(X) | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
( ) | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 38-0471180 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Dave Thomas Blvd., Dublin, Ohio | 43017 | |
(Address of principal executive offices) | (Zip Code) |
Delaware | 38-0471180 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Dave Thomas Blvd., Dublin, Ohio | 43017 | |
(Address of principal executive offices) | (Zip Code) |
The Wendy’s Company | Yes [x] No [ ] |
Wendy’s Restaurants, LLC | Yes [ ] No [x]* |
The Wendy’s Company | Yes [x] No [ ] |
Wendy’s Restaurants, LLC | Yes [x] No [ ] |
Page | |
The Wendy’s Company and Subsidiaries | |
Wendy’s Restaurants, LLC and Subsidiaries | |
The Wendy’s Company and Subsidiaries and Wendy’s Restaurants, LLC and Subsidiaries | |
October 2, 2011 | January 2, 2011 | ||||||
ASSETS | (Unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 488,817 | $ | 512,508 | |||
Accounts and notes receivable | 71,712 | 84,258 | |||||
Inventories | 12,508 | 22,694 | |||||
Prepaid expenses and other current assets | 32,274 | 24,386 | |||||
Deferred income tax benefit | 58,279 | 34,389 | |||||
Advertising funds restricted assets | 72,116 | 76,553 | |||||
Total current assets | 735,706 | 754,788 | |||||
Properties | 1,152,666 | 1,551,261 | |||||
Goodwill | 867,701 | 883,644 | |||||
Other intangible assets | 1,309,204 | 1,358,574 | |||||
Investments | 119,207 | 107,223 | |||||
Deferred costs and other assets | 68,811 | 77,164 | |||||
Total assets | $ | 4,253,295 | $ | 4,732,654 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 8,088 | $ | 18,415 | |||
Accounts payable | 69,599 | 81,361 | |||||
Accrued expenses and other current liabilities | 192,722 | 245,157 | |||||
Advertising funds restricted liabilities | 72,116 | 76,553 | |||||
Total current liabilities | 342,525 | 421,486 | |||||
Long-term debt | 1,348,707 | 1,553,987 | |||||
Deferred income | 13,137 | 11,460 | |||||
Deferred income taxes | 441,896 | 412,293 | |||||
Other liabilities | 109,677 | 170,254 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock | 47,042 | 47,042 | |||||
Additional paid-in capital | 2,781,497 | 2,771,126 | |||||
Accumulated deficit | (431,197 | ) | (412,464 | ) | |||
Common stock held in treasury, at cost | (394,257 | ) | (249,547 | ) | |||
Accumulated other comprehensive (loss) income | (5,732 | ) | 7,017 | ||||
Total stockholders’ equity | 1,997,353 | 2,163,174 | |||||
Total liabilities and stockholders’ equity | $ | 4,253,295 | $ | 4,732,654 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | October 2, 2011 | October 3, 2010 | ||||||||||||
(Unaudited) | |||||||||||||||
Revenues: | |||||||||||||||
Sales | $ | 534,525 | $ | 525,082 | $ | 1,588,048 | $ | 1,570,240 | |||||||
Franchise revenues | 76,891 | 75,626 | 228,292 | 222,616 | |||||||||||
611,416 | 600,708 | 1,816,340 | 1,792,856 | ||||||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 458,000 | 451,319 | 1,361,669 | 1,324,970 | |||||||||||
General and administrative | 66,006 | 73,984 | 215,147 | 230,405 | |||||||||||
Transaction related costs | 23,839 | — | 30,762 | — | |||||||||||
Depreciation and amortization | 30,816 | 32,639 | 90,972 | 96,452 | |||||||||||
Impairment of long-lived assets | — | 20,921 | 8,262 | 21,403 | |||||||||||
Other operating expense, net | 365 | 1,555 | 1,687 | 2,728 | |||||||||||
579,026 | 580,418 | 1,708,499 | 1,675,958 | ||||||||||||
Operating profit | 32,390 | 20,290 | 107,841 | 116,898 | |||||||||||
Interest expense | (28,384 | ) | (29,159 | ) | (85,915 | ) | (89,740 | ) | |||||||
Loss on early extinguishment of debt | — | — | — | (26,197 | ) | ||||||||||
Investment income, net | 3 | 77 | 188 | 5,254 | |||||||||||
Other income, net | 301 | 163 | 706 | 2,116 | |||||||||||
Income (loss) from continuing operations before income taxes | 4,310 | (8,629 | ) | 22,820 | 8,331 | ||||||||||
(Provision for) benefit from income taxes | (1,766 | ) | 7,872 | (9,198 | ) | 3,665 | |||||||||
Income (loss) from continuing operations | 2,544 | (757 | ) | 13,622 | 11,996 | ||||||||||
Discontinued operations: | |||||||||||||||
(Loss) income from discontinued operations, net of income taxes | (1,441 | ) | (152 | ) | 1,118 | (5,563 | ) | ||||||||
Loss on disposal of discontinued operations, net of income taxes | (5,069 | ) | — | (8,849 | ) | — | |||||||||
Net loss from discontinued operations | (6,510 | ) | (152 | ) | (7,731 | ) | (5,563 | ) | |||||||
Net (loss) income | $ | (3,966 | ) | $ | (909 | ) | $ | 5,891 | $ | 6,433 | |||||
Basic and diluted income (loss) per share: | |||||||||||||||
Continuing operations | $ | .01 | $ | 0.00 | $ | .03 | $ | .03 | |||||||
Discontinued operations | (.02 | ) | 0.00 | (.02 | ) | (.02 | ) | ||||||||
Net (loss) income | $ | (.01 | ) | $ | 0.00 | $ | .01 | $ | .01 | ||||||
Dividends per share: | $ | .02 | $ | .015 | $ | .06 | $ | .045 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 5,891 | $ | 6,433 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 113,085 | 137,448 | |||||
Net receipt of deferred vendor incentives | 13,876 | 10,096 | |||||
Share-based compensation provision | 13,756 | 10,519 | |||||
Distributions received from joint venture | 10,784 | 9,718 | |||||
Impairment of long-lived assets | 9,820 | 41,424 | |||||
Loss on disposal of Arby’s | 8,849 | — | |||||
Non-cash rent expense | 6,169 | 7,152 | |||||
Accretion of long-term debt | 6,137 | 13,013 | |||||
Write-off and amortization of deferred financing costs | 4,863 | 10,391 | |||||
Deferred income tax provision (benefit), net | 4,871 | (16,298 | ) | ||||
Provision for doubtful accounts | 2,004 | 7,586 | |||||
Operating investment adjustments, net (see below) | (145 | ) | (5,201 | ) | |||
Equity in earnings in joint ventures, net | (7,817 | ) | (7,127 | ) | |||
Other, net | 128 | (2,171 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts and notes receivable | (6,550 | ) | (6,971 | ) | |||
Inventories | (210 | ) | 1,824 | ||||
Prepaid expenses and other current assets | (8,138 | ) | (6,853 | ) | |||
Accounts payable | 9,365 | (8,973 | ) | ||||
Accrued expenses and other current liabilities | (4,635 | ) | (34,533 | ) | |||
Net cash provided by operating activities | 182,103 | 167,477 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sale of Arby’s, net | 103,162 | — | |||||
Proceeds from other dispositions | 3,799 | 4,394 | |||||
Capital expenditures | (91,913 | ) | (94,736 | ) | |||
Restaurant acquisitions | (6,613 | ) | — | ||||
Franchise incentive loans | (1,269 | ) | — | ||||
Investment activities, net (see below) | (818 | ) | 32,237 | ||||
Other, net | (245 | ) | 407 | ||||
Net cash provided by (used in) investing activities | 6,103 | (57,698 | ) | ||||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | — | 497,661 | |||||
Repayments of long-term debt | (36,611 | ) | (470,942 | ) | |||
Proceeds from stock option exercises | 5,345 | 1,380 | |||||
Repurchases of common stock | (152,681 | ) | (173,537 | ) | |||
Dividends paid | (24,584 | ) | (19,260 | ) | |||
Deferred financing costs | (57 | ) | (16,286 | ) | |||
Other, net | (753 | ) | (894 | ) | |||
Net cash used in financing activities | (209,341 | ) | (181,878 | ) | |||
Net cash used in operations before effect of exchange rate changes on cash | (21,135 | ) | (72,099 | ) | |||
Effect of exchange rate changes on cash | (2,556 | ) | 894 | ||||
Net decrease in cash and cash equivalents | (23,691 | ) | (71,205 | ) | |||
Cash and cash equivalents at beginning of period | 512,508 | 591,719 | |||||
Cash and cash equivalents at end of period | $ | 488,817 | $ | 520,514 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
(Unaudited) | |||||||
Detail of cash flows related to investments: | |||||||
Operating investment adjustments, net: | |||||||
Income on collection of DFR Notes | $ | — | $ | (4,909 | ) | ||
Other net recognized gains | (145 | ) | (292 | ) | |||
$ | (145 | ) | $ | (5,201 | ) | ||
Investment activities, net: | |||||||
Proceeds from sales of investments | $ | 365 | $ | 1,810 | |||
Proceeds from repayment of DFR Notes | — | 30,752 | |||||
Cost of securities | — | (325 | ) | ||||
Investment in joint venture | (1,183 | ) | — | ||||
$ | (818 | ) | $ | 32,237 | |||
Supplemental cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 96,760 | $ | 108,556 | |||
Income taxes, net of refunds | $ | 11,523 | $ | 11,513 | |||
Supplemental non-cash investing and financing activities: | |||||||
Total capital expenditures | $ | 92,707 | $ | 99,553 | |||
Cash capital expenditures | (91,913 | ) | (94,736 | ) | |||
Non-cash capitalized lease and certain sales-leaseback obligations | $ | 794 | $ | 4,817 | |||
Indirect investment in Arby's | $ | 19,000 | $ | — | |||
October 2, 2011 | January 2, 2011 | ||||||
ASSETS | (Unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 345,517 | $ | 198,686 | |||
Accounts and notes receivable | 70,808 | 83,352 | |||||
Inventories | 12,508 | 22,694 | |||||
Prepaid expenses and other current assets | 23,385 | 24,032 | |||||
Deferred income tax benefit | 59,758 | 45,067 | |||||
Advertising funds restricted assets | 72,116 | 76,553 | |||||
Total current assets | 584,092 | 450,384 | |||||
Properties | 1,152,617 | 1,541,853 | |||||
Goodwill | 872,978 | 888,921 | |||||
Other intangible assets | 1,309,204 | 1,358,574 | |||||
Investments | 114,609 | 102,406 | |||||
Deferred costs and other assets | 67,879 | 74,559 | |||||
Total assets | $ | 4,101,379 | $ | 4,416,697 | |||
LIABILITIES AND INVESTED EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 6,651 | $ | 17,047 | |||
Accounts payable | 69,157 | 81,148 | |||||
Accrued expenses and other current liabilities | 193,510 | 244,300 | |||||
Advertising funds restricted liabilities | 72,116 | 76,553 | |||||
Total current liabilities | 341,434 | 419,048 | |||||
Long-term debt | 1,338,490 | 1,542,684 | |||||
Due to parent | 19,401 | 30,808 | |||||
Deferred income | 13,137 | 11,460 | |||||
Deferred income taxes | 502,598 | 478,472 | |||||
Other liabilities | 96,806 | 157,595 | |||||
Commitments and contingencies | |||||||
Invested equity: | |||||||
Member interest, $0.01 par value; 1,000 shares authorized, one share issued and outstanding | — | — | |||||
Other capital | 2,436,432 | 2,423,459 | |||||
Accumulated deficit | (487,186 | ) | (499,500 | ) | |||
Advances to parent | (155,000 | ) | (155,000 | ) | |||
Accumulated other comprehensive (loss) income | (4,733 | ) | 7,671 | ||||
Total invested equity | 1,789,513 | 1,776,630 | |||||
Total liabilities and invested equity | $ | 4,101,379 | $ | 4,416,697 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | October 2, 2011 | October 3, 2010 | ||||||||||||
(Unaudited) | |||||||||||||||
Revenues: | |||||||||||||||
Sales | $ | 534,525 | $ | 525,082 | $ | 1,588,048 | $ | 1,570,240 | |||||||
Franchise revenues | 76,891 | 75,626 | 228,292 | 222,616 | |||||||||||
611,416 | 600,708 | 1,816,340 | 1,792,856 | ||||||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 458,000 | 451,319 | 1,361,669 | 1,324,970 | |||||||||||
General and administrative | 62,732 | 72,360 | 207,373 | 225,206 | |||||||||||
Transaction related costs | 23,571 | — | 29,542 | — | |||||||||||
Depreciation and amortization | 30,758 | 32,174 | 90,390 | 95,055 | |||||||||||
Impairment of long-lived assets | — | 20,921 | 8,262 | 21,403 | |||||||||||
Other operating expense, net | 362 | 1,553 | 1,582 | 2,887 | |||||||||||
575,423 | 578,327 | 1,698,818 | 1,669,521 | ||||||||||||
Operating profit | 35,993 | 22,381 | 117,522 | 123,335 | |||||||||||
Interest expense | (28,171 | ) | (28,855 | ) | (85,254 | ) | (88,752 | ) | |||||||
Loss on early extinguishment of debt | — | — | — | (26,197 | ) | ||||||||||
Other income, net | 301 | 234 | 703 | 999 | |||||||||||
Income (loss) from continuing operations before income taxes | 8,123 | (6,240 | ) | 32,971 | 9,385 | ||||||||||
(Provision for) benefit from income taxes | (3,213 | ) | 6,749 | (12,926 | ) | 3,350 | |||||||||
Income from continuing operations | 4,910 | 509 | 20,045 | 12,735 | |||||||||||
Discontinued operations: | |||||||||||||||
(Loss) income from discontinued operations, net of income taxes | (1,441 | ) | (152 | ) | 1,118 | (5,563 | ) | ||||||||
Loss on disposal of discontinued operations, net of income taxes | (5,069 | ) | — | (8,849 | ) | — | |||||||||
Net loss from discontinued operations | (6,510 | ) | (152 | ) | (7,731 | ) | (5,563 | ) | |||||||
Net (loss) income | $ | (1,600 | ) | $ | 357 | $ | 12,314 | $ | 7,172 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 12,314 | $ | 7,172 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 112,503 | 136,051 | |||||
Net receipt of deferred vendor incentives | 13,876 | 10,096 | |||||
Share-based compensation provision | 12,973 | 9,841 | |||||
Distributions received from joint venture | 10,784 | 9,718 | |||||
Impairment of long-lived assets | 9,820 | 41,424 | |||||
Loss on disposal of Arby’s | 8,849 | — | |||||
Deferred income tax provision (benefit), net | 8,600 | (4,918 | ) | ||||
Non-cash rent expense | 6,166 | 7,152 | |||||
Accretion of long-term debt | 6,137 | 13,013 | |||||
Write-off and amortization of deferred financing costs | 4,854 | 10,378 | |||||
Tax sharing payable to parent, net | 2,437 | (8,673 | ) | ||||
Provision for doubtful accounts | 2,004 | 7,586 | |||||
Other operating transactions with parent | (4,366 | ) | (6,831 | ) | |||
Equity in earnings in joint ventures, net | (7,817 | ) | (7,127 | ) | |||
Tax sharing payment to parent | (13,078 | ) | — | ||||
Other, net | 191 | (1,731 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts and notes receivable | (6,664 | ) | (6,721 | ) | |||
Inventories | (210 | ) | 1,824 | ||||
Prepaid expenses and other current assets | (8,520 | ) | (7,386 | ) | |||
Accounts payable | 8,960 | (7,289 | ) | ||||
Accrued expenses and other current liabilities | (513 | ) | (32,616 | ) | |||
Net cash provided by operating activities | 179,300 | 170,963 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sale of Arby’s, net | 103,162 | — | |||||
Proceeds from other dispositions | 3,799 | 4,394 | |||||
Capital expenditures | (91,913 | ) | (94,736 | ) | |||
Restaurant acquisitions | (6,613 | ) | — | ||||
Franchise incentive loans | (1,269 | ) | — | ||||
Investment in joint venture | (1,183 | ) | — | ||||
Other, net | (245 | ) | 1,369 | ||||
Net cash provided by (used in) investing activities | 5,738 | (88,973 | ) | ||||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | — | 497,661 | |||||
Repayments of long-term debt | (35,594 | ) | (462,831 | ) | |||
Dividends paid to parent | — | (443,700 | ) | ||||
Deferred financing costs | (57 | ) | (16,286 | ) | |||
Net cash used in financing activities | (35,651 | ) | (425,156 | ) | |||
Net cash provided by (used in) operations before effect of exchange rate changes on cash | 149,387 | (343,166 | ) | ||||
Effect of exchange rate changes on cash | (2,556 | ) | 894 | ||||
Net increase (decrease) in cash and cash equivalents | 146,831 | (342,272 | ) | ||||
Cash and cash equivalents at beginning of period | 198,686 | 538,864 | |||||
Cash and cash equivalents at end of period | $ | 345,517 | $ | 196,592 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
(Unaudited) | |||||||
Supplemental cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 96,097 | $ | 107,326 | |||
Income taxes, net of refunds | $ | 9,531 | $ | 7,458 | |||
Supplemental non-cash investing and financing activities: | |||||||
Total capital expenditures | $ | 92,707 | $ | 99,553 | |||
Cash capital expenditures | (91,913 | ) | (94,736 | ) | |||
Non-cash capitalized lease and certain sales-leaseback obligations | $ | 794 | $ | 4,817 | |||
Indirect investment in Arby's | $ | 19,000 | $ | — |
• | Balance sheets - As a result of our sale of Arby’s on July 4, 2011, there are no remaining Arby’s assets and liabilities as of October 2, 2011. Arby’s assets and liabilities were included in our condensed consolidated balance sheet as of January 2, 2011; however, they were not reclassified to discontinued operations. |
