ANNUAL 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 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Zip Code) | |||
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
Securities registered pursuant to Section 12(g) of the Act: None |
☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
• | the impact of competition, including from outside the quick-service restaurant industry; |
• | changes in consumer tastes and preferences and discretionary consumer spending; |
• | prevailing conditions and disruptions in the national and global economies, including areas with a high concentration of Wendy’s restaurants; |
• | food safety events, including instances of food-borne illness, involving Wendy’s, its supply chain or other food service companies; |
• | the success of our operating, promotional, marketing or new product development initiatives, including risks associated with our plans to enter the breakfast daypart across the U.S. system; |
• | our ability to achieve our growth strategy through net new restaurant development, including the availability of suitable locations and terms, and the success of our Image Activation program, including the ability of reimaged restaurants to positively affect sales; |
• | changes in commodity and other operating costs, including supply, distribution and labor costs; |
• | our ability to attract and retain qualified restaurant personnel; |
• | shortages or interruptions in the supply or distribution of food or other products and other risks associated with our independent supply chain purchasing co-op; |
• | consumer concerns regarding the nutritional aspects of our products; |
• | the effects of disease outbreaks, epidemics or pandemics; |
• | the effects of negative publicity that can occur from increased use of social media; |
• | risks associated with our international operations, including our ability to achieve our international growth strategy; |
• | risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences; |
• | our dependence on computer systems and information technology, including risks associated with the failure, interruption or breach of our systems or technology or other cyber incidents or deficiencies; |
• | risks associated with our plan to realign and reinvest resources in our IT organization to accelerate growth; |
• | our ability to effectively manage the acquisition and disposition of restaurants or successfully implement other strategic initiatives; |
• | conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest or other catastrophic events; |
• | the availability and cost of insurance; |
• | our ability to protect our intellectual property; |
• | the continued succession and retention of key personnel and the effectiveness of our leadership structure; |
• | compliance with legal or regulatory requirements, the impact of legal or regulatory proceedings and risks associated with an increased focus on environmental, social and governance issues; |
• | risks associated with leasing and owning significant amounts of real estate, including a decline in the value of our real estate assets or liability for environmental matters; |
• | the effects of charges for impairment of goodwill or other long-lived assets; |
• | risks associated with our securitized financing facility and other debt agreements, including our overall debt levels; |
• | the availability, terms and deployment of capital, including the amount and timing of equity and debt repurchases; |
• | other risks and uncertainties referred to in this Annual Report on Form 10-K (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. |
2019 | 2018 | 2017 | ||||||
Restaurants open at beginning of period | 6,711 | 6,634 | 6,537 | |||||
Restaurants opened during period | 182 | 159 | 174 | |||||
Restaurants closed during period | (105 | ) | (82 | ) | (77 | ) | ||
Restaurants open at end of period | 6,788 | 6,711 | 6,634 |
• | our ability to attract new franchisees; |
• | the availability of site locations for new restaurants (including non-traditional locations); |
