Wendy's 2014 Annual Report Download - page 114

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
Other related party transactions
On March 24, 2014, the Company completed the sale of 40 Company-owned restaurants in the Phoenix,
Arizona market to Arizona Restaurant Company, LLC (“ARC”) as part of the Company’s system optimization
initiative. John N. Peters, who served as the Company’s Senior Vice President – North America Operations until his
retirement on March 10, 2014, is a 10% owner and manager of ARC. Pursuant to an Asset Purchase Agreement
dated November 20, 2013 and related transaction documents: (1) the Company sold to ARC substantially all of the
assets (other than real property) used in the operation of the restaurants for an aggregate purchase price of
approximately $21,000 (including inventory, cash banks and franchise and development fees), subject to adjustment
as set forth in the agreement; (2) the Company and ARC entered into lease and sublease agreements with respect to
the real property and buildings for the restaurants; and (3) ARC agreed to develop five new restaurants and complete
Image Activation remodels at seven existing restaurants following the closing. During the year ended
December 28, 2014, the Company recognized $4,677 of royalty revenue and rental income from ARC of which $384
is outstanding as of December 28, 2014 and included in “Accounts and notes receivable.” As of December 28, 2014
the Company had $27 accrued for amounts owed to Mr. Peters in connection with his employment with the
Company.
As part of its overall retention efforts, The Wendy’s Company provided certain of its Former Executives and
current and former employees, the opportunity to co-invest with The Wendy’s Company in certain investments.
During 2013, The Wendy’s Company and certain of its former management had one remaining co-investment,
280 BT Holdings LLC (“280 BT”), a limited liability company formed to invest in certain operating entities. In early
2014, 280 BT received a liquidating distribution following the dissolution of its last investment. Upon receipt of the
liquidating distribution, 280 BT made a final, equivalent distribution to its members in accordance with the terms of
its operating agreement. The ownership percentages in 280 BT for the purpose of the distribution and as of
December 29, 2013 for The Wendy’s Company, the former officers of The Wendy’s Company and other investors
were 80.1%, 11.2% and 8.7%, respectively. The distribution during the first quarter of 2014 to
The Wendy’s Company and the former officers of The Wendy’s Company was $22 and $5, respectively. 280 BT did
not make any distributions to its members in 2013 or 2012.
During the third quarter of 2012, Matthew Peltz was appointed to the ARG Holding Corporation Board of
Directors. He is not currently receiving compensation as a director of ARG Holding Corporation. A subsidiary of the
Company owns 18.5% of the common stock of ARG Holding Corporation. Matthew Peltz is the son of the
Company’s Chairman of the Board.
(22) Legal and Environmental Matters
We are involved in litigation and claims incidental to our current and prior businesses. We provide accruals for
such litigation and claims when payment is probable and reasonably estimable. As of December 28, 2014, the
Company had accruals for all of its legal and environmental matters aggregating $3,339. We cannot estimate the
aggregate possible range of loss due to most proceedings being in preliminary stages, with various motions either yet
to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases
seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement
discussions or judicial or arbitral decisions is thus inherently difficult. Based on currently available information,
including legal defenses available to us, and given the aforementioned accruals and our insurance coverage, we do not
believe that the outcome of these legal and environmental matters will have a material effect on our consolidated
financial position or results of operations.
(23) Advertising Costs and Funds
We currently participate in two national advertising funds (the “Advertising Funds”) established to collect and
administer funds contributed for use in advertising and promotional programs. Contributions to the Advertising
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