Facilities Action Charges, Net



	Year Ended
	2013		2012		2011
System optimization initiative	$	4,901	$	—	$	—
Facilities relocation and other transition costs	4,574		28,990		5,527
Breakfast discontinuation	1,118		10,569		—
Arby’s transaction related costs	263		1,472		40,184
	$	10,856	$	41,031	$	45,711

System Optimization Initiative

In July 2013, the Company announced a system optimization initiative, as part of its brand transformation, which includes a plan to sell approximately 425 company-owned restaurants to franchisees by the end of the first quarter of 2014. This initiative also includes the consolidation of regional and divisional territories which has been completed as of the beginning of the 2014 fiscal year. As a result of the system optimization initiative, the Company has recorded losses on remeasuring long-lived assets to fair value upon determination that the assets will be leased and/or subleased to franchisees in connection with the sale or anticipated sale of restaurants. The Company does not anticipate significant changes to such System Optimization Remeasurement through the completion of the initiative, although such changes could occur if actual future rental payments differ substantially from estimated payments. Costs incurred related to the system optimization initiative, as well as gains or losses recognized on sales of restaurants under the system optimization initiative are recorded to “Facilities action charges, net” in our consolidated statements of operations. The Company’s estimate for costs to be incurred under the system optimization initiative during 2014 totals approximately $8,900 and includes: (1) accelerated amortization of previously acquired franchise rights in a territory being sold of $500, (2) severance and employee related costs of $3,300, (3) professional fees of $2,300 and (4) share-based compensation of $2,800. The Company cannot reasonably estimate the gains or losses resulting from future sales of restaurants.

The following is a summary of the activity recorded under our system optimization initiative:



	Year Ended
	2013
Gain on sales of restaurants, net	$	(46,667	)
System Optimization Remeasurement (a)	20,506
Accelerated amortization (b)	16,907
Severance and related employee costs	9,650
Professional fees	2,389
Share-based compensation (c)	1,253
Other	863
Total system optimization initiative	$	4,901

_______________


(a)	Includes remeasurement of land, buildings, leasehold improvements and favorable lease assets at all company-owned restaurants included in our system optimization initiative. See Note 11 for more information on non-recurring fair value measurements.


(b)	Includes accelerated amortization of previously acquired franchise rights related to company-owned restaurants in territories that are being sold in connection with our system optimization initiative.


(c)	Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

Gain on Sales of Restaurants, Net



	Year Ended
	2013
Number of restaurants sold to franchisees	244

Proceeds from sales of restaurants	$	130,154
Net assets sold (a)	(60,895		)
Goodwill related to sales of restaurants	(20,578		)
Net unfavorable lease liabilities (b)	(57		)
Other	(1,957		)
Gain on sales of restaurants, net	$	46,667

_______________


(a)	Net assets sold consisted primarily of cash, inventory and equipment.


(b)	The Company recorded favorable lease assets of $37,749 and unfavorable lease liabilities of $37,806 as a result leasing and/or subleasing land, buildings, and/or leasehold improvements to franchisees, in connection with sales of restaurants.

The table below presents a rollforward of our accrual for our system optimization initiative, which is included in “Accrued expenses and other current liabilities.”



	Balance December 30, 2012		Charges		Payments			Balance December 29, 2013
Severance and employee related costs	$	—	$	9,650	$	(2,599	)	$	7,051
Professional fees	—		2,389		(2,252		)	137
Other	—		863		(603		)	260
	$	—	$	12,902	$	(5,454	)	$	7,448

Restaurant Assets Held for Sale



	Year End
	2013
Number of restaurants classified as held for sale	181

Restaurant net assets held for sale	$	29,630

Restaurant net assets held for sale consist primarily of cash, inventory and equipment and are included in “Prepaid expenses and other current assets” as of December 29, 2013.

Subsequent Events

Subsequent to December 29, 2013, the Company completed the sale of certain assets used in the operation of 70 Wendy’s restaurants for cash proceeds of approximately $33,300, subject to customary purchase price adjustments. These sales are expected to result in an estimated pre-tax gain of approximately $14,700 in the first quarter of 2014.

Facilities Relocation and Other Transition Costs

As announced in December 2011, we commenced the relocation of the Company’s Atlanta restaurant support center to Ohio, which was substantially completed during 2012. The Company does not expect to incur additional costs related to the relocation.



