Wendy's 2014 Annual Report Download - page 112

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(21) Transactions with Related Parties
The following is a summary of transactions between the Company and its related parties, which are included in
continuing operations:
Year Ended
2014 2013 2012
Transactions with QSCC:
Wendy’s Co-Op (a) ............................................... $(1,516) $(3,291) $(2,464)
Lease income (b) ................................................. (185) (188) (191)
Transactions with the Management Company:
Use of company-owned aircraft (c) ................................... $ (375) $(1,420) $(1,309)
Sublease income (d) ............................................... — — (683)
Distributions of proceeds to noncontrolling interests (e) ....................... $ — $ — $3,667
TimWen lease and management fee payments (f) ............................ $6,064 $ 6,587 $ 6,605
Transactions with QSCC
(a) Wendy’s has a purchasing co-op relationship agreement (the “Wendy’s Co-op”) with its franchisees which
establishes Quality Supply Chain Co-op, Inc. (“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 agreements 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.
Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by 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, 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
$1,516, $3,291 and $2,464 in 2014, 2013 and 2012, respectively, which are included as a reduction of “Cost of
sales.”
(b) Effective January 1, 2011, Wendy’s leased 14,333 square feet of office space to QSCC for an annual base rental
of $176. There is currently one one-year renewal option remaining under this lease. The Wendy’s Company
received $185, $188 and $191 of lease income from QSCC during 2014, 2013 and 2012, respectively, which has
been recorded as a reduction of “General and administrative.”
Transactions with the Management Company
(c) In June 2009, The Wendy’s Company and TASCO, LLC (an affiliate of a management company formed by the
Former Executives and a director, who was our former Vice Chairman (the “Management Company”))
(“TASCO”) entered into an aircraft lease agreement (the “Aircraft Lease Agreement”) to lease a company-owned
aircraft. On June 29, 2011, The Wendy’s Company and TASCO entered into an agreement to extend the
Aircraft Lease Agreement for an additional one year period (expiring on June 30, 2012) and an increased monthly
rent of $13. On June 30, 2012, The Wendy’s Company and TASCO entered into an extension of that lease
agreement that extended the lease term to July 31, 2012 and effective as of August 1, 2012, entered into an
amended and restated aircraft lease agreement (the “2012 Lease”) that expired on January 5, 2014. Under the
2012 Lease, all expenses related to the ownership, maintenance and operation of the aircraft were paid by
TASCO, subject to certain limitations and termination rights. The 2012 Lease expired without any limitation or
termination provisions being invoked. The Wendy’s Company did not extend or renew the 2012 Lease. Under
the previous Aircraft Lease Agreement, the Company recorded lease income of $92 during 2012 as a reduction of
“General and administrative.”
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