Wendy's 2008 Annual Report Download - page 170

agreement and paid to Arby’s fees and royalty payments that unaffiliated third-party franchisees pay. Under an
arrangement that pre-dated the acquisition of units from Sybra, Sybra managed the restaurant for the
franchisee; however, the Company did not receive any compensation for its services during 2006. In November
2006, the Company acquired the assets of the franchisee for $121 in cash, its approximate fair value, which was
entirely used to satisfy outstanding liabilities of the franchisee. The Company’s Vice Chairman and former
President and Chief Operating Officer did not receive any portion of the proceeds from this sale.
Charitable Contributions to The Arby’s Foundation Inc.
In 2007 and 2006 the Company made charitable contributions of $575 and $100, respectively, to The
Arby’s Foundation, Inc. (the “Foundation”), a not-for-profit charitable foundation in which the Company has
non-controlling representation on the board of directors. The Company did not make any such contributions
during 2008. In addition, during 2008 and 2006 the Company paid $500 and $502 of expenses, respectively,
on behalf of the Foundation primarily utilizing funds reimbursed to it by Pepsi as provided for by the Pepsi
contract (see Note 27). All such amounts are included in “General and administrative” in the Consolidated
Statements of Operations.
Sale of Company Restaurants to Former Officer
During 2006, the Company sold nine of its restaurants to a former officer of its restaurant segment for
$3,400 in cash, which resulted in a pretax gain of $570 recognized as a reduction of “Depreciation and
amortization” net of the write-off of, among other assets and liabilities, allocated goodwill of $2,091. The
Company believes that such sale price represented the then fair value of the nine restaurants.
Charitable Contributions to the Dave Thomas Foundation for Adoption
In 2008, the Company pledged $1,000 to be donated to the Dave Thomas Foundation for Adoption, a
related party, which is expected to be funded in equal annual installments over the next five years. The full
pledge amount was recorded in “General and administrative” in the Consolidated Statements of Operations in
2008, with the first installment payment made in December 2008.
Wendy’s Executive Officers
On September 29, 2008, J. David Karam, a minority shareholder, director and former president of Cedar
Enterprises, Inc., which directly or through affiliates is a Wendy’s franchisee operator of 133 Wendy’s
restaurants, became President of Wendy’s. In connection with Mr. Karam’s employment, Mr. Karam resigned
as a director and president of Cedar Enterprises, Inc. but retained his minority ownership. After the Wendy’s
Merger, we recorded $1,772 in royalties and $1,318 in advertising fees from Cedar Enterprises and its affiliates
as a franchisee of Wendy’s. Cedar Enterprises, Inc. and its affiliates also received $125 in remodeling incentives
in 2008 from Wendy’s pursuant to a program generally available to Wendy’s franchisees.
Mr. Karam was also a minority investor in two other Wendy’s franchisee operators, Emerald Food, Inc.
and Diamond Foods, L.L.C., which are operators of 44 and 16 Wendy’s restaurants, respectively. Mr. Karam
disposed of his interests in these companies effective November 5, 2008.
Wendy’s Key Executive Agreements
In accordance with the merger agreement, amounts due under the key executive agreements, deferred
compensation plan and supplemental executive retirement plans (SERPs) were funded into a restricted account
and are included in “Restricted cash equivalents” in the Consolidated Balance Sheets. The corresponding
liabilities are included in “Accrued expenses and other current liabilities” and “Other liabilities.”
162
WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
(FORMERLY TRIARC COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)