Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at September 30, 2012 and January 1, 2012.

	September 30, 2012				January 1, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Non-current cost method investments (a)	$	25,111	$	33,815	$	27,452	$	62,496	Level 3
Interest rate swaps (b)	9,618		9,618		11,695		11,695		Level 2
Financial liabilities
Term Loan, due in 2019 (c)	1,114,415		1,125,559		—		—		Level 2
Senior Notes, repaid in July 2012 (c)	—		—		554,901		621,500		Level 2
Term Loan, repaid in May 2012 (c)	—		—		466,062		466,940		Level 2
6.20% senior notes, due in 2014 (c)	226,176		247,331		224,643		231,750		Level 2
7% debentures, due in 2025 (c)	83,207		95,400		82,342		84,000		Level 2
Capitalized lease obligations (d)	31,353		32,336		15,222		16,431		Level 3
Sale-leaseback obligations (d)	1,471		1,525		1,466		1,692		Level 3
6.54% aircraft term loan, repaid in June 2012 (d)	—		—		11,303		11,367		Level 3
Other	706		708		1,060		1,072		Level 3
Guarantees of franchisee loans obligations (e)	$	951	$	951	$	1,275	$	1,275	Level 3

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(a) The fair value of our indirect investment in Arby’s is based on its sale in July 2011 and our subsequent review of Arby’s current unaudited financial information. The fair values of the remaining investments 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, we relied on our review of valuations performed by the investment managers or investees or third-party appraisals. The fair value of our investment in Jurlique at January 1, 2012 was based upon an agreement with a third party to purchase Jurlique (which was completed in February 2012). See Note 4 for more information related to the sale of Jurlique.

(b) The fair values were based on information provided by the bank counterparties that is model-driven and where inputs were observable or where significant value drivers were observable.

(c) The fair values were based on quoted market prices in markets that are not considered active markets.

(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 has provided loan guarantees to various lenders on behalf of franchisees entering into pooled debt facility arrangements for new store development and equipment financing. During the third quarter of 2012, Wendy’s provided a guarantee to a lender for a franchisee in connection with the refinancing of the franchisee’s debt (see Note 12). We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage established at inception 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 the related allowance for doubtful accounts.

Interest rate swaps

Our derivative instruments for the periods presented included interest rate swaps on our 6.20% senior notes with notional amounts totaling $225,000 that were all designated as fair value hedges. The fair value of our interest rate swaps of $9,618 and $11,695 at September 30, 2012 and January 1, 2012, respectively, was included in “Deferred costs and other assets” and as an adjustment to the carrying amount of our 6.20% senior notes. Interest income on the interest rate swaps was $1,283 and $4,013 for the three and nine months ended September 30, 2012, respectively, and $1,402 and $4,250 for the three and nine months ended October 2, 2011, respectively. No ineffectiveness has been recorded to net income related to our fair value hedges for the nine months ended September 30, 2012 and October 2, 2011. Our interest rate swaps (and cash and cash equivalents as described above) are the only financial assets and liabilities measured and recorded at fair value on a recurring basis.

The following tables present the level and measurement of assets measured on a non-recurring basis as of September 30, 2012 and January 1, 2012. The following tables also present total losses for the nine months ended September 30, 2012 and for the year ended January 1, 2012, which include losses recognized from all non-recurring fair value measurements during those periods. See Note 7 for more information on the impairment of our long-lived assets.

	Fair Value Measurements								Nine Months Ended September 30, 2012 Total Losses
	September 30, 2012		Level 1		Level 2		Level 3
Properties and other intangible assets (a)	$	4,771	$	—	$	—	$	4,771	$	6,153
Aircraft (b)	6,333		—		—		6,333		1,628
Total	$	11,104	$	—	$	—	$	11,104	$	7,781

	Fair Value Measurements								2011 Total Losses
	January 1, 2012		Level 1		Level 2		Level 3
Properties and other intangible assets (a)	$	575	$	—	$	—	$	575	$	12,883
Total	$	575	$	—	$	—	$	575	$	12,883

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(a) The impaired assets consist of land and buildings and other intangible assets. The fair values of impaired assets were generally estimated based on the present values of the associated cash flows and market values with respect to land.

(b) The fair value of the aircraft was based on current market conditions.