Investments

The following is a summary of the carrying value of our investments:



	Year End
	2012			2011
Equity investments:
Joint venture with THI	$	89,370		$	91,742
Joint venture in Japan (a)	(1,750		)	77
Cost investments:
Arby’s	19,000			19,000
Jurlique	—			325
Other cost investments	4,913			8,127
	$	111,533		$	119,271

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(a)	In 2012, our equity investment in the Japan JV was included in “Other liabilities;” Wendy’s has provided certain guarantees and the partners have agreed on a plan to finance anticipated future cash requirements of the Japan JV as further described below.

Investment in Joint Venture with Tim Hortons Inc.

Wendy’s is a partner in TimWen and our 50% share of the joint venture is accounted for using the equity method of accounting. Our equity in earnings from TimWen is included in “Other operating expense, net.” The carrying value of our investment in TimWen exceeded our interest in the underlying equity of the joint venture by $54,088 and $55,805 as of December 30, 2012 and January 1, 2012, respectively, primarily due to purchase price adjustments from the Wendy’s merger.

Presented below is activity related to our portion of TimWen included in our consolidated balance sheets and consolidated statements of operations as of and for the years ended December 30, 2012, January 1, 2012 and January 2, 2011.



	Year Ended
	2012			2011			2010
Balance at beginning of period	$	91,742		$	98,631		$	97,476

Equity in earnings for the period	13,680			13,505			12,316
Amortization of purchase price adjustments (a)	(3,129		)	(2,934		)	(2,857		)
	10,551			10,571			9,459
Distributions received	(15,274		)	(14,942		)	(13,980		)
Foreign currency translation adjustment included in “Other comprehensive income (loss), net”	2,351			(2,518		)	5,676
Balance at end of period (b)	$	89,370		$	91,742		$	98,631

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(a)	Based upon an average original aggregate life of 21 years.


(b)	Included in “Investments.”

Presented below is a summary of the financial information of TimWen, including the balance sheets as of December 30, 2012 and January 1, 2012 and certain income statement information for the years ended December 30, 2012, January 1, 2012 and January 2, 2011. The summary balance sheet financial information does not distinguish between current and long-term assets and liabilities.



	Year End
	2012		2011
Balance sheet information:
Properties	$	73,013	$	73,394
Cash and cash equivalents	3,538		2,621
Accounts receivable	3,274		4,231
Other	2,516		2,565
	$	82,341	$	82,811
Accounts payable and accrued liabilities	$	3,215	$	2,281
Other liabilities	8,561		8,655
Partners’ equity	70,565		71,875
	$	82,341	$	82,811



	Year Ended
	2012		2011		2010
Income statement information:
Revenues	$	39,702	$	39,374	$	37,242
Income before income taxes and net income	27,377		27,358		24,247

Investment in Joint Venture in Japan

During the second quarter of 2011, Wendy’s entered into the Japan JV. Wendy’s 49% share of the joint venture is accounted for using the equity method of accounting and our equity in losses is included in “Other operating expense, net.”

Presented below is activity related to our portion of the Japan JV included in our consolidated balance sheets and consolidated statements of operations as of and for the years ended December 30, 2012 and January 1, 2012.



	Year Ended
	2012			2011
Balance at beginning of period	$	77		$	—
Initial investment	—			1,183
Equity in losses for the period	(1,827		)	(1,106		)
Balance at end of period (a)	$	(1,750	)	$	77

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(a)	Included in “Other liabilities” in 2012 and in “Investments” in 2011.

Presented below is a summary of the financial information of the Japan JV, including the balance sheets as of December 30, 2012 and January 1, 2012, and certain income statement information for the years ended December 30, 2012 and January 1, 2012.



	Year End
	2012			2011
Balance sheet information:
Current assets:
Cash	$	347		$	686
Inventories	23			39
Prepaid expenses and other current assets	265			281
Total current assets	635			1,006
Properties	1,343			2,625
Deposits and other assets	703			493
Total assets	$	2,681		$	4,124
Current liabilities:
Current portion of long-term debt	$	1,443		$	414
Accounts payable	342			1,193
Accrued expenses and other current liabilities	92			76
Total current liabilities	1,877			1,683
Long-term debt	4,912			1,689
Other liabilities	614			526
Partners’ (deficit) equity	(4,722		)	226
Total liabilities and partners’ equity	$	2,681		$	4,124



	Year Ended
	2012			2011
Income statement information:
Revenues	$	2,322		$	69
Loss before income taxes and net loss	(5,322		)	(2,293		)

In 2012, Wendy’s (1) provided a guarantee to certain lenders to the Japan JV for which our joint venture partners have agreed, should it become necessary, to reimburse and otherwise indemnify us for their 51% share of the guarantee and (2) agreed to reimburse and otherwise indemnify our joint venture partners for our 49% share of the guarantee by our joint venture partners of a line of credit granted by a different lender to the Japan JV to fund working capital requirements. As of December 30, 2012, our portion of these contingent obligations totaled approximately $3,000 based upon then current rates of exchange. The fair value of our guarantees is immaterial.

In early 2013, the joint venture partners agreed on a plan to finance anticipated future cash requirements of the Japan JV. As determined by the amount of future capital contributions by each of the partners, Wendy’s may become the majority owner of the Japan JV. The Japan JV and the effect of the noncontrolling interest in the Japan JV would then be included in the Wendy’s consolidated financial statements from the date that Wendy’s became the majority owner, or otherwise assumed day-to-day control of the Japan JV’s operations.

Our obligations, including the funding of anticipated future cash requirements of the Japan JV of approximately $3,000, could total up to approximately $8,000 if our joint venture partners are unable to perform their reimbursement and indemnity obligations to us.

Indirect Investment in Arby’s

In connection with the sale of Arby’s, Wendy’s Restaurants obtained an 18.5% equity interest in Buyer Parent (through which Wendy’s Restaurants indirectly retained an 18.5% interest in Arby’s) with a fair value of $19,000. See Note 2 for more information on the sale of Arby’s. We account for our interest in Arby’s as a cost method investment. During 2012, we received a $4,625 dividend from our investment in Arby’s which was included in “Investment income, net.”

Sale of Investment in Jurlique International Pty Ltd.

Jurl Holdings, LLC (“Jurl”), a 99.7% owned subsidiary, held our approximately 11% cost method investment in Jurlique International Pty Ltd. (“Jurlique”), an Australian manufacturer of skin care products. Prior to 2009, we had determined that all of our then remaining $8,500 investment in Jurlique was impaired. On February 2, 2012, Jurl completed the sale of our investment in Jurlique for which we received proceeds of $27,287, net of the amount held in escrow. The amount held in escrow as of December 30, 2012 was $3,372, which was adjusted for foreign currency translation and was included in “Deferred costs and other assets.” 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. 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 statement of operations.

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. The net assets and liabilities of the subsidiary that held the investment were not material to the consolidated financial statements. Therefore, the noncontrolling interest in those assets and liabilities was not previously reported separately. 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.