Wendy's 2014 Annual Report Download - page 87

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
support the future working capital needs of that entity. On December 27, 2013, Wendy’s transferred its interest in
the Japan JV to Higa Industries, Ltd. for nominal consideration, terminating the joint venture, and establishing the
Japan JV as a wholly-owned entity of the Higa Partners (“Wendy’s Japan”). Wendy’s Japan and the Higa Partners
issued a promissory note to Wendy’s evidencing the commitment to repay both amounts described above in full by
December 27, 2018. We have included our capital contributions totaling $4,800, net of cash acquired of $188, for
the year ended December 29, 2013 in “Acquisitions” in our consolidated statement of cash flows. Therefore, Wendy’s
deconsolidated the Japan JV and recognized a loss of $1,658, which was included in “Other operating expense, net”
in our consolidated statements of operations for the year ended December 29, 2013.
Certain of the Obligations were supported by guarantees by Wendy’s and the Higa Partners, and such
guarantees were subject to a cross-indemnification arrangement between Wendy’s and the Higa Partners. With the
repayment of the Japan JV’s financing debt, the applicable guarantees were also terminated, and both Wendy’s and the
Higa Partners terminated the cross-indemnification arrangement related thereto. As a result, as of December 29, 2013,
Wendy’s had no remaining funding requirements for, or exposure under guarantees to lenders to, the Japan JV.
Indirect Investment in Arby’s
In connection with the sale of Arby’s, Wendy’s Restaurants obtained an 18.5% equity interest in ARG Holding
Corporation (through which Wendy’s Restaurants indirectly retained an 18.5% interest in Arby’s) with a fair value of
$19,000. See Note 17 for more information on the sale of Arby’s. We account for our interest in Arby’s as a cost
method investment. During 2013, we received a dividend of $40,145 from our investment in Arby’s, of which
$21,145 was recognized in “Investment income, net,” with the remainder recorded as a reduction to the carrying
value of our investment in Arby’s. During 2012, we received a dividend of $4,625 from our investment in Arby’s,
which was included in “Investment income, net.”
Sale of Investment in Jurlique International Pty Ltd.
On February 2, 2012, Jurl Holdings, LLC (“Jurl”), a 99.7% owned subsidiary completed the sale of our
investment in Jurlique International Pty Ltd. (“Jurlique”), an Australian manufacturer of skin care products, for
which we received proceeds of $27,287, net of the amount held in escrow. In connection with the anticipated
proceeds of the sale and in order to protect ourselves from a decrease in the Australian dollar through the closing date,
we entered into a foreign currency related derivative transaction for an equivalent notional amount in U.S. dollars of
the expected proceeds of A$28,500. During the year ended December 30, 2012, we recorded a gain on sale of this
investment of $27,407, which included a loss of $2,913 on the settlement of the derivative transaction discussed
above. The gain was included in “Investment income, net” in our consolidated statements of operations. During the
year ended December 29, 2013, we collected $1,166 of the escrow. We also determined that $799 of the remaining
escrow would not be received and recorded the reduction of our escrow receivable to “Investment income, net.”
During the year ended December 28, 2014, we received a final escrow payment of $1,154 resulting in a gain of $199
which was recognized in “Investment income, net.”
We have reflected net income attributable to noncontrolling interests of $2,384, net of an income tax benefit of
$1,283, for the year ended December 30, 2012 in connection with the equity and profit interests discussed below. As
a result of this sale and distributions to the minority shareholders, there are no remaining noncontrolling interests in
this consolidated subsidiary.
Prior to 2009 when our predecessor entity was a diversified company active in investments, we had provided
our Chairman, who was also our then Chief Executive Officer, and our Vice Chairman, who was our then President
and Chief Operating Officer (the “Former Executives”), and certain other former employees, equity and profit
interests in Jurl. In connection with the gain on sale of Jurlique, we distributed, based on the related agreement,
approximately $3,667 to Jurl’s minority shareholders, including approximately $2,296 to the Former Executives.
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