Wendy's 2013 Annual Report Download - page 113

Download and view the complete annual report

Please find page 113 of the 2013 Wendy's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
Purchase and Capital Commitments
Beverage Agreements
The Company entered into a new agreement with an existing beverage vendor effective January 1, 2013, which
provides fountain beverage products and certain marketing support funding to the Company and its franchisees. This
agreement requires minimum purchases of fountain syrup (“Syrup”) by the Company and its franchisees at certain
agreed upon prices until the total contractual gallon volume usage is reached. This agreement also provides for an
annual advance to be paid to the Company based on the vendor’s expectation of the Company’s annual Syrup usage,
which is amortized over actual usage during the year. The Company estimates future annual purchases to be
approximately $12,700 per year during the next five years. Based on current pricing and the current ratio of usage at
company-owned restaurants to franchised restaurants, our total beverage purchase requirement under the agreement is
estimated to be approximately $103,000 over the remaining life of the contract, which expires the later of reaching the
minimum usage requirement or January 1, 2023.
Beverage purchases made by the Company under this agreement during 2013 were $16,289. As of
December 29, 2013, $2,471 is due to the beverage vendor and is included in “Accounts payable,” principally for
annual estimated payments that exceeded usage, under this agreement.
Capital Expenditure Commitments
As of December 29, 2013, the Company had $41,713 of outstanding commitments, included in “Accounts
payable,” for capital expenditures expected to be paid in 2014.
(21) Transactions with Related Parties
The following is a summary of transactions between the Company and its related parties, which are included in
continuing operations:
Year Ended
2013 2012 2011
Transactions with Purchasing Cooperatives:
Wendy’s Co-Op (a) ............................................... $(3,291) $(2,464) $(2,033)
SSG agreement (b) ................................................ — — (2,275)
Lease income (c) ................................................. (188) (191) (203)
Transactions with the Management Company:
Use of company-owned aircraft (d) ................................... $(1,420) $(1,309) $ (628)
Sublease income (e) ............................................... — (683) (1,631)
Advisory fees (f) .................................................. — — 500
Liquidation services agreement (g) .................................... — — 220
Distributions of proceeds to noncontrolling interests (h) ....................... $ — $3,667 $ —
TimWen lease expense and management fees (i) ............................. $6,587 $ 6,605 $ 6,525
Transactions with Purchasing Cooperatives
(a) During the fourth quarter of 2009, Wendy’s entered into a purchasing co-op relationship agreement (the
“Wendy’s Co-op”) with its franchisees to establish Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC
manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food,
proprietary paper, operating supplies and equipment under national contracts with pricing based upon total
system volume.
109