Wendy's 2009 Annual Report Download - page 43

•Expand our restaurant base in North America and accelerate our program to remodel restaurants;
•Invest in our international business to grow substantially in key markets outside of North
America; and
•Possibly acquire other restaurant companies.
Key Business Measures
We track our results of operations and manage our business using the following key business measures:
•Same-Store Sales
We report Arby’s North America Restaurants same-store sales commencing after a store has been
open for fifteen continuous months. Wendy’s North America Restaurants same-store sales are
reported after a store has been open for at least fifteen continuous months as of the beginning of
the fiscal year. These methodologies are consistent with the metrics used by our management for
internal reporting and analysis. Same-store sales exclude the impact of currency translation.
•Restaurant Margin
We define restaurant margin as sales from Company-owned restaurants (excluding sales of bakery
items and kid’s meal promotion items to franchisees) less cost of sales (excluding costs of bakery
items and kid’s meal promotion items sold to franchisees), divided by sales from Company-owned
restaurants (excluding sales of bakery items and kid’s meal promotion items sold to franchisees).
Restaurant margin is influenced by factors such as restaurant openings and closures, price
increases, the effectiveness of our advertising and marketing initiatives, featured products, product
mix, the level of our fixed and semi-variable costs, and fluctuations in food and labor costs.
Merger with Wendy’s International, Inc.
On September 29, 2008, we completed the Wendy’s Merger in an all-stock transaction in which Wendy’s
shareholders received 4.25 shares of Wendy’s/Arby’s Class A Common Stock for each share of Wendy’s
common stock owned. Immediately prior to the Wendy’s Merger, each share of our Class B Common Stock
was converted into Class A Common Stock on a one for one basis (the “Conversion”). In connection with the
May 28, 2009 amendment and restatement of our Certificate of Incorporation, our Class A Common Stock is
now referred to as “Common Stock.”
Senior Notes
On June 23, 2009, Wendy’s/Arby’s Restaurants issued $565.0 million principal amount of Senior Notes
(the “Senior Notes”). The Senior Notes will mature on July 15, 2016 and accrue interest at 10.00% per
annum, payable semi-annually on January 15 and July 15, the first payment of which was made on January 15,
2010. The Senior Notes were issued at 97.533% of the principal amount, representing a yield to maturity of
10.50% and resulting in net proceeds paid to us of $551.1 million. This original $13.9 million discount is
being accreted and the related charge included in “Interest expense” until the Senior Notes mature. The Senior
Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by certain direct
and indirect domestic subsidiaries of Wendy’s/Arby’s Restaurants (collectively, the “Guarantors”).
Deerfield
On December 21, 2007, we completed the Deerfield Sale to DFR resulting in non-cash proceeds
aggregating $134.6 million, consisting of 9.6 million shares of convertible preferred stock of DFR (“the DFR
Preferred Stock”) with a then estimated fair value of $88.4 million and $48.0 million principal amount of
series A senior secured notes of DFR due in December 2012 (the “DFR Notes”) with a then estimated fair
value of $46.2 million. We also owned an additional 0.2 million common shares in DFR.
On March 11, 2008, DFR stockholders approved the one-for-one conversion of all its outstanding
convertible preferred stock into DFR common stock which converted the 9.6 million preferred shares we held
into a like number of shares of common stock. During the first quarter of 2008, our Board of Directors
approved the distribution of our 9.8 million shares of DFR common stock, which included the 0.2 million
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