Wendy's 2013 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2013 Wendy's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(8) Goodwill and Other Intangible Assets
Goodwill activity for 2013 and 2012 was as follows:
Year End
2013 2012
Balance at beginning of year ........................................ $876,201 $870,431
Restaurant dispositions ........................................ (20,578) (3,103)
Restaurant acquisitions ........................................ — 7,982
Impairment ................................................ (9,397) —
Currency translation adjustment and other, net ..................... (3,682) 891
Balance at end of year ............................................. $842,544 $876,201
During the fourth quarter of 2013, we performed our annual goodwill impairment test. Step one of our process
determined that our international franchise restaurants reporting unit was impaired as its carrying amount exceeded
its fair value. The fair value of our international franchise reporting unit was based on the income approach, which is
determined based on the present value of the anticipated cash flows associated with the reporting unit. The decline in
the fair value of the international franchise restaurants reporting unit resulted from lower than anticipated current and
future operating results including lower projected growth rates and profitability levels than previously anticipated.
Step two of our process resulted in an impairment charge of $9,397, which represents the total amount of goodwill
recorded for our international franchise restaurants reporting unit. We also concluded at that time that our remaining
goodwill, which relates to our North America company-owned and franchise restaurants reporting unit was not
impaired.
The following is a summary of the components of other intangible assets:
Year End 2013 Year End 2012
Cost
Accumulated
Amortization Net Cost
Accumulated
Amortization Net
Indefinite-lived:
Trademarks ................ $ 903,000 $ — $ 903,000 $ 903,000 $ — $ 903,000
Definite-lived:
Franchise agreements ......... 352,339 (88,281) 264,058 353,778 (71,795) 281,983
Favorable leases ............. 140,619 (41,625) 98,994 103,914 (30,369) 73,545
Reacquired rights under
franchise agreements (a) ..... 23,065 (21,219) 1,846 23,065 (779) 22,286
Computer software ........... 68,665 (30,783) 37,882 45,005 (24,282) 20,723
$1,487,688 $(181,908) $1,305,780 $1,428,762 $(127,225) $1,301,537
(a) Includes $16,907 of accelerated amortization during the year ended December 29, 2013 on previously acquired
franchise rights in territories expected to be sold as part of our system optimization initiative.
86