• | the ability of potential restaurant owners to obtain financing; |
• | the ability of restaurant owners to attract, train and retain qualified operating personnel; |
• | construction and development costs of new restaurants, particularly in highly-competitive markets; |
• | the ability of restaurant owners to secure required governmental approvals and permits in a timely manner, or at all; and |
• | adverse weather conditions. |
• | diversion of management’s attention to the integration of acquired restaurant operations; |
• | increased operating expenses and the inability to achieve expected cost savings and operating efficiencies; |
• | exposure to liabilities arising out of prior operations of acquired restaurants; and |
• | the assumption of long-term, non-cancelable leases. |
• | significant adverse changes in the business climate; |
• | current period operating or cash flow losses combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with long-lived assets; |
• | a current expectation that more-likely-than-not (i.e., a likelihood that is more than 50%) long-lived assets will be sold or otherwise disposed of significantly before the end of their previously estimated useful life; and |
• | a significant drop in our stock price. |
• | making it more difficult to meet payment and other obligations under outstanding debt; |
• | resulting in an event of default if the Company’s subsidiaries fail to comply with the financial and other restrictive covenants contained in debt agreements, which event of default could result in all of the Company’s subsidiaries’ debt becoming immediately due and payable; |
• | reducing the availability of the Company’s cash flow to fund working capital, capital expenditures, equity and debt repurchases, dividends, acquisitions and other general corporate purposes, and limiting the Company’s ability to obtain additional financing for these purposes; |
• | subjecting the Company to the risk of increased sensitivity to interest rate increases on indebtedness with variable interest rates; |
• | limiting the Company’s flexibility in planning for or reacting to, and increasing its vulnerability to, changes in the Company’s business, the industry in which it operates and the general economy; and |
• | placing the Company at a competitive disadvantage compared to its competitors that are less leveraged. |
ACTIVE FACILITIES | FACILITIES LOCATION | LAND TITLE | APPROXIMATE SQ. FT. OF FLOOR SPACE | |||||
Corporate Headquarters | Dublin, Ohio | Owned | 324,025 | * | ||||
Wendy’s Restaurants of Canada Inc. | Burlington, Ontario, Canada | Leased | 8,917 |
* | QSCC, the independent Wendy’s purchasing cooperative in which Wendy’s has non-controlling representation on the board of directors, leases 14,493 square feet of this space from Wendy’s. |
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 (2) | ||||||
September 30, 2019 through November 3, 2019 | 450,702 | $ | 20.73 | 443,350 | $ | 161,102,043 | ||||
November 4, 2019 through December 1, 2019 (3) | 4,755,214 | $ | 20.97 | 4,733,171 | $ | 61,866,731 | ||||
December 2, 2019 through December 29, 2019 | 829,759 | $ | 21.84 | 828,863 | $ | 43,771,749 | ||||
Total | 6,035,675 | $ | 21.07 | 6,005,384 | $ | 43,771,749 |
(1) | Includes 30,291 shares reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the average of the high and low trading prices of our common stock on the vesting or exercise date of such awards. |
(2) | In February 2019, our Board of Directors authorized the repurchase of up to $225.0 million of our common stock through March 1, 2020, when and if market conditions warrant and to the extent legally permissible. |
(3) | In November 2019, the Company entered into an accelerated share repurchase agreement (the “2019 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the Company’s existing share repurchase program. Under the 2019 ASR Agreement, the Company paid the financial institution an initial purchase price of $100.0 million in cash and received an initial delivery of 4.1 million shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2019 ASR Agreement. |
