Wendy's 2011 Annual Report Download - page 122

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
purchases of fountain beverage syrup (“Syrup”) by the Companies and their franchisees at certain preferred prices
until the total contractual gallon volume usage has been reached. In addition, this agreement provides for an annual
advance to be paid to us based on the vendor’s expectation of annual Syrup usage of the Companies, which is
amortized over annual usage.
Beverage purchases made by the Companies under this agreement during 2011, 2010 and 2009 were
approximately $20,464, $21,273 and $20,425, respectively. Future purchases by the Companies under these beverage
purchase requirements are estimated to be approximately $20,464 per year over the next five years. Based on current
preferred prices and the current ratio of sales at company-owned restaurants to franchised restaurants, the total
remaining Companies’ beverage requirements are approximately $150,677 over the remaining life of the contracts. As
of January 1, 2012, $646 is due to beverage vendors and included in “Accounts payable” principally for annual
estimated payments that exceeded usage.
Capital Expenditures Commitments
As of January 1, 2012, the Companies have $26,319 of outstanding commitments for capital expenditures
expected to be paid in 2012.
(25) Transactions with Related Parties
The following is a summary of ongoing transactions between the Companies and their related parties, which are
included in continuing operations:
2011 2010 2009
Wendy’s Co-op (a) ................................................... $(2,033) $(1,238) $15,500
SSG agreement (b) ................................................... (2,275) 5,145 —
Subleases with related parties (c) ......................................... (203) (137) —
Advisory fees (d) ..................................................... — 2,465 5,368
(The Wendy’s Company)
Advisory fees (d) ..................................................... $ 500 $1,000 $ 500
Services Agreement (e) ................................................ — — 3,500
Sublease income (f) ................................................... (1,631) (1,632) (1,886)
Use of corporate aircraft (g) ............................................. (138) (120) (613)
Withdrawal Agreement (h) ............................................. — — 3,220
Liquidation services agreement (i) ........................................ 220 441 239
Distributions to co-investment shareholders (j) .............................. — — (795)
Transactions with Purchasing Cooperatives
(a) During the 2009 fourth quarter, Wendy’s entered into a purchasing co-op relationship agreement (the “Wendy’s
Co-op”) with its franchisees to establish QSCC. QSCC manages food and related product purchases and
distribution services for the Wendy’s system in the U.S. and Canada. Through QSCC, Wendy’s and Wendy’s
franchisees purchase food, proprietary paper and operating supplies under national contracts with pricing based
upon total system volume.
QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing
efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s
supply chain in the U.S. and Canada. Prior to 2010, the system’s purchasing function was performed and paid
for by Wendy’s. In order to facilitate the orderly transition of the 2010 purchasing function for operations in the
U.S. and Canada, Wendy’s transferred certain contracts, assets and certain Wendy’s purchasing employees to
QSCC in 2010. Pursuant to the terms of the Wendy’s Coop, Wendy’s paid $15,500 to QSCC over an 18 month
period through May 2011 in order to provide funding for start-up costs, operating expenses and cash
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