Wendy's 2008 Annual Report Download - page 53

Facilities Relocation and Corporate Restructuring
2008 2007 Change
(In Millions)
Restaurants, primarily Wendy’s severance costs ......................... $3.1 $ 0.6 $ 2.5
General corporate, Corporate Restructuring ............................ 0.8 84.8 (84.0)
$3.9 $85.4 $(81.5)
Gain on Sale of Consolidated Business
The gain on sale of consolidated business of $40.2 million in 2007 related to the Deerfield Sale discussed
above under “Introduction and Executive Overview—Deerfield Sale.”
Interest Expense
Interest expense increased $5.7 million, or 9.3%, principally reflecting the Wendy’s Merger which
resulted in $11.4 million in additional interest expense during the 2008 fourth quarter. Excluding Wendy’s,
interest expense decreased $5.7 million principally reflecting a $13.0 million decrease in interest expense on
the senior secured term loan (the “Arby’s Term Loan”) included within the Arby’s credit agreement (the
“Arby’s Credit Agreement”) due to (a) a decrease in the variable interest rates as compared to the prior year and
(b) the decrease in the Arby’s Term Loan outstanding principal balance as a result of the $143.2 million
voluntary net prepayment in 2008 to assure compliance with certain covenants in the Arby’s Credit
Agreement. This decrease was partially offset by (1) a $3.7 million increase related to the change in our interest
rate swap positions, through their expiration in 2008, due to market conditions and (2) a $3.2 million increase
related to an increase in average outstanding debt, excluding the Arby’s Term Loan.
Gain on Early Extinguishments of Debt
In 2008, we reacquired $10.9 million of outstanding Arby’s debt, resulting in a gain on early
extinguishment of approximately $3.6 million.
Investment Income, Net
2008 2007 Change
(In Millions)
Net gains (a):
Available-for-sale securities and derivative instruments ................ $5.7 $24.7 $(19.0)
Cost method investments and limited partnerships ................... 1.6 26.7 (25.1)
Interest income (b) .................................................. 1.3 9.1 (7.8)
Other .............................................................. 0.8 1.6 (0.8)
$9.4 $62.1 $(52.7)
(a) Our net gains include realized gains on available-for-sale securities and cost method investments and
unrealized and realized gains on derivative instruments. Our net recognized gains decreased $44.1 million
and included: (1) $22.4 million decrease in realized gains in 2007 on our available-for-sale investments
primarily reflecting $15.2 million of gains on two of those investments in 2007 and the reduction in value
of our investments in the deteriorating market, (2) $13.9 million of realized gains in 2007 on the sale of
two of our cost method investments and (3) $8.4 million of gains realized in 2007 related to the transfer of
several cost method investments from the deferred compensation trusts (the “Deferred Compensation
Trusts”) established for the benefit of the Former Executives. All of these recognized gains may vary
significantly in future periods depending upon changes in the value of our investments and the timing of
sales of our available-for-sale securities.
As of December 28, 2008, we had unrealized holding gains and (losses) on available-for-sale marketable
securities before income taxes and minority interests of $0.4 million and ($0.2) million respectively,
included in “Accumulated other comprehensive loss.” We evaluated the unrealized losses to determine
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