Wendy's 2014 Annual Report Download - page 82

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The fair values of the identifiable assets acquired were determined using one of the following valuation
approaches: market, income and cost. The selection of a particular method for a given asset depended on the
reliability of available data and the nature of the asset.
On July 13, 2012, Wendy’s acquired 24 franchised restaurants in the Albuquerque, New Mexico area from
Double Cheese Corporation and Double Cheese Realty Corporation (“Double Cheese”). The purchase price was
$19,181 in cash, including closing adjustments. Wendy’s also agreed to lease the real estate, buildings and
improvements related to 12 of the acquired restaurants from Double Cheese which were considered part of the
purchase transaction. Wendy’s did not incur any material acquisition-related costs with this acquisition.
The operating results of the 24 franchised restaurants acquired were included in our consolidated financial
statements beginning on the acquisition date through the subsequent sale during the first quarter of 2014 to a
franchisee in connection with our system optimization initiative. Such results were not material to our consolidated
financial statements.
The table below presents the allocation of the total purchase price to the fair value of assets acquired and
liabilities assumed at the acquisition date.
Total purchase price paid in cash ............................................... $19,181
Identifiable assets acquired and liabilities assumed:
Cash ............................................................. 27
Inventories ........................................................ 163
Properties ......................................................... 12,753
Deferred taxes and other assets ......................................... 190
Acquired territory rights (a) ........................................... 2,640
Favorable ground leases .............................................. 1,147
Capitalized lease obligations ........................................... (948)
Deferred vendor incentives ............................................ (248)
Unfavorable leases ................................................... (531)
Other liabilities ..................................................... (727)
Total identifiable net assets ........................................ 14,466
Goodwill (b) ............................................................... $ 4,715
(a) The acquired territory rights had a weighted average amortization period of 13 years. Due to the sale of this
territory, we accelerated the amortization through the date of sale.
(b) This goodwill was partially amortizable for income tax purposes. In addition, the goodwill was disposed of as a
result of the subsequent sale of this territory.
The fair values of the identifiable assets acquired were determined using one of the following valuation
approaches: market, income and cost. The selection of a particular method for a given asset depended on the
reliability of available data and the nature of the asset.
During the year ended December 30, 2012, Wendy’s also acquired two franchised restaurants along with
certain other equipment and franchise rights. The total net cash consideration for this acquisition was $2,594. The
total consideration was allocated to net tangible and identifiable intangible assets acquired, primarily properties, and
liabilities assumed based on their estimated fair values, with the excess of $485 recognized as goodwill.
Dispositions
During the year ended December 28, 2014, Wendy’s received cash proceeds of $53,553 from dispositions,
which were not included in the system optimization initiative, consisting of (1) $36,238 from the sale of
52 company-owned restaurants to franchisees, including the 18 restaurants acquired in the fourth quarter mentioned
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