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,” “we,” “us” or “our”) 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 September 27, 2015 and the results of our operations for the three and nine months ended September 27, 2015 and September 28, 2014 and cash flows for the nine months ended September 27, 2015 and September 28, 2014. The results of operations for the three and nine months ended September 27, 2015 are not necessarily indicative of the results to be expected for the full 2015 fiscal year. These Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2014 (the “Form 10-K”).

The principal subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business geographically. The operation and franchising of Wendy’s^®restaurants in North America (defined as the United States of America (“U.S.”) and Canada) comprises virtually all of our current operations and represents a single reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not material.

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. Our current 2015 fiscal year, ending on January 3, 2016, will contain 53 weeks and, accordingly, our fourth quarter of 2015 will contain 14 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods.

On May 31, 2015, Wendy’s completed the sale of its company-owned bakery, The New Bakery Company, LLC (the “Bakery”), a 100% owned subsidiary of Wendy’s. As a result of the sale of the Bakery, as further discussed in Note 2, the Bakery’s results of operations for all periods presented and the (loss) gain on disposal have been included in “Net (loss) income from discontinued operations” in our condensed consolidated statements of operations. Additionally, the Bakery’s assets and liabilities have been presented as discontinued operations in our condensed consolidated balance sheet as of December 28, 2014.

In connection with the reimaging of restaurants as part of our Image Activation program, we have recorded $2,475 and $6,578 of accelerated depreciation and amortization during the three and nine months ended September 27, 2015, respectively, and $1,180 and $16,199 during the three and nine months ended September 28, 2014, respectively, on certain long-lived assets to reflect their use over shortened estimated useful lives. We describe the circumstances under which we record accelerated depreciation and amortization for properties in our Form 10-K.

Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. During the second quarter of 2015, the Company early adopted an amendment requiring debt issuance costs to be presented in the balance sheet as a direct reduction of the related debt liability rather than as an asset. The adoption of this guidance resulted in the reclassification of debt issuance costs of $8,243 from “Other assets” to “Long-term debt” in our condensed consolidated balance sheet as of December 28, 2014. Refer to Note 7 and Note 16 for further information.

Prior to fiscal 2015, the Company reported its system optimization initiative as a discrete event and separately included the related gain or loss on sales of restaurants, impairment losses and other associated costs, along with other restructuring initiatives, in “Facilities action charges (income), net.” In February 2015, the Company announced plans to reduce its ongoing company-owned restaurant ownership to approximately 5% of the total system and further emphasized that restaurant dispositions and acquisitions are a continuous and integrated part of the overall strategy to optimize its restaurant portfolio. As a result, commencing with the first quarter of 2015, all gains and losses on dispositions are included on a separate line in our condensed consolidated statements of operations, “System optimization losses (gains), net” and impairment losses recorded in connection with the sale or anticipated sale of restaurants (“System Optimization Remeasurement”) are reclassified to “Impairment of long-lived assets.” In addition, the Company retitled the line, “Facilities action charges (income), net” to “Reorganization and realignment costs” in our condensed consolidated statements of operations to better describe the current and historical initiatives included given the reclassifications described above. The Company believes the new presentation will aid users in understanding its results of operations. The prior periods reflect reclassifications to conform to the current year presentation. All amounts being reclassified in our statements of operations were separately disclosed in the notes to our consolidated financial statements included in our Form 10-Q for the fiscal quarter ended September 28, 2014 and Form 10-K. Such reclassifications had no impact on operating profit, net income or net income per share.

The following table illustrates the reclassifications made to the condensed consolidated statements of operations for the three and nine months ended September 28, 2014:



	Three Months Ended
			Reclassifications
	As Previously Reported (b)		Gain on dispositions, net (c)			System Optimization Remeasurement (d)			As Currently Reported
System optimization losses, net	$	—	$	368		$	—		$	368
Reorganization and realignment costs (a)	7,520		(921		)	(5,210		)	1,389
Impairment of long-lived assets	3,408		—			5,210			8,618
Other operating expense, net	8,807		553			—			9,360
	$	19,735	$	—		$	—		$	19,735



	Nine Months Ended
				Reclassifications
	As Previously Reported (b)			Gain on dispositions, net (c)			System Optimization Remeasurement (d)			As Currently Reported
System optimization gains, net	$	—		$	(74,027	)	$	—		$	(74,027	)
Reorganization and realignment costs (a)	(35,630		)	60,490			(7,484		)	17,376
Impairment of long-lived assets	3,740			—			7,484			11,224
Other operating expense, net	4,583			13,537			—			18,120
	$	(27,307	)	$	—		$	—		$	(27,307	)

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(a) Previously titled “Facilities action charges (income), net.”


(b)	“As Previously Reported,” reflects adjustments to reclassify the Bakery’s other operating income, net of $24 and $61 for the three and nine months ended September 28, 2014, respectively, from “Other operating expense, net” to “(Loss) income from discontinued operations, net of income taxes.”

(c) Reclassified the gain on sales of restaurants, net, previously included in “Facilities action charges (income), net” and the gain on disposal of assets, net, which included sales of restaurants and other assets, and was previously reported in “Other operating expense, net” to a separate line in our condensed consolidated statements of operations, “System optimization losses (gains), net.”


(d)	Reclassified impairment losses recorded in connection with the sale or anticipated sale of restaurants (“System Optimization Remeasurement”), previously included in “Facilities action charges (income), net” to “Impairment of long-lived assets.”