• | Statements of operations - Arby’s (loss) income from operations for the period from January 3, 2011 through July 3, 2011 and the three months and nine months ended October 3, 2010 has been classified as discontinued operations. Loss from discontinued operations for the three months and nine months ended October 2, 2011 also includes additional Arby’s expenses which were incurred as a result of the sale and the loss on Arby’s disposal, as further described below. |
• | Statements of cash flows - Arby’s cash flows prior to its sale (for the period from January 3, 2011 through July 3, 2011 and for the nine months ended October 3, 2010) have been included in, and not separately reported from, all our cash flows. The statement of cash flows for the nine months ended October 2, 2011 also includes the effects of the sale of Arby’s in the third quarter of 2011. |
Three Months Ended | Nine Months Ended | |||||||||||||||
October 2, 2011 | October 3, 2010 | October 2, 2011 | October 3, 2010 | |||||||||||||
Revenues | $ | — | $ | 260,506 | $ | 546,453 | $ | 782,826 | ||||||||
Loss from discontinued operations, net of income taxes: | ||||||||||||||||
(Loss) income from discontinued operations before income taxes | $ | (2,287 | ) | $ | (4,549 | ) | $ | 1,992 | $ | (11,492 | ) | |||||
Benefit from (provision for) income taxes | 846 | 4,397 | (874 | ) | 5,929 | |||||||||||
(1,441 | ) | (152 | ) | 1,118 | (5,563 | ) | ||||||||||
Loss on disposal, net of income taxes | (5,069 | ) | — | (8,849 | ) | — | ||||||||||
Loss from discontinued operations | $ | (6,510 | ) | $ | (152 | ) | $ | (7,731 | ) | $ | (5,563 | ) |
Applicable to | ||||||||
Discontinued Operations | Continuing Operations | |||||||
Total future operating lease commitments: | ||||||||
Rental payments | $ | 729,940 | $ | 958,872 | ||||
Rental receipts | 33,016 | 52,516 | ||||||
Future rental receipts on owned properties | 24,985 | 53,907 | ||||||
Pledged assets | 325,774 | 2,557,456 | ||||||
Future purchase and capital commitments: | ||||||||
Beverage agreements | 52,301 | 175,249 | ||||||
Capital expenditures | 5,316 | 12,879 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Balance at beginning of period (a) | $ | 98,631 | $ | 97,476 | |||
Equity in earnings for the period | 10,258 | 9,309 | |||||
Amortization of purchase price adjustments | (2,170 | ) | (2,182 | ) | |||
8,088 | 7,127 | ||||||
Distributions received | (10,784 | ) | (9,718 | ) | |||
Currency translation adjustment included in “Comprehensive income” | (5,050 | ) | 3,465 | ||||
Balance at end of period (a) | $ | 90,885 | $ | 98,350 | |||
_____________________ | |||||||
(a) Included in “Investments.” |
October 2, 2011 | October 3, 2010 | ||||||
Balance sheet information: | |||||||
Properties | C$ | 76,158 | C$ | 80,011 | |||
Cash and cash equivalents | 2,644 | 2,315 | |||||
Accounts receivable | 4,418 | 3,941 | |||||
Other | 2,628 | 3,011 | |||||
C$ | 85,848 | C$ | 89,278 | ||||
Accounts payable and accrued liabilities | C$ | 1,541 | C$ | 1,418 | |||
Other liabilities | 8,975 | 8,844 | |||||
Partners’ equity | 75,332 | 79,016 | |||||
C$ | 85,848 | C$ | 89,278 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Income statement information: | |||||||
Revenues | C$ | 29,131 | C$ | 28,620 | |||
Income before income taxes and net income | 20,404 | 19,064 |
October 2, 2011 | |||||||||||
Wendy’s Restaurants | Corporate | The Wendy’s Company | |||||||||
Financial assets | |||||||||||
Carrying Amount: | |||||||||||
Non-current cost investments | $ | 22,812 | $ | 4,598 | $ | 27,410 | |||||
Interest rate swaps | 13,014 | — | 13,014 | ||||||||
Fair Value: | |||||||||||
Non-current cost investments (a) | $ | 25,219 | $ | 20,600 | $ | 45,819 | |||||
Interest rate swaps (b) | 13,014 | — | 13,014 |
October 2, 2011 | |||||||
Carrying Amount | Fair Value | ||||||
Financial liabilities | |||||||
Long-term debt, including current portion: | |||||||
10% senior notes (c) | $ | 554,474 | $ | 602,855 | |||
Wendy’s Restaurants term loan (c) | 467,163 | 466,718 | |||||
6.20% senior notes (c) | 224,777 | 234,000 | |||||
Sale-leaseback obligations (d) | 1,460 | 1,732 | |||||
Capitalized lease obligations (d) | 14,151 | 15,585 | |||||
7% debentures (c) | 82,056 | 87,500 | |||||
Other | 1,060 | 1,088 | |||||
Total Wendy’s Restaurants long-term debt, including current portion | 1,345,141 | 1,409,478 | |||||
6.54% aircraft term loan (d) | 11,654 | 11,840 | |||||
Total The Wendy’s Company long-term debt, including current portion | $ | 1,356,795 | $ | 1,421,318 |
Guarantees of: | |||||||
Franchisee loans obligations (e) | $ | 420 | $ | 420 |
(a) | Fair value of these investments was based entirely on statements of account received from investment managers or investees which were principally based on quoted market or broker/dealer prices. To the extent that some of these investments, including the underlying investments in investment limited partnerships, do not have available quoted market or broker/dealer prices, the Companies relied on valuations performed by the investment managers or investees in valuing those investments or third-party appraisals. |
(b) | The fair values were based on information provided by the bank counterparties that is model-driven and whose inputs were observable or whose significant value drivers were observable. |
(c) | The fair values were based on quoted market prices. |
(d) | The fair values were determined by discounting the future scheduled principal payments using an interest rate assuming the same original issuance spread over a current U.S. Treasury bond yield for securities with similar durations. |
(e) | Wendy’s provided loan guarantees to various lenders on behalf of franchisees entering into pooled debt facility arrangements for new store development and equipment financing. Wendy’s has accrued a liability for the fair value of these guarantees, the calculation for which was based upon a weighted average risk percentage established at the inception of each program. |
Fair Value Measurements | |||||||||||||||
October 2, 2011 | Level 1 | Level 2 | Level 3 | ||||||||||||
Interest rate swaps (included in “Deferred costs and other assets”) | $ | 13,014 | $ | — | $ | 13,014 | $ | — |
Nine Months Ended October 2, 2011 Total Losses | |||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||
October 2, 2011 | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Properties | $ | 575 | $ | — | $ | — | $ | 575 | $ | 6,449 | |||||||||
Other intangible assets | — | — | — | — | 1,813 | ||||||||||||||
$ | 575 | $ | — | $ | — | $ | 575 | $ | 8,262 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | October 2, 2011 | October 3, 2010 | ||||||||||||
Impairment of company-owned restaurants: | |||||||||||||||
Properties | $ | — | $ | 17,373 | $ | 6,449 | $ | 17,448 | |||||||
Intangible assets | — | 3,548 | 1,813 | 3,955 | |||||||||||
$ | — | $ | 20,921 | $ | 8,262 | $ | 21,403 |
Three Months Ended | Nine Months Ended | ||||||||||
October 2, 2011 | October 3, 2010 | October 2, 2011 | October 3, 2010 | ||||||||
Common Stock: | |||||||||||
Weighted average basic shares outstanding | 395,677 | 417,985 | 410,624 | 428,968 | |||||||
Dilutive effect of stock options and restricted shares | 2,222 | — | 1,619 | 1,006 | |||||||
Weighted average diluted shares outstanding | 397,899 | 417,985 | 412,243 | 429,974 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Balance, beginning of year | $ | 2,163,174 | $ | 2,336,339 | |||
Comprehensive (loss) income (a) | (6,858 | ) | 14,347 | ||||
Share-based compensation | 13,756 | 10,519 | |||||
Exercises of stock options | 5,199 | 1,227 | |||||
Dividends paid | (24,584 | ) | (19,260 | ) | |||
Repurchases of common stock for treasury | (152,681 | ) | (167,744 | ) | |||
Other | (653 | ) | (841 | ) | |||
Balance, end of the period | $ | 1,997,353 | $ | 2,174,587 |
(a) | The following is a summary of the components of comprehensive income, net of income taxes: |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Net income | $ | 5,891 | $ | 6,433 | |||
Net change in currency translation adjustment | (12,703 | ) | 7,878 | ||||
Net unrealized losses on available-for-sale securities | — | (59 | ) | ||||
Change in net unrecognized pension loss | (46 | ) | 95 | ||||
Other comprehensive (loss) income | (12,749 | ) | 7,914 | ||||
Comprehensive (loss) income | $ | (6,858 | ) | $ | 14,347 |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Balance, beginning of year | $ | 1,776,630 | $ | 2,197,907 | |||
Comprehensive (loss) income (a) | (90 | ) | 15,061 | ||||
Share-based compensation | 12,973 | 9,841 | |||||
Dividends paid to The Wendy’s Company | — | (443,700 | ) | ||||
Other | — | (76 | ) | ||||
Balance, end of the period | $ | 1,789,513 | $ | 1,779,033 |
(a) | The following is a summary of the components of comprehensive income, net of income taxes: |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Net income | $ | 12,314 | $ | 7,172 | |||
Net change in currency translation adjustment | (12,703 | ) | 7,878 | ||||
Change in net unrecognized pension loss (b) | 299 | 11 | |||||
Other comprehensive (loss) income | (12,404 | ) | 7,889 | ||||
Comprehensive (loss) income | $ | (90 | ) | $ | 15,061 |
(b) | Includes the reclassification of the change in net unrecognized pension loss related to Arby’s pension liability to a subsidiary of The Wendy’s Company. |
• | Wendy’s will continue to lease equipment to certain franchisees that are testing the breakfast program. At the time breakfast becomes a required program, the franchisees will be required to purchase the equipment from Wendy’s based on its then book value plus installation costs. The total amount of expenditures for equipment (including installation) leased to franchisees is expected to be no more than $4,500. |
• | Additionally, Wendy’s is providing loans to certain franchisees for the purchase and installation of equipment required to implement the breakfast program. The loans are expected to not exceed $25 per restaurant, carry no interest charge and be repayable in full 24 months after the installation is completed. Wendy’s will fund a maximum of $20,000 of these loans for early adopters of the breakfast program. |
• | For the first three years of an early adopting franchisee’s participation in the breakfast program, a portion of franchise royalties (on a sliding scale) will not be payable to Wendy’s but will be required to be reinvested in local advertising and promotions for the breakfast program. Based on franchisee participation in the breakfast program, Wendy’s estimates the royalties not to be received under this program will approximate $5,000 over the three year period. |
• | Contributions otherwise due to The Wendy’s National Advertising Program, Inc. (“Wendy’s National Advertising Program”) based on breakfast sales will not be made but will be required to be reinvested in local advertising and promotions for the breakfast program until Wendy’s National Advertising Program begins to purchase national advertising for the breakfast programs. |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
SSG agreement (a) | $ | (2,275 | ) | $ | 4,900 | ||
Subleases with related parties (b) | (157 | ) | (100 | ) | |||
Advisory fees (c) | — | 2,465 | |||||
(The Wendy’s Company) | |||||||
Advisory fees (c) | $ | 500 | $ | 750 | |||
Sublease income (d) | (1,225 | ) | (1,228 | ) | |||
Use of corporate aircraft (e) | (100 | ) | (90 | ) | |||
Liquidation services agreement (f) | 220 | 331 |
(a) | As agreed by its board of directors in March 2011, effective April 2011 the activities of Strategic Sourcing Group Co-op, LLC (“SSG”) were transferred to the Wendy’s independent purchasing cooperative, Quality Supply Chain Co-op (“QSCC”), and Arby’s independent purchasing cooperative (“ARCOP”), which, following the sale of Arby’s, is no longer a related party. Wendy’s Restaurants had committed to pay approximately $5,145 of SSG expenses, of which $4,900 was expensed in the first quarter of 2010, and was to be paid over a 24 month period through March 2012. During the first quarter of 2011, the remaining accrued commitment of $2,275 was reversed and credited to “General and administrative.” |
(b) | Wendy’s and QSCC entered into a sublease amendment, effective January 1, 2011, which increased the office space subleased 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. On July 5, 2011, QSCC renewed the lease for a one year period ending December 31, 2012. |
(c) | The Companies paid approximately $2,465 in the second quarter of 2010 in fees for corporate finance advisory services in connection with the negotiation and execution of the Wendy’s Restaurants credit agreement. |
(d) | The Wendy’s Company recognized income of $1,225 and $1,228 from the Management Company under subleases, which expire in May 2012, for office space on two of the floors of the Company’s former New York headquarters for the first nine months of 2011 and 2010, respectively, which has been recorded as a reduction of “General and administrative.” |
(e) | On June 29, 2011, The Wendy’s Company and TASCO, LLC, an affiliate of the Management Company, entered into an agreement to extend an aircraft lease agreement for an additional one year period (expiring on June 30, 2012) for an increased monthly rent of $13. Under the extended lease agreement, TASCO, LLC continues to be responsible for operating costs related to the aircraft’s usage. The Wendy’s Company received lease income of $100 and $90 in the first nine months of 2011 and 2010, respectively, which is included as an offset to “General and administrative.” |
(f) | The Wendy’s Company paid the Management Company a fee of $900 in two installments in June 2009 and 2010, which was deferred and amortized through its June 30, 2011 expiration date for assistance in the sale, liquidation, or other disposition of certain of our investments. Related amortization of $220 and $331 was recorded in “General and administrative” in the first nine months of 2011 and 2010, respectively. |
Nine Months Ended | |||||||
October 2, 2011 | October 3, 2010 | ||||||
Dividends paid (g) | $ | — | $ | 443,700 | |||
Other transactions: | |||||||
Payments for Federal and state income tax (h) | 13,078 | — | |||||
Share-based compensation (i) | 10,917 | 9,841 | |||||
Expense under management service agreements (j) | 2,521 | 3,763 |
(g) | Wendy’s Restaurants paid cash dividends to The Wendy’s Company which were charged to “Invested equity.” |
(h) | Wendy’s Restaurants made cash payments to The Wendy’s Company under a tax sharing agreement, as discussed in Note 8. |
(i) | Wendy’s Restaurants incurs share based compensation costs for The Wendy’s Company Common Stock awards issued to certain employees under The Wendy’s Company various equity plans. Such compensation cost is allocated by The Wendy’s Company to Wendy’s Restaurants and is correspondingly recorded as capital contributions from The Wendy’s Company. |
(j) | Wendy’s Restaurants incurred $2,521 and $3,763 for management services during the first nine months of 2011 and 2010, respectively. Such fees were included in “General and administrative” and were settled through Wendy’s Restaurants’ intercompany account with The Wendy’s Company. Effective upon the sale of Arby’s, the agreement for such management services was terminated. |
Three Months | Nine Months | |||||||
Ended | Ended | |||||||
October 2, 2011 | October 2, 2011 | |||||||
Termination and severance (including stock compensation costs) | $ | 14,462 | $ | 16,208 | ||||
Employee retention (a) | 5,305 | 7,855 | ||||||
Bonus | 2,529 | 2,529 | ||||||
Relocation (b) | 826 | 827 | ||||||
Other professional fees | 368 | 2,034 | ||||||
Other | 81 | 89 | ||||||
Total Wendy’s Restaurants | 23,571 | 29,542 | ||||||
Employee retention | 96 | 159 | ||||||
Other professional fees | 4 | 845 | ||||||
Other | 168 | 216 | ||||||
Total The Wendy’s Company | $ | 23,839 | $ | 30,762 |
(a) | The Companies expect to expense retention payments for current Wendy’s Restaurants employees of approximately $214 and $45 during the fourth quarter of 2011 and the first quarter of 2012, respectively. |
(b) | Compensation costs of $1,500 incurred during the third quarter of 2011 due to the relocation of a corporate executive will be expensed over the three year period following this executive’s relocation in accordance with the terms of the agreement. |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 142,319 | $ | 160,985 | $ | 42,213 | $ | — | $ | 345,517 | |||||||||
