Wendy's 2008 Annual Report Download - page 60

aggregate $172.9 million principal amount of our 5% convertible notes due 2023, (the “Convertible Notes”),
into shares of our class A and class B common stock, (the “Convertible Notes Conversions”), and consisted of
$9.0 million of premiums paid in cash and shares of our class B common stock, the write-off of $4.0 million of
related previously unamortized deferred financing costs and $0.1 million of fees related to the conversions and
(2) a $1.0 million write-off of previously unamortized deferred financing costs in connection with principal
repayments of the Arby’s Term Loan from excess cash.
Investment Income, Net
2007 2006 Change
(In Millions)
Net gains (a):
Available-for-sale securities and derivative instruments . . ............. $24.7 $ 7.0 $ 17.7
Cost method investments and limited partnerships .................. 26.7 3.6 23.1
Interest income (b) ................................................. 9.1 72.5 (63.4)
Other ............................................................. 1.6 1.2 0.4
$62.1 $84.3 $(22.2)
(a) Our recognized net gains increased $40.8 million and included (1) a $15.2 million realized gain on the sale
in 2007 of two of our available-for-sale securities, (2) $13.9 million of realized gains on the sale in 2007 of
two of our cost method investments, (3) $8.4 million of gains realized on the transfer of several cost
method investments from two deferred compensation trusts to the Former Executives in connection with
the Contractual Settlements during 2007 and (4) $2.7 million of unrealized gains on derivatives.
(b) Our interest income decreased $63.4 million due to lower average outstanding balances of our interest-
bearing investments principally as a result of the Redemption whereby our net investment income and
interest expense are no longer affected by the significant leverage associated with the Opportunities Fund
after September 29, 2006.
Other Than Temporary Losses on Investments
2007 2006 Change
(In Millions)
Available-for-sale securities, including CDOs ............................ $9.9 $2.0 $ 7.9
Cost method investments .............................................. — 2.1 (2.1)
$9.9 $4.1 $ 5.8
•Losses due to the reduction in value of our investments
Based on a review of our unrealized investment losses in 2007 and 2006, we determined that the
decreases in the fair value of certain of our investments were other than temporary due to the severity of
the decline, the financial condition of the investee and the prospect for future recovery in the market value
of the investment. Accordingly, we recorded other than temporary losses on investments in 2007 of $9.9
million. We also recorded other than temporary losses on investments of $4.1 million after a similar
evaluation in 2006.
Other Income (Expense), Net
Other income (expense), net, decreased $10.1 million in 2007 as compared to 2006, principally reflecting
(1) a $4.0 million decrease in our equity in DFR’s operations for the respective years, (2) a $2.9 million loss in
2007 on DFR common shares distributed from the 2007 Trusts, (3) a $1.7 million gain in 2006 which did not
recur in 2007 on the sale of a portion of our investment in Jurlique., (4) a $0.9 million decrease in equity in
earnings of Encore Capital Group, Inc., a former investee of ours, (“Encore”), which we no longer accounted for
under the Equity Method subsequent to May 10, 2007, the date of the sale of substantially all of our
investment and (5) a $0.5 million increase in the loss from a foreign currency derivative related to Jurlique
which matured on July 5, 2007. These decreases were partially offset by a $2.1 million decrease in costs
recognized related to strategic business alternatives that were not pursued.
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