Wendy's 2010 Annual Report Download - page 73
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Overall Market Risk
Our overall market risk as of January 2, 2011 with the exception of our equity investment in TimWen was not
material. As of January 2, 2011 and January 3, 2010, our investment in TimWen was classified in the consolidated
balance sheets as follows (in millions):
Year End 2010
Type
At
Cost
At Fair
Value
(a)
Carrying
Value
Non-current equity investment (b) ................................ $80.7 $98.6 $98.6
Year End 2009
Type
At
Cost
At Fair
Value
(a)
Carrying
Value
Non-current equity investment (b) ................................ $89.0 $97.5 $97.5
(a) There was no assurance at January 2, 2011 or January 3, 2010 that the Companies would have been able to sell
this investment at this amount.
(b) The Companies believe that the fair value of their equity interest in TimWen is at least equal to its carrying value
as there have been no indications of its impairment.
Wendy’s is a partner in TimWen and our 50% share of the joint venture is accounted for in accordance with
the equity method of accounting.
Sensitivity Analysis
Market risk exposure for Wendy’s/Arby’s and Wendy’s/Arby’s Restaurants is presented for each class of
financial instruments held by the Companies at January 2, 2011 and January 3, 2010 for which an immediate adverse
market movement would cause a potential material impact on their financial position or results of operations. We
believe that the adverse market movements described below represent the hypothetical loss to our financial position or
our results of operations and do not represent the maximum possible loss nor any expected actual loss, even under
adverse conditions, because actual adverse fluctuations would likely differ. As of January 2, 2011, we did not hold any
market-risk sensitive instruments, which were entered into for trading purposes. As such, the table below reflects the
risk for those financial instruments entered into as of January 2, 2011 and January 3, 2010 based upon assumed
immediate adverse effects as noted below (in millions):
Year End 2010
Carrying
Value
Interest
Rate
Risk
Equity
Price
Risk
Foreign
Currency
Risk
Non-current equity investment ......................... $ 98.6 $ — $(9.9) $(9.9)
Interest rate swaps ................................... 9.6 (7.7) — —
Long-term debt, excluding capitalized lease and sale-leaseback
obligations-variable rate ............................. (495.2) (30.7) — —
Long-term debt, excluding capitalized lease and sale-leaseback
obligations-fixed rate:
Wendy’s/Arby’s Restaurants ....................... (855.9) (79.0) — —
Corporate ..................................... (12.7) (0.7) — —
Wendy’s/Arby’s ............................. $(868.6) $(79.7) — —
67