Wendy's 2008 Annual Report Download - page 77

Company-owned restaurants. We continually review the performance of any underperforming Company-owned
restaurants and evaluate whether to close those restaurants, particularly in connection with the decision to
renew or extend their leases. Specifically, we have 56 Arby’s and 58 Wendy’s restaurant leases that are
scheduled for renewal or expiration during 2009. We currently anticipate the renewal or extension of 45 Arby’s
leases and 50 Wendy’s leases.
Franchise Revenues
Our franchise revenues will increase significantly for 2009 as a result of the Wendy’s Merger. Franchise
revenues will also be favorably impacted by net new restaurant openings by both Arby’s and Wendy’s
franchisee locations. Despite an overall increase in franchise revenues, the same-store sales trends for franchised
restaurants at Arby’s and Wendy’s will continue to be generally impacted by the various factors described
above under “Sales.”
Restaurant Margin
We expect that our restaurant margins for 2009 will increase primarily as a result of the impacts of menu
price increases, higher margins on new premium menu items and tighter controls on fixed and semi-variable
costs, which are expected to more than offset the negative impact of more aggressive value menu pricing in our
Wendy’s business and higher labor costs in 2009.
General and Administrative
We expect that our general and administrative expense for 2009 will increase significantly compared to
2008 as a result of the Wendy’s Merger, including integration costs. This increase will be partially offset by
the benefit from the merger related savings including the combined support center functions for Wendy’s and
Arby’s in Atlanta, Georgia.
Depreciation and Amortization
We expect that our depreciation and amortization expense for 2009 will increase compared to 2008 as a
result of the Wendy’s Merger and the full year effect of depreciation new Arby’s restaurants opened in 2008.
Facilities Relocation and Corporate Restructuring
We expect that our facilities relocation and corporate restructuring expense for 2009 will be higher than
2008 primarily due to Wendy’s Merger related costs.
Interest Expense
We expect that our interest expense for 2009 will increase compared to 2008 primarily as a result of the
Wendy’s Merger and the increased interest rates on our amended and restated Credit Agreement, partially
offset by the $143.2 voluntary net prepayment on the Term Loan in 2008.
Additionally, we will be writing off deferred financing costs of approximately $4.4 million related to the
Wendy’s credit facility executed in January 2009 because this facility is being replaced by the amended and
restated Credit Agreement, as described above.
Other Than Temporary Losses on Investments
As of February 27, 2009, there has been a decrease of approximately $3.6 million in the fair value of the
available for sale securities held in the Equities Account as compared to their value on December 28, 2008.
Should any of those investments losses in the Equities Account not recover or any of our investments accounted
for under the cost method experience declines in value due to conditions that we deem to be other than
temporary, we may recognize additional other than temporary losses on investments.
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