Year Ended (1) (2) (3) | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Sales (4) | $ | 707.5 | $ | 651.6 | $ | 622.8 | $ | 920.8 | $ | 1,438.8 | |||||||||
Franchise royalty revenue and fees (4) | 429.0 | 409.0 | 410.5 | 371.5 | 344.5 | ||||||||||||||
Franchise rental income (4) (5) | 233.1 | 203.3 | 190.1 | 143.1 | 87.0 | ||||||||||||||
Advertising funds revenue | 339.4 | 326.0 | — | — | — | ||||||||||||||
Revenues | 1,709.0 | 1,589.9 | 1,223.4 | 1,435.4 | 1,870.3 | ||||||||||||||
Cost of sales (4) | 597.5 | 548.6 | 517.9 | 752.1 | 1,194.5 | ||||||||||||||
Advertising funds expense | 338.1 | 321.9 | — | — | — | ||||||||||||||
System optimization (gains) losses, net (6) | (1.3 | ) | (0.5 | ) | 39.1 | (71.9 | ) | (74.0 | ) | ||||||||||
Reorganization and realignment costs (7) | 17.0 | 9.1 | 22.6 | 10.1 | 21.9 | ||||||||||||||
Impairment of long-lived assets (8) | 7.0 | 4.7 | 4.1 | 16.2 | 25.0 | ||||||||||||||
Operating profit | 262.6 | 249.9 | 214.8 | 314.8 | 274.5 | ||||||||||||||
Loss on early extinguishment of debt (9) | (8.5 | ) | (11.5 | ) | — | — | (7.3 | ) | |||||||||||
Investment income, net (10) | 25.6 | 450.7 | 2.7 | 0.7 | 52.2 | ||||||||||||||
(Provision for) benefit from income taxes (11) | (34.6 | ) | (114.8 | ) | 93.0 | (72.1 | ) | (94.1 | ) | ||||||||||
Income from continuing operations | 136.9 | 460.1 | 194.0 | 129.6 | 140.0 | ||||||||||||||
Net income from discontinued operations | — | — | — | — | 21.1 | ||||||||||||||
Net income | $ | 136.9 | $ | 460.1 | $ | 194.0 | $ | 129.6 | $ | 161.1 | |||||||||
Basic income per share: | |||||||||||||||||||
Continuing operations | $ | .60 | $ | 1.93 | $ | .79 | $ | .49 | $ | .43 | |||||||||
Discontinued operations | — | — | — | — | .07 | ||||||||||||||
Net income | $ | .60 | $ | 1.93 | $ | .79 | $ | .49 | $ | .50 | |||||||||
Diluted income per share: | |||||||||||||||||||
Continuing operations | $ | .58 | $ | 1.88 | $ | .77 | $ | .49 | $ | .43 | |||||||||
Discontinued operations | — | — | — | — | .06 | ||||||||||||||
Net income | $ | .58 | $ | 1.88 | $ | .77 | $ | .49 | $ | .49 | |||||||||
Dividends per share | $ | .42 | $ | .34 | $ | .28 | $ | .245 | $ | .225 | |||||||||
Weighted average diluted shares outstanding | 235.1 | 245.0 | 252.3 | 266.7 | 328.7 | ||||||||||||||
Net cash provided by operating activities | $ | 288.9 | $ | 224.2 | $ | 238.8 | $ | 193.8 | $ | 296.2 | |||||||||
Capital expenditures | 74.5 | 69.9 | 81.7 | 150.0 | 251.6 | ||||||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | January 1, 2017 | January 3, 2016 | |||||||||||||||
(In millions) | |||||||||||||||||||
Total assets (5) | $ | 4,994.5 | $ | 4,292.0 | $ | 4,096.9 | $ | 3,939.3 | $ | 4,108.7 | |||||||||
Long-term debt, including current portion (12) | 2,280.3 | 2,328.8 | 2,286.4 | 2,300.6 | 2,316.9 | ||||||||||||||
Finance lease liabilities, including current portion (12) | 491.9 | 455.6 | 468.0 | 211.7 | 109.2 | ||||||||||||||
Stockholders’ equity | 516.4 | 648.4 | 573.2 | 527.7 | 752.9 |
(1) | The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2019” or “2019,” which consisted of 52 weeks, (2) “the year ended December 30, 2018” or “2018,” which consisted of 52 weeks, (3) “the year ended December 31, 2017” or “2017,” which consisted of 52 weeks, (4) “the year ended January 1, 2017” or “2016,” which consisted of 52 weeks, and (5) “the year ended January 3, 2016” or “2015,” which consisted of 53 weeks. |
(2) | In May 2015, Wendy’s completed the sale of 100% of its membership interest in The New Bakery Company, LLC and its subsidiaries (collectively, the “Bakery”). The Bakery’s operating results through its May 2015 date of sale are classified as discontinued operations. |
(3) | The Company applied the revenue recognition guidance effective at the beginning of 2018 using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, periods prior to 2018 do not reflect adjustments for the guidance and are not comparable. |
