Wendy's 2008 Annual Report Download - page 110

sandwiches, side dishes, snacks, soft drinks and milk, including its Market Fresh威sandwiches, salads, wraps
and toasted subs.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant Estimates
The Company’s significant estimates which are susceptible to change in the near term relate to
(1) estimates of impairment for the carrying values of goodwill and long-lived assets of the restaurant
businesses (see Note 18), (2) provisions of allowance for doubtful accounts related to notes and accounts
receivable, including the DFR Notes receivable (see Note 4), (3) calculations of self-insurance liabilities,
(4) provisions for the resolution of income tax uncertainties subject to future examinations of the Company’s
Federal, international and state income tax returns by taxing authorities, including remaining provisions
included in “Current liabilities relating to discontinued operations,” (see Notes 14 and 23), (5) the valuation of
investments and derivatives which are not publicly traded (see Note 13), (6) provisions for the resolution of
legal and environmental matters (see Note 28), and (7) provisions for Other Than Temporary Losses on
Investments (see Note 20). Due to uncertainties inherent in the estimation process, it is reasonably possible
that the actual resolution of any of these items could vary significantly from the estimate and, accordingly,
there can be no assurance that the estimates may not materially change in the near term.
Certain Risk Concentrations
We believe that our vulnerability to risk concentrations in our cash equivalents is mitigated by (1) our
policies restricting the eligibility, credit quality and concentration limits for our placements in cash
equivalents and (2) insurance from the Securities Investor Protection Corporation of up to $500,000 per
account as well as supplemental private insurance coverage maintained by substantially all of our brokerage
firms, to the extent our cash equivalents are held in brokerage accounts. In order to partially mitigate the
exposure of our investments in our portfolio to market risk, we may employ a hedging program which utilizes
a put option on a market index. As a result of the DFR Notes received in 2007 in connection with the
Deerfield Sale (see Note 3), the Company has potential vulnerability to risk concentrations related to interest
from, and the collection of, the DFR Notes. All quarterly cash interest payments due through December 31,
2008 on the DFR Notes have been received on a timely basis. Based on the likelihood of the collectability of
the full principal amount of the DFR Notes, currently public available information including public filings
through the third quarter of 2008 and other factors (see Note 4), we have recorded an allowance for
collectability of $21,227 on these notes.
We had no customers which accounted for 10% or more of consolidated revenues in 2008, 2007 or 2006.
However, through the date of the Deerfield Sale, we derived revenues from DFR, which accounted for 22% of
asset management and related fees in each of the 2007 and 2006 years, as well as revenues from another fund,
which accounted for 10% and 16% of asset management and related fees in 2007 and 2006, respectively. In
addition, through the date of the Deerfield Sale, we had an institutional investor whose participation in various
funds managed by the Company generated approximately 9% and 10% of asset management and related fees in
2007 and 2006, respectively. None of the above Deerfield revenue items in any of the periods presented
represented more than 10% of consolidated revenues.
As of December 28, 2008, Arby’s restaurants segment has one main in-line distributor of food, packaging
and beverage products, excluding produce, breads and PepsiCo beverage products, that services approximately
54% of Arby’s Company-owned and franchised restaurants and three additional in-line distributors that, in the
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)