Wendy's 2014 Annual Report Download - page 113

Download and view the complete annual report

Please find page 113 of the 2014 Wendy's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The Wendy’s Company, through a wholly-owned subsidiary, was party to a three-year aircraft management and
lease agreement, which expired in March 2014, with CitationAir, a subsidiary of Cessna Aircraft Company,
pursuant to which the Company leased a corporate aircraft to CitationAir to use as part of its Jet Card program
fleet. The Company entered into the lease agreement as a means of offsetting the cost of owning and operating
the corporate aircraft by receiving revenue from third parties’ use of such aircraft. Under the terms of the lease
agreement, the Company paid annual management and flight crew fees to CitationAir and reimbursed
CitationAir for maintenance costs and fuel usage related to the corporate aircraft. In return, CitationAir paid a
negotiated fee to the Company based on the number of hours that the corporate aircraft was used by Jet Card
members. This fee was reduced based on the number of hours that (1) the Company used other aircraft in the Jet
Card program fleet and (2) Jet Card members who are affiliated with the Company used the corporate aircraft or
other aircraft in the Jet Card program fleet. The Company’s participation in the aircraft management and lease
agreement reduced the aggregate costs that the Company would otherwise have incurred in connection with
owning and operating the corporate aircraft. Under the terms of the lease agreement, the Company’s directors
had the opportunity to become Jet Card members and to use aircraft in the Jet Card program fleet at the same
negotiated fee paid by the Company as provided for under the lease agreement. During the first quarter of 2014
and the years ended December 29, 2013 and December 30, 2012, the Former Executives and a director, who was
our former Vice Chairman, and members of their immediate families, used their Jet Card agreements for business
and personal travel on aircraft in the Jet Card program fleet. The Management Company paid CitationAir
directly, and the Company received credit from CitationAir for charges related to such travel of approximately
$375, $1,420 and $1,217 during the first quarter of 2014 and the years ended December 29, 2013 and
December 30, 2012, respectively.
(d) 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 from the Management Company under such subleases in 2012,
which has been recorded as a reduction of “General and administrative.”
Distributions of proceeds to noncontrolling interests
(e) Jurl, a 99.7% owned subsidiary, completed the sale of our investment in Jurlique in February 2012. Prior to
2009, when our predecessor entity was a diversified company active in investments, we had provided our Former
Executives, and certain other former employees, equity and profit interests in Jurl. In connection with the gain on
sale of Jurlique, we distributed, based on the related agreement, approximately $3,667 in 2012 to Jurl’s minority
shareholders, including approximately $2,296 to the Former Executives. See Note 6 for further discussion of the
sale of Jurlique.
TimWen lease and management fee payments
(f) A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen for the operation of
Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $6,313, $6,854 and $6,880 under such
leases during 2014, 2013 and 2012, respectively, which have been included in “Costs of sales.” Wendy’s subleases
some of the restaurant facilities to franchisees and they pay TimWen directly. In addition, TimWen paid
Wendy’s a management fee under the TimWen joint venture agreement, of $249, $267 and $275 during
2014, 2013 and 2012, respectively, which has been included as a reduction to “General and administrative.”
109