Wendy's 2008 Annual Report Download - page 80

Overall Market Risk
Our overall market risk as of December 28, 2008 includes cash equivalents, investments in the Equities
Account that are managed by the Management Company and our investment in TimWen. We maintain
investment holdings of various issuers, types and maturities. As of December 28, 2008 and December 30,
2007, these investments were classified in our consolidated balance sheets as follows (in millions):
2008 2007
Year-End
Cash equivalents included in “Cash and cash equivalents” in our consolidated
balance sheets. ......................................................... $ 36.8 $ 60.5
Current restricted cash equivalents ........................................ 20.8 —
Short-term investments ................................................... 0.2 2.6
Investment related receivables.............................................. 0.4 0.4
Non-current restricted cash equivalents ..................................... 34.0 45.3
Non-current investments .................................................. 133.0 141.9
$225.2 $250.7
Certain liability positions related to investments included in “Other liabilities”
in 2008 and 2007:
Derivatives in liability positions....................................... $ (3.0) $ (0.3)
Securities sold with an obligation to purchase .......................... (16.6) —
$ (19.6) $ (0.3)
Prior to 2006, we invested $75.0 million in the Equities Account, and in April 2007, we entered into an
agreement under which (1) the Management Company will continue to manage the Equities Account until at
least December 31, 2010, (2) we will not withdraw our investment from the Equities Account prior to
December 31, 2010 and (3) beginning January 1, 2008, we began to pay management and incentive fees to the
Management Company in an amount customary for other unaffiliated third party investors with similarly sized
investments. The Equities Account is invested principally in debt and equity securities of a limited number of
publicly-traded companies, cash equivalents and equity derivatives and had a fair value of $37.7 million and
$99.3 million as of December 28, 2008 and December 30, 2007, respectively, detailed below. The fair value of
the Equities Account at December 28, 2008 excludes $47.0 million of restricted cash released from the
Equities Account to Wendy’s/Arby’s in 2008. We obtained permission from the Management Company to
release this amount from the aforementioned investment restriction and we are obligated to return this amount
to the Equities Account by January 29, 2010. As of December 28, 2008, the derivatives held in our Equities
Account investment portfolio consisted of a total return swaps on equity securities, and put options on equity
securities. We did not designate any of these strategies as hedging instruments and, accordingly all of these
derivative instruments were recorded at fair value with changes in fair value recorded in our results of
operations.
The investments in the Equities Account consist of the following (in millions):
December 28, 2008 (b) December 30, 2007
Restricted cash equivalents ........................... $26.5 $43.3
Investments......................................... 30.4 48.3
Derivatives in an asset position included in
“Investments” (a).................................. — 7.6
Investment settlement receivable included in
“Accounts and notes receivable” .................... — 0.3
Investment related receivables included in
“Deferred costs and other assets”. ................... 0.4 0.1
Securities sold with an obligation to purchase included
in “Other liabilities” .............................. (16.6) —
Derivatives in a liability position included in
“Other liabilities” (a) .............................. (3.0) (0.3)
Total fair value ..................................... $37.7 $99.3
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