Wendy's 2011 Annual Report Download - page 46

blended price increase taken primarily in late 2009, partially offset by a 0.4% point increase due to the deleverage
effect of the decline in Wendy’s same-store sales without similar reductions in fixed and semi-variable costs. As a
percent of sales, food and paper costs were impacted by a 0.6% point increase in commodity costs primarily in the
second half of 2010, which was offset by a 0.3% point decline in food costs from the approximate 1% blended price
increase taken primarily late in 2009 and by 0.3% points from other individually insignificant factors which
comprised the remainder of the offset.
General and Administrative
2011 Change
Wendy’s
Restaurants Corporate
The Wendy’s
Company
SSG co-op funding .................................... $ (7.4) $ — $ (7.4)
Franchise incentives .................................... (6.8) — (6.8)
Transition Service Agreement ............................ (6.8) — (6.8)
Integration costs ...................................... (5.5) — (5.5)
Management fees ...................................... (2.5) 2.5 —
Legal fees ............................................ 4.0 (0.2) 3.8
Professional services .................................... 3.9 (0.3) 3.6
Other, net ........................................... (0.6) 0.6 —
$(21.7) $ 2.6 $(19.1)
2010 Change
Wendy’s
Restaurants Corporate
The Wendy’s
Company
The Wendy’s Company support services costs ................ $(34.1) $ 34.1 $ —
Purchasing co-op start-up costs ........................... (10.4) — (10.4)
Incentive compensation ................................. (9.2) (2.4) (11.6)
Integration costs ...................................... (7.5) (3.6) (11.1)
Legal fees ............................................ (4.0) (1.1) (5.1)
Compensation ........................................ 9.9 (15.4) (5.5)
Franchise incentives .................................... 4.7 — 4.7
Professional services .................................... 3.7 (2.6) 1.1
401(k) expense ........................................ 2.3 (0.8) 1.5
Services agreements .................................... — (2.8) (2.8)
Other, net ........................................... 4.8 (7.2) (2.4)
$(39.8) $ (1.8) $(41.6)
(The Wendy’s Company)
The decrease in general and administrative expenses in 2011 was primarily due to (1) expenses related to the
formation of SSG recorded in the first quarter of 2010 combined with the reversal of the accrual for the unpaid SSG
funding commitment during the first quarter of 2011, (2) the effect of the various franchise incentive programs in
2011 compared to 2010, (3) reimbursement of costs incurred in the second half of 2011 in connection with the
Transition Services Agreement related to the sale of Arby’s; similar costs were incurred in the first half of 2011 and in
2010, which were not then subject to reimbursement, and (4) the completion of the integration efforts in early 2010
related to the merger with Wendy’s. These decreases were partially offset by (1) reductions in legal reserves in 2010
for matters accrued in prior years combined with an increase in legal reserves in 2011 and (2) an increase in
professional fees associated primarily with information technology and tax related projects.
The decrease in general and administrative expenses in 2010 was primarily related to (1) the non-recurrence in
2010 of the amounts recorded in the 2009 fourth quarter as a result of the Wendy’s Co-op, (2) decreases in incentive
compensation accruals due to lower operating performance as compared to plan in 2010 versus 2009, (3) declines in
integration costs resulting from the completion of integration efforts in early 2010 related to the merger with
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