Wendy's 2008 Annual Report Download - page 102

Investments
The Company’s investments (see Note 8) include (1) investments included in brokerage accounts
(“Equities Account”) being managed by a management company (the “Management Company”) (see Note 27),
(2) our 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with Tim
Hortons Inc. (“THI”), (3) investments in preferred and common stock of DFR (see Note 3), and (4) cost
investments. Investments in limited partnerships and other non-current investments in which we do not have
significant influence over the investees are recorded at cost (the “Cost Method”), and for which realized gains
and losses are reported as income or loss in the period in which the securities are sold or otherwise disposed.
Investments in which we have significant influence over the investees (“Equity Investments”) are accounted for
in accordance with the “Equity Method” of accounting under which our results of operations include our share
of the income or loss of the investees. Unrealized holding gains or losses, net of income taxes, for derivatives
are reported as a component of net income or loss.
The difference, if any, between the carrying value of the Company’s Equity Investments and its
underlying equity in the net assets of each investee (the “Carrying Value Difference”) is accounted for as if the
investee were a consolidated subsidiary. Accordingly, the Carrying Value Difference is amortized over the
estimated lives of the assets of the investee to which such difference would have been allocated if the Equity
Investment were a consolidated subsidiary. To the extent the Carrying Value Difference represents goodwill, it
is not amortized.
See Note 8 for further disclosure of the Company’s Investments.
Securities Sold With an Obligation to Purchase
Securities sold with an obligation to purchase are reported at fair market value with the resulting net
unrealized gains or losses included as a component of net income or loss.
All Investments
The Company reviews all of its investments with unrealized losses and recognizes investment losses
currently for any unrealized losses deemed to be other than temporary (“Other Than Temporary Losses”). These
investment losses are recognized as a component of net income. For investments other than preferred shares of
collateralized debt obligation vehicles (“CDOs”) for which the Company acted as collateral manager through
the date of the Deerfield Sale, the Company considers such factors as the length of time the market value of an
investment has been below its carrying value, the severity of the decline, the financial condition of the investee
and the prospect for future recovery in the market value of the investment, including the Company’s ability
and intent to hold the investments for a period of time sufficient for a forecasted recovery. With respect to
available-for-sale securities, the effect of the permanent reduction in the cost basis is an increase in the net
unrealized gain or a decrease in the net unrealized loss on the available-for-sale investments component of
“Comprehensive income (loss).” The cost-basis component of investments represents original cost less a
permanent reduction for any unrealized losses that were deemed to be other than temporary. For preferred
shares of CDOs, the Company considered, through the date of the Deerfield Sale, whether there had been any
adverse change in the estimated cash flows of the investments in the CDOs as well as the prospect for future
recovery, including the Company’s ability and intent to hold the investments for a period of time sufficient for
a forecasted recovery.
Properties and Depreciation and Amortization
Properties are stated at cost, including internal costs of employees to the extent such employees are
dedicated to specific restaurant construction projects, less accumulated depreciation and amortization.
Depreciation and amortization of properties is computed principally on the straight-line basis using the
following estimated useful lives of the related major classes of properties: 1 to 15 years for office and restaurant
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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)