Wendy's 2010 Annual Report Download - page 60

Liquidity and Capital Resources
For each of Wendy’s/Arby’s and Wendy’s/Arby’s Restaurants, the following tables included throughout
Liquidity and Capital Resources present dollars in millions.
Net Cash Provided by Operating Activities
2010 Compared with 2009
Net cash provided by operating activities for Wendy’s/Arby’s was $226.3 million for the year ended January 2,
2011 as compared to $298.8 million for the year ended January 3, 2010. Net cash provided by operating activities for
Wendy’s/Arby’s Restaurants was $231.3 million for the year ended January 2, 2011 as compared to $321.7 million
for the year ended January 3, 2010. The significant components, which accounted for the overall decreases in net cash
provided by operating activities of $72.5 million and $90.4 million for Wendy’s/Arby’s and Wendy’s/Arby’s
Restaurants, respectively, for the year ended January 2, 2011 as compared to the year ended January 3, 2010 were as
follows:
Change
Wendy’s/Arby’s
Restaurants Corporate Wendy’s/Arby’s
Accrued expenses and other current liabilities:
Incentive compensation ......................... $(32.7) $ 0.2 $(32.5)
QSCC Co-op Agreement ....................... (30.5) — (30.5)
Interest ..................................... (29.8) 0.4 (29.4)
Income taxes ................................. 4.5 (1.0) 3.5
Accounts payable ................................. 38.4 (0.7) 37.7
Tax sharing agreement ............................. (28.9) 28.9 —
Net (loss) income and non-cash adjustments, net ......... (13.0) (16.4) (29.4)
Other, net ....................................... 1.6 6.5 8.1
$(90.4) $ 17.9 $(72.5)
The net decrease in the comparative operating cash flow principally resulted from (1) an increase in amounts
paid under incentive compensation plans in 2010 versus 2009 for fiscal 2009 and fiscal 2008, respectively, combined
with a decrease in the amounts accrued in 2010 as compared to 2009 due to lower operating performance, (2) the
payment of start-up costs to QSCC in 2010 which were accrued in 2009, and (3) interest payments in 2010 primarily
resulting from interest payments in January and July 2010 on the Senior Notes and a decrease in interest expense due
to the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2009, partially offset by an increase in
interest expense accruals on the Senior Notes issued in June 2009. The net decrease in comparative operating cash
flow was partially offset by the effect of the income tax benefit recorded in 2010 as compared to the provision for
income taxes recorded in 2009 primarily due to variations in (loss) income before income taxes of our subsidiaries in
2010 and 2009. These changes were partially offset by the net impact of the following, which affected accounts
payable: (1) a decrease in the 2009 amounts payable for non-recurring items more typically included in accrued
expenses rather than accounts payable with no comparable amounts in 2010, (2) a decrease in the volume of
transactions processed as received from third parties, due in part to the decrease in sales in 2010 as compared to 2009,
(3) a reduction in amounts paid to the Wendy’s national advertising cooperative in 2010 as compared to 2009 due to
changes in the timing of royalty payments to them and a shift of product testing to the advertising co-op, and
(4) amounts paid in 2009 associated with certain outstanding 2008 lease payments which did not recur in
2010. Wendy’s/Arby’s Restaurants’ comparative operating cash flow was also impacted by an increase in amounts
accrued in 2010 versus 2009 for Federal and state income taxes under a tax sharing agreement with Wendy’s/Arby’s,
partially offset by 2009 tax payments under this agreement, which were settled in cash with Wendy’s/Arby’s.
Additionally, for the year ended January 2, 2011, the Companies had the following significant sources and uses
of cash other than from operating activities:
• Proceeds from the term loan of $497.5 million;
• Repayments of $250.8 million of Wendy’s/Arby’s Restaurants amended senior secured term loan;
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