Wendy's 2008 Annual Report Download - page 166

Ownership in DFR
Prior to 2006, the Company purchased 1,000 shares of DFR (see Note 8) for $15,000, and certain former
officers (the “DFR Stock Purchasers”) purchased 115 shares of DFR for a cost of $1,731. Such shares were all
purchased at the same price and terms as those shares purchased by third-party investors pursuant to an initial
public offering of DFR prior to 2006. Subsequently, certain of DFR Stock Purchasers, but not the Company,
acquired additional shares at various prices in open-market transactions. The Company, through the date of the
Deerfield Sale, was the investment manager of DFR and, subsequent to the Deerfield Sale, maintains one seat
on its Board of Directors. Prior to 2006, the Company received restricted investments consisting of 404 of
DFR restricted shares and options to purchase an additional 1,346 shares of stock of DFR, which represented
compensation granted in consideration of the Company’s management of DFR. The restricted stock and
options vested one-third each in 2005 through 2007. In addition, during 2007 and 2006 the Company
received 21 and 52 shares, respectively, of DFR Incentive Fee Shares. In May 2006, the Company made a
restricted stock award of 50 shares of DFR owned by it to two of its then executives serving DFR. The vesting
was accelerated in connection with the Deerfield Sale and the $650 fair market value of the DFR shares was
amortized to “Depreciation and amortization” through that date. In addition, in March 2007, the Company
granted an aggregate 97 of the vested DFR Restricted Shares owned by the Company as restricted stock to
additional then employees of the Company. The vesting of the shares is ratably over a three-year period with
the first one-third vesting in February 2008. With the exception of the March 2007 grant of the vested DFR
Restricted Shares to employees, all of the DFR Restricted Shares were distributed to the members of Deerfield
immediately prior to the Deerfield Sale. In connection with the March 2007 award, the Company recorded the
$1,500 fair market value of DFR shares as of the date of grant as “Deferred costs and other assets.” The
remaining aggregate 206 unrestricted DFR common shares, representing the portion of the DFR Restricted
and Incentive Fee Shares distributed to us in connection with the Deerfield Sale, and the 9,629 DFR preferred
shares received in connection with the Deerfield Sale held by the Company represented an ownership
percentage in DFR of 14.7% as of December 30, 2007, on an as-if fully converted basis. Certain former officers
of Wendy’s/Arby’s had an approximate 1.5% ownership interest in DFR as of December 30, 2007.
For further detail regarding the transactions that involved our ownership in DFR see Note 8.
Deerfield Sale
As defined in an equity arrangement further described under “Principles of consolidation” in Note 1, the
Deerfield Sale is an event of dissolution of TDH. In connection with its dissolution during April 2008, $743
was distributed to the minority members of TDH, which included former members of our management.
In accordance with an employment agreement with a Deerfield Executive who was also a director of the
Company through June 2007, Deerfield incurred expenses in 2007 through the date of the Deerfield Sale and
2006 of $170 and $478, respectively, included in “General and administrative” in the accompanying
Consolidated Statements of Operations, to reimburse an entity of which the executive is the principal owner for
operating expenses related to the business usage of an airplane.
Immediately prior to the Deerfield Sale, the Company and one of the Deerfield Executives entered into an
agreement whereby such executive agreed to resign as an officer and director of Deerfield upon the completion
of the Deerfield Sale (the “Deerfield Severance Agreement”). In exchange, the Company agreed to a severance
package in 2007 with a cost of approximately $2,600 which is included in “General and administrative” in the
accompanying Consolidated Statements of Operations. The severance package was a continuing liability of
Deerfield and, as it was not to be paid by the Company, there is an equally offsetting amount included in the
gain related to the Deerfield Sale included in the “Gain on sale of consolidated business.”
In connection with the sale to another Deerfield Executive of an internally developed financial model that
the Company’s former asset management segment chose not to use, in the fourth quarter of 2007, the
Company recorded a gain of $300. During 2007, the Company recognized a $3,025 impairment charge, which
is included in “Non-goodwill impairment” in the accompanying Consolidated Statements of Operations,
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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)