Wendy's 2014 Annual Report Download - page 91

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
domestic subsidiaries (other than certain unrestricted subsidiaries) and 65% of the stock of certain of its foreign
subsidiaries in each case subject to certain limitations and exceptions.
On September 24, 2013, Wendy’s entered into an amendment (the “Amendment”) to its Restated Credit
Agreement to borrow an aggregate principal amount of up to $225,000 of additional Term A Loans
(“Incremental Term Loans”). The Amendment does not contain any material changes to existing covenants or
other terms of the Restated Credit Agreement, except as described in the preceding sentence. On
October 24, 2013, Wendy’s borrowed $225,000 of Incremental Term Loans under the Amendment.
The Term B Loans, Term A Loans and Incremental Term Loans (collectively, the “Term Loans”) are payable in
quarterly installments which commenced on December 31, 2012, September 30, 2013 and December 31, 2013,
respectively, with the remaining balances payable upon maturity. In addition, the Term Loans require
prepayments of principal amounts resulting from certain events and excess cash flow on an annual basis from
Wendy’s as defined under the Restated Credit Agreement. An excess cash flow payment was not required for
fiscal 2014, 2013 or 2012. An unused commitment fee of 50 basis points per annum is payable quarterly on the
average unused amount of the revolving credit facility until the maturity date. During the third quarter of 2013,
Wendy’s transitioned the security for all of its outstanding letters of credit from the revolving credit facility to
cash collateral. Therefore, as of December 28, 2014 and December 29, 2013, there were no amounts outstanding
under the revolving credit facility. As of December 28, 2014, the Company had outstanding cash collateralized
letters of credit with various parties of $16,843. The interest rates on Term A Loans and Term B Loans were
2.41% and 3.25%, respectively, as of December 28, 2014.
During the year ended December 29, 2013, Wendy’s incurred $7,961 in costs related to the Restated Credit
Agreement and the Amendment, which are being amortized to “Interest expense” through the maturity of the
Term Loans utilizing the effective interest rate method. Proceeds from the Incremental Term Loans, plus cash on
hand, were used to redeem all amounts outstanding on the aggregate principal amount of the Wendy’s
6.20% Senior Notes due in 2014 (the “6.20% Senior Notes”) at a price equal to 103.8%, as defined in the
6.20% Senior Notes and accrued and unpaid interest to the redemption date. In connection with the redemption
of the 6.20% Senior Notes, Wendy’s terminated the related interest rate swaps with notional amounts totaling
$225,000 which had been designated as fair value hedges. See Note 11 for more information on the interest rate
swaps. As a result, Wendy’s recognized a loss on the early extinguishment of debt of $7,544 during the fourth
quarter of 2013 which consisted of (1) a premium payment, as defined in the 6.20% Senior Notes, (2) the
remaining fair value adjustment previously recorded in connection with the Wendy’s merger, partially offset by
(3) a benefit from the cumulative effect of our fair value hedges, as illustrated in the table below.
During the year ended December 30, 2012, proceeds from the Term B Loans were used (1) to repay all amounts
outstanding under the 2010 Term Loan, (2) to redeem the Wendy’s Restaurants 10.00% Senior Notes due 2016
(the “Senior Notes”) in the amounts of $440,775 aggregate principal at a redemption price of 107.5% of the
principal amount in July 2012 and to purchase $124,225 aggregate principal at a purchase price of 108.125% of
the principal amount in May 2012, both plus accrued and unpaid interest and (3) to pay substantially all of the
Credit Agreement fees and expenses.
87