected as
discontinued operations in the condensed consolidating statements of operations for the period from January 3, 2011
through July 3, 2011 and the years ended January 2, 2011 and January 3, 2010. Arby’s cash flows prior to its sale (for
the period from January 3, 2011 through July 3, 2011 and for the years ended January 2, 2011 and January 3, 2010)
have been included in, and not separately reported from, all our cash flows.
The following are included in the presentation of our: (1) Condensed Consolidating Balance Sheets as of
January 1, 2012 and January 2, 2011, (2) Condensed Consolidating Statements of Operations for the years ended
January 1, 2012, January 2, 2011, and January 3, 2010, and (3) Condensed Consolidating Statements of Cash Flows
for the years ended January 1, 2012, January 2, 2011, and January 3, 2010 to reflect:
(a) Wendy’s Restaurants (the “Parent”);
(b) the Senior Notes guarantor subsidiaries as a group;
(c) the Senior Notes non-guarantor subsidiaries as a group;
(d) elimination entries necessary to combine the Parent with the guarantor and non-guarantor subsidiaries; and
(e) Wendy’s Restaurants on a consolidated basis.
Substantially all of our domestic restricted subsidiaries are guarantors of the Senior Notes. Certain of our
subsidiaries, including our foreign subsidiaries and national advertising funds, do not guarantee the Senior Notes.
For purposes of presentation of such consolidating information, investments in subsidiaries are accounted for by
the Parent on the equity method. The elimination entries are principally necessary to eliminate intercompany balances
and transactions.
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