Wendy's 2015 Annual Report Download - page 105

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
and (4) changes in valuation allowances related to the likelihood of the utilization of state net operating loss
carryforwards of $4,542 in 2015. These amounts are included in the state income tax provision, the foreign provision,
non-deductible goodwill and the valuation allowance amounts presented in the table above.
The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”).
As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the
filing of the tax return. As such, our tax returns for fiscal years 2009 through 2014 have been settled. Certain of the
Company’s state income tax returns from its 2011 fiscal year and forward remain subject to examination. We believe
that adequate provisions have been made for any liabilities, including interest and penalties that may result from the
completion of these examinations.
Unrecognized Tax Benefits
As of January 3, 2016, the Company had unrecognized tax benefits of $21,224, which, if resolved favorably
would reduce income tax expense by $15,843. A reconciliation of the beginning and ending amount of unrecognized
tax benefits follows:
Year End
2015 2014 2013
Beginning balance ........................................... $25,715 $23,897 $28,848
Additions:
Tax positions of current year ........................... 927 — —
Tax positions of prior years ............................ 476 2,678 3,579
Reductions:
Tax positions of prior years ............................ (5,182) (582) (4,914)
Settlements ........................................ (251) — (2,416)
Lapse of statute of limitations .......................... (461) (278) (1,200)
Ending balance ............................................. $21,224 $25,715 $23,897
During the first quarter of 2015, we concluded two state income tax examinations which resulted in the
recognition of a net tax benefit of $1,872 and the reduction of our unrecognized tax benefits by $3,686. Additionally,
during the second quarter of 2015, unfavorable state court decisions and audit experience led us to abandon certain
refund claims, which resulted in a reduction of our unrecognized tax benefits by $1,274.
During 2016, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to
$6,896, primarily as a result of the completion of certain income tax examinations.
During 2015, 2014 and 2013, the Company recognized $(1,627), $315 and $(835) of (income) expense for
interest and $15, $330 and $672 of income resulting from the reversal of accrued penalties, respectively, related to
uncertain tax positions. The Company has approximately $1,223 and $2,949 accrued for interest and $642 and $657
accrued for penalties as of January 3, 2016 and December 28, 2014, respectively.
(15) Stockholders’ Equity
Dividends
During the years ended January 3, 2016, December 28, 2014 and December 29, 2013, The Wendy’s Company
paid dividends per share of $0.225, $0.205 and $0.18, respectively.
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