Accounts and notes receivable | 4,841 | 62,437 | 3,530 | — | 70,808 | ||||||||||||||
Inventories | — | 11,525 | 983 | — | 12,508 | ||||||||||||||
Prepaid expenses and other current assets | 4,809 | 17,339 | 1,237 | — | 23,385 | ||||||||||||||
Deferred income tax benefit | 37,781 | 20,927 | 1,050 | — | 59,758 | ||||||||||||||
Advertising funds restricted assets | — | — | 72,116 | — | 72,116 | ||||||||||||||
Total current assets | 189,750 | 273,213 | 121,129 | — | 584,092 | ||||||||||||||
Properties | 11,395 | 1,087,765 | 53,457 | — | 1,152,617 | ||||||||||||||
Goodwill | — | 826,962 | 46,016 | — | 872,978 | ||||||||||||||
Other intangible assets | 18,480 | 1,266,698 | 24,026 | — | 1,309,204 | ||||||||||||||
Investments | 19,000 | — | 95,609 | — | 114,609 | ||||||||||||||
Deferred costs and other assets | 27,871 | 39,760 | 248 | — | 67,879 | ||||||||||||||
Net investment in subsidiaries | 2,479,879 | 242,444 | — | (2,722,323 | ) | — | |||||||||||||
Deferred income tax benefit | 54,877 | — | — | (54,877 | ) | — | |||||||||||||
Due from affiliate | 67,705 | — | — | (67,705 | ) | — | |||||||||||||
Total assets | $ | 2,868,957 | $ | 3,736,842 | $ | 340,485 | $ | (2,844,905 | ) | $ | 4,101,379 | ||||||||
LIABILITIES AND INVESTED EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current portion of long-term debt | $ | 5,465 | $ | 915 | $ | 271 | $ | — | $ | 6,651 | |||||||||
Accounts payable | 12,262 | 50,552 | 6,343 | — | 69,157 | ||||||||||||||
Accrued expenses and other current liabilities | 40,279 | 144,004 | 9,227 | — | 193,510 | ||||||||||||||
Advertising funds restricted liabilities | — | — | 72,116 | — | 72,116 | ||||||||||||||
Total current liabilities | 58,006 | 195,471 | 87,957 | — | 341,434 | ||||||||||||||
Long-term debt | 1,016,888 | 318,136 | 3,466 | — | 1,338,490 | ||||||||||||||
Due to affiliates | — | 83,489 | 3,617 | (67,705 | ) | 19,401 | |||||||||||||
Deferred income | — | 12,765 | 372 | — | 13,137 | ||||||||||||||
Deferred income taxes | — | 541,504 | 15,971 | (54,877 | ) | 502,598 | |||||||||||||
Other liabilities | 4,550 | 84,123 | 8,133 | — | 96,806 | ||||||||||||||
Invested equity: | |||||||||||||||||||
Member interest, $0.01 par value; 1,000 shares authorized, one share issued and outstanding | — | — | — | — | — | ||||||||||||||
Other capital | 2,436,432 | 2,417,177 | 197,630 | (2,614,807 | ) | 2,436,432 | |||||||||||||
(Accumulated deficit) retained earnings | (487,186 | ) | 243,910 | 28,072 | (271,982 | ) | (487,186 | ) | |||||||||||
Advances to The Wendy’s Company | (155,000 | ) | (155,000 | ) | — | 155,000 | (155,000 | ) | |||||||||||
Accumulated other comprehensive loss | (4,733 | ) | (4,733 | ) | (4,733 | ) | 9,466 | (4,733 | ) | ||||||||||
Total invested equity | 1,789,513 | 2,501,354 | 220,969 | (2,722,323 | ) | 1,789,513 | |||||||||||||
Total liabilities and invested equity | $ | 2,868,957 | $ | 3,736,842 | $ | 340,485 | $ | (2,844,905 | ) | $ | 4,101,379 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 79,355 | $ | 53,810 | $ | 65,521 | $ | — | $ | 198,686 | |||||||||
Accounts and notes receivable | 320 | 61,508 | 21,524 | — | 83,352 | ||||||||||||||
Inventories | — | 12,522 | 10,172 | — | 22,694 | ||||||||||||||
Prepaid expenses and other current assets | 3,900 | 12,434 | 7,698 | — | 24,032 | ||||||||||||||
Deferred income tax benefit | 17,634 | 20,926 | 6,507 | — | 45,067 | ||||||||||||||
Advertising funds restricted assets | — | — | 76,553 | — | 76,553 | ||||||||||||||
Total current assets | 101,209 | 161,200 | 187,975 | — | 450,384 | ||||||||||||||
Properties | 13,748 | 1,084,546 | 443,559 | — | 1,541,853 | ||||||||||||||
Goodwill | — | 823,539 | 65,382 | — | 888,921 | ||||||||||||||
Other intangible assets | 21,453 | 1,285,615 | 51,506 | — | 1,358,574 | ||||||||||||||
Investments | — | — | 102,406 | — | 102,406 | ||||||||||||||
Deferred costs and other assets | 32,610 | 32,384 | 9,565 | — | 74,559 | ||||||||||||||
Net investment in subsidiaries | 2,559,526 | 381,828 | — | (2,941,354 | ) | — | |||||||||||||
Deferred income tax benefit | 86,423 | — | — | (86,423 | ) | — | |||||||||||||
Due from affiliate | 59,618 | — | — | (59,618 | ) | — | |||||||||||||
Total assets | $ | 2,874,587 | $ | 3,769,112 | $ | 860,393 | $ | (3,087,395 | ) | $ | 4,416,697 | ||||||||
LIABILITIES AND INVESTED EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current portion of long-term debt | $ | 5,228 | $ | 687 | $ | 11,132 | $ | — | $ | 17,047 | |||||||||
Accounts payable | 4,624 | 52,242 | 24,282 | — | 81,148 | ||||||||||||||
Accrued expenses and other current liabilities | 38,871 | 128,089 | 77,340 | — | 244,300 | ||||||||||||||
Advertising funds restricted liabilities | — | — | 76,553 | — | 76,553 | ||||||||||||||
Total current liabilities | 48,723 | 181,018 | 189,307 | — | 419,048 | ||||||||||||||
Long-term debt | 1,043,623 | 310,339 | 188,722 | — | 1,542,684 | ||||||||||||||
Due to affiliates | — | 60,653 | 29,773 | (59,618 | ) | 30,808 | |||||||||||||
Deferred income | — | 6,291 | 5,169 | — | 11,460 | ||||||||||||||
Deferred income taxes | — | 541,800 | 23,095 | (86,423 | ) | 478,472 | |||||||||||||
Other liabilities | 5,611 | 86,993 | 64,991 | — | 157,595 | ||||||||||||||
Invested equity: | |||||||||||||||||||
Member interest, $0.01 par value; 1,000 shares authorized, one share issued and outstanding | — | — | — | — | — | ||||||||||||||
Other capital | 2,423,459 | 3,244,488 | 1,077,762 | (4,322,250 | ) | 2,423,459 | |||||||||||||
Accumulated deficit | (499,500 | ) | (515,141 | ) | (726,097 | ) | 1,241,238 | (499,500 | ) | ||||||||||
Advances to The Wendy’s Company | (155,000 | ) | (155,000 | ) | — | 155,000 | (155,000 | ) | |||||||||||
Accumulated other comprehensive income | 7,671 | 7,671 | 7,671 | (15,342 | ) | 7,671 | |||||||||||||
Total invested equity | 1,776,630 | 2,582,018 | 359,336 | (2,941,354 | ) | 1,776,630 | |||||||||||||
Total liabilities and invested equity | $ | 2,874,587 | $ | 3,769,112 | $ | 860,393 | $ | (3,087,395 | ) | $ | 4,416,697 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Sales | $ | — | $ | 472,289 | $ | 62,236 | $ | — | $ | 534,525 | |||||||||
Franchise revenues | — | 71,735 | 5,156 | — | 76,891 | ||||||||||||||
— | 544,024 | 67,392 | — | 611,416 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | — | 404,920 | 53,080 | — | 458,000 | ||||||||||||||
General and administrative | 11,251 | 47,418 | 4,063 | — | 62,732 | ||||||||||||||
Transaction related costs | 25,317 | — | (1,746 | ) | — | 23,571 | |||||||||||||
Depreciation and amortization | 2,859 | 25,206 | 2,693 | — | 30,758 | ||||||||||||||
Other operating expense (income), net | — | 2,678 | (2,316 | ) | — | 362 | |||||||||||||
39,427 | 480,222 | 55,774 | — | 575,423 | |||||||||||||||
Operating (loss) profit | (39,427 | ) | 63,802 | 11,618 | — | 35,993 | |||||||||||||
Interest expense | (22,234 | ) | (5,822 | ) | (115 | ) | — | (28,171 | ) | ||||||||||
Other income (expense), net | 136 | 4,260 | (4,095 | ) | — | 301 | |||||||||||||
Equity in income of subsidiaries | 42,734 | 5,377 | — | (48,111 | ) | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (18,791 | ) | 67,617 | 7,408 | (48,111 | ) | 8,123 | ||||||||||||
Benefit from (provision for) income taxes | 22,260 | (23,442 | ) | (2,031 | ) | — | (3,213 | ) | |||||||||||
Income from continuing operations | 3,469 | 44,175 | 5,377 | (48,111 | ) | 4,910 | |||||||||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | — | — | (1,441 | ) | — | (1,441 | ) | ||||||||||||
Loss on disposal of discontinued operations, net of income taxes | (5,069 | ) | — | — | — | (5,069 | ) | ||||||||||||
Loss from discontinued operations, net of income taxes | (5,069 | ) | — | (1,441 | ) | — | (6,510 | ) | |||||||||||
Net (loss) income | $ | (1,600 | ) | $ | 44,175 | $ | 3,936 | $ | (48,111 | ) | $ | (1,600 | ) |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Sales | $ | — | $ | 467,668 | $ | 57,414 | $ | — | $ | 525,082 | |||||||||
Franchise revenues | — | 70,706 | 4,947 | (27 | ) | 75,626 | |||||||||||||
— | 538,374 | 62,361 | (27 | ) | 600,708 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | — | 402,988 | 48,331 | — | 451,319 | ||||||||||||||
General and administrative | — | 62,739 | 9,621 | — | 72,360 | ||||||||||||||
Depreciation and amortization | 3,116 | 26,397 | 2,661 | — | 32,174 | ||||||||||||||
Impairment of long-lived assets | — | 17,213 | 3,708 | — | 20,921 | ||||||||||||||
Other operating expense (income), net | — | 3,171 | (1,618 | ) | — | 1,553 | |||||||||||||
3,116 | 512,508 | 62,703 | — | 578,327 | |||||||||||||||
Operating (loss) profit | (3,116 | ) | 25,866 | (342 | ) | (27 | ) | 22,381 | |||||||||||
Interest expense | (22,641 | ) | (6,000 | ) | (214 | ) | — | (28,855 | ) | ||||||||||
Other income (expense), net | — | 4,146 | (3,912 | ) | — | 234 | |||||||||||||
Equity in income (loss) of subsidiaries | 10,850 | (9,395 | ) | — | (1,455 | ) | — | ||||||||||||
(Loss) income from continuing operations before income taxes | (14,907 | ) | 14,617 | (4,468 | ) | (1,482 | ) | (6,240 | ) | ||||||||||
Benefit from (provision for) income taxes | 15,264 | (3,588 | ) | (4,927 | ) | — | 6,749 | ||||||||||||
Income (loss) from continuing operations | 357 | 11,029 | (9,395 | ) | (1,482 | ) | 509 | ||||||||||||
Discontinued operations: | |||||||||||||||||||
Loss from discontinued operations, net of income taxes | — | — | (179 | ) | 27 | (152 | ) | ||||||||||||
Net income (loss) | $ | 357 | $ | 11,029 | $ | (9,574 | ) | $ | (1,455 | ) | $ | 357 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Sales | $ | — | $ | 1,409,928 | $ | 178,207 | $ | (87 | ) | $ | 1,588,048 | ||||||||
Franchise revenues | — | 213,772 | 14,534 | (14 | ) | 228,292 | |||||||||||||
— | 1,623,700 | 192,741 | (101 | ) | 1,816,340 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | — | 1,205,511 | 156,158 | — | 1,361,669 | ||||||||||||||
General and administrative | 11,251 | 170,808 | 25,314 | — | 207,373 | ||||||||||||||
Transaction related costs | 29,542 | — | — | — | 29,542 | ||||||||||||||
Depreciation and amortization | 7,886 | 74,572 | 7,932 | — | 90,390 | ||||||||||||||
Impairment of long-lived assets | — | 7,890 | 372 | — | 8,262 | ||||||||||||||
Other operating expense (income), net | — | 8,223 | (6,641 | ) | — | 1,582 | |||||||||||||
48,679 | 1,467,004 | 183,135 | — | 1,698,818 | |||||||||||||||
Operating (loss) profit | (48,679 | ) | 156,696 | 9,606 | (101 | ) | 117,522 | ||||||||||||
Interest expense | (67,758 | ) | (17,103 | ) | (393 | ) | — | (85,254 | ) | ||||||||||
Other income (expense), net | 136 | 12,291 | (11,724 | ) | — | 703 | |||||||||||||
Equity in income (loss) of subsidiaries | 89,796 | (5,275 | ) | — | (84,521 | ) | — | ||||||||||||
(Loss) income from continuing operations before income taxes | (26,505 | ) | 146,609 | (2,511 | ) | (84,622 | ) | 32,971 | |||||||||||
Benefit from (provision for) income taxes | 47,668 | (57,830 | ) | (2,764 | ) | — | (12,926 | ) | |||||||||||
Income (loss) from continuing operations | 21,163 | 88,779 | (5,275 | ) | (84,622 | ) | 20,045 | ||||||||||||
Discontinued operations: | |||||||||||||||||||
Income from discontinued operations, net of income taxes | — | — | 1,017 | 101 | 1,118 | ||||||||||||||
Loss on disposal of discontinued operations, net of income taxes | (8,849 | ) | — | — | — | (8,849 | ) | ||||||||||||
(Loss) income from discontinued operations, net of income taxes | (8,849 | ) | — | 1,017 | 101 | (7,731 | ) | ||||||||||||
Net income (loss) | $ | 12,314 | $ | 88,779 | $ | (4,258 | ) | $ | (84,521 | ) | $ | 12,314 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Revenues: | |||||||||||||||||||
Sales | $ | — | $ | 1,400,788 | $ | 169,452 | $ | — | $ | 1,570,240 | |||||||||
Franchise revenues | — | 208,415 | 14,228 | (27 | ) | 222,616 | |||||||||||||
— | 1,609,203 | 183,680 | (27 | ) | 1,792,856 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | — | 1,179,325 | 145,645 | — | 1,324,970 | ||||||||||||||
General and administrative | — | 191,457 | 33,749 | — | 225,206 | ||||||||||||||
Depreciation and amortization | 9,341 | 77,983 | 7,731 | — | 95,055 | ||||||||||||||
Impairment of long-lived assets | — | 17,695 | 3,708 | — | 21,403 | ||||||||||||||
Other operating expense (income), net | — | 8,315 | (5,428 | ) | — | 2,887 | |||||||||||||
9,341 | 1,474,775 | 185,405 | — | 1,669,521 | |||||||||||||||
Operating (loss) profit | (9,341 | ) | 134,428 | (1,725 | ) | (27 | ) | 123,335 | |||||||||||
Interest expense | (56,263 | ) | (23,132 | ) | (9,357 | ) | — | (88,752 | ) | ||||||||||
Loss on early extinguishment of debt | — | (20,430 | ) | (5,767 | ) | — | (26,197 | ) | |||||||||||
Other income (expense), net | 157 | 12,293 | (11,451 | ) | — | 999 | |||||||||||||
Equity in income (loss) of subsidiaries | 26,830 | (38,142 | ) | — | 11,312 | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (38,617 | ) | 65,017 | (28,300 | ) | 11,285 | 9,385 | ||||||||||||
Benefit from (provision for) income taxes | 45,789 | (32,597 | ) | (9,842 | ) | — | 3,350 | ||||||||||||
Income (loss) from continuing operations | 7,172 | 32,420 | (38,142 | ) | 11,285 | 12,735 | |||||||||||||
Discontinued operations: | |||||||||||||||||||
Loss from discontinued operations, net of income taxes | — | — | (5,590 | ) | 27 | (5,563 | ) | ||||||||||||
Net income (loss) | $ | 7,172 | $ | 32,420 | $ | (43,732 | ) | $ | 11,312 | $ | 7,172 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 12,314 | $ | 88,779 | $ | (4,258 | ) | $ | (84,521 | ) | $ | 12,314 | |||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||||
Equity in (income) loss from operations of subsidiaries | (89,796 | ) | 5,275 | — | 84,521 | — | |||||||||||||
Depreciation and amortization | 7,886 | 74,572 | 30,045 | — | 112,503 | ||||||||||||||
Net receipt of deferred vendor incentives | — | 6,789 | 7,087 | — | 13,876 | ||||||||||||||
Share-based compensation provision | 8,480 | 3,821 | 672 | — | 12,973 | ||||||||||||||
Distributions received from joint venture | — | — | 10,784 | — | 10,784 | ||||||||||||||
Impairment of long-lived assets | — | 7,890 | 1,930 | — | 9,820 | ||||||||||||||
Loss on disposal of Arby's | 8,849 | — | — | — | 8,849 | ||||||||||||||
Deferred income tax provision (benefit), net | 8,856 | (826 | ) | 570 | — | 8,600 | |||||||||||||
Non-cash rent expense (credit) | — | 6,434 | (268 | ) | — | 6,166 | |||||||||||||
Accretion of long-term debt | 1,590 | 4,383 | 164 | — | 6,137 | ||||||||||||||
Write-off and amortization of deferred financing costs | 4,854 | — | — | — | 4,854 | ||||||||||||||
Tax sharing (receivable from) payable to affiliate, net | (57,495 | ) | 59,932 | — | — | 2,437 | |||||||||||||
(Recovery of) provision for doubtful accounts | — | (319 | ) | 2,323 | — | 2,004 | |||||||||||||
Tax sharing receipt from (payment to) affiliate, net | 36,000 | (36,000 | ) | — | — | — | |||||||||||||
Other operating transactions with affiliates | 58,509 | (2,651 | ) | (60,224 | ) | — | (4,366 | ) | |||||||||||
Equity in earnings in joint ventures, net | — | — | (7,817 | ) | — | (7,817 | ) | ||||||||||||
Tax sharing payment to The Wendy's Company | (13,078 | ) | — | — | — | (13,078 | ) | ||||||||||||
Other, net | (948 | ) | 2,342 | (1,203 | ) | — | 191 | ||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts and notes receivable | (806 | ) | (1,891 | ) | (3,967 | ) | — | (6,664 | ) | ||||||||||
Inventories | (6 | ) | 1,031 | (1,235 | ) | — | (210 | ) | |||||||||||
Prepaid expenses and other current assets | (1,727 | ) | (3,551 | ) | (3,242 | ) | — | (8,520 | ) | ||||||||||
Accounts payable | 2,370 | 527 | 6,063 | — | 8,960 | ||||||||||||||
Accrued expenses and other current liabilities | (6,749 | ) | 9,037 | (2,801 | ) | — | (513 | ) | |||||||||||
Net cash (used in) provided by operating activities | (20,897 | ) | 225,574 | (25,377 | ) | — | 179,300 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Proceeds from sale of Arby's, net of Arby's cash | 110,238 | — | (7,076 | ) | — | 103,162 | |||||||||||||
Proceeds from dispositions | 98 | 2,865 | 836 | — | 3,799 | ||||||||||||||
Capital expenditures | (7,602 | ) | (71,712 | ) | (12,599 | ) | — | (91,913 | ) | ||||||||||