(4) | The decline in sales and cost of sales and the related increase in franchise royalty revenue and fees and franchise rental income during 2015 through 2017 is primarily a result of the sale of Wendy’s Company-operated restaurants to franchisees under our system optimization initiative, which began in 2013. As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. |
(5) | The Company adopted the new accounting guidance for leases during the first quarter of 2019 using the effective date as the date of initial application; therefore, periods prior to 2019 do not reflect adjustments for the guidance and are not comparable. |
(6) | System optimization (gains) losses, net includes all gains and losses recognized on dispositions of restaurants and other assets in connection with Wendy’s system optimization initiative. See Note 3 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(7) | Reorganization and realignment costs include the impact of (1) Wendy’s information technology (“IT”) realignment plan in 2019, (2) Wendy’s May 2017 general and administrative (“G&A”) realignment plan in 2017 through 2019, (3) costs related to Wendy’s system optimization initiative in 2015 through 2019 and (4) Wendy’s November 2014 G&A realignment plan in 2015 through 2016. See Note 5 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(8) | Impairment of long-lived assets primarily includes impairment charges on (1) restaurant-level assets resulting from the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, (2) restaurant-level assets resulting from the closing of Company-operated restaurants and classifying such surplus properties as held for sale and (3) restaurant-level assets resulting from the deterioration in operating performance of certain Company-operated restaurants. See Note 17 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(9) | Loss on early extinguishment of debt primarily relates to refinancings, redemptions and repayments of long-term debt. See Note 12 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(10) | Investment income, net includes (1) a cash settlement related to a previously held investment during 2019, (2) the gain on sale of our remaining ownership interest in Inspire Brands, Inc. (“Inspire Brands”) (formerly Arby’s) during 2018 and (3) the effect of dividends received from our investment in Inspire Brands during 2015. See Note 8 and Note 18 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(11) | The benefit from income taxes in 2017 includes the impact of the Tax Cuts and Jobs Act. See Note 14 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
(12) | In connection with the adoption of the new accounting guidance for leases during the first quarter of 2019, the Company reclassified current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively, which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior periods reflect the reclassification of these liabilities to conform to the current year presentation. See Note 1 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion. |
• | Same-Restaurant Sales - We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen. This methodology is consistent with the metric used by our management for internal reporting and analysis. The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes. |
• | Restaurant Margin - We define restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs. |
• | Systemwide Sales - Systemwide sales is a non-GAAP financial measure, which includes sales by both Company-operated restaurants and franchised restaurants. Franchised restaurants’ sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers. The Company believes systemwide sales data is useful in assessing consumer demand for the Company’s products, the overall success of the Wendy’s brand and, ultimately, the performance of the Company. The Company’s royalty revenues are computed as percentages of sales made by Wendy’s franchisees. As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty revenues and profitability. |
• | Average Unit Volumes - We calculate Company-operated restaurant average unit volumes by summing the average weekly sales of all Company-operated restaurants which reported sales during the week. |
