Wendy's 2008 Annual Report Download - page 133

was established to fund the advertising fund operations (see Note 29). There are no amounts outstanding under
this facility as of December 28, 2008.
At December 28, 2008, one of Wendy’s Canadian subsidiaries had a revolving credit facility of $6,000
Canadian dollars. No amounts were outstanding under this facility as of December 28, 2008 which bears
interest at the Bank of Montreal Prime Rate.
During 2006, an aggregate $172,900 principal amount of the Company’s Convertible Notes were
converted or effectively converted into an aggregate of 4,323 shares of class A common stock and 8,645 shares
of class B common stock (see Note 10). In order to induce the effective conversions, the Company paid
negotiated premiums aggregating $8,998 to certain converting noteholders consisting of cash of $4,975 and
244 shares of class B common stock with an aggregate fair value of $4,023 based on the closing market price of
the Company’s class B common stock on the dates of the effective conversions. The aggregate resulting increase
to “Stockholders’ equity” was $177,818 consisting of the $172,900 principal amount of the Convertible Notes,
the $4,023 fair value for the shares issued for premiums and the $895 fair value of 54,000 shares of class B
common stock issued to certain note holders who agreed to receive such shares in lieu of a cash payment for
accrued interest.
(11) Gain (loss) on early extinguishments of debt
The components of the gain and losses on early extinguishments of debt in 2008 and 2006, respectively,
are as follows:
2008 2006
Discount on amounts voluntarily prepaid on the Arby’s Term Loans
(Note 10)............................................................ $3,656 $ —
Premiums paid in cash and Class B Common Shares upon conversion of the
Convertible Notes .................................................... — (8,998)
Write-off of previously unamortized deferred financing and other costs
primarily on Convertible Notes ........................................ — (5,084)
$3,656 $(14,082)
(12) Derivative instruments
The Company invests in derivative instruments that are subject to the guidance in SFAS 133. At
December 28, 2008, these instruments are as follows: (1) put options on equity securities and (2) total return
swaps on equity securities. Prior to their expiration through October 2008, we also had three interest rate swap
agreements (the “Swap Agreements”) related to our Term Loan (see Note 10). Prior to the effective
redemptions of the Opportunities Fund and the DM Fund (see Note 1), the Company had invested in short-
term trading derivatives as part of its overall investment portfolio strategy. Other than the Swap Agreements,
the Company did not designate these derivatives as hedging instruments, and accordingly, these derivative
instruments were recorded at fair value with changes in fair value recorded in the Company’s results of
operations. In addition, prior to the Deerfield sale, we had a derivative instrument related to the vested portion
of stock options owned by the Company in DFR (see Note 27). The Company also had a put and call
arrangement that matured in July 2007 on a portion of the foreign currency exposure of its investment in
Jurlique.
The Swap Agreements hedged a portion of the related Term Loan interest rate risk exposure. As discussed
in Note 10, interest payments under Arby’s Term Loan are based on LIBOR plus a spread. These hedges of
interest rate risk relating to Arby’s Term Loan had been designated as effective cash flow hedges at inception
and on an ongoing quarterly basis through their expiration dates. There was no ineffectiveness from these
hedges through their expiration in 2008. Accordingly, gains and losses from changes in the fair value of the
hedges were included in the “Unrealized gains (loss) on cash flow hedges” component of “Accumulated other
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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)