Restaurant acquisitions | — | (6,613 | ) | — | — | (6,613 | ) | ||||||||||||
Franchise incentive loans | — | (1,269 | ) | — | — | (1,269 | ) | ||||||||||||
Investment in joint venture | — | (1,183 | ) | — | — | (1,183 | ) | ||||||||||||
Other, net | — | — | (245 | ) | — | (245 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 102,734 | (77,912 | ) | (19,084 | ) | — | 5,738 | ||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Repayments of long-term debt | (28,816 | ) | (487 | ) | (6,291 | ) | — | (35,594 | ) | ||||||||||
Capital contribution from Parent | (30,000 | ) | — | 30,000 | — | — | |||||||||||||
Dividend paid to Parent | 40,000 | (40,000 | ) | — | — | — | |||||||||||||
Deferred financing costs | (57 | ) | — | — | — | (57 | ) | ||||||||||||
Net cash (used in) provided by financing activities | (18,873 | ) | (40,487 | ) | 23,709 | — | (35,651 | ) | |||||||||||
Net cash provided by (used in) operations before effect of exchange rate changes on cash | 62,964 | 107,175 | (20,752 | ) | — | 149,387 | |||||||||||||
Effect of exchange rate changes on cash | — | — | (2,556 | ) | — | (2,556 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 62,964 | 107,175 | (23,308 | ) | — | 146,831 | |||||||||||||
Cash and cash equivalents at beginning of period | 79,355 | 53,810 | 65,521 | — | 198,686 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 142,319 | $ | 160,985 | $ | 42,213 | $ | — | $ | 345,517 |
Guarantor | Non-guarantor | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Total | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 7,172 | $ | 32,420 | $ | (43,732 | ) | $ | 11,312 | $ | 7,172 | ||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||||
Equity in (income) loss from operations of subsidiaries | (26,830 | ) | 38,142 | — | (11,312 | ) | — | ||||||||||||
Depreciation and amortization | 9,341 | 77,983 | 48,727 | — | 136,051 | ||||||||||||||
Impairment of long-lived assets | — | 17,695 | 23,729 | — | 41,424 | ||||||||||||||
Accretion of long-term debt | 1,229 | 11,571 | 213 | — | 13,013 | ||||||||||||||
Write-off and amortization of deferred financing costs | 3,133 | — | 7,245 | — | 10,378 | ||||||||||||||
Net receipt of deferred vendor incentives | — | 5,009 | 5,087 | — | 10,096 | ||||||||||||||
Share-based compensation provision | 2,950 | 4,330 | 2,561 | — | 9,841 | ||||||||||||||
Distributions received from joint venture | — | — | 9,718 | — | 9,718 | ||||||||||||||
Non-cash rent expense (credit) | — | 7,227 | (75 | ) | — | 7,152 | |||||||||||||
Provision for doubtful accounts | — | 2,163 | 5,423 | — | 7,586 | ||||||||||||||
Tax sharing receipt from (payment to) affiliate, net | 32,000 | (32,000 | ) | — | — | — | |||||||||||||
Tax sharing (receivable from) payable to affiliate, net | (38,855 | ) | 30,182 | — | — | (8,673 | ) | ||||||||||||
Equity in earnings in joint venture | — | — | (7,127 | ) | — | (7,127 | ) | ||||||||||||
Other operating transactions with affiliates | (734 | ) | (30,430 | ) | 24,333 | — | (6,831 | ) | |||||||||||
Deferred income tax benefit, net | (1,485 | ) | (3,433 | ) | — | — | (4,918 | ) | |||||||||||
Other, net | 2,527 | 1,402 | (5,660 | ) | — | (1,731 | ) | ||||||||||||
Changes in operating assets and liabilities net: | |||||||||||||||||||
Accounts and notes receivable | (42 | ) | 3,042 | (9,721 | ) | — | (6,721 | ) | |||||||||||
Inventories | — | 570 | 1,254 | — | 1,824 | ||||||||||||||
Prepaid expenses and other current assets | 1,185 | (4,077 | ) | (4,494 | ) | — | (7,386 | ) | |||||||||||
Accounts payable | 712 | (3,875 | ) | (4,126 | ) | — | (7,289 | ) | |||||||||||
Accrued expenses and other current liabilities | (25,060 | ) | (9,895 | ) | 2,339 | — | (32,616 | ) | |||||||||||
Net cash (used in) provided by operating activities | (32,757 | ) | 148,026 | 55,694 | — | 170,963 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | (12,890 | ) | (40,237 | ) | (41,609 | ) | — | (94,736 | ) | ||||||||||
Proceeds from dispositions | — | 2,174 | 2,220 | — | 4,394 | ||||||||||||||
Other, net | — | — | 1,369 | — | 1,369 | ||||||||||||||
Net cash used in investing activities | (12,890 | ) | (38,063 | ) | (38,020 | ) | — | (88,973 | ) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from long-term debt | 497,500 | — | 161 | — | 497,661 | ||||||||||||||
Repayments of long-term debt | (1,411 | ) | (200,551 | ) | (260,869 | ) | — | (462,831 | ) | ||||||||||
Dividends paid to The Wendy’s Company | (68,700 | ) | (361,000 | ) | (14,000 | ) | — | (443,700 | ) | ||||||||||
Capital contributions from Parent | (474,569 | ) | 215,000 | 259,569 | — | — | |||||||||||||
Redemption of preferred stock | — | 19,877 | (19,877 | ) | — | — | |||||||||||||
Deferred financing costs | (16,286 | ) | — | — | — | (16,286 | ) | ||||||||||||
Net cash used in financing activities | (63,466 | ) | (326,674 | ) | (35,016 | ) | — | (425,156 | ) | ||||||||||
Net cash used in operations before effect of exchange rate changes on cash | (109,113 | ) | (216,711 | ) | (17,342 | ) | — | (343,166 | ) | ||||||||||
Effect of exchange rate changes on cash | — | — | 894 | — | 894 | ||||||||||||||
Net decrease in cash and cash equivalents | (109,113 | ) | (216,711 | ) | (16,448 | ) | — | (342,272 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 237,607 | 255,230 | 46,027 | — | 538,864 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 128,494 | $ | 38,519 | $ | 29,579 | $ | — | $ | 196,592 |
• | Same-Store Sales |
• | Restaurant Margin |
• | Wendy’s will continue to lease equipment to certain franchisees that are testing the breakfast program. At the time breakfast becomes a required program, the franchisees will be required to purchase the equipment from Wendy’s based on its then book value plus installation costs. The total amount of expenditures for equipment (including installation) leased to franchisees is expected to be no more than $4.5 million. |
• | Additionally, Wendy’s is providing loans to certain franchisees for the purchase and installation of equipment required to implement the breakfast program. The loans are expected to not exceed $25 thousand per restaurant, carry no interest charge and be repayable in full 24 months after the installation is completed. Wendy’s will fund a maximum of $20.0 million of these loans for early adopters of the breakfast program. |
• | For the first three years of an early adopting franchisee’s participation in the breakfast program, a portion of franchise royalties (on a sliding scale) will not be payable to Wendy’s but will be required to be reinvested in local advertising and promotions for the breakfast program. Based on franchisee participation in the breakfast program, Wendy’s estimates the royalties not to be received under this program will approximate $5.0 million over the three year period. |
• | Contributions otherwise due to The Wendy’s National Advertising Program, Inc. (“Wendy’s National Advertising Program”) based on breakfast sales will not be made but will be required to be reinvested in local advertising and promotions for the breakfast program until Wendy’s National Advertising Program begins to purchase national advertising for the breakfast programs. |
Three Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | $ Change | % Change | |||||||||||
Revenues: | ||||||||||||||
Sales | $ | 534.5 | $ | 525.1 | $ | 9.4 | 1.8 | % | ||||||
Franchise revenues | 76.9 | 75.6 | 1.3 | 1.7 | ||||||||||
611.4 | 600.7 | 10.7 | 1.8 | |||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 458.0 | 451.3 | 6.7 | 1.5 | ||||||||||
General and administrative | 66.0 | 74.0 | (8.0 | ) | (10.8 | ) | ||||||||
Transaction related costs | 23.8 | — | 23.8 | 100.0 | ||||||||||
Depreciation and amortization | 30.8 | 32.6 | (1.8 | ) | (5.5 | ) | ||||||||
Impairment of long-lived assets | — | 20.9 | (20.9 | ) | (100.0 | ) | ||||||||
Other operating expense, net | 0.4 | 1.6 | (1.2 | ) | (75.0 | ) | ||||||||
579.0 | 580.4 | (1.4 | ) | (0.2 | ) | |||||||||
Operating profit | 32.4 | 20.3 | 12.1 | 59.6 | ||||||||||
Interest expense | (28.4 | ) | (29.2 | ) | 0.8 | (2.7 | ) | |||||||
Investment income, net | — | 0.1 | (0.1 | ) | (100.0 | ) | ||||||||
Other income, net | 0.3 | 0.2 | 0.1 | 50.0 | % | |||||||||
Income (loss) from continuing operations before income taxes | 4.3 | (8.6 | ) | 12.9 | n/m | |||||||||
(Provision for) benefit from income taxes | (1.8 | ) | 7.8 | (9.6 | ) | n/m | ||||||||
Income (loss) from continuing operations | 2.5 | (0.8 | ) | 3.3 | n/m | |||||||||
Loss from discontinued operations, net of income taxes | (6.5 | ) | (0.1 | ) | (6.4 | ) | n/m | |||||||
Net loss | $ | (4.0 | ) | $ | (0.9 | ) | $ | (3.1 | ) | n/m |
Three Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | $ Change | % Change | |||||||||||
Revenues: | ||||||||||||||
Sales | $ | 534.5 | $ | 525.1 | $ | 9.4 | 1.8 | % | ||||||
Franchise revenues | 76.9 | 75.6 | 1.3 | 1.7 | ||||||||||
611.4 | 600.7 | 10.7 | 1.8 | |||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 458.0 | 451.3 | 6.7 | 1.5 | ||||||||||
General and administrative | 62.7 | 72.4 | (9.7 | ) | (13.4 | ) | ||||||||
Transaction related costs | 23.6 | — | 23.6 | 100.0 | ||||||||||
Depreciation and amortization | 30.8 | 32.2 | (1.4 | ) | (4.3 | ) | ||||||||
Impairment of long-lived assets | — | 20.9 | (20.9 | ) | (100.0 | ) | ||||||||
Other operating expense, net | 0.3 | 1.5 | (1.2 | ) | (80.0 | ) | ||||||||
575.4 | 578.3 | (2.9 | ) | (0.5 | ) | |||||||||
Operating profit | 36.0 | 22.4 | 13.6 | 60.7 | ||||||||||
Interest expense | (28.2 | ) | (28.8 | ) | 0.6 | (2.1 | ) | |||||||
Other income, net | 0.3 | 0.2 | 0.1 | 50.0 | % | |||||||||
Income (loss) from continuing operations before income taxes | 8.1 | (6.2 | ) | 14.3 | n/m | |||||||||
(Provision for) benefit from income taxes | (3.2 | ) | 6.7 | (9.9 | ) | n/m | ||||||||
Income from continuing operations | 4.9 | 0.5 | 4.4 | n/m | ||||||||||
Loss from discontinued operations, net of income taxes | (6.5 | ) | (0.1 | ) | (6.4 | ) | n/m | |||||||
Net (loss) income | $ | (1.6 | ) | $ | 0.4 | $ | (2.0 | ) | n/m |
Third Quarter 2011 | Third Quarter 2010 | ||||||||||||
Sales: | |||||||||||||
Wendy’s | $ | 515.4 | $ | 500.3 | |||||||||
Bakery and kids’ meal promotion items sold to franchisees (a) | 19.1 | 24.8 | |||||||||||
Total sales | $ | 534.5 | $ | 525.1 | |||||||||
Cost of sales: | % of Sales | % of Sales | |||||||||||
Wendy’s | |||||||||||||
Food and paper | $ | 174.3 | 33.8% | $ | 166.3 | 33.2% | |||||||
Restaurant labor | 150.6 | 29.2% | 147.9 | 29.6% | |||||||||
Occupancy, advertising and other operating costs | 120.1 | 23.3% | 119.0 | 23.8% | |||||||||
Total Wendy’s cost of sales | 445.0 | 86.3% | 433.2 | 86.6% | |||||||||
Bakery and kids’ meal promotion items sold to franchisees | 13.0 | n/m | 18.1 | n/m | |||||||||
Total cost of sales | $ | 458.0 | 85.7% | $ | 451.3 | 85.9% |
Third Quarter 2011 | Third Quarter 2010 | |||||||
Margin $: | ||||||||
Wendy’s | $ | 70.4 | $ | 67.1 | ||||
Bakery and kids’ meal promotion items sold to franchisees | 6.1 | 6.7 | ||||||
Total margin | $ | 76.5 | $ | 73.8 | ||||
Restaurant margin %: | ||||||||
Wendy’s | 13.7 | % | 13.4 | % | ||||
(a) | During the first quarter of 2011, QSCC began managing the operations for kids’ meal promotion items sold to franchisees. There were no company sales of kids’ meal promotion items in the third quarter of 2011. |
Wendy’s restaurant statistics: | ||||||||
Same-store sales: | Third Quarter 2011 | Third Quarter 2010 | ||||||
North America company-owned restaurants | 1.8% | (3.1)% | ||||||
North America franchised restaurants | 0.7% | (1.3)% | ||||||
North America systemwide | 0.9% | (1.7)% | ||||||
Restaurant count: | Company-owned | Franchised | Systemwide | |||||
Restaurant count at July 3, 2011 | 1,400 | 5,171 | 6,571 | |||||
Opened | 5 | 13 | 18 | |||||
Closed | — | (11 | ) | (11 | ) | |||
Net (sold to) purchased by franchisees | (1 | ) | 1 | — | ||||
Restaurant count at October 2, 2011 | 1,404 | 5,174 | 6,578 |
Sales | |||
Change | |||
Wendy’s | $ | 15.1 | |
Bakery and kids’ meal promotion items sold to franchisees | (5.7 | ) | |
$ | 9.4 |
Franchise Revenues | |||
Change | |||
$ | 1.3 |
Cost of Sales | |||
Change | |||
Wendy’s | |||
Food and paper | 0.6 | % | points |
Restaurant labor | (0.4 | )% | points |
Occupancy, advertising and other operating costs | (0.5 | )% | points |
(0.3 | )% | points |
General and Administrative | |||||||||||
Change | |||||||||||
Wendy’s Restaurants | Corporate | The Wendy’s Company | |||||||||
Transition Services Agreement | $ | (5.9 | ) | $ | — | $ | (5.9 | ) | |||
Franchise incentives | (1.6 | ) | — | (1.6 | ) | ||||||
Management fees | (1.3 | ) | 1.3 | — | |||||||
Other, net | (0.9 | ) | 0.4 | (0.5 | ) | ||||||
$ | (9.7 | ) | $ | 1.7 | $ | (8.0 | ) |
Depreciation and Amortization | |||
Change | |||
Restaurants, primarily properties | $ | (1.2 | ) |
Shared services center assets | (0.2 | ) | |
Total Wendy’s Restaurants | (1.4 | ) | |
Corporate | (0.4 | ) | |
Total The Wendy’s Company | $ | (1.8 | ) |
Impairment of Long-Lived Assets | |||
Change | |||
Restaurants, primarily properties at underperforming locations | $ | (20.9 | ) |
(Provision for) Benefit from Income Taxes | |||||||
Change | |||||||
Wendy’s Restaurants | The Wendy’s Company | ||||||
Federal and state benefit on variance in income (loss) from continuing operations before income taxes | $ | 5.2 | $ | 4.8 | |||
Foreign tax credit, net of tax on foreign earnings | 3.5 | 3.5 | |||||
Other | 1.2 | 1.3 | |||||
$ | 9.9 | $ | 9.6 |
Loss from Discontinued Operations, Net of Income Taxes | |||
Change | |||
Loss from discontinued operations before income taxes | $ | 2.3 | |
Benefit from income taxes | (3.6 | ) | |
(1.3 | ) | ||
Loss on disposal, net of income taxes | (5.1 | ) | |
$ | (6.4 | ) |
Nine Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | $ Change | % Change | |||||||||||
Revenues: | ||||||||||||||
Sales | $ | 1,588.0 | $ | 1,570.2 | $ | 17.8 | 1.1 | % | ||||||
Franchise revenues | 228.3 | 222.6 | 5.7 | 2.6 | ||||||||||
1,816.3 | 1,792.8 | 23.5 | 1.3 | |||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 1,361.7 | 1,325.0 | 36.7 | 2.8 | ||||||||||
General and administrative | 215.1 | 230.4 | (15.3 | ) | (6.6 | ) | ||||||||
Transaction related costs | 30.8 | — | 30.8 | 100.0 | ||||||||||
Depreciation and amortization | 91.0 | 96.4 | (5.4 | ) | (5.6 | ) | ||||||||
Impairment of long-lived assets | 8.3 | 21.4 | (13.1 | ) | (61.2 | ) | ||||||||
Other operating expense, net | 1.6 | 2.7 | (1.1 | ) | (40.7 | ) | ||||||||
1,708.5 | 1,675.9 | 32.6 | 1.9 | |||||||||||
Operating profit | 107.8 | 116.9 | (9.1 | ) | (7.8 | ) | ||||||||
Interest expense | (85.9 | ) | (89.7 | ) | 3.8 | (4.2 | ) | |||||||
Loss on early extinguishment of debt | — | (26.2 | ) | 26.2 | (100.0 | ) | ||||||||
Investment income, net | 0.2 | 5.2 | (5.0 | ) | (96.2 | ) | ||||||||
Other income, net | 0.7 | 2.1 | (1.4 | ) | (66.7 | ) | ||||||||
Income from continuing operations before income taxes | 22.8 | 8.3 | 14.5 | n/m | ||||||||||
(Provision for) benefit from income taxes | (9.2 | ) | 3.7 | (12.9 | ) | n/m | ||||||||
Income from continuing operations | 13.6 | 12.0 | 1.6 | 13.3 | ||||||||||
Loss from discontinued operations, net of income taxes | (7.7 | ) | (5.6 | ) | (2.1 | ) | 37.5 | |||||||
Net income | $ | 5.9 | $ | 6.4 | $ | (0.5 | ) | (7.8 | )% |
Nine Months Ended | ||||||||||||||
October 2, 2011 | October 3, 2010 | $ Change | % Change | |||||||||||
Revenues: | ||||||||||||||
Sales | $ | 1,588.0 | $ | 1,570.2 | $ | 17.8 | 1.1 | % | ||||||
Franchise revenues | 228.3 | 222.6 | 5.7 | 2.6 | ||||||||||
1,816.3 | 1,792.8 | 23.5 | 1.3 | |||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 1,361.7 | 1,325.0 | 36.7 | 2.8 | ||||||||||
General and administrative | 207.4 | 225.2 | (17.8 | ) | (7.9 | ) | ||||||||
Transaction related costs | 29.5 | — | 29.5 | 100.0 | ||||||||||
Depreciation and amortization | 90.4 | 95.1 | (4.7 | ) | (4.9 | ) | ||||||||
Impairment of long-lived assets | 8.3 | 21.4 | (13.1 | ) | (61.2 | ) | ||||||||
Other operating expense, net | 1.5 | 2.8 | (1.3 | ) | (46.4 | ) | ||||||||
1,698.8 | 1,669.5 | 29.3 | 1.8 | |||||||||||
Operating profit | 117.5 | 123.3 | (5.8 | ) | (4.7 | ) | ||||||||
Interest expense | (85.3 | ) | (88.7 | ) | 3.4 | (3.8 | ) | |||||||
