Wendy's 2012 Annual Report Download - page 108

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
annual Syrup usage, which is amortized over actual usage during the year. The Company estimates future annual
purchases to be approximately $21,000 per year during the next five years. Based on current pricing and the current
ratio of usage at company-owned restaurants to franchised restaurants, our total beverage purchase requirement under
the new agreement is estimated to be approximately $170,000 over the remaining life of the contract, which expires
the later of reaching the minimum usage requirement or January 1, 2023.
Capital Expenditure Commitments
As of December 30, 2012, the Company had $22,109 of outstanding commitments, included in “Accounts
payable,” for capital expenditures expected to be paid in 2013, of which $13,867 pertained to capital expenditures
related to our Image Activation program.
(23) Transactions with Related Parties
The following is a summary of ongoing transactions between the Company and its related parties, which are
included in continuing operations:
Year Ended
2012 2011 2010
Transactions with Purchasing Cooperatives:
Wendy’s Co-Op (a) ............................................... $(2,464) $(2,033) $(1,238)
SSG agreement (b) ................................................ — (2,275) 5,145
Lease income (c) ................................................. (191) (203) (137)
Transactions with the Management Company:
Advisory fees (d) ................................................. $ — $ 500 $3,465
Sublease income (e) ............................................... (683) (1,631) (1,632)
Use of company-owned aircraft (f) .................................... (92) (138) (120)
Liquidation services agreement (g) .................................... — 220 441
Distributions of proceeds to noncontrolling interests (h) ....................... $3,667 $ — $ —
Transactions with Purchasing Cooperatives
(a) During the fourth quarter of 2009, Wendy’s entered into a purchasing co-op relationship agreement (the
“Wendy’s Co-op”) with its franchisees to establish QSCC. QSCC manages, for the Wendy’s system in the U.S.
and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and
equipment under national contracts with pricing based upon total system volume.
QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing
efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s
supply chain in the U.S. and Canada. Prior to 2010, the system’s purchasing function was performed and paid
for by Wendy’s. In order to facilitate the orderly transition of the 2010 purchasing function for operations in the
U.S. and Canada, Wendy’s transferred certain contracts, assets and certain Wendy’s purchasing employees to
QSCC in 2010. Pursuant to the terms of the Wendy’s Co-op, Wendy’s expensed $15,500 in 2009 for payments
to QSCC required over an 18 month period through May 2011 in order to provide funding for start-up costs,
operating expenses and cash reserves. Wendy’s made such payments of $305 and $15,195 in 2011 and 2010,
respectively. In connection with the ongoing operations of QSCC during 2010, QSCC reimbursed Wendy’s
$913 for amounts Wendy’s had paid primarily for payroll-related expenses for certain Canadian QSCC
purchasing employees.
Since the third quarter of 2010, all QSCC members (including Wendy’s) pay sourcing fees to third party vendors
on products which are sourced through QSCC. Such sourcing fees are remitted by these vendors to QSCC and
are the primary means of funding QSCC’s operations. Should QSCC’s sourcing fees exceed its expected needs,
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