Wendy's 2008 Annual Report Download - page 67

(d) Includes (1) $266.3 million remaining obligation for beverage purchase commitments with Coca-Cola, Inc.
for Wendy’s restaurants and PepsiCo, Inc. for Arby’s restaurants (2) $139.1 million for food purchase
commitments, (3) $134.1 million for advertising commitments, (4) $18.6 million for capital expenditures
and (5) $37.3 million of other purchase obligations.
(e) Represents severance for Wendy’s and Wendy’s/Arby’s personnel in connection with the Wendy’s Merger
and New York headquarters’ employees.
(f) Excludes Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes,” (“FIN 48”), obligations of $30.3 million. We are unable to predict when,
and if, payment of any of this accrual will be required.
Guarantees and Other Contingencies
As of December 28, 2008
(in millions)
Guaranteed debt of a subsidiary (1)............................................ $138.0
Lease guarantees and contingent rent on leases (2) .............................. 161.9
Loan guarantees (3) .......................................................... 19.1
Letters of credit (4) .......................................................... 26.4
(1) Our wholly-owned subsidiary, National Propane Corporation (“National Propane”), retains a less than 1%
special limited partner interest in our former propane business, now known as AmeriGas Eagle Propane,
L.P., (“AmeriGas Eagle”). National Propane agreed that while it remains a special limited partner of
AmeriGas Eagle, National Propane would indemnify the owner of AmeriGas Eagle for any payments the
owner makes related to the owner’s obligations under certain of its debt of AmeriGas Eagle, aggregating
approximately $138.0 million as of December 28, 2008, if Amerigas is unable to repay or refinance such
debt, but only after recourse by the owner to the assets of AmeriGas Eagle. National Propane’s principal
asset is an intercompany note receivable from Wendy’s/Arby’s in the amount of $50.0 million as of
December 28, 2008. We believe it is unlikely that we will be called upon to make any payments under
this indemnity. Prior to 2006, AmeriGas Propane, L.P., (“AmeriGas Propane”), purchased all of the
interests in AmeriGas Eagle other than National Propane’s special limited partner interest. Either National
Propane or AmeriGas Propane may require AmeriGas Eagle to repurchase the special limited partner
interest. However, we believe it is unlikely that either party would require repurchase prior to 2009 as
either AmeriGas Propane would owe us tax indemnification payments if AmeriGas Propane required the
repurchase or we would accelerate payment of deferred taxes of $34.7 million as of December 28, 2008,
associated with our sale of the propane business if National Propane required the repurchase. As of
December 28, 2008, we have net operating loss tax carryforwards sufficient to substantially offset these
deferred taxes.
(2) As of December 28, 2008, RTM, a subsidiary of Wendy’s/Arby’s, guarantees the lease obligations of 10
restaurants operated by former affiliates of RTM (the “Affiliate Lease Guarantees”). The RTM selling
stockholders have indemnified us with respect to the Affiliate Lease Guarantees. In addition, RTM remains
contingently liable for 15 leases for restaurants sold by RTM prior to our acquisition of RTM in 2005 (the
“RTM Acquisition”) if the respective purchasers do not make the required lease payments (collectively with
the Affiliate Lease Guarantees, the “Lease Guarantees”). These Lease Guarantees, which extend through
2025, including all existing extension or renewal option periods could aggregate a maximum of
approximately $16.4 million as of December 28, 2008, assuming all scheduled lease payments have been
made by the respective tenants through December 28, 2008. In addition, Wendy’s has guaranteed certain
leases primarily related to restaurant locations operated by its franchisees. These leases, which extend
through 2022, including all existing extension or renewal option periods, could aggregate a maximum
$38.0 million, assuming all scheduled lease payments have been made by respective tenants through
December 28, 2008. Wendy’s is also contingently liable for certain other leases which have been assigned
to unrelated third parties, who have indemnified Wendy’s against future liabilities arising under the leases
of $107.5 million. These leases expire on various dates, which extend through 2022, including all existing
extension or renewal option periods.
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