Wendy's 2015 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2015 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 152

  • 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
  • 149
  • 150
  • 151
  • 152

The decrease in general and administrative expenses during 2014 was primarily due to decreases in
(1) employee compensation and related expenses primarily as a result of the consolidation of regional and divisional
territories as part of our system optimization initiative, (2) incentive compensation accruals due to weaker operating
performance as compared to plan in 2014 versus 2013, (3) franchise incentives due to lower cash incentives offered
under our 2014 Image Activation incentive program compared to our 2013 program and (4) severance expense
primarily as a result of a separation agreement with an executive in 2013. These decreases were partially offset by an
increase in share-based compensation as a result of awards granted and timing of expense recognition.
Depreciation and Amortization
Change
2015 2014
Restaurants .................................................. $(8.7) $(18.5)
Corporate and other ............................................ (0.2) (3.0)
$(8.9) $(21.5)
The decrease in restaurant depreciation and amortization during 2015 was primarily due to decreases in
(1) accelerated depreciation on existing assets that are being replaced as part of our Image Activation program of
$10.7 million and (2) depreciation on assets sold or classified as held for sale under our system optimization initiative
of $10.2 million. These decreases were partially offset by an increase in restaurant depreciation and amortization of
$13.2 million on new and reimaged Image Activation restaurants.
The decrease in restaurant depreciation and amortization during 2014 was primarily due to decreases in
(1) depreciation of assets sold under our system optimization initiative of $11.7 million and (2) accelerated
depreciation on existing assets that are being replaced as part of our Image Activation program of $18.8 million.
These decreases were partially offset by an increase in restaurant depreciation and amortization of $9.0 million during
2014 on new and reimaged Image Activation restaurants. Corporate and other depreciation expense decreased
primarily due to the sale of our aircraft during 2014 and reduced depreciation on assets at our Canadian corporate
location in connection with our system optimization initiative.
System Optimization Gains, Net
Year Ended
2015 2014 2013
System optimization gains, net ........................... $(74.0) $(91.5) $(51.3)
During 2015, 2014 and 2013, the Company sold 327, 255 and 244 company-owned restaurants to franchisees,
respectively, under its system optimization initiative. System optimization gains, net in 2014 includes the impact of
recording net favorable lease assets of $36.3 million as a result of leasing and/or subleasing land, buildings, and/or
leasehold improvements to franchisees, in connection with the sales of restaurants. See Note 3 of the Financial
Statements and Supplementary Data contained in Item 8 herein for further discussion.
Reorganization and Realignment Costs
Year Ended
2015 2014 2013
G&A realignment ...................................... $10.3 $12.9 $ —
System optimization initiative ............................. 11.6 19.0 31.0
Facilities relocation and other transition costs ................. — — 4.6
Breakfast discontinuation ................................ — — 1.1
Arby’s transaction related costs ............................ — — 0.3
$21.9 $31.9 $37.0
41