2019 | 2018 (a) | 2017 (a) (b) | |||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Revenues: | |||||||||||||||||||
Sales | $ | 707.5 | $ | 55.9 | $ | 651.6 | $ | 28.8 | $ | 622.8 | |||||||||
Franchise royalty revenue and fees | 429.0 | 20.0 | 409.0 | (1.5 | ) | 410.5 | |||||||||||||
Franchise rental income | 233.1 | 29.8 | 203.3 | 13.2 | 190.1 | ||||||||||||||
Advertising funds revenue | 339.4 | 13.4 | 326.0 | 326.0 | — | ||||||||||||||
1,709.0 | 119.1 | 1,589.9 | 366.5 | 1,223.4 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of sales | 597.5 | 48.9 | 548.6 | 30.7 | 517.9 | ||||||||||||||
Franchise support and other costs | 43.7 | 18.5 | 25.2 | 8.9 | 16.3 | ||||||||||||||
Franchise rental expense | 123.9 | 32.8 | 91.1 | 3.1 | 88.0 | ||||||||||||||
Advertising funds expense | 338.1 | 16.2 | 321.9 | 321.9 | — | ||||||||||||||
General and administrative | 200.2 | (17.3 | ) | 217.5 | 13.9 | 203.6 | |||||||||||||
Depreciation and amortization | 131.7 | 2.8 | 128.9 | 3.2 | 125.7 | ||||||||||||||
System optimization (gains) losses, net | (1.3 | ) | (0.8 | ) | (0.5 | ) | (39.6 | ) | 39.1 | ||||||||||
Reorganization and realignment costs | 17.0 | 7.9 | 9.1 | (13.5 | ) | 22.6 | |||||||||||||
Impairment of long-lived assets | 7.0 | 2.3 | 4.7 | 0.6 | 4.1 | ||||||||||||||
Other operating income, net | (11.4 | ) | (4.9 | ) | (6.5 | ) | 2.2 | (8.7 | ) | ||||||||||
1,446.4 | 106.4 | 1,340.0 | 331.4 | 1,008.6 | |||||||||||||||
Operating profit | 262.6 | 12.7 | 249.9 | 35.1 | 214.8 | ||||||||||||||
Interest expense, net | (116.0 | ) | 3.6 | (119.6 | ) | (1.5 | ) | (118.1 | ) | ||||||||||
Loss on early extinguishment of debt | (8.5 | ) | 3.0 | (11.5 | ) | (11.5 | ) | — | |||||||||||
Investment income, net | 25.6 | (425.1 | ) | 450.7 | 448.0 | 2.7 | |||||||||||||
Other income, net | 7.8 | 2.4 | 5.4 | 3.8 | 1.6 | ||||||||||||||
Income before income taxes | 171.5 | (403.4 | ) | 574.9 | 473.9 | 101.0 | |||||||||||||
(Provision for) benefit from income taxes | (34.6 | ) | 80.2 | (114.8 | ) | (207.8 | ) | 93.0 | |||||||||||
Net income | $ | 136.9 | $ | (323.2 | ) | $ | 460.1 | $ | 266.1 | $ | 194.0 |
(a) | We adopted the new accounting guidance for leases effective December 31, 2018, which had a material impact on our consolidated financial statements. Beginning with the first quarter of 2019, our financial condition and results of operations reflect adoption of this guidance; however, prior period results were not restated. See Note 1 of the Financial Statements and Supplementary Data contained in Item 8 herein for further information. |
(b) | We adopted the accounting guidance for revenue recognition effective January 1, 2018, which had a material impact on our consolidated financial statements. Beginning with the first quarter of 2018, our financial results reflect adoption of this guidance; however, prior period results were not restated. See Note 1 of the Financial Statements and Supplementary Data contained in Item 8 herein for further information. |
2019 | % of Total Revenues | 2018 | % of Total Revenues | 2017 | % of Total Revenues | |||||||||||||||
Revenues: | ||||||||||||||||||||
Sales | $ | 707.5 | 41.4 | % | $ | 651.6 | 41.0 | % | $ | 622.8 | 50.9 | % | ||||||||
Franchise royalty revenue and fees: | ||||||||||||||||||||
Royalty revenue | 400.7 | 23.4 | % | 377.9 | 23.7 | % | 366.0 | 29.9 | % | |||||||||||
Franchise fees | 28.3 | 1.7 | % | 31.1 | 2.0 | % | 44.5 | 3.7 | % | |||||||||||
Total franchise royalty revenue and fees | 429.0 | 25.1 | % | 409.0 | 25.7 | % | 410.5 | 33.6 | % | |||||||||||
Franchise rental income | 233.1 | 13.6 | % | 203.3 | 12.8 | % | 190.1 | 15.5 | % | |||||||||||
Advertising funds revenue | 339.4 | 19.9 | % | 326.0 | 20.5 | % | — | — | % | |||||||||||
Total revenues | $ | 1,709.0 | 100.0 | % | $ | 1,589.9 | 100.0 | % | $ | 1,223.4 | 100.0 | % | ||||||||
2019 | % of Sales | 2018 | % of Sales | 2017 | % of Sales | |||||||||||||||
Cost of sales: | ||||||||||||||||||||
Food and paper | $ | 222.8 | 31.5 | % | $ | 207.0 | 31.8 | % | $ | 196.4 | 31.6 | % | ||||||||
Restaurant labor | 214.7 | 30.3 | % | 194.4 | 29.8 | % | 183.8 | 29.5 | % | |||||||||||