Loss on early extinguishment of debt | — | (26.2 | ) | 26.2 | (100.0 | ) | ||||||||
Other income, net | 0.7 | 1.0 | (0.3 | ) | (30.0 | ) | ||||||||
Income from continuing operations before income taxes | 32.9 | 9.4 | 23.5 | n/m | ||||||||||
(Provision for) benefit from income taxes | (12.9 | ) | 3.4 | (16.3 | ) | n/m | ||||||||
Income from continuing operations | 20.0 | 12.8 | 7.2 | 56.3 | ||||||||||
Loss from discontinued operations, net of income taxes | (7.7 | ) | (5.6 | ) | (2.1 | ) | 37.5 | |||||||
Net income | $ | 12.3 | $ | 7.2 | $ | 5.1 | 70.8 | % |
Nine Months 2011 | Nine Months 2010 | ||||||||||||
Sales: | |||||||||||||
Wendy’s | $ | 1,531.4 | $ | 1,495.6 | |||||||||
Bakery and kids’ meal promotion items sold to franchisees (a) | 56.6 | 74.6 | |||||||||||
Total sales | $ | 1,588.0 | $ | 1,570.2 | |||||||||
Cost of sales: | % of Sales | % of Sales | |||||||||||
Wendy’s | |||||||||||||
Food and paper | $ | 507.9 | 33.2% | $ | 479.4 | 32.1% | |||||||
Restaurant labor | 457.1 | 29.8% | 444.7 | 29.7% | |||||||||
Occupancy, advertising and other operating costs | 357.3 | 23.3% | 346.0 | 23.1% | |||||||||
Total Wendy’s cost of sales | 1,322.3 | 86.3% | 1,270.1 | 84.9% | |||||||||
Bakery and kids’ meal promotion items sold to franchisees | 39.4 | n/m | 54.9 | n/m | |||||||||
Total cost of sales | $ | 1,361.7 | 85.7% | $ | 1,325.0 | 84.4% |
Nine Months 2011 | Nine Months 2010 | |||||||
Margin $: | ||||||||
Wendy’s | $ | 209.1 | $ | 225.5 | ||||
Bakery and kids’ meal promotion items sold to franchisees | 17.2 | 19.7 | ||||||
Total margin | $ | 226.3 | $ | 245.2 | ||||
Restaurant margin %: | ||||||||
Wendy’s | 13.7 | % | 15.1 | % | ||||
(a) | During the first quarter of 2011, QSCC began managing the operations for kids’ meal promotion items sold to franchisees. Company sales of kids’ meal promotion items during the first nine months of 2011 were from inventory on hand prior to QSCC’s management of the process. |
Wendy’s restaurant statistics: | ||||||||
Same-store sales: | Nine Months 2011 | Nine Months 2010 | ||||||
North America company-owned restaurants | 1.1% | (2.0)% | ||||||
North America franchised restaurants | 1.1% | (0.6)% | ||||||
North America systemwide | 1.1% | (0.9)% | ||||||
Restaurant count: | Company-owned | Franchised | Systemwide | |||||
Restaurant count at January 2, 2011 | 1,394 | 5,182 | 6,576 | |||||
Opened | 8 | 44 | 52 | |||||
Closed | (8 | ) | (42 | ) | (50 | ) | ||
Net purchased from (sold by) franchisees | 10 | (10 | ) | — | ||||
Restaurant count at October 2, 2011 | 1,404 | 5,174 | 6,578 |
Sales | |||
Change | |||
Wendy’s | $ | 35.8 | |
Bakery and kids’ meal promotion items sold to franchisees | (18.0 | ) | |
$ | 17.8 |
Franchise Revenues | |||
Change | |||
$ | 5.7 |
Cost of Sales | |||
Change | |||
Wendy’s | |||
Food and paper | 1.1 | % | points |
Restaurant labor | 0.1 | % | points |
Occupancy, advertising and other operating costs | 0.2 | % | points |
1.4 | % | points |
General and Administrative | |||||||||||
Change | |||||||||||
Wendy’s Restaurants | Corporate | The Wendy’s Company | |||||||||
SSG co-op funding | $ | (7.2 | ) | $ | — | $ | (7.2 | ) | |||
Transition Services Agreement | (5.9 | ) | — | (5.9 | ) | ||||||
Wendy’s integration | (4.3 | ) | — | (4.3 | ) | ||||||
Franchise incentives | (2.3 | ) | — | (2.3 | ) | ||||||
Management fees | (1.2 | ) | 1.2 | — | |||||||
Professional fees | 2.3 | (0.4 | ) | 1.9 | |||||||
Other, net | 0.8 | 1.7 | 2.5 | ||||||||
$ | (17.8 | ) | $ | 2.5 | $ | (15.3 | ) |
Depreciation and Amortization | |||
Change | |||
Restaurants, primarily properties | $ | (3.2 | ) |
Shared services center assets | (1.5 | ) | |
Total Wendy’s Restaurants | (4.7 | ) | |
Corporate | (0.7 | ) | |
Total The Wendy’s Company | $ | (5.4 | ) |
Impairment of Long-Lived Assets | |||
Change | |||
Restaurants, primarily properties at underperforming locations | $ | (13.1 | ) |
Interest Expense | |||
Change | |||
Wendy’s debt | $ | (7.3 | ) |
Wendy’s Restaurants term loan | 2.2 | ||
Interest rate swaps | 2.1 | ||
Other | (0.4 | ) | |
Total Wendy’s Restaurants | (3.4 | ) | |
Other | (0.4 | ) | |
Total The Wendy’s Company | $ | (3.8 | ) |
(Provision for) Benefit From Income Taxes | |||||||
Change | |||||||
Wendy’s Restaurants | The Wendy’s Company | ||||||
Federal and state benefit on variance in income from continuing operations before income taxes | $ | 9.1 | $ | 5.7 | |||
Foreign tax credits, net of tax on foreign earnings | 3.5 | 3.5 | |||||
Valuation allowance reduction | 2.5 | 2.5 | |||||
Other | 1.2 | 1.2 | |||||
$ | 16.3 | $ | 12.9 |
Loss from Discontinued Operations, Net of Income Taxes | |||
Change | |||
Income from discontinued operations before income taxes | $ | 13.5 | |
Provision for income taxes | (6.8 | ) | |
6.7 | |||
Loss on disposal, net of income taxes | (8.8 | ) | |
$ | (2.1 | ) |
• | a $29.9 million favorable impact in accrued expenses and other current liabilities for the comparable periods. These favorable impacts were primarily due to the following: (1) an increase in amounts accrued for termination, severance and relocation costs associated with the sale of Arby’s and related corporate realignment, (2) payments to QSCC in the first quarter of 2010 which were accrued in 2009, (3) a decrease in amounts paid in 2011 versus 2010 under incentive compensation plans for the 2010 and 2009 fiscal years, respectively, and an increase in amounts accrued for the 2011 fiscal year bonus plans versus 2010 due to improved operating performance as compared to plan in 2011, and (4) a decrease in interest payments in the first nine months of 2011 compared to the first nine months of 2010, partially offset by a decrease in accrued interest expense both primarily due to the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2010 and a $190 million decrease in long-term debt which was assumed by Buyer on July 4, 2011. These favorable changes were partially offset by a decrease in current income tax accruals due to variations in taxable income of continuing operations during the same comparable periods; |
• | a $18.3 million favorable impact in accounts payable resulting from an increase in accounts payable of $9.3 million during the first nine months of 2011 compared to a decrease in accounts payable of $9.0 million during the first nine months of 2010, both as compared to the end of the respective prior fiscal year. The changes for each of the 2011 and 2010 comparable periods were primarily due to the following: (1) an increase in amounts payable for food purchases at Wendy’s as a result of higher sales trends in 2011 as compared to 2010, (2) a decrease in payments for Wendy’s kids’ meal promotion items as the management for kids’ meal promotion items sold to franchisees was transferred to QSCC in the first quarter of 2011, (3) a decrease in payments for certain expenses at Arby’s as a result of its sale on July 4, 2011, and (4) an increase in amounts accrued associated with the corporate realignment following the sale of Arby’s; |
• | a $21.2 million favorable impact in deferred income taxes due to variations in taxable income of continuing operations during the same comparable periods, net foreign tax credits and a reduction in valuation allowances related to state tax matters; |
• | an $8.8 million favorable impact due to the loss on disposal on the sale of Arby’s; |
• | $31.6 million in impairment of long-lived assets due to the level of impairment charges taken in prior periods; and |
• | $24.4 million in depreciation and amortization primarily as a result of nine months of depreciation and amortization for Arby’s in 2010 as compared to five months in 2011 due to the classification of Arby’s as a discontinued operation in May 2011. |
• | a $32.1 million favorable impact in accrued expenses and other current liabilities for the comparable periods. These favorable impacts were primarily due to the following: (1) an increase in amounts accrued for termination, severance and relocation costs associated with the sale of Arby’s and related corporate realignment, (2) payments to QSCC in the first quarter of 2010 which were accrued in 2009, (3) a decrease in amounts paid in 2011 versus 2010 under incentive compensation plans for the 2010 and 2009 fiscal years, respectively, and an increase in amounts accrued for the 2011 fiscal year bonus plans versus 2010 due to improved operating performance as compared to plan in 2011, and (4) a decrease in interest payments in the first nine months of 2011 compared to the first nine months of 2010, partially offset by a decrease in accrued interest expense both primarily due to the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2010 and a $190 million decrease in long-term debt which was assumed by Buyer on July 4, 2011. These favorable changes were partially offset by a decrease in current income tax accruals due to variations in taxable income of continuing operations combined with an increase in income tax payments during the same comparable periods; |
• | a $16.2 million favorable impact in accounts payable resulting from an increase in accounts payable of $8.9 million during the first nine months of 2011 compared to a decrease in accounts payable of $7.3 million during the first nine months of 2010, both as compared to the end of the respective prior fiscal year. The changes for each of the 2011 and 2010 comparable periods were primarily due to the following: (1) an increase in amounts payable for food purchases at Wendy’s as a result of higher sales trends in 2011 as compared to 2010, (2) a decrease in payments for Wendy’s kids’ meal promotion items as the management for kids’ meal promotion items sold to franchisees was transferred to QSCC in the first quarter of 2011, (3) a decrease in payments for certain expenses at Arby’s as a result of its sale on July 4, 2011, and (4) an increase in amounts accrued associated with the corporate alignment following the sale of Arby’s; |
• | a $13.5 million favorable impact in deferred income taxes due to variations in taxable income of continuing during the same comparable periods, net foreign tax credits and a reduction in valuation allowances related to state tax matters; |
• | an $8.8 million favorable impact due to the loss on disposal on the sale of Arby’s; |
• | $13.1 million in cash outflows related to tax payments made under a tax sharing agreement with The Wendy’s Company net of amounts accrued under this tax sharing agreement. No similar payments or accruals were made under this tax sharing agreement in the first nine months of 2010; |
• | $31.6 million in impairment of long-lived assets due to the level of impairment charges taken in prior periods; and |
• | $23.5 million in depreciation and amortization primarily as a result of nine months of depreciation and amortization for Arby’s in 2010 as compared to five months in 2011 due to the classification of Arby’s as a discontinued operation in May 2011. |
• | Proceeds from the sale of Arby’s of $103.2 million, which is net of the following: Arby’s cash balance of $7.1 million at the sale date, customary purchase price adjustments primarily related to working capital, and transaction closing costs paid through October 2, 2011; |
• | Repayments of long-term debt of $35.6 million, including an excess cash flow prepayment of $24.9 million as required by the Wendy’s Restaurants term loan; |
• | Cash capital expenditures totaling $91.9 million, which included $15.7 million for the remodeling of restaurants, $12.4 million for the construction of new restaurants, and $63.8 million for various capital projects; |
• | Dividend payments of $24.6 million; and |
• | Repurchases of Common Stock of $152.7 million, including commissions of $0.5 million. |
• | Payments of $6.5 million for accrued Arby’s transaction closing costs which will reduce the net cash proceeds received from the sale to $96.7 million; |
• | Capital expenditures of approximately $53 million, which would result in total cash capital expenditures for the year of approximately $145 million; |
• | Any other potential restaurant acquisitions and dispositions; |
• | Quarterly cash dividends aggregating up to approximately $7.8 million as discussed below in “Dividends;” |
• | Potential repurchases of common stock of up to approximately $92.5 million as of November 3, 2011 under the currently authorized stock buyback program, including $4.9 million purchased in the fourth quarter through November 3, 2011; and |
• | Potential intercompany dividends and fees. |
Fiscal Years | ||||||||||||||||||||
2011 | 2012-2013 | 2014-2015 | After 2015 | Total | ||||||||||||||||
Long-term debt (a) | $ | 113.5 | $ | 226.5 | $ | 438.2 | $ | 1,315.8 | $ | 2,094.0 | ||||||||||
Sale-leaseback obligations (b) | 0.1 | 0.2 | 0.2 | 2.8 | 3.3 | |||||||||||||||
Capitalized lease obligations (b) | 2.7 | 4.4 | 4.3 | 19.1 | 30.5 | |||||||||||||||
Operating leases (c) | 72.9 | 127.2 | 103.5 | 655.3 | 958.9 | |||||||||||||||
Purchase obligations (d) | 68.9 | 49.8 | 39.9 | 63.8 | 222.4 | |||||||||||||||
Other (e) | 4.1 | 0.7 | — | — | 4.8 | |||||||||||||||
Total Wendy’s Restaurants (f) | 262.2 | 408.8 | 586.1 | 2,056.8 | 3,313.9 | |||||||||||||||
Corporate long-term debt (a) | 1.4 | 11.3 | — | — | 12.7 | |||||||||||||||
Corporate operating leases (c) | 1.6 | 0.7 | — | — | 2.3 | |||||||||||||||
Other Corporate | 0.2 | 0.1 | — | — | 0.3 | |||||||||||||||
Total The Wendy’s Company (f) | $ | 265.4 | $ | 420.9 | $ | 586.1 | $ | 2,056.8 | $ | 3,329.2 | ||||||||||
_______________ |
(a) | Excludes sale-leaseback and capitalized lease obligations, which are shown separately in the table. The table above includes interest of approximately $708.8 million. The table above also reflects the effect of interest rate swaps entered into in 2009 which lowered our interest rate on our 6.20% Wendy’s senior notes. These amounts exclude the effects of the original issue discount on our 10% senior notes and the fair value adjustments related to certain debt assumed in the Wendy’s merger. |
(b) | Excludes related sublease rental receipts of $0.5 million on sale-leaseback obligations and $0.8 million on capitalized lease obligations. The table above includes interest of approximately $1.9 million for sale-leaseback obligations and $15.8 million for capitalized lease obligations. |
(c) | Represents the minimum lease cash payments. Excludes aggregate related sublease rental receipts of $52.4 million for Wendy’s Restaurants and additional sublease rental receipts for The Wendy’s Company of $1.9 million. |
(d) | Includes (1) $163.4 million remaining for beverage purchase requirements for Wendy’s restaurants, (2) $28.1 million for capital expenditures and (3) $30.9 million of other purchase obligations. |
(e) | Represents (1) $0.3 million for funding for QSCC, (2) $3.0 million for funding related to SSG, (3) $1.4 million for potential additional capital investment requirements, and (4) $0.1 million and $0.3 million for severance for Wendy’s Restaurants and The Wendy’s Company. |
(f) | Excludes obligation for uncertain income tax positions of $26.3 million and $36.4 million for Wendy’s Restaurants and The Wendy’s Company respectively. We are unable to predict when, and if cash payments on any of this accrual will be required. |
• | competition, including pricing pressures, aggressive marketing and the potential impact of competitors’ new unit openings on sales of Wendy’s restaurants; |
• | consumers’ perceptions of the relative quality, variety, affordability and value of the food products we offer; |
• | food safety events, including instances of food-borne illness (such as salmonella or E. coli) involving Wendy’s or its supply chain; |
• | consumer concerns over nutritional aspects of beef, poultry, French fries or other products we sell, or concerns regarding the effects of disease outbreaks such as “mad cow disease” and avian influenza or “bird flu”; |
• | success of operating and marketing initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors; |
• | the impact of general economic conditions and high unemployment rates on consumer spending, particularly in geographic regions that contain a high concentration of Wendy’s restaurants; |
