Wendy's 2010 Annual Report Download - page 97

WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
WENDY’S/ARBY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The computation of the total merger consideration and the allocation of the consideration to the net tangible
and intangible assets acquired and liabilities assumed was finalized during the year ended January 3, 2010 and is
presented in the table below:
Value of shares of Wendy’s/Arby’s common stock issued in exchange for Wendy’s common shares .... $2,476,197
Value of Wendy’s stock options converted into Wendy’s/Arby’s options ........................ 18,296
Wendy’s Merger costs ............................................................... 21,028
Total merger consideration ........................................................... 2,515,521
Net book value of Wendy’s assets acquired and liabilities assumed ............................. 712,794
Excess of merger consideration over net book value of Wendy’s assets acquired and liabilities
assumed ....................................................................... 1,802,727
Changes to fair values of assets and liabilities and deferred income tax liability related to the merger:
(Increase)/decrease in:
Current assets
Accounts and notes receivable ............................................. (694)
Prepaid expenses and other current assets .................................... 985
Investments .............................................................. (64,852)
Properties ................................................................ (46,527)
Other intangible assets
Trademark ........................................................... (900,109)
Franchise agreements ................................................... (353,000)
Favorable leases ........................................................ (121,620)
Computer software ..................................................... 9,572
Deferred costs and other assets ................................................ (377)
Increase/(decrease) in:
Accrued expenses and other current liabilities ..................................... 1,956
Long-term debt, including current portion of $228 ................................ (56,337)
Other liabilities ............................................................ (31,378)
Unfavorable leases .......................................................... 70,762
Wendy’s/Arby’s Restaurants deferred income tax liability ............................ 557,995
Wendy’s/Arby’s Restaurants total adjustments ........................................ (933,624)
Wendy’s/Arby’s Restaurants goodwill ....................................... 869,103
Decrease in Wendy’s/Arby’s deferred income tax liability ............................ (5,277)
Wendy’s/Arby’s goodwill ................................................ $ 863,826
In the Wendy’s Merger, 376,776 shares of Wendy’s/Arby’s Class A common stock were issued to Wendy’s
shareholders. The equity consideration was based on the 4.25 conversion factor of the Wendy’s outstanding shares at
a value of $6.57 per share which represented the average closing market price of Triarc Class A common stock two
days before and after the merger announcement date of April 24, 2008. Immediately prior to the Wendy’s Merger,
each share of Wendy’s/Arby’s 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 Wendy’s/Arby’s
Certificate of Incorporation, their former Class A common stock is now referred to as “Common Stock.”
Outstanding Wendy’s stock options were converted upon completion of the merger into stock options with
respect to Wendy’s/Arby’s Common Stock, based on the 4.25:1 exchange ratio. The value of Wendy’s stock options
that have been converted into Wendy’s/Arby’s stock options of $18,296 was calculated using the Black-Scholes
option pricing model as of April 24, 2008.
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