Wendy's 2010 Annual Report Download - page 54

operating performance as compared to plan in 2010 versus 2009, (5) reductions in staffing at our shared services
center in Atlanta, Georgia, and the formation of the Wendy’s Co-Op in 2009, and (6) declines in fees under our
related party services agreement that was renegotiated in June 2009. The decreases were partially offset by (1) the costs
incurred in 2010 related to the formation of SSG, (2) increases in franchise incentives offered in conjunction with the
Wendy’s remodeling program, (3) increases in professional services fees associated primarily with information
technology projects, (4) increases in severance costs related to the termination of certain senior Arby’s executives, and
(5) increased 401(k) expense associated with certain legacy Wendy’s plans that have since been merged into the
Wendy’s/Arby’s plan.
The increases for 2009 were primarily due to the effects of the Wendy’s Merger, as well as increases in
(1) integration costs related to the Wendy’s Merger and (2) salaries and wages due to staffing and other expenses
associated with the establishment of the shared services center in Atlanta, Georgia. Our 2009 general and
administrative expenses were also significantly impacted by (1) required future payments expensed in the 2009 fourth
quarter as a result of the Wendy’s Co-op Agreement, (2) increases in incentive compensation accruals due to stronger
operating performance versus plan in 2009 than in 2008, and (3) an increase in the provision for doubtful accounts
primarily associated with the collectability of Arby’s franchise receivables. The 2009 increases in general and
administrative expenses were partially offset by (1) a decrease in fees under the services agreement with the
Management Company and (2) a decrease in costs associated with our corporate aircraft agreements with the
Principals and the Management Company and the sale of one of the aircraft in 2009.
(Wendy’s/Arby’s Restaurants)
The decrease in general and administrative expenses in 2010 was primarily related to (1) Wendy’s/Arby’s
support services costs charged to Wendy’s/Arby’s Restaurants during the first quarter of 2009, which were incurred
directly by Wendy’s/Arby’s Restaurants after the 2009 first quarter, (2) the non-recurrence in 2010 of the amounts
recorded in the 2009 fourth quarter as a result of the Wendy’s Co-op Agreement, (3) declines in Wendy’s-related
integration costs resulting from the completion of integration efforts in early 2010, (4) reductions in legal reserves for
legal matters accrued in prior years, and (5) decreases in incentive compensation accruals due to lower operating
performance as compared to plan in 2010 versus 2009. The decreases were partially offset by (1) the costs incurred in
2010 related to the formation of SSG, (2) increases in compensation costs as 2009 first quarter compensation costs
were included in the Wendy’s/Arby’s support services charge, (3) increases in franchise incentives offered in
conjunction with the Wendy’s remodeling program, (4) increases in professional services fees associated primarily
with information technology projects, (5) increases in severance costs related to the termination of certain senior
Arby’s executives, and (6) increased 401(k) expense associated with certain legacy Wendy’s plans that have since been
merged into the Wendy’s/Arby’s plan.
The increases for 2009 were primarily due to the Wendy’s Merger. Our 2009 general and administrative
expenses were also significantly impacted by (1) Wendy’s/Arby’s support services costs charged to Wendy’s/Arby’s
Restaurants during the first quarter of 2009, which were incurred directly by Wendy’s/Arby’s Restaurants after the
2009 first quarter, (2) required future payments expensed in the 2009 fourth quarter as a result of the Wendy’s Co-op
Agreement, (3) integration costs related to the Wendy’s Merger, (4) increases in incentive compensation accruals due
to stronger operating performance versus plan in 2009 than in 2008, (5) an increase in the provision for doubtful
accounts primarily associated with the collectability of Arby’s franchise receivables, and (6) a 2009 increase in fees
related to the 2005 Arby’s management services agreement with Wendy’s/Arby’s as compared to a net credit in fees in
the prior year due to the reimbursement of certain costs from Wendy’s/Arby’s to Wendy’s/Arby’s Restaurants.
Depreciation and Amortization
Change
2010 2009
Wendy’s restaurants, primarily properties .................................. $(14.9) $104.2
Arby’s restaurants, primarily properties .................................... (0.9) (5.0)
Shared services center assets ............................................. 7.6 4.3
Total Wendy’s/Arby’s Restaurants .................................... (8.2) 103.5
Corporate .......................................................... 0.1 (1.5)
Total Wendy’s/Arby’s ............................................. $ (8.1) $102.0
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