Occupancy, advertising and other operating costs | 160.0 | 22.7 | % | 147.2 | 22.6 | % | 137.7 | 22.1 | % | |||||||||||
Total cost of sales | $ | 597.5 | 84.5 | % | $ | 548.6 | 84.2 | % | $ | 517.9 | 83.2 | % |
2019 | % of Sales | 2018 | % of Sales | 2017 | % of Sales | |||||||||||||||
Restaurant margin | $ | 110.0 | 15.5 | % | $ | 103.0 | 15.8 | % | $ | 104.9 | 16.8 | % |
2019 | 2018 | 2017 | ||||||
Key business measures: | ||||||||
U.S. same-restaurant sales growth: | ||||||||
Company-operated restaurants | 3.1 | % | 1.3 | % | 0.2 | % | ||
Franchised restaurants | 2.9 | % | 0.5 | % | 2.0 | % | ||
Systemwide | 2.9 | % | 0.6 | % | 1.9 | % | ||
International same-restaurant sales growth (a) | 3.2 | % | 4.7 | % | 4.4 | % | ||
Global same-restaurant sales growth: | ||||||||
Company-operated restaurants | 3.1 | % | 1.3 | % | 0.2 | % | ||
Franchised restaurants (a) | 2.9 | % | 1.0 | % | 2.2 | % | ||
Systemwide (a) | 2.9 | % | 1.0 | % | 2.1 | % |
(a) | Includes international franchised restaurants same-restaurant sales (excluding Venezuela, and excluding Argentina beginning in the third quarter of 2018, due to the impact of the highly inflationary economies of those countries). |
2019 | 2018 | 2017 | |||||||||
Key business measures (continued): | |||||||||||
Systemwide sales: (a) | |||||||||||
Company-operated | $ | 707.5 | $ | 651.6 | $ | 622.8 | |||||
U.S. franchised | 9,055.2 | 8,719.1 | 8,607.6 | ||||||||
U.S. systemwide | 9,762.7 | 9,370.7 | 9,230.4 | ||||||||
International franchised (b) | 1,181.6 | 1,141.9 | 1,052.8 | ||||||||
Global systemwide | $ | 10,944.3 | $ | 10,512.6 | $ | 10,283.2 | |||||
Restaurant average unit volumes (in thousands): | |||||||||||
Company-operated | $ | 1,989.6 | $ | 1,918.0 | $ | 1,876.8 | |||||
U.S. franchised | 1,664.1 | 1,612.8 | 1,598.5 | ||||||||
U.S. systemwide | 1,684.0 | 1,630.8 | 1,614.6 | ||||||||
International franchised (b) | 1,357.5 | 1,359.2 | 1,332.3 | ||||||||
Global systemwide | $ | 1,641.4 | $ | 1,596.1 | $ | 1,580.4 |
(a) | During 2019 and 2018, global systemwide sales increased 4.4% and 2.5%, respectively, U.S. systemwide sales increased 4.2% and 1.5%, respectively, and international franchised sales increased 6.7% and 10.8%, respectively, on a constant currency basis. |
(b) | Excludes Venezuela, and excludes Argentina beginning in the third quarter of 2018, due to the impact of the highly inflationary economies of those countries. |
Company-operated | U.S. Franchised | International Franchised | Systemwide | ||||||||
Restaurant count: | |||||||||||
Restaurant count at December 31, 2017 | 337 | 5,432 | 865 | 6,634 | |||||||
Opened | 7 | 90 | 62 | 159 | |||||||
Closed | (5 | ) | (51 | ) | (26 | ) | (82 | ) | |||
Net purchased from (sold by) franchisees | 14 | (14 | ) | — | — | ||||||
Restaurant count at December 30, 2018 | 353 | 5,457 | 901 | 6,711 | |||||||
Opened | 2 | 105 | 75 | 182 | |||||||
Closed | (3 | ) | (62 | ) | (40 | ) | (105 | ) | |||
Net purchased from (sold by) franchisees | 5 | (5 | ) | — | — | ||||||
Restaurant count at December 29, 2019 | 357 | 5,495 | 936 | 6,788 |
Sales | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Sales | $ | 707.5 | $ | 55.9 | $ | 651.6 | $ | 28.8 | $ | 622.8 |
Franchise Royalty Revenue and Fees | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Royalty revenue | $ | 400.7 | $ | 22.8 | $ | 377.9 | $ | 11.9 | $ | 366.0 | |||||||||
Franchise fees | 28.3 | (2.8 | ) | 31.1 | (13.4 | ) | 44.5 | ||||||||||||
$ | 429.0 | $ | 20.0 | $ | 409.0 | $ | (1.5 | ) | $ | 410.5 |
Franchise Rental Income | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Franchise rental income | $ | 233.1 | $ | 29.8 | $ | 203.3 | $ | 13.2 | $ | 190.1 |
Advertising Funds Revenue | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Advertising funds revenue | $ | 339.4 | $ | 13.4 | $ | 326.0 | $ | 326.0 | $ | — |
Cost of Sales, as a Percent of Sales | 2019 | 2018 | 2017 | |||||||||||
Amount | Change | Amount | Change | Amount | ||||||||||
Food and paper | 31.5 | % | (0.3 | )% | 31.8 | % | 0.2 | % | 31.6 | % | ||||
