Wendy's 2011 Annual Report Download - page 102

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
Year End
2011 2010
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial liabilities
Long-term debt, including current portion:
Senior Notes (c) .......................... $ 554,901 $ 621,500 $ 553,258 $ 620,370
Term Loan (c) ........................... 466,062 466,940 495,226 505,000
6.20% senior notes (c) ..................... 224,643 231,750 217,855 229,500
7% debentures (c) ......................... 82,342 84,000 81,204 86,500
Capitalized lease obligations (d) .............. 15,222 16,431 86,670 91,015
Sale-leaseback obligations (d) ................ 1,466 1,692 121,884 128,171
Other .................................. 1,060 1,072 3,634 3,806
Total Wendy’s Restaurants long-term debt,
including current portion ............. 1,345,696 1,423,385 1,559,731 1,664,362
6.54% aircraft term loan (d) ................. 11,303 11,367 12,671 13,010
Total The Wendy’s Company long-term
debt, including current portion ......... $1,356,999 $1,434,752 $1,572,402 $1,677,372
Guarantees of:
Franchisee loans obligations (e) ................... $ 1,275 $ 1,275 $ 373 $ 373
(a) The fair value of our investment in Jurlique was based upon an agreement with a third party to purchase Jurlique.
The fair value of our indirect investment in Arby’s is based on the fair value as determined in connection with its
sale in July 2011. The fair value of the remaining investments was based entirely on statements of account
received from investment managers or investees which were principally based on quoted market or broker/dealer
prices. To the extent that some of these investments, including the underlying investments in investment limited
partnerships, do not have available quoted market or broker/dealer prices, the Companies relied on valuations
performed by the investment managers or investees in valuing those investments or third-party appraisals.
(b) The fair values were based on information provided by the bank counterparties that is model-driven and whose
inputs were observable or whose significant value drivers were observable.
(c) The fair values were based on quoted market prices.
(d) The fair values were determined by discounting the future scheduled principal payments using an interest rate
assuming the same original issuance spread over a current U.S. Treasury bond yield for securities with similar
durations.
(e) Wendy’s provided loan guarantees to various lenders on behalf of franchisees entering into pooled debt facility
arrangements for new store development and equipment financing. Wendy’s has accrued a liability for the fair
value of these guarantees, the calculation for which was based upon a weighted average risk percentage established
at the inception of each program adjusted for a history of defaults.
The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses approximated fair
value due to the short-term maturities of those items. The carrying amounts of accounts and notes receivable (both
current and non-current) approximated fair value due to the effect of related allowances for doubtful accounts and
notes receivable.
Valuation techniques under the accounting guidance related to fair value measurements were based on
observable and unobservable inputs. Observable inputs reflected readily obtainable data from independent sources,
while unobservable inputs reflected our market assumptions. These inputs are classified into the following hierarchy:
Level 1 Inputs—Quoted prices for identical assets or liabilities in active markets.
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