Wendy's 2011 Annual Report Download - page 53

relocation of the Companies’ Atlanta headquarters and restaurant support center to Ohio, (2) payments to
QSCC in the first quarter of 2010 which were accrued in 2009, (3) a decrease in amounts paid in 2011
versus 2010 under incentive compensation plans for the 2010 and 2009 fiscal years, respectively, and (4) a
decrease in interest payments in 2011 compared to 2010, partially offset by a decrease in accrued interest
expense both primarily due to the redemption of the Wendy’s 6.25% senior notes in the second quarter of
2010 and a $190 million decrease in long-term debt which was assumed by Buyer on July 4, 2011. These
favorable changes were partially offset by a decrease in the current income tax provision due to variations in
taxable income of continuing operations during the same comparable periods;
• a $25.3 million favorable impact in accounts payable resulting from an increase in accounts payable of $11.1
million during 2011 compared to a decrease in accounts payable of $14.2 million during 2010. The changes
for 2011 and 2010 were primarily due to the following: (1) an increase in amounts payable for food
purchases at Wendy’s as a result of higher sales trends in 2011 as compared to 2010, (2) a decrease in
payments for expenses at Arby’s as a result of its sale on July 4, 2011, (3) amounts payable related to the
Wendy’s annual convention held in the 2011 fourth quarter, and (4) a decrease in payments for Wendy’s
kids’ meal promotion items as the management for kids’ meal promotion items sold to franchisees was
transferred to QSCC in the first quarter of 2011;
• a $37.5 million favorable impact in deferred income taxes due to variations in taxable income of continuing
operations during the comparable periods, net foreign tax credits and a reduction in valuation allowances
related to state tax matters; and
• an $8.8 million favorable impact due to the loss on disposal on the sale of Arby’s;
partially offset by a $103.7 million decrease due to the following:
• $13.1 million in cash outflows related to tax payments made under a tax sharing agreement with The
Wendy’s Company net of amounts accrued under this tax sharing agreement. No similar payments or
accruals were made under this tax sharing agreement in 2010;
• $55.0 million decrease in impairment of long-lived assets (including a decrease of $41.6 million of
impairment of long-term assets for Arby’s) as compared to the prior period; and
• $35.6 million decrease in depreciation and amortization primarily as a result of twelve months of
depreciation and amortization for Arby’s in 2010 as compared to five months in 2011 due to the
classification of Arby’s as a discontinued operation in May 2011.
Additionally, for the year ended January 1, 2012, the Companies had the following significant sources and uses
of cash other than from operating activities:
• Proceeds from the sale of Arby’s of $97.9 million, which is net of the following: Arby’s cash balance of $7.1
million at the sale date, customary purchase price adjustments primarily related to working capital, and
transaction closing costs paid through January 1, 2012;
• Repayments of long-term debt of $37.3 million, including an excess cash flow prepayment of $24.9 million
as required by the Term Loan;
• Cash capital expenditures totaling $146.8 million, which included $27.5 million for the remodeling of
restaurants, $23.9 million for the construction of new restaurants, and $95.4 million for various capital
projects;
(The Wendy’s Company)
• Dividend payments of $32.4 million; and
• Repurchases of common stock of $157.6 million, including commissions of $0.6 million.
The net cash (used in) provided by our business before the effect of exchange rate changes on cash was
approximately $(36.1) million and $149.2 million for The Wendy’s Company and Wendy’s Restaurants, respectively.
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