Wendy's 2014 Annual Report Download - page 76

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
three additional in-line distributors that, in the aggregate, serviced approximately 36% of its company-owned and
franchised restaurants. We believe that our vulnerability to risk concentrations related to significant vendors and
sources of its raw materials is mitigated as we believe that there are other vendors who would be able to service our
requirements. However, if a disruption of service from any of our main in-line distributors was to occur, we could
experience short-term increases in our costs while distribution channels were adjusted.
Wendy’s restaurants are principally located throughout the U.S. and to a lesser extent, in 28 foreign countries
and U.S. territories with the largest number in Canada. Wendy’s restaurants are located in 50 states and the District
of Columbia, with the largest number in Florida, Ohio, Texas, Georgia, California, Michigan, Pennsylvania and
North Carolina. Because our restaurant operations are generally located throughout the U.S. and to a much lesser
extent, Canada and other foreign countries and U. S. territories, we believe the risk of geographic concentration is not
significant. We could be adversely affected by changing consumer preferences resulting from concerns over nutritional
or safety aspects of beef, poultry, french fries or other products we sell or the effects of food safety events or disease
outbreaks. Our exposure to foreign exchange risk is primarily related to fluctuations in the Canadian dollar relative to
the U.S. dollar for our Canadian operations. However, our exposure to Canadian dollar foreign currency risk is
mitigated by the fact that less than 10% of Wendy’s restaurants are in Canada.
New Accounting Standards
In June 2014, the Financial Accounting Standards Board (the “FASB”) issued an amendment to clarify that a
performance target that affects vesting and which could be achieved after the requisite service period should be treated
as a performance condition and therefore should not be reflected in estimating the grant-date fair value of the award.
The Company does not expect the amendment, which is effective commencing with our 2016 fiscal year, to have a
material impact on our consolidated financial statements.
In May 2014, the FASB issued a new standard on revenue recognition. The new standard outlines a single
comprehensive model for entities to use in accounting for revenue arising from contracts with customers and
supersedes most current revenue recognition guidance, including industry-specific guidance. The amendment is
effective commencing with our 2017 fiscal year and requires enhanced disclosures. We are currently evaluating the
impact of the adoption of this standard on our consolidated financial statements.
In April 2014, the FASB issued an amendment that modifies the criteria for reporting a discontinued operation.
The amendment changes the definition of a discontinued operation including the implementation guidance and
requires expanded disclosures. The amendment is effective, prospectively, commencing with our 2015 fiscal year. We
are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
New Accounting Standards Adopted
In July 2013, the FASB issued an amendment that requires companies to present unrecognized tax benefits as a
reduction to deferred tax assets when a net operating loss carryforward, a similar tax loss or a tax credit carryforward
exists, with limited exceptions. The Company adopted this amendment during the first quarter of 2014. See Note 12
for more information.
(2) Facilities Action (Income) Charges, Net
Year Ended
2014 2013 2012
System optimization initiative .............................. $(42,026) $ 4,901 $ —
G&A realignment ....................................... 12,926 — —
Facilities relocation and other transition costs ................... — 4,574 28,990
Breakfast discontinuation .................................. — 1,118 10,569
Arby’s transaction related costs .............................. — 263 1,472
$(29,100) $10,856 $41,031
72