Wendy's 2010 Annual Report Download - page 139

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)
fee. The Management Company paid the monthly management fee and all other costs related to the helicopter
interest to the owner on behalf of Wendy’s/Arby’s from July 1, 2007 until October 1, 2008.
(l) In 2005, the Company invested $75,000 in brokerage accounts (the “Equities Account”), which were managed
by the Management Company. The Equities Account was invested principally in equity securities, cash
equivalents and equity derivatives of a limited number of publicly-traded companies. In addition, the Equities
Account sold securities short and invested in market put options in order to lessen the impact of significant
market downturns. On September 12, 2008, 251 shares of Wendy’s common stock, which were included in the
Equities Account, were sold to the Management Company at the closing market value as of the day the Company
decided to sell the shares. The sale resulted in a loss of $38.
(m) On June 10, 2009, Wendy’s/Arby’s and the Management Company entered into a withdrawal agreement (the
“Withdrawal Agreement”) which provided that Wendy’s/Arby’s would be permitted to withdraw all amounts in
the Equities Account on an accelerated basis (the “Early Withdrawal”) effective no later than June 26, 2009. Prior
to the Withdrawal Agreement and as a result of an investment management agreement with the Management
Company which was terminated on June 26, 2009, Wendy’s/Arby’s had not been permitted to withdraw any
amounts from the Equities Account until December 31, 2010, although $47,000 was released from the Equities
Account in 2008 subject to an obligation to return that amount to the Equities Account by a specified date. In
consideration for obtaining such Early Withdrawal right, Wendy’s/Arby’s agreed to pay the Management
Company $5,500 (the “Withdrawal Fee”), was not required to return the $47,000 referred to above and was no
longer obligated to pay investment management and incentive fees to the Management Company. The Equities
Account investments were liquidated in June 2009 for $37,401 (the “Equities Sale”), of which $31,901 was
received by Wendy’s/Arby’s, net of the Withdrawal Fee, and for which Wendy’s/Arby’s realized a gain of $2,280
in 2009, which are both included in “Investment income (expense), net.”
(n) On June 10, 2009, Wendy’s/Arby’s and the Management Company entered into a liquidation services agreement
(the “Liquidation Services Agreement”) pursuant to which the Management Company assists us in the sale,
liquidation or other disposition of our cost investments and DFR Notes, (the “Legacy Assets”), which are not related
to the Equities Account. As of the date of the Liquidation Services Agreement, the Legacy Assets were valued at
$36,600 (the “Target Amount”), of which $5,138 was owned by Wendy’s/Arby’s Restaurants. The Liquidation
Services Agreement, which expires June 30, 2011, required Wendy’s/Arby’s to pay the Management Company a fee
of $900 in two installments in June 2009 and 2010, which is being amortized over the term of the agreement. $441
and $239 were amortized and recorded in “General and administrative” in 2010 and 2009, respectively. In addition,
in the event that any or all of the Legacy Assets are sold, liquidated or otherwise disposed of and the aggregate net
proceeds to us are in excess of the Target Amount, we would be required to pay the Management Company a
success fee equal to 10% of the aggregate net proceeds in excess of the Target Amount. Assuming a current
liquidation of all remaining Legacy Assets, the aggregate proceeds ($32,209 as of January 2, 2011 primarily related
to the cancellation and repayment of the DFR Notes) would not be expected to be in excess of the Target Amount.
Transactions with Other Related Parties
(o) In 2008, the Companies pledged $1,000 to be paid in equal annual installments over a five year period
commencing in 2008 to be donated to the Dave Thomas Foundation for Adoption, a related party. The amount
pledged was recorded in “General and administrative” in 2008.
(p) During the 2010, 2009, and 2008, the Companies made charitable contributions of $500 to Foundation,
primarily utilizing funds reimbursed to it by one of the beverage companies used by Arby’s as provided by their
contract. Such payments are included in “General and administrative.”
(q) As part of its overall retention efforts, Wendy’s/Arby’s provided certain of its Former Executives and current and
former employees, the opportunity to co-invest with Wendy’s/Arby’s in certain investments. Wendy’s/Arby’s and
certain of its former management have one remaining co-investment, 280 BT, which is a limited liability holding
company principally owned by Wendy’s/Arby’s and former company management that, among other things,
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