• | changes in consumer tastes and preferences, and in discretionary consumer spending; |
• | changes in spending patterns and demographic trends, such as the extent to which consumers eat meals away from home; |
• | certain factors affecting our franchisees, including the business and financial viability of franchisees, the timely payment of such franchisees’ obligations due to us or to national or local advertising organizations, and the ability of our franchisees to open new restaurants in accordance with their development commitments, including their ability to finance restaurant development and remodels; |
• | changes in commodity costs (including beef and chicken), labor, supply, fuel, utilities, distribution and other operating costs; |
• | availability, location and terms of sites for restaurant development by us and our franchisees; |
• | development costs, including real estate and construction costs; |
• | delays in opening new restaurants or completing remodels of existing restaurants; |
• | the timing and impact of acquisitions and dispositions of restaurants; |
• | our ability to successfully integrate acquired restaurant operations; |
• | anticipated or unanticipated restaurant closures by us and our franchisees; |
• | our ability to identify, attract and retain potential franchisees with sufficient experience and financial resources to develop and operate Wendy’s restaurants successfully; |
• | availability of qualified restaurant personnel to us and to our franchisees, and the ability to retain such personnel; |
• | our ability, if necessary, to secure alternative distribution of supplies of food, equipment and other products to Wendy’s restaurants at competitive rates and in adequate amounts, and the potential financial impact of any interruptions in such distribution; |
• | availability and cost of insurance; |
• | adverse weather conditions; |
• | availability, terms (including changes in interest rates) and deployment of capital; |
• | changes in, and our ability to comply with, legal, regulatory or similar requirements, including franchising laws, accounting standards, payment card industry rules, overtime rules, minimum wage rates, wage and hour laws, government-mandated health care benefits, tax legislation and menu-board labeling requirements; |
• | the costs, uncertainties and other effects of legal, environmental and administrative proceedings; |
• | the effects of charges for impairment of goodwill or for the impairment of other long-lived assets due to deteriorating operating results; |
• | the effects of war or terrorist activities; |
• | expenses and liabilities for taxes related to periods up to the date of sale of Arby’s as a result of the indemnification provisions of the Arby’s Purchase and Sale Agreement; and |
• | other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K for the fiscal year ended January 2, 2011 (see especially “Item 1A. Risk Factors” and “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the Securities and Exchange Commission. |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||
July 4, 2011 through August 7, 2011 | 14,406,089 | $5.29 | 14,270,700 | $127,603,399 | ||
August 8, 2011 through September 4, 2011 | 4,462,376 | $4.73 | 4,461,792 | $106,497,414 | ||
September 5, 2011 through October 2, 2011 | 1,896,951 | $4.82 | 1,895,000 | $97,359,123 | ||
Total | 20,765,416 | $5.12 | 20,627,492 | $97,359,123 |
EXHIBIT NO. | DESCRIPTION |
2.1 | Agreement and Plan of Merger, dated as of April 23, 2008, by and among Triarc Companies, Inc., Green Merger Sub, Inc. and Wendy’s International, Inc., incorporated herein by reference to Exhibit 2.1 to Triarc’s Current Report on Form 8-K dated April 29, 2008 (SEC file no. 001-02207). |
2.2 | Side Letter Agreement, dated August 14, 2008, by and among Triarc Companies, Inc., Green Merger Sub, Inc. and Wendy’s International, Inc., incorporated herein by reference to Exhibit 2.3 to Triarc’s Registration Statement on Form S-4, Amendment No.3, filed on August 15, 2008 (Reg. no. 333-151336). |
2.3 | Agreement and Plan of Merger, dated as of December 17, 2007, by and among Deerfield Triarc Capital Corp., DFR Merger Company, LLC, Deerfield & Company LLC and, solely for the purposes set forth therein, Triarc Companies, Inc. (in such capacity, the Sellers’ Representative), incorporated herein by reference to Exhibit 2.1 to Triarc’s Current Report on Form 8-K dated December 21, 2007 (SEC file No. 001-02207). |
2.4 | Purchase and Sale Agreement, dated as of June 13, 2011, by and among Wendy's/Arby's Restaurants, LLC, ARG Holding Corporation and ARG IH Corporation, incorporated herein by reference to Exhibit 2.1 of the Wendy's/Arby's Group, Inc. and Wendy's/Arby's Restaurants, LLC Current Reports on Form 8-K filed on June 13, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
2.5 | Closing letter dated as of July 1, 2011 by and among Wendy’s/Arby’s Restaurants, LLC, ARG Holding Corporation, ARG IH Corporation, and Roark Capital Partners II, LP, incorporated by reference to Exhibit 2.2 of the Wendy’s/Arby’s Group, Inc. and Wendy’s/Arby’s Restaurants, LLC Current Reports on Form 8-K filed on July 8, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
3.1 | Restated Certificate of Incorporation of Wendy's/Arby's Group, Inc., as filed with the Secretary of State of the State of Delaware on May 26, 2011, incorporated herein by reference to Exhibit 3.1 of the Wendy's/Arby's Group, Inc. Current Report on Form 8-K filed on May 31, 2011 (SEC file no. 001-02207). (The Wendy's Company only.) |
3.2 | Certificate of Ownership and Merger of The Wendy's Company, incorporated herein by reference to Exhibit 3.1 of The Wendy's Company and Wendy's Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 ( SEC file nos. 001-02207 and 333-161613, respectively). (The Wendy's Company only.) |
3.3 | By-Laws of The Wendy’s Company, as amended and restated as of August 8, 2011, incorporated herein by reference to Exhibit 3.3 to The Wendy’s Company Form 10-Q for the quarter ended July 3, 2011 (SEC file no. 001-02207). (The Wendy’s Company only.) |
3.4 | Certificate of Formation of Wendy’s/Arby’s Restaurants, LLC, as amended to date, incorporated herein by reference to Exhibit 3.1 to the Wendy’s/Arby’s Restaurants, LLC Registration Statement on Form S-4 filed on August 28, 2009 (Reg. No. 333-161613). (Wendy’s Restaurants, LLC only.) |
3.5 | Certificate of Amendment of Wendy’s Restaurants, LLC, incorporated herein by reference to Exhibit 3.2 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). (Wendy’s Restaurants, LLC only.) |
3.6 | Fourth Amended and Restated Limited Liability Company Operating Agreement of Wendy’s Restaurants, LLC, incorporated herein by reference to Exhibit 3.3 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). (Wendy’s Restaurants, LLC only.) |
10.1 | |
10.2 | Employment Agreement effective September 12, 2011 by and between The Wendy’s Company and Emil J. Brolick, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on September 2, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
10.3 | Special Deferred Compensation Plan by and between The Wendy’s Company and Emil J. Brolick, incorporated herein by reference to Exhibit 10.2 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on September 2, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
10.4 | |
10.5 | |
10.6 | |
31.1 |
EXHIBIT NO. | DESCRIPTION |
31.2 | |
31.3 | |
31.4 | |
32.1 | |
101.INS | XBRL Instance Document** |
101.SCH | XBRL Taxonomy Extension Schema Document** |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document** |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document** |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document** |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document** |
* | Filed herewith |
** | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.” |
THE WENDY’S COMPANY (Registrant) | |
Date: November 9, 2011 | By: /s/Stephen E. Hare |
Stephen E. Hare | |
Senior Vice President and | |
Chief Financial Officer | |
(On behalf of the Company) | |
Date: November 9, 2011 | By: /s/Steven B. Graham |
Steven B. Graham | |
Senior Vice President and | |
Chief Accounting Officer | |
(Principal Accounting Officer) |
WENDY’S RESTAURANTS, LLC (Registrant) | |
Date: November 9, 2011 | By: /s/Stephen E. Hare |
Stephen E. Hare | |
Senior Vice President and | |
Chief Financial Officer | |
(On behalf of the Company) | |
Date: November 9, 2011 | By: /s/Steven B. Graham |
Steven B. Graham | |
Senior Vice President and | |
Chief Accounting Officer | |
(Principal Accounting Officer) |
EXHIBIT NO. | DESCRIPTION |
2.1 | Agreement and Plan of Merger, dated as of April 23, 2008, by and among Triarc Companies, Inc., Green Merger Sub, Inc. and Wendy’s International, Inc., incorporated herein by reference to Exhibit 2.1 to Triarc’s Current Report on Form 8-K dated April 29, 2008 (SEC file no. 001-02207). |
2.2 | Side Letter Agreement, dated August 14, 2008, by and among Triarc Companies, Inc., Green Merger Sub, Inc. and Wendy’s International, Inc., incorporated herein by reference to Exhibit 2.3 to Triarc’s Registration Statement on Form S-4, Amendment No.3, filed on August 15, 2008 (Reg. no. 333-151336). |
2.3 | Agreement and Plan of Merger, dated as of December 17, 2007, by and among Deerfield Triarc Capital Corp., DFR Merger Company, LLC, Deerfield & Company LLC and, solely for the purposes set forth therein, Triarc Companies, Inc. (in such capacity, the Sellers’ Representative), incorporated herein by reference to Exhibit 2.1 to Triarc’s Current Report on Form 8-K dated December 21, 2007 (SEC file No. 001-02207). |
2.4 | Purchase and Sale Agreement, dated as of June 13, 2011, by and among Wendy’s/Arby’s Restaurants, LLC, ARG Holding Corporation and ARG IH Corporation, incorporated herein by reference to Exhibit 2.1 of the Wendy’s/Arby’s Group, Inc. and Wendy’s/Arby’s Restaurants, LLC Current Reports on Form 8-K filed on June 13, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
2.5 | Closing letter dated as of July 1, 2011 by and among Wendy’s/Arby’s Restaurants, LLC, ARG Holding Corporation, ARG IH Corporation, and Roark Capital Partners II, LP, incorporated by reference to Exhibit 2.2 of the Wendy’s/Arby’s Group, Inc. and Wendy’s/Arby’s Restaurants, LLC Current Reports on Form 8-K filed on July 8, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
3.1 | Restated Certificate of Incorporation of Wendy’s/Arby’s Group, Inc., as filed with the Secretary of State of the State of Delaware on May 26, 2011, incorporated herein by reference to Exhibit 3.1 of the Wendy’s/Arby’s Group, Inc. Current Report on Form 8-K filed on May 31, 2011 (SEC file no. 001-02207). (The Wendy’s Company only.) |
3.2 | Certificate of Ownership and Merger of The Wendy’s Company, incorporated herein by reference to Exhibit 3.1 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 ( SEC file nos. 001-02207 and 333-161613, respectively). (The Wendy’s Company only.) |
3.3 | By-Laws of The Wendy’s Company, as amended and restated as of August 8, 2011, incorporated herein by reference to Exhibit 3.3 to The Wendy’s Company Form 10-Q for the quarter ended July 3, 2011 (SEC file no. 001-02207). (The Wendy’s Company only.) |
3.4 | Certificate of Formation of Wendy’s/Arby’s Restaurants, LLC, as amended to date, incorporated herein by reference to Exhibit 3.1 to the Wendy’s/Arby’s Restaurants, LLC Registration Statement on Form S-4 filed on August 28, 2009 (Reg. No. 333-161613). (Wendy’s Restaurants, LLC only.) |
3.5 | Certificate of Amendment of Wendy’s Restaurants, LLC, incorporated herein by reference to Exhibit 3.2 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). (Wendy’s Restaurants, LLC only.) |
3.6 | Fourth Amended and Restated Limited Liability Company Operating Agreement of Wendy’s Restaurants, LLC, incorporated herein by reference to Exhibit 3.3 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on July 5, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). (Wendy’s Restaurants, LLC only.) |
10.1 | |
10.2 | Employment Agreement effective September 12, 2011 by and between The Wendy’s Company and Emil J. Brolick, incorporated herein by reference to Exhibit 10.1 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on September 2, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
10.3 | Special Deferred Compensation Plan by and between The Wendy’s Company and Emil J. Brolick, incorporated herein by reference to Exhibit 10.2 of The Wendy’s Company and Wendy’s Restaurants, LLC Current Reports on Form 8-K filed on September 2, 2011 (SEC file nos. 001-02207 and 333-161613, respectively). |
10.4 | |
10.5 | |
10.6 | |
31.1 |
EXHIBIT NO. | DESCRIPTION |
31.2 | |
31.3 | |
31.4 | |
32.1 | |
101.INS | XBRL Instance Document** |
101.SCH | XBRL Taxonomy Extension Schema Document** |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document** |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document** |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document** |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document** |
* | Filed herewith |
** | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.” |
(a) | If to the Company, to: |
(b) | If to the Indemnitee, to: |
• | Wendy’s International, Inc. (“WII”) will contribute its international franchise contracts to Wendy’s Global, Inc.; |
• | WII and Wendy’s Global, Inc. will form a limited liability company (the “LLC”), which will be treated as a partnership for tax purposes, by each contributing assets in exchange for Equity Interests of the LLC; WII will contribute certain foreign exploitation rights of the Wendy’s brand and other intangible property and Wendy’s Global, Inc. will contribute its franchise contracts as well as the franchise contracts formerly held by WII and the Equity Interests of Wendy’s Singapore Pte. Ltd. (which owns approximately 49% of the Equity Interests in Wendy’s Japan LLC); |
• | WII will sell and contribute Wendy’s Restaurants of Canada, Inc. (“WROC”) and WII’s foreign subsidiaries to the LLC in exchange for a promissory note (“Note 1”) and additional Equity Interests of the LLC; |
• | WII will distribute Note 1 to the Borrower; |
• | The Borrower will make a loan of not to exceed approximately 100.0 million Canadian dollars to the LLC in exchange for a promissory note (“Note 2”); |
• | The LLC will make a loan of not to exceed approximately 100.0 million Canadian dollars to WROC in exchange for a promissory note (“Note A”); |
• | WROC will make a cash distribution of not to exceed approximately 100.0 million Canadian dollars to the LLC, which distribution will be used to repay Note 2; |
• | The LLC will form a new single-member limited liability company (“NewCo LLC 1”); |
• | The LLC and NewCo LLC 1 will form a flow-through limited partnership entity for Canadian tax purposes (“Canada LP”) with a de minimis capital contribution; |
• | The LLC will acquire a shell Dutch entity (“New Dutch BV”); |
• | The LLC will sell its Equity Interests in WROC and Note A to New Dutch BV in exchange for two promissory notes, Note B1 and Note B2; |
• | The LLC will contribute the Equity Interests of New Dutch BV and Notes B1 and B2 to Canada LP in exchange for Equity Interests of Canada LP; |
• | The LLC will form a new single-member limited liability company (“NewCo LLC 2”) with a de minimis capital contribution; |
• | The LLC and NewCo LLC 2 will form an entity in the Netherlands (“New Dutch CV”) with a de minimis capital contribution; |
• | The LLC will contribute the Equity Interests of Wendy’s Singapore Pte. Ltd., Wendy’s Restaurants (Asia) Limited and Wendy’s Old Fashioned Hamburger Restaurants Pty. Ltd. to New Dutch CV; |
• | The LLC will contribute its Equity Interest in Canada LP and NewCo LLC 1 to New Dutch CV in exchange for additional Equity Interests of New Dutch CV; and |
• | New Dutch CV will contribute the Equity Interests of Wendy’s Singapore Pte. Ltd., Wendy’s Restaurants (Asia) Limited and Wendy’s Old Fashioned Hamburger Restaurants Pty. Ltd. to Canada LP in exchange for additional Equity Interests of Canada LP. |
By: | /s/ Daniel T. Collins Name: Daniel T. Collins Title: SVP and Treasurer |
