Wendy's 2012 Annual Report Download - page 28

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Wendy’s
Country/Territory Company Franchise
Argentina ................................................................... — 1
Aruba ...................................................................... — 4
Bahamas .................................................................... — 11
Costa Rica .................................................................. — 13
Curacao .................................................................... — 1
Dominican Republic .......................................................... — 8
El Salvador .................................................................. — 14
Grand Cayman Islands ......................................................... — 2
Guam ...................................................................... — 4
Guatemala .................................................................. — 9
Honduras ................................................................... — 35
Indonesia ................................................................... — 25
Jamaica .................................................................... — 4
Japan ...................................................................... — 2(a)
Malaysia .................................................................... — 10
Mexico ..................................................................... — 25
New Zealand ................................................................ — 18
Panama .................................................................... — 7
Philippines .................................................................. — 32
Puerto Rico ................................................................. — 76
Russian Federation ............................................................ — 8
Singapore ................................................................... — 11
Trinidad and Tobago .......................................................... — 3
United Arab Emirates ......................................................... — 13
Venezuela ................................................................... — 36
U. S. Virgin Islands ........................................................... — 2
International subtotal ........................................................ — 374
Grand total ............................................................. 1,427 5,133
(a) Wendy’s is a 49% partner in a joint venture for the operation of Wendy’s restaurants in Japan.
Item 3. Legal Proceedings.
We are involved in litigation and claims incidental to our current and prior businesses. We provide reserves for
such litigation and claims when payment is probable and reasonably estimable. The Company believes it has adequate
reserves for continuing operations for all of its legal and environmental matters. We cannot estimate the aggregate
possible range of loss due to most proceedings being in preliminary stages, with various motions either yet to be
submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases seek
an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement
discussions or judicial or arbitral decisions is thus inherently difficult. Based on our currently available information,
including legal defenses available to us, and given the aforementioned reserves and our insurance coverage, we do not
believe that the outcome of these legal and environmental matters will have a material effect on our consolidated
financial position or results of operations.
Wendy’s completed the initial public offering of Tim Hortons Inc. (“THI”) in March, 2006 and the spin-off of
THI in September, 2006. In connection with the initial public offering, Wendy’s and THI entered into a tax sharing
agreement that governed the rights and responsibilities of the parties with respect to taxes for periods up to the date of
the spin-off, including the allocation of tax attributes between the parties. In 2007, Wendy’s asserted a claim against
THI for approximately $1.0 million for a tax claim related to a competent authority adjustment. THI has disputed
this claim. In addition, THI has asserted claims for damages related to foreign tax credits THI allegedly should have
received in the spin-off in the aggregate amount of C$29.0 million. Wendy’s has disputed and continues to dispute
these claims. In 2011, THI invoked the dispute resolution provision of the tax sharing agreement, which calls for
binding mandatory arbitration. In February, 2012, THI submitted a notice of claim, which makes the same claims
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