Wendy's 2009 Annual Report Download - page 136

food, proprietary paper and operating supplies under national contracts with pricing based upon total system
volume.
QSCC’s supply chain management will facilitate continuity of supply and provide consolidated purchasing
efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the North
American supply chain. The system’s purchasing function for 2009 and prior was performed and paid for by
Wendy’s. In order to facilitate the orderly transition of the 2010 purchasing function for North American
operations, Wendy’s transferred certain contracts, assets and certain Wendy’s purchasing employees to QSCC in
the first quarter of 2010. Pursuant to the terms of the Co-op Agreement, Wendy’s is required to pay $15,500
to QSCC over an 18 month period in order to provide funding for start-up costs, operating expenses and cash
reserves. Future operations will be funded by all members of QSCC, including Wendy’s and its franchisees.
The required payments by Wendy’s under the Co-op Agreement were expensed in the fourth quarter of 2009
and included in “General and administrative.” Effective January 4, 2010, the QSCC will be leasing 9,333
square feet of office space from Wendy’s for a two year period for an average annual rental of $113 with five
one-year renewal options.
Subleases with ARCOP and The Arby’s Foundation Inc.
ARCOP, the independent Arby’s purchasing cooperative, and the Foundation subleased approximately
2,680 and 3,800 square feet, respectively, of the corporate headquarters office space from ARG in 2009 and
2008. In 2007, ARCOP subleased approximately 2,680 square feet and the Foundation subleased
approximately 5,000 square feet of office space from ARG. The Company has received $106, $111, and
$106 of sublease income from ARCOP in 2009, 2008, and 2007, respectively, and $107, $116, and $117 of
sublease income from the Foundation in 2009, 2008, and 2007, respectively.
Revolving credit facilities
On December 31, 2009, AFA entered into a revolving loan agreement with ARG. This agreement, which
provided for ARG to make revolving loans of up to $5,500 to AFA, was amended on February 25, 2010 to
provide for revolving loans up to $14,500. Under the terms of this agreement; outstanding amounts are due
through April 4, 2011 and bear interest at 7.5%. As of January 3, 2010, the outstanding balance under this
agreement was $5,089.
(23) Legal and Environmental Matters
We are involved in litigation and claims incidental to our current and prior businesses. We have reserves
for all of our legal and environmental matters aggregating $6,262 as of January 3, 2010. Although the
outcome of these matters cannot be predicted with certainty and some of these matters may be disposed of
unfavorably to us, based on currently available information, including legal defenses available to us, and given
the aforementioned reserves and our insurance coverage, we do not believe that the outcome of these legal and
environmental matters will have a material adverse effect on our consolidated financial position or results of
operations.
(24) Advertising Costs and Funds
Since the Wendy’s Merger, the Company participates in three national advertising funds (the “Advertising
Funds”) established to collect and administer funds contributed for use in advertising and promotional
programs. Contributions to the Advertising Funds are required from both company-owned and franchise
restaurants and are based on a percentage of restaurant sales. In addition to the contributions to the various
Advertising Funds, company-owned and franchise restaurants make additional contributions to other local and
regional advertising programs.
129
Wendy’s/Arby’s Group, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)