Wendy's 2014 Annual Report Download - page 88

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(7) Properties
Year End
2014 2013
Owned:
Land ................................................... $ 384,148 $ 384,847
Buildings and improvements ................................ 505,218 454,805
Office, restaurant and transportation equipment ................. 428,469 389,161
Leasehold improvements .................................... 365,441 374,586
Leased:
Capital leases (a) .......................................... 44,604 36,126
1,727,880 1,639,525
Accumulated depreciation and amortization (b) ...................... (456,642) (474,038)
$1,271,238 $1,165,487
(a) These assets principally include buildings and improvements.
(b) Includes $13,151 and $14,911 of accumulated amortization related to capital leases at December 28, 2014 and
December 29, 2013, respectively.
In connection with the reimaging of restaurants as part of our Image Activation program, we recorded $19,353
and $38,190 of accelerated depreciation and amortization during the years ended December 28, 2014 and
December 29, 2013, respectively, on certain long-lived assets to reflect their use over shortened estimated useful lives.
(8) Goodwill and Other Intangible Assets
Goodwill activity for 2014 and 2013 was as follows:
Year End
2014 2013
Balance at beginning of year ........................................ $842,544 $876,201
Restaurant dispositions (a) ..................................... (27,571) (20,578)
Restaurant acquisitions ........................................ 11,455 —
Impairment ................................................ — (9,397)
Currency translation adjustment and other, net ..................... (3,866) (3,682)
Balance at end of year ............................................. $822,562 $842,544
(a) During 2014, in connection with the Company’s plan to sell all of its company-owned restaurants in Canada to
franchisees as part of its ongoing system optimization initiative, goodwill of $11,574 was reclassified to assets
held for sale, of which $2,035 was disposed of as a result of the sale of 29 Canadian restaurants. See Note 2 for
further information.
During the fourth quarter of 2013, step one of our annual goodwill impairment test indicated that our
international franchise restaurants reporting unit was impaired as its carrying amount exceeded its fair value. The fair
value of our international franchise reporting unit was based on the income approach, which was determined based on
the present value of the anticipated cash flows associated with the reporting unit. The decline in the fair value of the
international franchise restaurants reporting unit resulted from lower than anticipated current and future operating
results including lower projected growth rates and profitability levels than previously anticipated. Step two of our
process resulted in an impairment charge of $9,397, which represented the total amount of goodwill recorded for our
international franchise restaurants reporting unit. We concluded in 2014 and 2013 that our remaining goodwill
related to our North America company-owned and franchise restaurants reporting unit was not impaired.
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