Wendy's 2010 Annual Report Download - page 131

WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
WENDY’S/ARBY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The balance of the accumulated benefit obligations and the fair value of the plans’ assets at January 2, 2011 was
$3,983 and $2,669, respectively, of which $1,227 and $839, respectively, was recorded by Wendy’s/Arby’s
Restaurants related to the Eligible Arby’s Employees. As of January 3, 2010, the balance of the accumulated benefit
obligations and the fair value of the plans’ assets was $3,920 and $2,714, respectively, of which $1,123 and $820,
respectively, was recorded by Wendy’s/Arby’s Restaurants related to the Eligible Arby’s Employees. As of January 2,
2011 and January 3, 2010, each of the plans had accumulated benefit obligations in excess of the fair value of the
assets of the respective plan. Wendy’s/Arby’s recognized $221, $243, and $121 in benefit plan expenses included in
“General and administrative” in 2010, 2009, and 2008, respectively, of which $64, $68, and $42 was recorded by
Wendy’s/Arby’s Restaurants related to the Eligible Arby’s Employees. Wendy’s/Arby’s’s future required contributions
to the plan are not expected to be material.
Multiemployer Pension Plan
The unionized employees at The New Bakery Co. of Ohio, Inc. (the “Bakery”), a 100% owned subsidiary of
Wendy’s, were covered by the Bakery and Confectionery Union and Industry International Pension Fund (the
“Union Pension Fund”), an underfunded union sponsored multiemployer pension plan. Generally, the Bakery had no
obligation to this plan other than to remit contributions based on hours worked by covered, unionized employees. In
the fourth quarter of 2009, the Bakery terminated its participation in the Union Pension Fund and formally notified
the plan’s trustees of its withdrawal from that plan. This decision required Wendy’s to assume a withdrawal liability of
$4,975 in accordance with the applicable requirements of the Employee Retirement Income Security Act, as
amended, to reflect this obligation which has been included in “Cost of sales” and “Accrued expenses and other
current liabilities.” In addition, the unionized employees became eligible to participate in the 401(k) Plan.
In the fourth quarter of 2010, the terms of a new collective bargaining agreement (the “New CBA”) were
agreed to by the Bakery and Bakers Local No. 57, Bakery, Confectionery, Tobacco Workers & Grain Millers
International Union of America, AFL-CIO. Included in the terms of the New CBA, the Bakery agreed to participate
in the Union Pension Fund as if it had not previously withdrawn its participation and the unionized employees would
no longer be eligible to contribute to the 401(k) Plan. Accordingly, the withdrawal liability recorded during the
fourth quarter of 2009 was reversed during the fourth quarter of 2010 and credited to “Cost of sales.” The other
terms of the New CBA resulted in additional expense to Wendy’s of approximately $900, which is included in “Cost
of sales,” in the fourth quarter of 2010.
Wendy’s Executive Plans
In accordance with the Wendy’s Merger agreement, amounts due under key executive agreements and
supplemental executive retirement plans (the “SERP”) were funded into a restricted account. The corresponding
liabilities were included in “Accrued expenses and other current liabilities” and “Other liabilities” and in aggregate,
and were approximately $5,391 and $6,397 as of January 2, 2011 and January 3, 2010, respectively.
Effective January 1, 2011 participation in the SERP was frozen and current participants’ balances will only earn
interest.
(22) Lease Commitments
The Companies lease real property, leasehold interests, and restaurant, transportation, and office
equipment. Some leases which relate to restaurant operations provide for contingent rentals based on sales
volume. Certain leases also provide for payments of other costs such as real estate taxes, insurance and common area
maintenance which are not included in rental expense or the future minimum rental payments set forth below.
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