Wendy's 2012 Annual Report Download - page 75

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
Wendy’s Restaurants also entered into a stockholders agreement with Buyer Parent and ARG Investment
Corporation, an entity affiliated with Buyer Parent, which sets forth certain agreements among the parties thereto
concerning, among other things, the governance of Buyer Parent and transfer rights, information rights and
registration rights with respect to the equity securities of Buyer Parent. In addition, Wendy’s Restaurants entered into
a transition services agreement with Buyer, pursuant to which it provided and was reimbursed for continuing
corporate and shared services to Buyer for a limited period of time; such services were completed in the fourth quarter
of 2011.
Information related to Arby’s has been reflected in the accompanying consolidated financial statements as
follows:
• Balance sheets - As a result of our sale of Arby’s on July 4, 2011, there are no remaining Arby’s assets and
liabilities included in our consolidated balance sheets.
• Statements of operations - Arby’s income (loss) from operations for the period from January 3, 2011 through
July 3, 2011 and the year ended January 2, 2011 has been classified as discontinued operations. Net loss
from discontinued operations for the year ended January 1, 2012 also includes additional Arby’s expenses
which were incurred as a result of the sale and the loss on the disposal of Arby’s. Net income from
discontinued operations for the year ended December 30, 2012 includes certain post-closing Arby’s related
transactions, as further described below.
• Statements of cash flows - Arby’s cash flows prior to its sale (for the period from January 3, 2011 through
July 3, 2011 and for the year ended January 2, 2011) have been included in and not separately reported from
our cash flows. The consolidated statements of cash flows for the year ended January 1, 2012 also includes
the effects of the sale of Arby’s. The statement of cash flows for the year ended December 30, 2012 includes
the effect of certain post-closing Arby’s related transactions, as further described below.
Our consolidated statements of operations for periods through July 3, 2011 (prior to the sale of Arby’s) include
certain indirect corporate overhead costs in “General and administrative,” which, for segment reporting purposes, had
previously been allocated to Arby’s. These indirect corporate overhead costs do not qualify for classification within
discontinued operations and therefore are included in “General and administrative” in continuing operations. Interest
expense on Arby’s debt that was assumed by Buyer has been included in discontinued operations; however, interest
expense on the $650,000 credit agreement, which was not required to be repaid as a result of the sale, continued to be
included in “Interest expense” in continuing operations.
The following table presents Arby’s revenues and income (loss) from operations which have been reported in
discontinued operations:
Year Ended
2012 2011 2010
Revenues ............................................ $ — $546,453 $1,040,975
Income (loss) from discontinued operations, net of income taxes:
Income (loss) from discontinued operations before income
taxes .......................................... $ 907 $ 1,692 $ (35,550)
Benefit from (provision for) income taxes ................ 1,044 (930) 13,114
1,951 762 (22,436)
Loss on disposal of discontinued operations, net of income
taxes .......................................... (442) (8,799) —
Net income (loss) from discontinued operations ....... $1,509 $ (8,037) $ (22,436)
Income from discontinued operations before income taxes for the year ended December 30, 2012 includes the
effect of reversals of certain tax accruals, retained by the Company in connection with the sale of Arby’s, including
sales tax reserves and interest and penalty accruals for uncertain tax positions, due to the lapse of certain statute of
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