Wendy's 2008 Annual Report Download - page 136

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(b) The fair values are based on quoted market prices.
(c) The fair value of the DFR Preferred Stock received in connection with the Deerfield Sale as of December
30, 2007 was based on the quoted market price of the related DFR Common Stock into which it was
mandatorily convertible and is shown net of a deferred gain of $6,945. The DFR preferred stock was
converted to DFR common stock and distributed to our stockholders in 2008 (Note 3).
(d) The fair value of the DFR Notes received in connection with the Deerfield Sale was based on the present
value of the probability weighted average of expected cash flows of the notes which could reasonably
approximate their collectability. The Company believes that the 2007 present value approximated the fair
value of the DFR Notes as of December 30, 2007 due to the close proximity to the Deerfield Sale. Due to
significant financial weakness in the credit markets and at DFR and based upon current publicly available
information and other factors further discussed in Note 4, the company established an allowance for
doubtful accounts for the DFR Notes of $21,227 at December 28, 2008. The notes’ carrying amount net of
the allowance was $25,344 at December 28, 2008.
(e) These consist of investments in certain non-current cost investments. The fair values of these investments,
other than Jurlique (see Note 8), were based entirely on statements of account received from investment
managers or investees which are principally based on quoted market or broker/dealer prices. To the extent
that some of these investments, including the underlying investments in investment limited partnerships,
do not have available quoted market or broker/dealer prices, the Company relies on valuations performed
by the investment managers or investees in valuing those investments or third-party appraisals. The fair
value of our investment in Jurlique as of December 30, 2007 was based upon the price per share received
upon the sale of a portion of our investment during 2006. We evaluated operating reports and other
available information of Jurlique for 2007 which did not indicate any change in this valuation as of
December 30, 2007. Based on an evaluation of our investment in Jurlique and their operating results in
2008 (see Note 20), we determined that its value had declined due to a significant deterioration in their
operating results and, utilizing a market multiples model based on projected performance, that the decline
was other than temporary. Therefore we recorded an other than temporary loss of the entire investment
carrying value of $8,504 in 2008 (Note 20).
(f) It was not practicable to estimate the fair value of these cost investments because the investments are non-
marketable.
(g) The fair values were based on quotes provided by the bank counterparties.
(h) The fair values were determined by discounting the future scheduled principal payments using an interest
rate assuming the same original issuance spread over a current Treasury bond yield for securities with
similar durations.
(i) The fair values were based on broker/dealer prices since quoted asked prices close to our fiscal year end
dates were not available for the remaining Convertible Notes.
(j) The fair value was assumed to reasonably approximate the carrying amount since the carrying amount
represents the fair value as of the RTM Acquisition date less subsequent amortization.
(k) The fair value was determined by management, with the assistance of a valuation firm, based on the net
present value of the probability adjusted payments which may be required to be made by the Company.
(l) Wendy’s provided loan guarantees to various lenders on behalf of franchisees entering into pooled debt
facility arrangements for new store development and equipment financing. In accordance with FIN 45,
“Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others”, Wendy’s has accrued a liability for the fair value of these guarantees, the
calculation for which was based upon a weighed average risk percentage established at the inception of each
program.
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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)