	Year Ended							Total Incurred Since Inception
	2013		2012		2011			Total Incurred Since Inception
Severance, retention and other payroll costs	$	1,856	$	9,952	$	5,345		$	17,153
Relocation costs	1,898		5,222		—			7,120
Atlanta facility closure costs	337		4,541		—			4,878
Consulting and professional fees	128		4,928		—			5,056
Other	355		2,126		14			2,495
	4,574		26,769		5,359			36,702
Accelerated depreciation expense	—		1,921		197			2,118
Share-based compensation	—		300		(29		)	271
Total	$	4,574	$	28,990	$	5,527		$	39,091

The tables below present a rollforward of our accruals for facility relocation costs, which are included in “Accrued expenses and other current liabilities” and “Other liabilities.”



	Balance December 30, 2012		Charges		Payments			Balance December 29, 2013
Severance, retention and other payroll costs	$	4,121	$	1,856	$	(5,038	)	$	939
Relocation costs	500		1,898		(2,398		)	—
Atlanta facility closure costs	4,170		337		(1,733		)	2,774
Consulting and professional fees	80		128		(208		)	—
Other	9		355		(364		)	—
	$	8,880	$	4,574	$	(9,741	)	$	3,713



	Balance January 1, 2012		Charges		Payments			Balance December 30, 2012
Severance, retention and other payroll costs	$	5,345	$	9,952	$	(11,176	)	$	4,121
Relocation costs	—		5,222		(4,722		)	500
Atlanta facility closure costs	—		4,541		(371		)	4,170
Consulting and professional fees	—		4,928		(4,848		)	80
Other	—		2,126		(2,117		)	9
	$	5,345	$	26,769	$	(23,234	)	$	8,880

Breakfast Discontinuation

During 2013 and 2012, the Company reflected costs totaling $1,118 and $10,569, respectively, resulting from the discontinuation of the breakfast daypart at certain restaurants. Costs during 2013 primarily consisted of the remaining carrying value of breakfast related equipment no longer being used. Costs during 2012 consisted primarily of (1) the remaining net carrying value of $5,277 for certain breakfast equipment and (2) amounts advanced to franchisees of $3,544 for breakfast equipment which will not be reimbursed.

Arby’s Transaction Related Costs

As a result of the sale of Arby’s in July 2011, we expensed costs related to the Arby’s transaction during 2013, 2012 and 2011 as detailed in the table below. The Company does not expect to incur additional costs related to the sale of Arby’s.



	Year Ended						Total Incurred Since Inception
	2013		2012		2011		Total Incurred Since Inception
Severance, retention and other payroll costs (a)	$	153	$	615	$	29,194	$	29,962
Relocation costs (b)	—		349		1,670		2,019
Consulting and professional fees	—		7		2,935		2,942
Other	110		278		288		676
	263		1,249		34,087		35,599
Share-based compensation (a) (b)	—		223		6,097		6,320
	$	263	$	1,472	$	40,184	$	41,919

_______________


(a)	2011 transaction related costs included $20,806 of costs incurred by the Company in accordance with the termination provisions of the employment agreements for three senior executives (for required payments of $14,481 and vesting of previously issued stock awards of $6,325).

(b)

Relocation costs are expensed as incurred. However, payments of $750 made due to the relocation of a corporate executive were being expensed over the three year period following this executive’s relocation in accordance with the terms of the agreement. The agreement also included a restricted share award with a grant date fair value of $750 which was being expensed over a three year requisite service period. In accordance with the terms of a separation agreement with such executive, the remaining unamortized costs were recorded to severance expense and included in “General and administrative” during the second quarter of 2013.

As of December 30, 2012, our accrual for Arby’s transaction related costs, which was included in “Accrued expenses and other current liabilities,” totaled $696 and related to severance, retention and other payroll costs. Arby’s transaction related costs expensed during 2013, as well as amounts included in the accrual at December 30, 2012, were paid during the year ended December 29, 2013. As a result, no accrual remains at December 29, 2013. The table below presents a rollforward of the accrual for Arby’s transaction related costs, which was included in “Accrued expenses and other current liabilities.”



	Balance January 1, 2012		Charges		Payments			Balance December 30, 2012
Severance, retention and other payroll costs	$	14,414	$	615	$	(14,333	)	$	696
Relocation costs	1,101		349		(1,450		)	—
Consulting and professional fees	—		7		(7		)	—
Other	—		278		(278		)	—
	$	15,515	$	1,249	$	(16,068	)	$	696