Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Discontinued Operations

Discontinued Operations

On July 4, 2011, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”), a direct 100% owned subsidiary holding company of the Company, completed the sale of 100% of the common stock of its then wholly-owned subsidiary, Arby’s Restaurant Group, Inc. (“Arby’s”) (while indirectly retaining an 18.5% interest in Arby’s), as described in the Form 10-K. Information related to Arby’s has been reflected in the accompanying unaudited condensed consolidated financial statements as follows:

• Statements of operations - Arby’s income from operations for the period from January 3, 2011 through July 3, 2011 has been classified as discontinued operations. Loss from discontinued operations for the three and nine months ended October 2, 2011 also includes additional Arby's expenses which were incurred as a result of the sale and the loss on the disposal of Arby’s. Income from discontinued operations for the three and nine months ended September 30, 2012 includes certain post-closing Arby’s related transactions, as further described below.

• Statements of cash flows - Arby’s cash flows for the period from January 3, 2011 through July 3, 2011 have been included in, and not separately reported from, our consolidated cash flows. The statement of cash flows for the nine months ended October 2, 2011 also includes the effects of the sale of Arby’s during the third quarter of 2011. The statement of cash flows for the nine months ended September 30, 2012 includes the effect of certain post-closing Arby’s related transactions, as further described below.

Our unaudited condensed consolidated statement of operations for the period from January 3, 2011 through July 3, 2011 (prior to the sale of Arby’s) includes certain indirect corporate overhead costs in “General and administrative,” which, for segment reporting purposes, had previously been allocated to Arby’s. These indirect corporate overhead costs do not qualify for classification within discontinued operations, and therefore are included in “General and administrative” in continuing operations. Interest expense on Arby’s debt that was assumed by the buyer in the sale has been included in discontinued operations; however, interest expense on Wendy’s Restaurants’ credit agreement, which was not required to be repaid as a result of the sale, continued to be included in “Interest expense” in continuing operations.

We incurred “Transaction related costs” resulting from the sale of Arby’s of $145 and $1,319 during the three and nine months ended September 30, 2012, respectively, and $23,839 and $30,762 during the three and nine months ended October 2, 2011, respectively.

The following table presents the net income (loss) from discontinued operations, as a result of the sale of Arby’s, for the three and nine months ended September 30, 2012 and October 2, 2011:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Revenues	$	—		$	—		$	—		$	546,453
Income (loss) from discontinued operations, net of      income taxes:
Income (loss) from discontinued       operations before income taxes	$	341		$	(2,287	)	$	341		$	1,992
Benefit from (provision for) income taxes	443			846			443			(874		)
	784			(1,441		)	784			1,118
Loss on disposal of discontinued       operations, net of income taxes	(254		)	(5,069		)	(254		)	(8,849		)
Net income (loss) from discontinued    operations	$	530		$	(6,510	)	$	530		$	(7,731	)

Income from discontinued operations, before income taxes, for the three and nine months ended September 30, 2012 includes the effect of reversals of certain sales tax reserves established in connection with the sale of Arby’s. The benefit from income taxes for the three and nine months ended September 30, 2012 includes approximately $580 of employment credits realized by the Company for 2011 through the date of the sale of Arby’s which are partially offset by certain tax payments related to Arby’s made during 2012. Loss on disposal of discontinued operations, net of income taxes, for the three and nine months ended September 30, 2012, includes the after tax effect of amounts paid to the prior owner of an Arby’s location that was transferred to Wendy’s Restaurants during the third quarter of 2012, as contemplated in the sale agreement, and as such, had no impact on the total purchase price. Net loss from discontinued operations for the three and nine months ended October 2, 2011 includes additional Arby’s expenses which were incurred as a result of the sale and the loss on the disposal of Arby’s.