Wendy's 2013 Annual Report Download - page 44

Depreciation and Amortization
Change
2013 2012
Restaurants ................................................... $36.6 $21.7
Other ....................................................... (1.2) 2.3
$35.4 $24.0
Depreciation and amortization during 2013 includes accelerated depreciation of $17.5 million and
$20.7 million on existing assets that were replaced in 2013 and will be replaced in 2014, respectively, as part of our
Image Activation program. The increase in restaurant depreciation and amortization during 2013 also includes a
$6.4 million increase on new and reimaged Image Activation restaurants.
The increase in restaurant depreciation and amortization in 2012 included (1) $11.6 million related to our
Image Activation program which includes depreciation on existing assets of $7.0 million that were replaced during
2012 and depreciation on new and reimaged restaurants of $4.6 million, (2) $7.2 million related to other restaurant
capital expenditures, including the effect from restaurants acquired from franchisees subsequent to 2011 and
(3) $2.9 million related to point-of-sale system hardware purchased during 2012.
Facilities Action Charges, Net
Year Ended
2013 2012 2011
System optimization initiative ..................................... $ 4.9 $ — $ —
Facilities relocation and other transition costs ......................... 4.6 29.0 5.5
Breakfast discontinuation ........................................ 1.1 10.6 —
Arby’s transaction related costs .................................... 0.3 1.4 40.2
$10.9 $41.0 $45.7
During 2013, the Company recorded net expense totaling $4.9 million related to its system optimization
initiative which is primarily comprised of (1) System Optimization Remeasurement of $20.5 million, (2) accelerated
amortization of previously acquired franchise rights in territories being sold of $16.9 million, (3) severance and related
employee costs of $9.7 million and (4) a $46.7 million net gain on sales of restaurants.
During 2013, 2012 and 2011, the Company incurred facilities relocation and other transition costs aggregating
$4.6 million, $29.0 million and $5.5 million, respectively, related to the relocation of the Atlanta restaurant support
center to Ohio, which was substantially completed during 2012. Costs during 2013, 2012 and 2011 primarily related
to severance, retention and other payroll costs, and additionally in 2013 and 2012, relocation, consulting and
professional fees and costs associated with the closure of the Atlanta restaurant support center.
During 2013 and 2012, the Company reflected costs totaling $1.1 million and $10.6 million, respectively,
resulting from the discontinuation of the breakfast daypart at certain restaurants. Costs during 2012 consisted
primarily of (1) the remaining net carrying value of $5.3 million for certain breakfast equipment and (2) amounts
advanced to franchisees of $3.5 million for breakfast equipment which will not be reimbursed.
During 2013, 2012 and 2011, the Company recorded transaction related costs aggregating $0.3 million,
$1.4 million and $40.2 million, respectively, as a result of the sale of Arby’s in July 2011. Costs expensed during 2011
primarily related to severance, retention and stock compensation primarily associated with the accelerated vesting of
previously granted awards. 2011 also included relocation and stock compensation costs related to the relocation of a
corporate executive which were being amortized over a three year period in accordance with the terms of an
agreement. In accordance with the terms of a separation agreement with such executive, the remaining unamortized
costs were recorded to severance expense and included in “General and administrative” during the second quarter of
2013.
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