Wendy's 2011 Annual Report Download - page 49

The increase in interest expense in 2010 was principally affected by (1) the full year impact in 2010 of interest
on the Senior Notes issued in June 2009 and (2) higher principal amounts outstanding during 2010 under the Term
Loan than were outstanding during 2009 under the prior Arby’s credit agreement as partially offset by the lower
effective interest rate of the Term Loan as compared to the prior Arby’s credit agreement. These increases in interest
expense were partially offset by (1) the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2010,
(2) the effect of the 2009 first half write-off of deferred debt costs relating to prepayments on the term loan under the
prior Arby’s credit agreement, and (3) a favorable impact of interest rate swaps on the Wendy’s 6.20% and 6.25%
senior notes entered into during 2009 and 2010. This favorable impact included a $1.9 million gain on the
cancellation of the swaps related to the Wendy’s 6.25% senior notes as discussed above.
Loss on Early Extinguishment of Debt
The loss on early extinguishment of debt in 2010 of $26.2 million consisted of (1) a $15.0 million premium
payment required to redeem the Wendy’s 6.25% senior notes as discussed above in “Executive Overview—Credit
Agreement,” (2) $5.5 million for the write-off of the unaccreted discount of the Wendy’s 6.25% senior notes
(recorded in connection with the merger with Wendy’s ), and (3) $5.7 million for the write-off of deferred costs
associated with the repayment of the Wendy’s Restaurants prior senior secured term loan as discussed above in
“Executive Overview—Credit Agreement.”
Investment Income (Expense), Net
(The Wendy’s Company)
Change
2011 2010
DFR Notes ......................................... $(4.9) $ 4.9
Withdrawal Fee ..................................... — 5.5
Recognized net gains ................................. (0.2) (1.7)
Interest income ...................................... — (0.2)
Other ............................................. 0.3 (0.1)
$(4.8) $ 8.4
The decrease in investment income in 2011 primarily related to the recognition of income of $4.9 million on the
repayment and cancellation of the series A senior notes (the “DFR Notes”) of Deerfield Capital Corp. during 2010.
The increase in investment income in 2010 primarily related to (1) the recognition of income on the DFR
Notes as discussed above and (2) an early withdrawal fee incurred in 2009 that did not recur in 2010. These increases
were partially offset by net investment gains recognized in the prior year that did not recur in 2010.
Other Than Temporary Losses on Investments
(The Wendy’s Company)
We did not recognize any other than temporary losses on our remaining investments during 2011 or 2010. The
2010 change reflects 2009 other than temporary losses on investments which did not recur in 2010. Due to market
conditions and other factors present during 2009, we recorded other than temporary losses of $3.9 million.
(Provision for) Benefit from Income Taxes
Change
Wendy’s Restaurants The Wendy’s Company
2011 2010 2011 2010
Federal and state benefit on variance in income (loss) from continuing
operations before income taxes ................................ $(11.9) $(2.1) $ (4.9) $(13.7)
Foreign tax credit, net of tax on foreign earnings .................... (6.5) 5.9 (6.5) 5.9
Recognition of tax benefit of state net operating losses as a result of
dissolution of our captive insurance company ..................... — (9.6) — (9.6)
Other ..................................................... — 1.5 0.4 0.2
$(18.4) $(4.3) $(11.0) $(17.2)
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