Wendy's 2010 Annual Report Download - page 138

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)
(h) In connection with its 2007 restructuring, Wendy’s/Arby’s entered into an agreement with the Management
Company for the provision of services under a two-year transition services agreement (the “Services Agreement”),
effective June 30, 2007, pursuant to which the Management Company provided Wendy’s/Arby’s with a range of
professional and strategic services. Under the Services Agreement, which expired on June 30, 2009 and was
superseded by the New Services Agreement, Wendy’s/Arby’s paid the Management Company $3,000 per quarter
for the first year of services and $1,750 per quarter for the second year of services. Wendy’s/Arby’s incurred
$3,500 and $9,500 of such service fees for 2009 and 2008, respectively, which are included in “General and
administrative.”
(i) In July 2008 and July 2007, Wendy’s/Arby’s entered into agreements under which the Management Company is
subleasing (the “Subleases”) office space on two of the floors of the Company’s former New York
headquarters. Under the terms of the Subleases, the Management Company paid Wendy’s/Arby’s approximately
$157 and $153 in 2009 and 2008, respectively, per month, which included an amount equal to the rent
Wendy’s/Arby’s pays plus a fixed amount reflecting a portion of the increase in the then fair market value of
Wendy’s/Arby’s leasehold interest, as well as amounts for property taxes and the other costs related to the use of
the space. During the second quarter of 2010, Wendy’s/Arby’s and the Management Company entered into an
amendment to the sublease, effective April 1, 2010, pursuant to which the Management Company’s early
termination right was cancelled in exchange for a reduction in rent. Under the terms of the amended sublease, the
sublease is not cancelable prior to the expiration of the prime lease and the Management Company pays rent to
Wendy’s/Arby’s in an amount that covers substantially all of the Company’s rent obligations under the prime
lease for the subleased space. Wendy’s/Arby’s recognized $1,632, $1,886, and $1,633 from the Management
Company under the Subleases for 2010, 2009, and 2008, respectively, which has been recorded as a reduction of
“General and administrative.”
(j) In August 2007, Wendy’s/Arby’s entered into time share agreements under which the Chairman and then Chief
Executive Officer and the Vice Chairman and then President and Chief Operating Officer of Wendy’s/Arby’s
(the “Former Executives”) and the Management Company used two Wendy’s/Arby’s corporate aircraft in
exchange for payment of certain incremental flight and related costs of such aircraft. Those time share agreements
expired during the second quarter of 2009 and, in the third quarter of 2009, one of the aircraft was sold to an
unrelated third party. Such reimbursements for 2009 and 2008 amounted to $553 and $3,028 and have been
recognized as a reduction of “General and administrative.”
In June 2009, Wendy’s/Arby’s and TASCO, LLC (an affiliate of the Management Company) (“TASCO”)
entered into an aircraft lease agreement (the “Aircraft Lease Agreement”) for the other aircraft that was previously
under the time share agreement mentioned above. The Aircraft Lease Agreement originally provided that
Wendy’s/Arby’s would lease such corporate aircraft to TASCO from July 1, 2009 until June 30, 2010. Under the
Aircraft Lease Agreement, TASCO pays $10 per month for such aircraft plus substantially all operating costs of
the aircraft including all costs of fuel, inspection, servicing and storage, as well as operational and flight crew costs
relating to the operation of the aircraft, and all transit maintenance costs and other maintenance costs required as
a result of TASCO’s usage of the aircraft. Wendy’s/Arby’s continues to be responsible for calendar-based
maintenance and any extraordinary and unscheduled repairs and/or maintenance for the aircraft, as well as
insurance and other costs. The Aircraft Lease Agreement may be terminated by Wendy’s/Arby’s without penalty
in the event it sells the aircraft to a third party, subject to a right of first refusal in favor of the Management
Company with respect to such a sale.
On June 24, 2010, Wendy’s/Arby’s and TASCO renewed the Aircraft Lease Agreement for an additional one
year period (expiring June 30, 2011). We received lease income of $120 and $60 in 2010 and 2009, respectively,
under this agreement, which is included as an offset to “General and administrative.”
(k) The Management Company assumed Wendy’s/Arby’s 25% fractional interest in a helicopter on October 1, 2008
for $1,860 which is the amount Wendy’s/Arby’s would have received under the relevant agreement, if it exercised
its right to sell the helicopter interest on October 1, 2008, which is equal to the then fair value, less a remarketing
132