1. | I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q of Wendy’s Restaurants, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q of Wendy’s Restaurants, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
(13) Legal and Environmental Matters (Details) (Wendy's Restaurants, LLC [Member], Legal and Environmental Matters [Member], USD $) In Thousands | Oct. 02, 2011 |
---|---|
Wendy's Restaurants, LLC [Member] | Legal and Environmental Matters [Member] | |
Loss Contingencies [Line Items] | |
Reserves for legal and environmental matters | $ 1,722 |
Condensed Consolidated Balance Sheets (Parenthetical) (Subsidiaries [Member], USD $) | Oct. 02, 2011 | Jan. 02, 2011 |
---|---|---|
Subsidiaries [Member] | ||
Member interest, par value | $ 0.01 | $ 0.01 |
Member interest, shares authorized | 1,000 | 1,000 |
Member interest, shares issued | 1 | 1 |
Member interest, shares authorized | 1 | 1 |
(5) Investment in Joint Ventures (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Joint Venture with Tim Horton's, Inc [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Joint Venture with Tim Horton's, Inc. |
|
Document and Entity Information | 9 Months Ended | |
---|---|---|
Oct. 02, 2011 | Nov. 03, 2011 | |
Entity Information [Line Items] | ||
Entity Registrant Name | WENDY'S CO | |
Entity Central Index Key | 0000030697 | |
Current Fiscal Year End Date | --01-01 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 02, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 389,140,409 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Subsidiaries [Member] | ||
Entity Information [Line Items] | ||
Entity Registrant Name | WENDY'S RESTAURANTS, LLC | |
Entity Central Index Key | 0001467974 | |
Entity Filer Category | Non-accelerated Filer |
(11) Guarantees and Other Commitments and Contingencies Commitment to Fund, Breakfast Expansion (Details) (Wendy's Restaurants, LLC [Member], USD $) In Thousands | 9 Months Ended | |
---|---|---|
Oct. 02, 2011 | Oct. 03, 2010 | |
Wendy's Restaurants, LLC [Member] | ||
Funding Commitment [Line Items] | ||
Expenditure related to breakfast expansion program, expected | $ 4,500 | |
Commitment to fund, per restaurant | 25 | |
Commitment to fund programs, maximum | 20,000 | |
Equipment leased to franchisees | 1,846 | |
Franchise incentive loans | 1,269 | 0 |
Royalties required to be reinvested, expected | $ 5,000 |
(9) Income Per Share (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of shares used to calculate basic and diluted income per share |
|
(11) Guarantees and Other Commitments and Contingencies (Details) (Wendy's Restaurants, LLC [Member]) In Thousands | 3 Months Ended | ||
---|---|---|---|
Oct. 02, 2011
Equipment, Purchase and Installation [Member]
USD ($) | Oct. 02, 2011
Property Lease Guarantee [Member]
CAD | Jan. 01, 2012
USD ($) | |
Guarantor Obligations [Line Items] | |||
Direct loan to franchisee | $ 2,700 | ||
Guarantor obligations | 621 | 249 | |
Loan guarantees, maximum amount | 5,000 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
(7) Impairment of Long-Lived Assets | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long Lived Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long Lived Assets | Impairment of Long-Lived Assets Wendy’s company-owned restaurant impairment losses included in the table below for the nine months ended October 2, 2011 and the three months and nine months ended October 3, 2010 predominantly reflected impairment charges on restaurant level assets resulting from the deterioration in operating performance of certain restaurants and additional charges for capital improvements in restaurants impaired in prior years which did not subsequently recover. The Wendy’s impairment losses for the three months and nine months ended October 3, 2010 also included write-downs in the carrying value of certain surplus properties and properties held for sale. These impairment losses represented the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets.” The fair values of impaired assets in the table below were generally estimated based on the present values of the associated cash flows and on market value with respect to land (Level 3 inputs).
Arby’s company-owned restaurant impairment losses of $6,488 and $20,021 for the three months and nine months ended October 3, 2010, respectively, predominantly reflected impairment charges on restaurant level assets resulting from the deterioration in operating performance of certain restaurants and additional charges for capital improvements in restaurants impaired in prior years which did not subsequently recover. These impairment losses represented the excess of the carrying amount over the fair value of the affected assets and are included in discontinued operations and not included in the table above. The fair values of impaired assets were generally estimated based on the present values of the associated cash flows and on market value with respect to land (Level 3 inputs). Arby’s impairment losses for the period from January 3, 2011 through July 4, 2011 (its date of sale) were not significant. See Note 2 for more information on discontinued operations. |
(10) Debt and Equity (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Wendy's Company [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stockholders' Equity |
_______________
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wendy's Restaurants, LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Invested Equity |
_______________
|
(9) Income Per Share (Details) (The Wendy's Company [Member]) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 02, 2011 | Oct. 03, 2010 | Oct. 02, 2011 | Oct. 03, 2010 | |
Common Stock: | ||||
Weighted average basic shares outstanding | 395,677 | 417,985 | 410,624 | 428,968 |
Dilutive effect of stock options and restricted shares | 2,222 | 0 | 1,619 | 1,006 |
Weighted average diluted shares outstanding | 397,899 | 417,985 | 412,243 | 429,974 |
Potential common shares excluded from diluted per share calculation | 20,525 | 19,038 | 23,846 | |
Stock Options [Member] | ||||
Common Stock: | ||||
Potential common shares, outstanding | 31,022 | 31,022 | ||
Restricted Stock [Member] | ||||
Common Stock: | ||||
Potential common shares, outstanding | 3,820 | 3,820 |
(6) Fair Value of Financial Instruments Fair Value of Financial Instruments, Fair Value Measure on Recurring Basis (Details) (Interest Rate Swap [Member], Designated as Hedging Instrument [Member], Fair Value Hedging [Member], Fair Value, Measurements, Recurring [Member], USD $) In Thousands | Oct. 02, 2011 |
---|---|
Estimate of Fair Value, Fair Value Disclosure [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate swaps | $ 13,014 |
Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate swaps | 0 |
Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate swaps | 13,014 |
Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate swaps | $ 0 |
(7) Impairment of Long-Lived Assets (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long Lived Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of impairment of long-lived assets by asset |
|
(12) Transactions with Related Parties | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Related Parties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions Disclosure [Text Block] | Transactions with Related Parties The following is a summary of ongoing transactions between the Companies and their related parties which are included in continuing operations and includes any updates and amendments since those reported in the Form 10-K:
___________________ Transactions with Purchasing Cooperatives
The Companies received $23 and $16 of sublease income from SSG and $134 and $84 of sublease income from QSCC during the first nine months of 2011 and 2010, respectively. Transactions with the Management Company
In addition, The Wendy’s Company incurred service fees of $500 and $750 in the first nine months of 2011 and 2010, respectively, which are included in “General and administrative.” These fees were paid to a management company (the “Management Company”) which was formed by our Chairman, who was our former Chief Executive Officer, and our Vice Chairman, who was our former President and Chief Operating Officer, and a director, who was our former Vice Chairman, in connection with a services agreement which expired on June 30, 2011.
We intend to dispose of the Company-owned aircraft leased under the lease agreement discussed above as soon as practicable. As of October 2, 2011, the aircraft has a carrying value that approximates its fair value, is classified as held-for-sale, and is included in “Prepaid expenses and other current assets.”
(Wendy’s Restaurants) The following is a summary of continuing transactions between Wendy’s Restaurants and The Wendy’s Company:
_____________________
As a result of the sale of Arby’s, Arby’s and its affiliates are no longer considered related parties. Prior to the sale, the transactions between Arby’s and its non-consolidated affiliates were not material. |
(3) Acquisitions and Dispositions | 9 Months Ended |
---|---|
Oct. 02, 2011 | |
Acquisitions and Dispositions [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Other Dispositions During the nine months ended October 2, 2011, Wendy’s acquired nine Wendy’s franchised restaurants in three separate acquisitions. The total consideration for these acquisitions before post closing adjustments was $7,673 consisting of (1) $6,613 of cash, net of $55 of cash acquired, and (2) the issuance of a note payable of $1,060. The total consideration was allocated to net tangible and identifiable intangible assets acquired, primarily properties, and liabilities assumed based on their estimated fair values with the excess of $3,689 recognized as goodwill. During the nine months ended October 2, 2011, Wendy’s also assumed the operations and management of four additional Wendy’s franchised restaurants. During the nine months ended October 2, 2011, Wendy’s received proceeds from dispositions of $2,865 consisting of $1,125 from the sale of three company-owned Wendy’s restaurants to franchisees, $899 from the sale of surplus properties, and $841 related to other dispositions. These sales resulted in a net gain of $744 which is included as an offset to “Depreciation and amortization.” During the nine months ended October 3, 2010, Wendy’s received proceeds from dispositions of $2,174 consisting of $1,123 from the sale of surplus properties, $821 from the sale of two company-owned Wendy’s restaurants, and $230 related to other dispositions. These sales resulted in a net gain of $1,292 which is included as an offset to “Depreciation and amortization.” |
(9) Income Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (Loss) Per Share | Income (Loss) Per Share (The Wendy’s Company) Basic income (loss) per share for the three months and nine months ended October 2, 2011 and October 3, 2010 was computed by dividing net income (loss) by the weighted average number of common shares outstanding. The weighted average number of shares used to calculate basic and diluted income per share was as follows:
Diluted income (loss) per share for the three months and nine months ended October 2, 2011 and the nine months ended October 3, 2010 was computed by dividing income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares, computed using the treasury stock method. For the three months and nine months ended October 2, 2011, we excluded 20,525 and 19,038, respectively, of potential common shares from our diluted income per share calculation as they would have had anti-dilutive effects. For the nine months ended October 3, 2010, we excluded 23,846 of potential common shares from our diluted income per share calculation as they would have had anti-dilutive effects. Diluted loss per share for the three months ended October 3, 2010 was the same as basic loss per share since we reported a loss from continuing operations and, therefore, the effect of all potentially dilutive securities would have been antidilutive. As of October 2, 2011, our potential common shares consisted of the following: (1) outstanding stock options which can be exercised into 31,022 shares of our Common Stock and (2) 3,820 restricted stock units and other restricted stock awards. |
(14) Transaction Related Costs | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retention and Other Transaction Costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction Related Costs | Transaction Related Costs Following the sale of Arby’s and the related announcement that the Companies’ headquarters would be relocated to Ohio, our then President and Chief Executive Officer of the Company resigned effective as of September 12, 2011. The former President and Chief Executive Officer continues to serve as a director of the Company and, until December 30, 2011, remains an employee of the Company in the capacity of Special Advisor. As a result, and in accordance with the termination provisions of the related employment agreement, the Companies incurred termination costs of $12,568 (principally for required payments of $7,987 and vesting of previously issued stock awards of $4,581) in the third quarter of 2011, which are included in the table below. The following table summarizes the Companies “Transaction related costs” associated with the sale of Arby’s and related corporate realignment:
_____________________
|
(10) Debt and Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Equity | Debt and Equity Debt The Wendy’s Restaurants senior secured term loan facility (the “Term Loan”), which is part of the credit agreement entered into in May 2010 and is further described in the Form 10-K, requires prepayments of principal amounts resulting from certain events and on an annual basis from Wendy’s Restaurants excess cash flow as defined under the Term Loan. An excess cash flow payment for fiscal 2010 of $24,874 was paid in the first quarter of 2011. Wendy’s Restaurants was not required to utilize any portion of the proceeds from the sale of Arby’s described in Note 2 as a Term Loan prepayment. In the second quarter of 2010 the Companies recognized a loss on early extinguishment of debt of $26,197 related to the repayment of debt from the proceeds of the Term Loan as discussed above. This loss consisted of (1) a $14,953 premium payment required to redeem the Wendy’s 6.25% senior notes, (2) $5,477 for the write-off of the unaccreted discount of the Wendy’s 6.25% senior notes (recorded in connection with the Wendy’s merger), and (3) $5,767 for the write-off of deferred costs associated with the repayment of the Wendy’s Restaurants prior senior secured term loan. Stockholders’ Equity (The Wendy’s Company) The following is a summary of the changes in stockholders’ equity:
_______________
Invested Equity (Wendy’s Restaurants) The following is a summary of the changes in invested equity:
_______________
|
(2) Discontinued Operations Detail of change in guarantees and commitments (Details) (Wendy's Restaurants, LLC [Member], USD $) | Jan. 02, 2011 |
---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Rental payments | $ 958,872 |
Rental receipts | 52,516 |
Future rental receipts on owned properties | 53,907 |
Pledged assets | 2,557,456 |
Beverage agreements | 175,249 |
Capital expenditures | 12,879 |
Arby’s Restaurant Group, Inc [Member] | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Rental payments | 729,940 |
Rental receipts | 33,016 |
Future rental receipts on owned properties | 24,985 |
Pledged assets | 325,774 |
Beverage agreements | 52,301 |
Capital expenditures | $ 5,316 |
(8) Income Taxes | 9 Months Ended |
---|---|
Oct. 02, 2011 | |
