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WEN » Topics » Reclassifications, Eliminations and Excluded Items Adjustments

This excerpt taken from the WEN 8-K filed Oct 19, 2006.

Reclassifications, Eliminations and Excluded Items Adjustments

(a)   To eliminate in consolidation royalties from RTM to the Company.
     
(b)   To eliminate in consolidation franchise fees from RTM to the Company. These amounts differ since the Company recognizes franchise fees in revenue as restaurants open and RTM capitalizes franchise fees paid and amortizes them to expense over the useful life of the franchise agreement.
     
(c)   To reclassify RTM's advertising and selling expenses from “Cost of sales, excluding depreciation and amortization,” to “Advertising and selling” to conform with the Company's classification.
     
(d)   To exclude the effect on results of operations relating to assets and liabilities and costs and expenses of RTM not acquired by the Company in the RTM Acquisition.
     
(e)   To reclassify RTM's amortization of deferred financing costs from “Depreciation and amortization, excluding amortization of deferred financing costs” to “Interest expense” to conform with the Company's classification.
     
(f)   To reclassify RTM's interest income from “Interest expense” to “Other income, net” to conform with the Company's classification.
     
(g)   To reflect the income tax provision on the net effect of entries (b) and (d) above.
 
Pro Forma Adjustments for the RTM Acquisition
     
(h)   To adjust rent expense for the amortization of unfavorable lease liabilities assumed in the RTM Acquisition.

31

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (continued)

(i)   To adjust rent expense to account for the land portion of RTM's sale-leaseback transactions involving land leased without a purchase option as operating leases instead of capitalized sale-leaseback obligations to conform with the Company's accounting policy.
     
(j)   To adjust compensation expense over the remaining vesting period for the amortization of unearned compensation relating to the nonvested portion of stock options to purchase 774,000 Class B common shares of Triarc issued in connection with the RTM Acquisition. The vested portion of such stock options has been included as a component of the purchase price for RTM.
     
(k)   To adjust “Depreciation and amortization, excluding amortization of deferred financing costs” as follows (in thousands):
             

Record depreciation and amortization on the properties acquired in the RTM Acquisition over useful lives ranging from 5 to 17 years

      $ 13,810  
             

Record amortization on the identifiable intangible assets acquired in the RTM Acquisition, all of which were determined to have finite lives, over useful lives ranging from 2 to 20 years

        2,025  
             

Reverse RTM's reported depreciation and amortization, as adjusted by entries (b), (d) and (e) above

        (15,439 )
          
 
             

     $ 396  
          
 
             

       
(l)   To reverse interest income on the $124,831,000 of existing cash and cash equivalents, including $30,573,000 of previously restricted cash equivalents, used by the Company to partially fund the cash portion of the purchase price for RTM. The interest income was computed using the Company's average rate on its interest-bearing investments of 3.5% per annum for the 2005 Pre-Acquisition Period.
     
(m)   To increase “Other income, net” for the reduction in the fair value of RTM's guarantees of certain lease obligations, recorded as a liability in connection with the RTM Acquisition purchase price allocation, of restaurants either (1) operated by affiliates of RTM not acquired by the Company or (2) related to restaurants sold by RTM in various transactions prior to the RTM Acquisition whereby the purchasers of the restaurants assumed the lease obligations, although RTM remains contingently liable if the respective purchasers do not make the required lease payments.
     
(n)   To adjust “Benefit from (provision for) income taxes” as follows (in thousands):
             

Reflect the estimated income tax benefit of entries (h) through (m) above at the incremental tax rate of 40.0%

      $ 2,968  
             

Reflect an income tax provision on the portion of RTM's pretax income relating to limited liability companies for which no income tax provision was provided, at the incremental tax rate of 40.0%

        (1,967 )
          
 
             

     $ 1,001  
          
 
             

       

32

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (continued)

This excerpt taken from the WEN 8-K filed Aug 26, 2005.

Reclassifications, Eliminations and Excluded Items Adjustments

(a)      To eliminate in consolidation royalties from RTM to the Company. The amounts of royalties recognized by the Company as revenue differ from the amounts of royalties recognized as expense by RTM, due to the different fiscal periods of the Company and RTM used in the pro forma condensed consolidated financial statements.
(b)      To eliminate in consolidation franchise fees from RTM to the Company. These amounts differ since the Company recognizes franchise fees in revenue as restaurants open and RTM capitalizes franchise fees paid and amortizes them to expense over the useful life of the franchise agreement and due to the different fiscal periods of the Company and RTM used in the pro forma condensed consolidated financial statements.
(c)      To reclassify RTM's advertising and selling expenses from “Cost of sales, excluding depreciation and amortization,” to “Advertising and selling” to conform with the Company's classification.
(d)      To exclude the effect on results of operations relating to assets and liabilities and costs and expenses of RTM not acquired by the Company in the RTM Acquisition.
(e)      To reclassify RTM's amortization of deferred financing costs from “Depreciation and amortization, excluding amortization of deferred financing costs” to “Interest expense” to conform with the Company's classification.
(f)      To reclassify RTM's interest income from “Interest expense” to “Other income, net” to conform with the Company's classification.

59

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS—(Continued)

(g)      To reflect the income tax provision on the net effect of the eliminations in entries (a) and (b) above at the incremental tax rate of 40.0%.
Pro Forma Adjustments for the RTM Acquisition
(h)      To adjust rent expense for the amortization of unfavorable lease liabilities assumed in the RTM Acquisition.
(i)      To adjust compensation expense over the remaining vesting period for the amortization of unearned compensation relating to the nonvested portion of stock options to purchase 774,000 Class B Common Shares issued in connection with the RTM Acquisition. The vested portion of such stock options has been included as a component of the purchase price for RTM.
(j)      To adjust “Depreciation and amortization, excluding amortization of deferred financing costs” as follows (in thousands):
        Year Ended
January 2,
2005
   Six Months
Ended
July 3,
2005
       Record depreciation and amortization on the properties acquired in the RTM Acquisition over the remaining useful lives ranging from 5 to 17 years      $ 22,522        $ 11,261  
       Record amortization on the identifiable intangible assets acquired in the RTM Acquisition, all of which were determined to have finite lives, over the remaining useful lives ranging from 7 to 30 years        4,603          2,302  
       Reverse RTM's reported depreciation and amortization, as adjusted by entries (b), (d) and (e) above and excluding an impairment charge of $1,100 recognized by RTM during the six months ended May 29, 2005        (26,015 )        (13,141 )
            
        
 
           $ 1,110        $ 422  
            
        
 
(k)      To reverse interest income on the $127,773,000 of existing cash and cash equivalents, including $32,912,000 of previously restricted cash equivalents, used by the Company to partially fund the cash portion of the purchase price for RTM. The interest income was computed using the Company's average rates on its interest-bearing investments of 2.5% and 3.4% per annum for the year ended January 2, 2005 and the six months ended July 3, 2005, respectively.
(l)      To adjust “Benefit from (provision for) income taxes” as follows (in thousands):
        Year Ended
January 2,
2005
   Six Months
Ended
July 3,
2005
       Reflect the estimated income tax benefit from entries (h) through (k) above at the incremental tax rate of 40%      $ 1,778        $ 897  
       Reflect an income tax provision on the portion of RTM's pretax income relating to limited liability companies for which no tax provision was provided, at the incremental tax rate of 40%        (1,892 )        (1,330 )
            
        
 
           $ (114 )      $ (433 )
            
        
 

60

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS—(Continued)

EXCERPTS ON THIS PAGE:

8-K
Oct 19, 2006
8-K
Aug 26, 2005

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