Wendy's International (WEN)

(19) Impairment of Long-Lived Assets

The Company recognized impairment losses in its restaurant business segment and asset management business segment during 2004, 2005 and 2006 consisting of the following (in thousands):

The restaurant impairment losses in each year predominantly reflected (1) impairment charges resulting from the deterioration in operating performance of certain restaurants including, for 2006, the effect of nineteen restaurants expected to be closed in 2007 and (2) additional charges for investments in restaurants impaired in a prior year which did not subsequently recover. The trademark impairment losses resulted from

135

Triarc Companies, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
December 31, 2006

the Company’s assessment of the T.J. Cinnamons brand, which offers, through franchised and Company-owned restaurants, a product line of gourmet cinnamon rolls, coffee rolls, coffees and other related products. These impairment assessments resulted from (1) the Company’s decision in 2004 to not actively pursue new T.J. Cinnamons franchisees until additional new product offerings within its existing product line were tested and became available, (2) the corresponding reduction in anticipated T.J. Cinnamons unit growth and (3) in 2005 and 2006, lower than expected revenues and an overall decrease in management’s focus on the T.J. Cinnamons brand. The 2005 charge related to the asset management contracts represented the write-off of the value of an asset management contract for a CDO (see Note 3) as a result of that CDO being terminated early during 2005 rather than the projected date in 2010 and the related reduction of the Company’s asset management fees to be received. The 2006 charge related to the asset management contracts represented the write-off of the value of asset management contracts for two CDOs as a result of those CDOs being terminated during 2006 rather than the respective projected dates of 2007 and 2013 and the related reduction of the Company’s asset management fees to be received. All of these impairment losses represented the excess of the carrying value over the fair value of the affected assets and are included in “Depreciation and amortization, excluding amortization of deferred financing costs” in the accompanying consolidated statements of operations. The fair values of impaired assets discussed above were estimated to be the present values of the anticipated cash flows associated with each affected Company-owned restaurant, the trademark and the asset management contracts.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” if indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets, exclusive of Goodwill, by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, the Company measures the amount of such impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset. The Company believes the future cash flows to be received from the long-lived assets will exceed the assets’ carrying value, and, accordingly, the Company has not recognized any impairment losses through December 31, 2005.