Wendy's 2008 Annual Report Download - page 114

consideration for the acquisitions represents $316 for the aggregate settlement loss from unfavorable franchise
rights on the termination of a sublease, and $3,826 for the aggregate purchase prices. The Company paid an
additional $10 in 2007 related to the other restaurant acquisitions in 2006 principally related to finalizing a
post-closing purchase price adjustment. Additionally, the Company recorded purchase adjustments related to
its acquisition of RTM, including a payment of $1,600 related to a post-closing purchase price adjustment and
a reduction of goodwill recognized of $2,064 due to an increase in deferred income taxes from a change in the
estimate of tax basis of the net assets acquired.
2006
The Company completed the acquisitions of the operating assets, net of liabilities assumed, of 13 Arby’s
franchised restaurants in five separate transactions during the year ended December 31, 2006. The total
consideration for the acquisitions was $5,407 consisting of (1) $3,471 of cash (including $10 paid in 2007 and
before consideration of $11 of cash acquired), (2) the assumption of $1,808 of debt and (3) $128 of related
expenses. The total consideration for the acquisitions represents the aggregate $887 for the settlement loss from
unfavorable franchise rights and $4,520 for the aggregate purchase prices. Additional adjustments included a
$5,426 increase to goodwill related to its acquisition of RTM, primarily as a result of adjustments to the
estimated acquisition costs, and revisions to preliminary estimated fair values of both assets acquired and
liabilities assumed, and $195 in payments to finalize post-closing purchase price adjustments related to other
restaurant acquisitions in 2005.
Due to the relative insignificance of these other restaurant acquisitions, disclosures of pro forma operating
data and purchase price allocations have not been presented.
Sale of Deerfield
On December 21, 2007, the Company sold its 63.6% capital interest in Deerfield, the Company’s former
asset management business (the “Deerfield Sale”), to DFR. The completion of the Deerfield Sale was the
primary aspect in Triarc’s corporate restructuring (Note 27). The Deerfield Sale resulted in non-cash proceeds
to the Company aggregating approximately $134,608 consisting of (1) 9,629 preferred shares (the “Preferred
Stock”) of a subsidiary of DFR with a then estimated fair value of $88,398 at the time of the Deerfield sale and
(2) $47,986 principal amount of series A Senior Secured Notes of DFR due in December 2012 with an
estimated fair value of $46,210 (see Note 4) at the date of the Deerfield Sale.
The Deerfield Sale resulted in an approximate pretax gain of $40,193, net of approximately $2,320 of
related fees and expenses and net of the then remaining $6,945 unrecognized gain on the sale which could not
be recognized due to the Company’s then continuing interest in DFR, as further described below, and is
included in “Gain on sale of consolidated businesses” in the accompanying Consolidated Statements of
Operations. The gain at the date of sale excluded approximately $7,651 that the Company could not recognize
because of its then approximate 16% continuing interest in DFR through its ownership in the Preferred Shares,
on an as-if converted basis, and common stock of DFR it already owned. As a result of a subsequent
distribution of 1,000 DFR shares previously owned by the Company in 2007 (see Note 8 and Note 27), our
ownership decreased to approximately 15% and the Company recognized approximately $706 of the originally
deferred gain. The fees and expenses include approximately $825 representing a portion of the additional fees
which are attributable to the Company’s utilization of Management Company personnel in connection with the
provision of services under the Services Agreement as further described in the Transactions with Related Parties
footnote (see Note 27).
The Preferred Stock had a mandatory redemption feature in December 2014 and had cumulative dividend
rights equal to the greater of 5% of the $10.00 liquidation preference or the per share common stock dividend
declared by DFR. The DFR Preferred Shares were accounted for as an available-for-sale debt security due to
their mandatory redemption requirement and were included, net of the $6,945 unrecognized gain, in
“Investments” in the accompanying consolidated balance sheet as of December 30, 2007 (see Note 8).
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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)