Wendy's 2008 Annual Report Download - page 164

Advertising Commitments
Wendy’s and Arby’s have purchase commitments of approximately $113,674 and $20,464 related to
execution of our advertising strategy, including agency fees and media buy obligations for 2009. Because most
media purchase commitments can be canceled within 90 days of scheduled broadcast, the Company does not
believe that termination of these agreements would have a significant impact on the Company’s operations.
Capital Expenditures Commitments
As of December 28, 2008, the Company has $18,591 of outstanding commitments for capital
expenditures, of which $12,841 is expected to be paid in 2009.
(27) Transactions with Related Parties
Deferred Compensation Trusts
Prior to 2006 the Company provided aggregate incentive compensation of $22,500 to the Former
Executives which had been invested in two deferred compensation trusts (the “Deferred Compensation Trusts”)
for their benefit. As of January 1, 2007, the obligation to the Former Executives related to the Deferred
Compensation Trusts was $35,679. This obligation was settled effective July 1, 2007 as a result of the Former
Executives’ resignation and the assets in the Deferred Compensation Trusts were either distributed to the
Former Executives or used to satisfy withholding taxes. In addition, the Former Executives paid $801 to the
Company during 2007 which represented the balance of withholding taxes payable on their behalf. As of the
settlement date, the obligation was $38,195 which represented the then fair value of the assets held in the
Deferred Compensation Trusts. Deferred compensation expense of $2,516 and $1,720 was recognized in 2007
through the settlement date and 2006, respectively, for net increases in the fair value of the investments in the
Deferred Compensation Trusts. Under GAAP, the Company was unable to recognize any investment income
for unrealized net increases in the fair value of those investments in the Deferred Compensation Trusts that
were accounted for under the Cost Method. The Company did recognize net investment income (loss) from
investments in the Deferred Compensation Trusts of $8,653 and ($1,002) in 2007 through the settlement date
and 2006, respectively. The net investment income during 2007 consisted of $8,449 of realized gains almost
entirely attributable to the transfer of the investments to the Former Executives and $222 of interest income,
less management fees of $18. The net investment loss during 2006 consisted of an impairment charge of
$2,142 related to an investment fund within the Deferred Compensation Trusts which experienced a
significant decline in market value which the Company deemed to be other than temporary and management
fees of $36, less realized gains from the sale of certain Cost Method investments of $586, which included
increases in value prior to 2006 of $395, equity in earnings of an Equity Method investment purchased and
sold during 2006 of $396 and interest income of $194. Realized gains, interest income and investment
management fees are included in “Investment income, net” and deferred compensation expense is included in
“General and administrative” expenses in the accompanying Consolidated Statements of Operations.
In October 2007, there was a settlement of a lawsuit related to an investment that had been included in
the Deferred Compensation Trusts. The terms of the Contractual Settlements included provisions pursuant to
which the Former Executives would be responsible for any settlement amounts under this lawsuit. As a result,
the Former Executives were responsible for the approximate $1,500 settlement cost. The Company reduced its
deferred compensation expense included in “General and administrative, to reflect the responsibility of the
Former Executives for the settlement, and its “Investment income, net” in the accompanying Consolidated
Statements of Operations for 2007 to reflect the cost of the settlements. The Company received the
reimbursements from the Former Executives, net of the tax withheld during 2007 and an adjustment of the
settlement amount in 2008, paid the settlement amount during 2007 and received a refund for the applicable
taxes withheld with the respective payroll tax return filings in 2008.
156
WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
(FORMERLY TRIARC COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)