Income Taxes [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended October 2, 2011 and effective tax rate benefit for the three months ended October 3, 2010 was 41.0% and 91.2%, respectively. Wendy’s Restaurants effective tax rate for the three months ended October 2, 2011 and effective tax rate benefit for the three months ended October 3, 2010 was 39.6% and 108.2%, respectively. The Companies’ effective tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes, net of federal income tax benefit, (2) tax credits, (3) adjustments related to prior year tax matters, and (4) the tax benefit of foreign tax credits, net of the tax on foreign earnings resulting from the repatriation of foreign earnings during the third quarter of 2010. The Company’s effective tax rate for the nine months ended October 2, 2011 and effective tax rate benefit for the nine months ended October 3, 2010 was 40.3% and 44.0%, respectively. Wendy’s Restaurants effective tax rate for the nine months ended October 2, 2011 and effective tax rate benefit for the nine months ended October 3, 2010 was 39.2% and 35.7%, respectively. The Companies’ effective tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes, net of federal income tax benefit, (2) tax credits, (3) adjustments related to prior year tax matters, (4) the tax benefit of foreign tax credits, net of the tax on foreign earnings resulting from the repatriation of foreign earnings during the third quarter of 2010, and (5) a reduction in our state valuation allowances in 2010. There were no significant changes to unrecognized tax benefits or related interest and penalties for either the Company or Wendy’s Restaurants for the nine month periods ended October 2, 2011 and October 3, 2010. Amounts payable for Federal and certain state income taxes are settled by Wendy’s Restaurants to The Wendy’s Company under a tax sharing agreement. During the nine months ended October 2, 2011 and October 3, 2010, Wendy’s Restaurants made tax sharing payments to The Wendy’s Company of $13,078 and $0, respectively. |
(1) Basis of Presentation | 9 Months Ended |
---|---|
Oct. 02, 2011 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company”) and Wendy’s Restaurants, LLC (“Wendy’s Restaurants”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments necessary to present fairly our financial position as of October 2, 2011 and the results of our operations for the three months and nine months ended October 2, 2011 and October 3, 2010 and our cash flows for the nine months ended October 2, 2011 and October 3, 2010. The results of operations for the three months and nine months ended October 2, 2011 are not necessarily indicative of the results to be expected for the full 2011 fiscal year. These Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and Wendy’s Restaurants, and combined notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2011 (the “Form 10-K”). On July 5, 2011, and as a result of the sale of Arby’s Restaurant Group, Inc. (“Arby’s”) discussed in Note 2, Wendy’s/Arby’s Group, Inc. changed its name to The Wendy’s Company and Wendy’s/Arby’s Restaurants, LLC, a 100% owned subsidiary of The Wendy’s Company, changed its name to Wendy’s Restaurants. The Wendy’s Company and Wendy’s Restaurants (together, the “Companies”) manage and internally report their business in one segment: the operation and franchising of Wendy’s® restaurants through a wholly owned subsidiary Wendy’s International, Inc. (“Wendy’s”), including its wholesale bakery operations. References herein to The Wendy’s Company corporate (“Corporate”) represent The Wendy’s Company parent company only functions and their effect on the Company’s consolidated results of operations and financial condition. We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to December 31. All three month and nine month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. |
(4) DFR Notes | 9 Months Ended |
---|---|
Oct. 02, 2011 | |
DFR Notes [Abstract] | |
DFR Notes | DFR Notes (The Wendy’s Company) On June 9, 2010, pursuant to a March 2010 agreement between the Company and Deerfield Capital Corp. (“DFR”), we received cash proceeds of $31,330, including interest, in consideration for the repayment and cancellation of the series A senior notes (the “DFR Notes”) we received in December 2007 in connection with the sale of Deerfield & Company (the “Deerfield Sale”) to DFR. Additional information on the DFR Notes and the Deerfield Sale is discussed in the Form 10-K. The proceeds represented 64.1% of the $47,986 aggregate principal amount of the DFR Notes. During the fourth quarter of 2008, we recognized an allowance for collectability of $21,227 to reduce the then carrying amount of the notes to $24,983. As a result, we recognized income of $4,909 during the nine months ended October 3, 2010, as the repayment proceeds exceeded the carrying value of the DFR Notes. This gain is included in “Investment income, net.” |
(6) Fair Value of Financial Instruments Derivative Instruments (Details) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011
The Wendy's Company [Member]
Debt Instrument 3 [Member]
Portion at Fair Value, Fair Value Disclosure [Member]
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Fair Value Hedging [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Debt Instrument 3 [Member]
Portion at Fair Value, Fair Value Disclosure [Member]
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Fair Value Hedging [Member] | Jan. 02, 2011
Wendy's Restaurants, LLC [Member]
Debt Instrument 3 [Member]
Portion at Fair Value, Fair Value Disclosure [Member]
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Fair Value Hedging [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Debt Instrument 3 [Member]
Interest Rate Swap [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Debt Instrument 3 [Member]
Interest Rate Swap [Member] | Jul. 04, 2010
Wendy's Restaurants, LLC [Member]
Debt Instrument 9 [Member] | Oct. 03, 2010
Interest Rate Swap [Member]
Debt Instrument 9 [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Interest Rate Swap [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Interest Rate Swap [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||||||||||
Notional amount of interest rate swaps | $ 225,000 | $ 225,000 | $ 175,000 | ||||||||||
Fair value of interest rate swaps | 13,014 | [1] | 13,014 | [1] | 9,623 | ||||||||
Interest income on interest rate swaps | 1,402 | 4,250 | 1,320 | 6,396 | |||||||||
Gain on cancellation of interest rate swaps | $ 1,875 | ||||||||||||
|
(2) Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Other income tax expense (benefit) [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Permanent tax difference related to goodwill [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member] | Jul. 03, 2011
Wendy's Restaurants, LLC [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member]
Bonus [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Segment, Discontinued Operations [Member]
Compensation Cost [Member] | Jun. 12, 2011
Wendy's Restaurants, LLC [Member]
Arby’s Restaurant Group, Inc [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Arby’s Restaurant Group, Inc [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Arby’s Restaurant Group, Inc [Member] | Oct. 02, 2011
Wendy's Restaurants, LLC [Member]
Arby’s Restaurant Group, Inc [Member] | Oct. 03, 2010
Wendy's Restaurants, LLC [Member]
Arby’s Restaurant Group, Inc [Member] | Oct. 02, 2011
The Wendy's Company [Member] | Oct. 03, 2010
The Wendy's Company [Member] | Oct. 02, 2011
The Wendy's Company [Member]
Segment, Discontinued Operations [Member] | Oct. 03, 2010
The Wendy's Company [Member]
Segment, Discontinued Operations [Member] | Oct. 02, 2011
The Wendy's Company [Member]
Segment, Discontinued Operations [Member] | Oct. 03, 2010
The Wendy's Company [Member]
Segment, Discontinued Operations [Member] | Oct. 02, 2011
The Wendy's Company [Member]
Arby’s Restaurant Group, Inc [Member] | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||||||||||||||||
Date of disposal | 7/4/2011 | 7/4/2011 | ||||||||||||||||||||||
Percentage of stock divested | 100.00% | 100.00% | ||||||||||||||||||||||
Proceeds from divestiture of businesses | $ 130,000 | |||||||||||||||||||||||
Proceeds from divestiture of business, percentage of buyer stock received | 18.50% | 18.50% | ||||||||||||||||||||||
Indirect investment in Arby's | 19,000 | 0 | 19,000 | 19,000 | 0 | |||||||||||||||||||
Debt assumed by buyer | 190,000 | 190,000 | ||||||||||||||||||||||
Date of execution of purchase and sale agreement | Jun. 13, 2011 | |||||||||||||||||||||||
Discontinued operation, tax loss on disposal of discontinued operation | 240,000 | |||||||||||||||||||||||
Revenues | 0 | 260,506 | 546,453 | 782,826 | ||||||||||||||||||||
Loss from discontinued operations, net of income taxes: | ||||||||||||||||||||||||
(Loss) income from discontinued operations before income taxes | (2,287) | (4,549) | 1,992 | (11,492) | ||||||||||||||||||||
Benefit from (provision for) income taxes | 846 | 4,397 | (874) | 5,929 | ||||||||||||||||||||
(Loss) income on discontinued operations | (1,441) | (152) | 1,118 | (5,563) | (1,441) | (152) | 1,118 | (5,563) | (1,441) | (152) | 1,118 | (5,563) | ||||||||||||
Loss on disposal, net of income taxes | (8,849) | 0 | (5,069) | 0 | (8,849) | 0 | (5,069) | 0 | (8,849) | 0 | (8,849) | 0 | (5,069) | 0 | (8,849) | 0 | ||||||||
Loss from discontinued operations | (6,510) | (152) | (7,731) | (5,563) | (6,510) | (152) | (7,731) | (5,563) | (6,510) | (152) | (7,731) | (5,563) | ||||||||||||
Sales and use tax liabilities, provision | (2,112) | |||||||||||||||||||||||
Transaction related costs | (704) | 529 | ||||||||||||||||||||||
Pre-tax loss on disposal | (723) | 5,277 | ||||||||||||||||||||||
Transaction closing costs | 11,500 | |||||||||||||||||||||||
Post closing purchase price adjustments | 14,800 | |||||||||||||||||||||||
Income tax benefit (expense) on pre-tax loss on disposal | $ (268) | $ (5,524) | $ 2,220 | $ (3,572) |
(14) Transaction Related Costs (Details) (Segment, Continuing Operations [Member], USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | Oct. 03, 2010 | Oct. 02, 2011 | Oct. 03, 2010 | |||||||
Wendy's Restaurants, LLC [Member] | Q4 2011 [Member] | Employee retention [Member] | ||||||||||
Transaction related costs, expected | $ 214 | |||||||||
Wendy's Restaurants, LLC [Member] | Fiscal year 2012 [Member] | Employee retention [Member] | ||||||||||
Transaction related costs, expected | 45 | |||||||||
The Wendy's Company [Member] | ||||||||||
Transaction related costs | 23,839 | 0 | 30,762 | 0 | ||||||
Wendy's Restaurants, LLC [Member] | ||||||||||
Transaction related costs | 23,571 | 0 | 29,542 | 0 | ||||||
Wendy's Restaurants, LLC [Member] | Bonus [Member] | ||||||||||
Transaction related costs | 2,529 | 2,529 | ||||||||
Wendy's Restaurants, LLC [Member] | Terminations costs [Domain] | ||||||||||
Transaction related costs | 12,568 | |||||||||
Wendy's Restaurants, LLC [Member] | Executive severance, required payments [Member] | ||||||||||
Transaction related costs | 7,987 | |||||||||
Wendy's Restaurants, LLC [Member] | Executive severance, vesting of stock awards [Member] | ||||||||||
Transaction related costs | 4,581 | |||||||||
Wendy's Restaurants, LLC [Member] | Termination and severance [Member] | ||||||||||
Transaction related costs | 14,462 | 16,208 | ||||||||
Wendy's Restaurants, LLC [Member] | Employee retention [Member] | ||||||||||
Transaction related costs | 5,305 | [1] | 7,855 | [1] | ||||||
Wendy's Restaurants, LLC [Member] | Relocation [Member] | ||||||||||
Transaction related costs | 826 | [2] | 827 | [2] | ||||||
Transaction related costs, expected | 1,500 | |||||||||
Wendy's Restaurants, LLC [Member] | Other professional fees [Member] | ||||||||||
Transaction related costs | 368 | 2,034 | ||||||||
Wendy's Restaurants, LLC [Member] | Other [Member] | ||||||||||
Transaction related costs | 81 | 89 | ||||||||
Corporate [Member] | Employee retention [Member] | ||||||||||
Transaction related costs | 96 | 159 | ||||||||
Corporate [Member] | Other professional fees [Member] | ||||||||||
Transaction related costs | 4 | 845 | ||||||||
Corporate [Member] | Other [Member] | ||||||||||
Transaction related costs | $ 168 | $ 216 | ||||||||
|
(5) Investment in Joint Ventures | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Joint Venture with Tim Horton's, Inc [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Joint Ventures | Investment in Joint Ventures Investment in Joint Venture with Tim Hortons Inc. Wendy’s is a partner in a Canadian restaurant real estate joint venture (“TimWen”) with Tim Hortons Inc. Wendy’s 50% share of the joint venture is accounted for using the equity method of accounting. Our equity in earnings from TimWen is included in “Other operating expense, net.” Presented below is an unaudited summary of activity related to our portion of TimWen included in our condensed consolidated balance sheets and condensed consolidated statements of operations:
Presented below is a summary of unaudited financial information of TimWen as of and for the nine months ended October 2, 2011 and October 3, 2010, respectively, in Canadian dollars. The summary balance sheet financial information does not distinguish between current and long-term assets and liabilities:
Investment in Joint Venture in Japan During the second quarter of 2011, Wendy’s entered into a joint venture for the operation of Wendy’s restaurants in Japan (the “Japan JV”). Wendy’s 49% share of the joint venture is accounted for using the equity method of accounting. The Japan JV expects to open its first restaurant before the end of 2011. As of October 2, 2011, the carrying value of our investment in the Japan JV was $912, which is included in “Investments.” For the nine months ended October 2, 2011, we recognized a loss of $271 which is included in “Other operating expense, net.” |
(8) Income Taxes (Details) (USD $) In Thousands, unless otherwise specified | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 02, 2011 | Oct. 03, 2010 | Oct. 02, 2011 | Oct. 03, 2010 | |
U.S. federal statutory rate | 35.00% | 35.00% | ||
The Wendy's Company [Member] | ||||
Effective tax rate | 41.00% | (91.20%) | 40.30% | (44.00%) |
Wendy's Restaurants, LLC [Member] | ||||
Effective tax rate | 39.60% | (108.20%) | 39.20% | (35.70%) |
Tax sharing payment to parent | $ 13,078 | $ 0 |
(12) Transactions with Related Parties (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 02, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Related Parties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions by Related Party [Table Text Block] |
_____________________
___________________ Transactions with Purchasing Cooperatives
The Companies received $23 and $16 of sublease income from SSG and $134 and $84 of sublease income from QSCC during the first nine months of 2011 and 2010, respectively. Transactions with the Management Company
In addition, The Wendy’s Company incurred service fees of $500 and $750 in the first nine months of 2011 and 2010, respectively, which are included in “General and administrative.” These fees were paid to a management company (the “Management Company”) which was formed by our Chairman, who was our former Chief Executive Officer, and our Vice Chairman, who was our former President and Chief Operating Officer, and a director, who was our former Vice Chairman, in connection with a services agreement which expired on June 30, 2011.
We intend to dispose of the Company-owned aircraft leased under the lease agreement discussed above as soon as practicable. As of October 2, 2011, the aircraft has a carrying value that approximates its fair value, is classified as held-for-sale, and is included in “Prepaid expenses and other current assets.”
|
<7%8A:K!A,4SD'90];7!#NE7Z\
M[I0D*LX(7;G94)IE78KR0<5U73EB!([7!292K'WMT4?OVN:>Z\=Z*%WKQ F
M3E:3HU9,$VG8.ZT/$L"YVT#>7B[`-W/K[_M5_4(U''LZ1)`N(@>A!8."6(
M(;>V?PVWDAK(&4(%]!9'(,_@=7-0O_Q?W/^JSN?SY3_V !M(CF&$M!
MQ&+).63!@6ZRAN6$1;35BG,0CZ'<&$FB=P9\*"$+B>GF2QD^.SSYS,"U]70G
M`E+S1D4#7EJB:%C]CH8*I)L<_G2J>!P^AQI2K,WU;JFADUW`L2[:08
M+IG53#\0SNW(;[6F]&*F5#N"LKKW7S>=E`U7>4^%';@PK+_?AUPILLGRZ_&P
MN$M8+FNWV)LYPWDT6$5^R3[&';"K[F`\XUR`6,KK!OU!%QZ67=\,IX-%6^/$
MPW!3>C:0]G223^>A'4!QE/?!;L:0GM8NYWXPJXA_DG<+>-"T;G`I"+RWG)FQ
M+$;SP.X;'>\\[B[TY:N]WY*!S4S(S&QU%D&"T\MBX@&,+O[G:4=4?U[.6K?(
M2Q^GMA`[#\N/_0\+EOC8_ZD87?X$X^G-DN%_Y,.>&?7^M\Q[]JZZ]#L`VPZ+
M[A_/)[G84^QP=9JB]8AJ*=E\T5HTEFCYXDGNDEUV\\2-F[0R3LG-Z/(BA=#O
M$%CNLBFG[\N/&8'^.L/W]6^FQ3@U_.=]P]/.9P@#N_EP.+_GQS?H3?6]''>Z
M]?>O'_]U9P)\/>MDYV9:U!
@^%
MO>BN?/.TK.8D.Y<$'O^959NOLN^JPW_05K)<2;=+TMK