Wendy's 2011 Annual Report Download - page 124

THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(f) In July 2008 and July 2007, The Wendy’s Company 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 The Wendy’s Company
approximately $157 per month in 2009, which included an amount equal to the rent The Wendy’s Company
paid plus a fixed amount reflecting a portion of the increase in the then fair market value of The Wendy’s
Company 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, The Wendy’s Company 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 canceled in exchange for a reduction in rent. Under the terms of the amended sublease,
which expires in May 2012, the sublease is not cancelable prior to the expiration of the prime lease in May 2012
and the Management Company pays rent to The Wendy’s Company in an amount that covers substantially all of
the Company’s rent obligations under the prime lease for the subleased space. The Wendy’s Company recognized
income of $1,631, $1,632, and $1,886 from the Management Company under such subleases in 2011, 2010 and
2009, respectively, which has been recorded as a reduction of “General and administrative.”
(g) In August 2007, The Wendy’s Company entered into time share agreements under which the Former Executives and
the Management Company used two of The Wendy’s Company’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 amounted to $553 and have been recognized as a reduction of “General and administrative.”
In June 2009, The Wendy’s Company 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 The Wendy’s Company would lease such corporate aircraft to TASCO from July 1, 2009 until
June 30, 2010. On June 24, 2010, The Wendy’s Company and TASCO renewed the Aircraft Lease Agreement
for an additional one year period (expiring on June 30, 2011). Under the Aircraft Lease Agreement, TASCO paid
$10 per month for such aircraft plus substantially all operating costs of the aircraft including all costs of fuel,
inspection, servicing and certain 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. The Wendy’s Company continued 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.
On June 29, 2011, The Wendy’s Company and TASCO entered into an agreement to extend the Aircraft Lease
Agreement for an additional one year period (expiring on June 30, 2012) and an increased monthly rent of $13.
The Wendy’s Company received lease income of $138, $120 and $60 in the 2011, 2010 and 2009, respectively,
under this agreement, which is included as an offset to “General and administrative.”
The Aircraft Lease Agreement may be terminated by The Wendy’s Company 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. We intend to dispose of the Company-owned aircraft leased under the lease agreement discussed
above as soon as practicable. As of January 1, 2012, the aircraft has a carrying value that approximates its fair
value, is classified as held-for-sale, and is included in “Prepaid expenses and other current assets.”
(h) On June 10, 2009, The Wendy’s Company and the Management Company entered into a withdrawal agreement
(the “Withdrawal Agreement”) which provided that The Wendy’s Company would be permitted to withdraw all
amounts in brokerage accounts (the “Equities Account”), which were managed by the Management Company,
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, The Wendy’s Company 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, The Wendy’s Company agreed to pay the Management Company
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