Wendy's 2012 Annual Report Download - page 44

During 2012 and 2011, the Company had facilities relocation and other transition costs aggregating
$29.0 million and $5.5 million, respectively, related to the relocation of the Atlanta restaurant support center to
Ohio, which was substantially completed during 2012. Costs during both 2012 and 2011 primarily related to
severance, retention and other payroll costs, and additionally in 2012, relocation, consulting and professional fees and
costs associated with the closure of the Atlanta restaurant support center.
During the fourth quarter of 2012, the Company reflected costs totaling $10.6 million resulting from the
discontinuation of the breakfast daypart at certain restaurants consisting primarily of (1) the remaining net carrying
value of $5.3 million for certain breakfast equipment and (2) amounts advanced to franchisees of $3.5 million for
breakfast equipment which will not be reimbursed.
During 2012 and 2011, the Company recorded transaction related costs aggregating $1.4 million and
$40.2 million, respectively, as a result of the sale of Arby’s in July 2011. Costs expensed during 2011 primarily related
to severance, retention and stock compensation primarily associated with the accelerated vesting of previously granted
awards. Relocation and stock compensation costs related to the relocation of a corporate executive are being amortized
over a three year period in accordance with the terms of an agreement.
Interest Expense
Change
2012 2011
Senior Notes ......................................................... $(29.1) $ 0.2
Amortization of deferred financing costs .................................... (2.0) 0.2
Term loans ........................................................... 15.2 1.8
Interest rate swaps ..................................................... 0.1 2.3
Wendy’s 6.25% senior notes ............................................. — (7.7)
Other, net ........................................................... 0.3 (1.1)
$(15.5) $(4.3)
The decrease in interest expense during 2012 was primarily due to the purchase and redemption of the Senior
Notes outstanding in May and July 2012, respectively, as further discussed in “Liquidity and Capital Resources—
2012 Credit Agreement.” This decrease in interest expense was partially offset by the effect of higher comparative
weighted average principal amounts outstanding under the term loans as partially offset by lower effective comparative
interest rates on the term loans.
The decrease in interest expense in 2011 was primarily due to the redemption of the Wendy’s 6.25% senior
notes in the second quarter of 2010 as partially offset by a $1.9 million gain on the cancellation of related interest rate
swaps. Interest expense was also affected by higher comparative weighted average principal amounts on the then
outstanding term loans as partially offset by lower effective comparative interest rates of the term loans.
Loss on Early Extinguishment of Debt
The loss on early extinguishment of debt in 2012 of $75.1 million consisted of (1) a $43.2 million premium
payment required to redeem and purchase the Senior Notes, (2) $9.3 million for the write-off of the unaccreted
discount on the Senior Notes, (3) $12.4 million for the write-off of deferred costs associated with the Senior Notes,
(4) $1.7 million for the write-off of the unaccreted discount on the 2010 Term Loan and (5) $8.5 million for the
write-off of deferred costs associated with the repayment of the 2010 Term Loan.
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, (2) $5.5 million for the write-off of the unaccreted
discount on the Wendy’s 6.25% senior notes and (3) $5.7 million for the write-off of deferred costs associated with
the repayment of the Wendy’s Restaurants 2009 senior secured term loan.
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