Wendy's 2011 Annual Report Download - page 47

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Wendy’s, (4) reductions in legal reserves for matters accrued in prior years, (5) reductions in staffing at our shared
services center in Atlanta, Georgia, and (6) declines in fees under our related party services agreement that was
renegotiated in June 2009. These 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) increased 401(k) expense associated with certain legacy Wendy’s plans that have since been merged into the The
Wendy’s Company plan, and (4) increases in professional services fees associated primarily with information
technology projects.
(Wendy’s Restaurants)
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, (4) the completion of the integration efforts in early 2010
related to the merger with Wendy’s, and (5) the termination of an intercompany management services agreement
during the third quarter of 2011 in connection with the sale of Arby’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 Wendy’s
Company support services costs charged to Wendy’s Restaurants during the first quarter of 2009, which were
incurred directly by Wendy’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, (3) decreases in incentive compensation
accruals due to lower operating performance as compared to plan in 2010 versus 2009, (4) declines in integration
costs resulting from the completion of integration efforts in early 2010 related to the merger with Wendy’s, and
(5) reductions in legal reserves for legal matters accrued in prior years. 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 The Wendy’s Company 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, and (5) increased 401(k) expense associated with certain
legacy Wendy’s plans that have since been merged into the The Wendy’s Company plan.
Depreciation and Amortization
Change
2011 2010
Restaurants, primarily properties ...................... $(1.4) $(14.9)
Shared services center assets .......................... (1.2) 7.6
Total Wendy’s Restaurants ...................... (2.6) (7.3)
Corporate ....................................... (1.2) —
Total The Wendy’s Company .................... $(3.8) $ (7.3)
The decrease in depreciation and amortization for Wendy’s Restaurants in 2011 was primarily related to
(1) previously impaired long-lived assets, (2) depreciation on properties in 2010 which have since been fully
depreciated, and (3) the transfer of certain information technology equipment from our shared services center to
Arby’s during the first half of 2011 (the depreciation of those assets is included in discontinued operations).
Additionally, depreciation and amortization for Corporate decreased due to the classification of one of our corporate
aircraft as held for sale during the second quarter of 2011 as no depreciation expense is recorded on assets held for
sale.
The 2010 decrease in depreciation and amortization was primarily related to (1) an adjustment of $6.5 million
in the prior year related to a one-time increase in depreciation as a result of refinements to the purchase price
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