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Notes to Consolidated Financial Statements

Note 12. Preferred Stock

As of December 27, 2008 and December 29, 2007, there were 3 million shares of convertible preferred stock authorized. The preferred stock was issued only for an ESOP established by Quaker and these shares are redeemable for common stock by the ESOP participants. The preferred stock accrues dividends at an annual rate of $5.46 per share. At year-end 2008 and 2007, there were 803,953 preferred shares issued and 266,253 and 287,553 shares outstanding, respectively. The outstanding preferred shares had a fair value of $72 million as of December 27, 2008 and $108 million as of December 29, 2007. Each share is convertible at the option of the holder into 4.9625 shares of common stock. The preferred shares may be called by us upon written notice at $78 per share plus accrued and unpaid dividends. Quaker made the final award to its ESOP plan in June 2001.

                                   
   
2008
   
2007
   
2006
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Preferred stock
 
0.8
 
$
41
   
0.8
 
$
41
   
0.8
 
$
41
 
Repurchased preferred stock
                                   
Balance, beginning of year
 
0.5
 
$
132
   
0.5
 
$
120
   
0.5
 
$
110
 
Redemptions
 
   
6
   
   
12
   
   
10
 
Balance, end of year
 
0.5
 
$
138
   
0.5
 
$
132
   
0.5
 
$
120