Wendy's 2014 Annual Report Download - page 45

During the first quarter of 2012, impairment losses of $1.6 million were recorded to reflect a company-owned
aircraft at fair value as a result of classifying the aircraft as held for sale. Subsequently, during the second quarter of
2012, the Company decided to lease the aircraft and as a result reclassified the aircraft to held and used. During 2013,
the Company decided to sell its company-owned aircraft and recorded an impairment charge of $5.3 million to reflect
the aircraft at fair value based on current market values. The aircraft were sold during 2014 resulting in a net loss of
$0.3 million.
Impairment of Goodwill
In 2013, our annual goodwill impairment test resulted in an impairment charge of $9.4 million, which
represented all of the goodwill recorded for our international franchise restaurants reporting unit. In 2014, 2013 and
2012, we concluded there was no impairment of goodwill for our North America company-owned and franchise
restaurants reporting unit.
Other Operating Expense, Net
Year Ended
2014 2013 2012
Lease expense ................................................. $37.8 $13.6 $11.6
Gain on dispositions, net ........................................ (21.9) (4.7) —
Equity in earnings in joint ventures, net ............................. (10.2) (9.7) (8.7)
Other ....................................................... (1.5) 1.0 1.5
$ 4.2 $ 0.2 $ 4.4
The increase in other operating expense, net during 2014 was primarily due to an increase in lease expense
resulting from the subleasing of properties to franchisees. Lease expense on such properties, which were part of our
system optimization initiative, had been previously recorded in cost of sales. This increase in expense was partially
offset by an increase in net gains on dispositions, which were not included in our system optimization initiative. The
increase in net gains on dispositions was primarily from sales of company-owned restaurants to franchisees during
2014.
The decrease in other operating expense, net during 2013 was primarily due to net gains on dispositions
primarily from sales of surplus properties.
Interest Expense
Change
2014 2013
6.20% Senior Notes ........................................... $(11.1) $ (2.0)
Term loans .................................................. (5.1) 2.0
Senior Notes ................................................ — (29.0)
Other, net .................................................. (0.6) (0.6)
$(16.8) $(29.6)
The decrease in interest expense during 2014 was primarily due to the redemption of the Wendy’s
6.20% Senior Notes (the “6.20% Senior Notes”) in October 2013 and lower effective interest rates on the current
term loans compared to the prior term loan as a result of amending the Credit Agreement dated May 15, 2012 (the
“Credit Agreement”) on May 16, 2013 (the “Restated Credit Agreement”). This decrease in interest expense was
partially offset by the effect of higher weighted average principal amounts outstanding on the term loans during 2014
compared to 2013.
The decrease in interest expense during 2013 was primarily due to the purchase and redemption of the Wendy’s
Restaurants 10.00% Senior Notes due in 2016 (the “Senior Notes”) in May and July 2012, respectively, and the
redemption of the 6.20% Senior Notes in October 2013. This decrease in interest expense was partially offset by the
net effect of higher weighted average principal amounts outstanding and lower effective interest rates on the current
term loans compared to the prior term loan. The decrease in our effective interest rates on our current term loans
compared to the prior term loan is a result of the execution of the Credit Agreement in May 2012 and the Restated
Credit Agreement in May 2013.
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