Wendy's 2008 Annual Report Download - page 127

Quarter ended
December 28, 2008
(Canadian)
(Unaudited)
Income statement information:
Revenues. . . ....................................................... C$9,462
Income before income taxes and net income .......................... 6,325
Investment in Jurlique International Pty Ltd.
Prior to 2006, we acquired a 29.1% interest in Jurlique for approximately $30,164. Jurlique is an
Australian manufacturer and multi-channel global marketer which sells a high-end series of natural skincare
products in certain department stores, duty-free shops, company and franchised locations. In April 2006, we
sold 17.6% of our ownership interest to an independent third party for $14,600. Prior to the closing of the
sale, Jurlique paid us a return of capital of $8,782. We recorded a gain on the sale of $1,722 included in
“Other income (expense), net” in the accompanying Consolidated Statement of Operations (see Note 22). In the
second quarter of 2008, a minority interest partner purchased an approximate new 2.7% ownership position in
Jurlique, thereby reducing our ownership position to 11.3%.
We account for our investment in Jurlique under the Cost Method since our voting interest does not
provide us the ability to exercise significant influence over Jurlique’s operational and financial policies. In
connection with the Jurlique investment, we entered into certain foreign currency related derivative
transactions that extended through July 2007 for which, at their settlement date, we recorded a loss of $877,
which is included in “Other income (expense), net” in the accompanying consolidated statement of operations
(see Note 22).
Jurlique is being affected by the global economic recession leading to lower than anticipated sales and
margins. Based on financial results provided by the company, which noted significant declines in operations in
2008, its budget for 2009, current economic conditions and our internal valuations of the company, we have
determined that our investment in this company will more than likely not be recoverable. Therefore, we
recorded other than temporary losses of $8,504 in 2008, which are included in “Other than temporary losses on
investments” (see Note 20).
Investment in Encore Capital Group, Inc.
Prior to 2006, the Company and certain of its former officers had invested in the common stock of Encore
Capital Group, Inc. (“Encore”). Through the 2007 sale of substantially all of its holdings of Encore, the
Company’s investment in Encore had been accounted for under the Equity Method even though it owned less
than 20% of the voting stock of Encore, because of its then ability to exercise significant influence over
operating and financial policies of Encore through the Company’s representation on Encore’s board of directors.
After the 2007 sale until the distribution to its former executives of its entire remaining holdings at the end of
2007, this investment was accounted for as an available-for-sale security.
The Company recorded gains of $2,558 and $2,241 in 2007 and 2006, respectively, as a result of sales of
Encore common stock by the Company. The Company recorded a non-cash gain of $18 in 2006 from the
exercise of Encore stock options not participated in by the Company. There were no such exercises during
2007. All such gains are included in “Other Income (Expense), net” (see Note 22) in the accompanying
Consolidated Statements of Operations.
Presented below is summary unaudited financial information for the Company’s equity investment in
Encore, which was disposed of in 2007, for the year ended December 31, 2006, the year end of such
investment.
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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)