Wendy's 2010 Annual Report Download - page 56

Interest Expense
Change
2010 2009
Senior Notes ........................................................ $28.9 $ 32.0
Term Loan .......................................................... 2.6 (11.2)
Wendy’s debt ........................................................ (10.5) 31.6
Amortization of deferred financing costs ................................... (6.5) 6.1
Wendy’s interest rate swaps ............................................. (5.0) —
Arby’s debt .......................................................... (0.6) 1.1
Other .............................................................. 1.9 (1.1)
Total Wendy’s/Arby’s Restaurants .................................... 10.8 58.5
Corporate debt ....................................................... (0.5) 0.8
Other .............................................................. 0.2 0.4
Total Wendy’s/Arby’s ............................................. $10.5 $ 59.7
The increase in interest expense in 2010 was principally affected by (1) the full year impact in 2010 of interest
on the Senior Notes issued in June 2009, and (2) higher principal amounts outstanding during 2010 under the Term
Loan than were outstanding during 2009 under the prior Arby’s credit agreement as partially offset by the lower
effective interest rate of the Term Loan as compared to the prior Arby’s credit agreement. These increases in interest
expense were partially offset by (1) the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2010
as further described in “Liquidity and Capital Resources—Long-term Debt—Credit Agreement” below, (2) the effect
of the 2009 first half write-off of deferred debt costs relating to prepayments on the term loan under the prior Arby’s
credit agreement, and (3) a favorable impact of interest rate swaps on the Wendy’s 6.20% and 6.25% senior notes
entered into during 2009 and 2010. This favorable impact included a $1.9 million gain on the cancellation of the
swaps related to the Wendy’s 6.25% senior notes in connection with the redemption of those notes in the second
quarter of 2010.
The 2009 increase in interest expense was principally affected by interest on the Senior Notes issued in June
2009, as well as the full year impact in 2009 of interest expense on debt assumed in the Wendy’s Merger. Excluding
the effect of the Senior Notes issuance and the effect of the Wendy’s debt assumed, the decrease in 2009 interest
expense was primarily due to a net decrease in the senior secured term loan interest expense as a result of significant
prepayments, partially offset by the write-off of financing costs related to these prepayments as discussed above and an
increase in the interest rate on such loan.
Loss on Early Extinguishment of Debt
The loss on early extinguishment of debt in 2010 of $26.2 million consisted of (1) a $15.0 million premium
payment required to redeem the Wendy’s 6.25% senior notes as discussed below in “Liquidity and Capital
Resources—Long-term Debt—Credit Agreement,” (2) $5.5 million for the write-off of the unaccreted discount of the
Wendy’s 6.25% senior notes (recorded in connection with the Wendy’s Merger), and (3) $5.7 million for the
write-off of deferred costs associated with the repayment of the Wendy’s/Arby’s Restaurants prior senior secured term
loan as discussed below in “Liquidity and Capital Resources—Long-term Debt—Credit Agreement.”
Investment Income (Expense), Net
(Wendy’s/Arby’s)
Change
2010 2009
DFR Notes .......................................................... $4.9 $—
Withdrawal Fee ....................................................... 5.5 (5.5)
Recognized net gains ................................................... (1.7) (4.5)
Interest income ....................................................... (0.2) (1.0)
Other ............................................................... (0.3) (1.4)
$ 8.2 $(12.4)
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