Wendy's 2008 Annual Report Download - page 58

Cost of Services
Our cost of services, which resulted entirely from the management of CDOs and Funds by Deerfield,
decreased $10.1 million, or 28.6%, to $25.2 million for 2007, through December 21, 2007, from $35.3
million for 2006 principally due to a net decrease of $10.0 million in incentive compensation primarily for
existing employees reflecting Deerfield’s weaker performance during 2007.
General and Administrative
Our general and administrative expenses decreased $30.4 million, or 12.9%, principally due to (1) a
$17.0 million decrease in corporate general and administrative expenses principally related to (a) the
resignation effective in June 2007 of the Former Executives and certain other officers and employees of Triarc
who became employees of the Management Company and are no longer employed by us and (b) our sublease to
the Management Company of one of the floors of our New York headquarters, both partially offset by the fees
for professional and strategic services provided to us under a two-year transition Services Agreement which
commenced on June 30, 2007, (2) an $8.1 million decrease in incentive compensation due to weaker
performance at our business segments, (3) a $5.9 million decrease in outside consultant fees at our Arby’s
restaurant segment partially offset by a $2.1 million increase in salaries, which partially replaced those fees,
primarily attributable to the strengthening of the infrastructure of that segment following the acquisition of
RTM Restaurant Group (“RTM”) prior to 2006 (the “RTM Acquisition”), (4) a $4.0 million reduction of
severance and related charges in connection with the replacement of three senior restaurant executives during
2006 that did not recur in 2007, (5) a $1.8 million decrease in recruiting fees at our Arby’s restaurant segment
associated with the strengthening of the infrastructure in 2006 following the RTM Acquisition and (6) a $1.7
million reduction of training and travel costs at our Arby ‘s restaurant segment as part of an expense reduction
initiative. These decreases were partially offset by (1) a $2.6 million severance charge in 2007 for one of our
asset management executives and (2) a $2.3 million increase in relocation costs in our Arby’s restaurant
segment principally attributable to additional estimated declines in market value and increased carrying costs
related to homes we purchased for resale from relocated employees.
Depreciation and Amortization
2007 2006 Change
(In Millions)
Arby’s restaurants, primarily properties ............................... $56.9 $50.5 $ 6.4
Asset management.................................................. 4.9 5.8 (0.9)
General corporate, primarily properties ............................... 4.4 4.3 0.1
$66.2 $60.6 $ 5.6
Impairment of Other Long-lived Assets
2007 2006 Change
(In Millions)
Asset management .................................................... $4.5 $1.6 $ 2.9
Restaurants, primarily properties at underperforming locations ............ 2.6 4.0 (1.4)
$7.1 $5.6 $ 1.5
The impairment of other long-lived assets increased $1.5 million principally reflecting (1) a $2.9 million
asset impairment charge related to an internally developed financial model that our asset management segment
did not use and that was subsequently sold. In addition there was as $0.4 million increase in impairment
charges related to our TJ Cinnamons brands significantly offset by a $1.8 million decrease in charges related to
underperforming Arby’s restaurants.
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