Wendy's 2012 Annual Report Download - page 109

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage
dividend. Wendy’s recorded its share of patronage dividends of $2,464, $2,033 and $325 in 2012, 2011 and
2010, respectively, which are included as a reduction of “Cost of sales.”
(b) On April 5, 2010, QSCC and the Arby’s independent purchasing cooperative (“ARCOP”) in consultation with
Wendy’s Restaurants, established Strategic Sourcing Group Co-op, LLC (“SSG”). SSG was formed to manage
and operate purchasing programs for certain non-perishable goods, equipment and services. Wendy’s Restaurants
had committed to pay approximately $5,145 of SSG expenses, which were expensed in 2010 and included in
“General and administrative,” and were to be paid over a 24 month period through March 2012. However, in
anticipation of the sale of Arby’s, effective April 2011, SSG was dissolved and its activities were transferred to
QSCC and ARCOP and the remaining accrued commitment of $2,275 was reversed and credited to “General
and administrative.”
(c) Effective January 4, 2010, QSCC leased 9,333 square feet of office space from Wendy’s. Effective January 1,
2011, Wendy’s and QSCC entered into a lease amendment which increased the office space leased to QSCC to
14,333 square feet for a one year period for a revised annual base rental of $176 with five one-year renewal
options, three of which are currently remaining. During the period from April 2010 to April 2011, SSG leased
2,300 square feet of office space from a subsidiary of Wendy’s Restaurants. The Wendy’s Company received
$191, $180 and $113 of lease income from QSCC during 2012, 2011 and 2010, respectively, and $23 and $24
of lease income from SSG during 2011 and 2010, respectively, both of which have been recorded as reductions of
“General and administrative.”
Transactions with the Management Company
(d) The Wendy’s Company entered into a services agreement (the “Services Agreement”) with a management
company formed by the Former Executives and a director, who was our former Vice Chairman (the
“Management Company”), which commenced on July 1, 2009 and expired on June 30, 2011. Under the
Services Agreement, the Management Company assisted us with strategic merger and acquisition consultation,
corporate finance and investment banking services and related legal matters. The Wendy’s Company paid
approximately $2,465 in 2010 in fees for corporate finance advisory services under the Services Agreement in
connection with the negotiation and execution of the $650,000 credit agreement in 2010 and the issuance of the
Senior Notes in 2009.
In addition, The Wendy’s Company paid the Management Company a service fee of $250 per quarter, in
connection with the Services Agreement until it expired on June 30, 2011. The Wendy’s Company incurred
service fees of $500 and $1,000 in 2011 and 2010, respectively, which are included in “General and
administrative.”
(e) In July 2008 and July 2007, The Wendy’s Company entered into agreements under which the Management
Company subleased (the “Subleases”) office space on two of the floors of the Company’s former New York
headquarters. 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 expired in May 2012, the Management Company paid rent to the Company in an
amount that covered substantially all of the Company’s rent obligations under the prime lease for the subleased
space. The Company recognized income of $683, $1,631, and $1,632 from the Management Company under
such subleases in 2012, 2011 and 2010, respectively, which has been recorded as a reduction of “General and
administrative.”
(f) 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”) to lease a company-owned
aircraft. The Aircraft Lease Agreement originally provided that The Wendy’s Company would lease such
company-owned 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
106