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This excerpt taken from the WEN 8-K filed Oct 19, 2006. Consolidation of Variable Interest Entities (“FIN 46R”). The revised Interpretation requires that a variable interest entity (“VIE”) be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the VIE’s residual returns or both. The consolidation provisions of FIN 46R immediately apply to VIEs created after January 1, 2004 or interests in VIEs obtained after that date. The Group did not create or acquire any VIEs after January 1, 2004. For interests in VIEs obtained prior to January 1,
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RTM Restaurant Group 2. Summary of Significant Accounting Policies—(continued) 2004, the consolidation provisions of FIN 46R become effective for the Group in its fiscal year ending May 28, 2006. Although the Group has not adopted FIN 46R, and its provisions have not been applied in the accompanying Combined Financial Statements, the Group has determined that, as of May 29, 2005, it has four VIEs that it would consolidate upon application of FIN 46R: Winners International Restaurants, Inc., Mrs. Winners, L.P. and Winners Partners (collectively “Winners”) and RTM Future Associates. These entities are under common control with the Group. Subsequent to the Triarc Transaction, the Group holds no variable interests in the entities. Additionally, the Group has determined that it holds variable interests in the form of notes receivable from entities that purchased restaurants from the Group subsequent to January 1, 2004. As more fully described in Note 4, in April and September of 2004, the Group sold restaurants to unrelated third parties for cash and notes receivable. The buyers are variable interest entities; however, the Group is not considered the primary beneficiary and, therefore, has not consolidated the entities. The Group’s outstanding notes receivable balances exposed to loss as a result of its involvement in these variable interest entities totaled approximately $2,000 as of May 29, 2005. The Group may hold variable interests in the form of notes receivable from entities that purchased restaurants from the Group prior to January 1, 2004. The Group has not yet determined whether any of such entities are VIEs or whether the Group will be required to consolidate any of them beginning in fiscal year 2006. In December 2004, the FASB issued a revision to Statement of Financial Accounting Standards No. 123, This excerpt taken from the WEN 8-K filed Aug 26, 2005. Consolidation of Variable Interest Entities, in December 2003 (“FIN 46R”). The revised Interpretation requires that a variable interest entity be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. The consolidation provisions of FIN 46R immediately apply to variable interest entities created after January 1, 2004 or interests in variable interest entities obtained after that date. For interests in variable interest entities obtained prior to January 1, 2004, the consolidation
provisions of FIN 46R become effective for the Group in its fiscal year ending May 28, 2006.
Although the Group has not adopted FIN 46R, and its provisions have not been applied in the accompanying financial statements, the Group has determined that, as of May 30, 2004, it holds interests in four variable interest entities that it would consolidate upon application of FIN 46R: Winners International Restaurants, Inc., Mrs. Winners, L.P. and Winners Partners (collectively “Winners”) and RTM Future Associates. These entities are under common control with the Group. Winners owns and operates 99 restaurants under the name of Mrs. Winner's Chicken & Biscuits in 38
RTM RESTAURANT GROUP 2. Summary of Significant Accounting Policies—(Continued) seven states. RTM Future Associates was established to purchase the stock of RTMRG's largest shareholder (see Note 17). The Group's maximum exposure to loss as a result of its involvement with Winners includes the Group's guarantee of $20,043 of Winners' debt as of March 6, 2005, the Group's guarantee of Winners' leases of $17,277 as of March 6, 2005, and the Group's commitment to provide liquidity support for Winners, as needed, over the 2005 fiscal year. Such exposure excludes receivables from Winners of $58,804 as of March 6, 2005, that are included in net capital deficiency in the accompanying balance sheet. See Note 17 for further discussion. Additionally, the Group has determined that it holds variable interests in the form of notes receivable from entities that purchased restaurants from the Group subsequent to January 1, 2004. As more fully described in Note 4, in April and September of 2004, the Group sold restaurants to unrelated third parties for cash and notes receivable. The buyers are variable interest entities; however, the Group is not considered the primary beneficiary and, therefore, has not consolidated the entities. The Group's outstanding notes receivable balances exposed to loss as a result of its involvement in these variable interest entities totaled $2,600 as of March 6, 2005. The Group may hold variable interests in the form of notes receivable from entities that purchased restaurants from the Group prior to January 1, 2004. The Group has not yet determined whether any of such entities are variable interest entities or whether the Group would be required to consolidate any of them beginning in fiscal year 2006. In December 2004, the FASB issued a revision to Statement of Financial Accounting Standards No. 123 (SFAS 123R), | EXCERPTS ON THIS PAGE:
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