Wendy's 2011 Annual Report Download - page 125

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)
$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, of which $31,901 was received by The Wendy’s
Company, net of the Withdrawal Fee, and for which The Wendy’s Company realized a gain of $2,280 in 2009.
The Withdrawal Fee and the gain on the liquidation of the investments were included in “Investment income
(expense), net.”
(i) On June 10, 2009, The Wendy’s Company and the Management Company entered into a liquidation services
agreement (the “Liquidation Services Agreement”) pursuant to which the Management Company assisted us in
the sale, liquidation or other disposition of our cost investments and DFR Notes (the “Legacy Assets”), which
were not related to the Equities Account. The Liquidation Services Agreement required The Wendy’s Company
to pay the Management Company a fee of $900 in two installments in June 2009 and 2010, which was deferred
and amortized through its June 30, 2011 expiration date. Related amortization of $220, $441 and $239 was
recorded in “General and administrative” in 2011, 2010 and 2009, respectively.
Transactions with Other Related Parties
(j) As part of its overall retention efforts, The Wendy’s Company provided certain of its Former Executives and
current and former employees, the opportunity to co-invest with The Wendy’s Company in certain investments.
The Wendy’s Company and certain of its former management have one remaining co-investment, 280 BT,
which is a limited liability holding company principally owned by The Wendy’s Company and former company
management that, among other things, invested in operating companies. During 2009, The Wendy’s Company
received distributions of $795 from the liquidation of certain of the investments owned by 280 BT; distributions
of $156 in 2009 were further distributed to 280 BT’s minority shareholders. No distributions were received in
2011 or 2010. The ownership percentages in 280 BT as of January 1, 2012 for The Wendy’s Company, the
former officers of The Wendy’s Company and other investors were 80.1%, 11.2% and 8.7%, respectively.
From September 29, 2008 through his resignation effective December 30, 2011, J. David Karam, a minority
shareholder, director and former president of Cedar Enterprises, Inc., which directly or through affiliates is a Wendy’s
franchisee operator of 150 Wendy’s restaurants as of January 1, 2012, 146 Wendy’s restaurants as of January 2, 2011,
and 133 Wendy’s restaurants as of January 3, 2010, was President of Wendy’s. In connection with Mr. Karam’s
employment, Mr. Karam resigned as a director and president of Cedar Enterprises, Inc., but retained his minority
ownership. The Companies recorded $7,565, $7,315 and $6,240 in royalties and $5,667, $5,471 and $4,633 in
advertising fees in 2011, 2010, and 2009, respectively, from Cedar Enterprises and its affiliates as a franchisee of
Wendy’s. Cedar Enterprises, Inc. and its affiliates also received $125 and $175 in remodeling incentives in 2010 and
2009, respectively, from Wendy’s pursuant to a program generally available to Wendy’s franchisees, and $186 and
$774 in 2011 and 2010, respectively, related to funding for equipment for the systemwide core menu initiative and
participation in the expanded testing of the breakfast daypart.
(Wendy’s Restaurants)
The following is a summary of continuing transactions between Wendy’s Restaurants and The Wendy’s
Company:
2011 2010 2009
Dividends paid (k) .................................................. $— $443,700 $115,000
Cost allocation to restaurant segments (l) ................................. — — 34,085
Other transactions:
Payments for Federal and state income tax (m) ........................ 13,078 — 10,417
Share-based compensation (n) ..................................... 15,967 9,575 10,358
Expense under management service agreements (o) ..................... 2,521 5,017 5,017
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