Wendy's 2014 Annual Report Download - page 106

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(17) Discontinued Operations
On July 4, 2011, Wendy’s Restaurants completed the sale of 100% of the common stock of Arby’s, its then
wholly-owned subsidiary, to ARG IH Corporation (“Buyer”), a wholly-owned subsidiary of ARG Holding
Corporation (“Buyer Parent”), for $130,000 in cash (subject to customary purchase price adjustments) and 18.5% of
the common stock of Buyer Parent (through which Wendy’s Restaurants indirectly retained an 18.5% interest in
Arby’s) with a fair value of $19,000. Buyer and Buyer Parent were formed for purposes of this transaction. The Buyer
also assumed approximately $190,000 of Arby’s debt, consisting primarily of capital lease and sale-leaseback
obligations.
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 — Net (loss) income from discontinued operations for the years ended
December 29, 2013 and December 30, 2012 includes certain post-closing Arby’s related transactions.
• Statements of cash flows — The statements of cash flows for the years ended December 29, 2013 and
December 30, 2012 include the effect of certain post-closing Arby’s related transactions.
The following table presents Arby’s (loss) income from operations which have been reported in discontinued
operations:
Year Ended
2013 2012
(Loss) income from discontinued operations, net of income taxes:
(Loss) income from discontinued operations before income taxes ............. $(425) $ 907
Benefit from income taxes .......................................... 159 1,044
(266) 1,951
Loss on disposal of discontinued operations, net of income taxes ............. — (442)
Net (loss) income from discontinued operations ...................... $(266) $1,509
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 statutes of
limitations and favorable settlements. The benefit from income taxes for the year ended December 30, 2012 includes
approximately $580 of employment credits realized by the Company for 2011 through the date of the sale of Arby’s
and reversals of accruals for uncertain tax positions discussed above, partially offset by taxes on income from
discontinued operations. Loss on disposal of discontinued operations, net of income taxes, for the year ended
December 30, 2012, includes the after tax effect of amounts paid to the prior owner of an Arby’s location that was
transferred to Wendy’s Restaurants during 2012, as contemplated in the sale agreement, and as such, had no impact
on the total purchase price.
(18) Retirement Benefit Plans
401(k) Plan
Subject to certain restrictions, the Company has a 401(k) defined contribution plan (the “401(k) Plan”) for all
of its employees who meet certain minimum requirements and elect to participate. The 401(k) Plan permits
employees to contribute up to 75% of their compensation, subject to certain limitations and provides for matching
employee contributions up to 4% of compensation and for discretionary profit sharing contributions.
In connection with the matching and profit sharing contributions, the Company recognized compensation
expense of $7,023, $8,235 and $8,887 in 2014, 2013 and 2012, respectively.
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