Wendy's 2009 Annual Report Download - page 53

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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 established for the benefit of the Former Executives.
In 2008, our interest income decreased principally due to: (1) lower average outstanding balances of our
interest-bearing investments principally as a result of cash equivalents used in connection with our Corporate
Restructuring, (2) interest income recognized in 2007 at our former asset management segment and (3) a
decrease in interest rates.
Other Than Temporary Losses on Investments
2009 2008
Change
(In Millions)
DFR common stock...................................................... $ (68.1) $ 68.1
DFR Notes ............................................................. (21.2) 21.2
Available-for-sale securities, including CDOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12.3) 3.2
Cost method investments................................................. (7.2) 10.3
$(108.8) $102.8
•Losses due to the reduction in value of our investments
Based on a review of our unrealized investment losses in 2009, 2008 and 2007, we determined that the
decreases in the fair value of certain of our investments were other than temporary due to the severity of
the decline, the financial condition of the investee and the prospect for future recovery in the market value
of the investment. Accordingly, we recorded other than temporary losses on certain common stock, certain
available-for-sale securities and certain cost method investments.
The 2009 decrease in losses due to reduction in value of our investments was principally impacted by the
2008 loss on our DFR common stock discussed in “Introduction and Executive Overview—Deerfield”,
which did not recur. In addition, 2009 losses on certain available-for-sale securities were not as significant
due primarily to the Equities Sale in June 2009. Losses in 2009 related to cost method investments were
not as significant due to improved market conditions as compared to 2008. The 2008 increase in losses on
available-for sale securities and $1.8 million of the increase in losses on cost method investments was
primarily due to a reduction in the value of these investments due to overall market conditions as
compared to 2007.
•Losses due to investment collectability
There were no losses due to investment collectability in 2009. The 2008 increase in losses due to
investment collectability was impacted by the allowance for doubtful collectability on the DFR Notes,
discussed above in “Introduction and Executive Overview—Deerfield.”
•Losses due to illiquidity
There were no 2009 losses due to illiquidity. The 2008 increase in losses due to illiquidity was due to the
2008 write-down of $8.5 million on our entire cost method investment in Jurlique International Pty Ltd,
a privately-held Australian upscale skin care company (“Jurlique”). Based on financial results provided by
Jurlique, which noted significant declines in operations in 2008, its budget for 2009, economic
conditions, illiquidity of the private company stock, and our internal valuations of Jurlique, we
determined that our investment in this company was more than likely not recoverable.
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