Wendy's 2013 Annual Report Download - page 71

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)
(1) Summary of Significant Accounting Policies
Corporate Structure
The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,”
“us,” or “our”) is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC
(“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, Inc., now known as
Wendy’s International, LLC. As used herein, “Wendy’s” refers to Wendy’s International, Inc. for periods through
December 29, 2013 and to Wendy’s International, LLC thereafter. Wendy’s franchises and operates company-owned
Wendy’s®quick-service restaurants specializing in hamburger sandwiches throughout North America (defined as the
United States of America (“U.S.”) and Canada). Wendy’s also has franchised restaurants in 27 foreign countries and
U.S. territories. At December 29, 2013, Wendy’s operated and franchised 1,183 and 5,374 restaurants, respectively.
The Company manages and internally reports its business geographically. The operation and franchising of
Wendy’s restaurants in North America comprises virtually all of our current operations and represents a single
reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not
material.
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) and include all of the Company’s
subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company reports
“Net loss (income) attributable to noncontrolling interests,” separately in our consolidated statements of operations.
The Company participates in two national advertising funds established to collect and administer funds
contributed for use in advertising and promotional programs for company-owned and franchised restaurants. The
revenue, expenses and cash flows of such advertising funds are not included in the Company’s consolidated statements
of operations or consolidated statements of cash flows because the contributions to these advertising funds are
designated for specific purposes and the Company acts as an agent, in substance, with regard to these contributions.
The assets and liabilities of these funds are reported as “Advertising funds restricted assets” and “Advertising funds
restricted liabilities.”
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ materially from those estimates.
Certain reclassifications have been made to prior year presentation to conform to the current year presentation.
Fiscal Year
The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to
December 31 and are referred to herein as (1) “the year ended December 29, 2013” or “2013,” (2) “the year ended
December 30, 2012” or “2012,” and (3) “the year ended January 1, 2012” or “2011,” all of which consisted of
52 weeks.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less when acquired are considered cash
equivalents. The Company’s cash and cash equivalents principally consist of cash in bank and money market mutual
fund accounts and are primarily not in Federal Deposit Insurance Corporation insured accounts.
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