Restaurant labor | 30.3 | % | 0.5 | % | 29.8 | % | 0.3 | % | 29.5 | % | ||||
Occupancy, advertising and other operating costs | 22.7 | % | 0.1 | % | 22.6 | % | 0.5 | % | 22.1 | % | ||||
84.5 | % | 0.3 | % | 84.2 | % | 1.0 | % | 83.2 | % |
Franchise Support and Other Costs | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Franchise support and other costs | $ | 43.7 | $ | 18.5 | $ | 25.2 | $ | 8.9 | $ | 16.3 |
Franchise Rental Expense | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Franchise rental expense | $ | 123.9 | $ | 32.8 | $ | 91.1 | $ | 3.1 | $ | 88.0 |
Advertising Funds Expense | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Advertising funds expense | $ | 338.1 | $ | 16.2 | $ | 321.9 | $ | 321.9 | $ | — |
General and Administrative | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Legal reserves | $ | (2.5 | ) | $ | (30.1 | ) | $ | 27.6 | $ | 26.9 | $ | 0.7 | |||||||
Employee compensation and related expenses | 168.7 | 14.0 | 154.7 | (10.1 | ) | 164.8 | |||||||||||||
Professional fees | 19.5 | (0.1 | ) | 19.6 | (2.8 | ) | 22.4 | ||||||||||||
Other, net | 14.5 | (1.1 | ) | 15.6 | (0.1 | ) | 15.7 | ||||||||||||
$ | 200.2 | $ | (17.3 | ) | $ | 217.5 | $ | 13.9 | $ | 203.6 |
Depreciation and Amortization | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Restaurants | $ | 85.8 | $ | 2.9 | $ | 82.9 | $ | (0.3 | ) | $ | 83.2 | ||||||||
Corporate and other | 45.9 | (0.1 | ) | 46.0 | 3.5 | 42.5 | |||||||||||||
$ | 131.7 | $ | 2.8 | $ | 128.9 | $ | 3.2 | $ | 125.7 |
System Optimization (Gains) Losses, Net | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
System optimization (gains) losses, net | $ | (1.3 | ) | $ | (0.8 | ) | $ | (0.5 | ) | $ | (39.6 | ) | $ | 39.1 |
Reorganization and Realignment Costs | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
IT realignment | $ | 9.1 | $ | 9.1 | $ | — | $ | — | $ | — | |||||||||
G&A realignment | 7.8 | (1.0 | ) | 8.8 | (12.9 | ) | 21.7 | ||||||||||||
System optimization initiative | 0.1 | (0.2 | ) | 0.3 | (0.6 | ) | 0.9 | ||||||||||||
$ | 17.0 | $ | 7.9 | $ | 9.1 | $ | (13.5 | ) | $ | 22.6 |
Impairment of Long-Lived Assets | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Impairment of long-lived assets | $ | 7.0 | $ | 2.3 | $ | 4.7 | $ | 0.6 | $ | 4.1 |
Other Operating Income, Net | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Gains on sales-type leases | $ | (2.3 | ) | $ | (2.3 | ) | $ | — | $ | — | $ | — | |||||||
Lease buyout | (0.5 | ) | (1.3 | ) | 0.8 | 2.2 | (1.4 | ) | |||||||||||
Equity in earnings in joint ventures, net | (8.7 | ) | (0.6 | ) | (8.1 | ) | (0.5 | ) | (7.6 | ) | |||||||||
Other, net | 0.1 | (0.7 | ) | 0.8 | 0.5 | 0.3 | |||||||||||||
$ | (11.4 | ) | $ | (4.9 | ) | $ | (6.5 | ) | $ | 2.2 | $ | (8.7 | ) |
Interest Expense, Net | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Interest expense, net | $ | 116.0 | $ | (3.6 | ) | $ | 119.6 | $ | 1.5 | $ | 118.1 |
Loss on Early Extinguishment of Debt | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Loss on early extinguishment of debt | $ | 8.5 | $ | (3.0 | ) | $ | 11.5 | $ | 11.5 | $ | — |
Investment Income, Net | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Investment income, net | $ | 25.6 | $ | (425.1 | ) | $ | 450.7 | $ | 448.0 | $ | 2.7 |
Other Income, Net | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Other income, net | $ | 7.8 | $ | 2.4 | $ | 5.4 | $ | 3.8 | $ | 1.6 |
(Provision for) Benefit from Income Taxes | 2019 | 2018 | 2017 | ||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Income before income taxes | $ | 171.5 | $ | (403.4 | ) | $ | 574.9 | $ | 473.9 | $ | 101.0 | ||||||||
(Provision for) benefit from income taxes | (34.6 | ) | 80.2 | (114.8 | ) | (207.8 | ) | 93.0 | |||||||||||
Effective tax rate on income | 20.1 | % | 0.1 | % | 20.0 | % | 112.1 | % | (92.1 | )% |
2019 | 2018 | 2017 | |||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Sales | $ | 707.5 | $ | 55.9 | $ | 651.6 | $ | 28.8 | $ | 622.8 | |||||||||
Franchise royalty revenue | 355.7 | 20.2 | 335.5 | 8.7 | 326.8 | ||||||||||||||
Franchise fees | 21.9 | 2.9 | 19.0 | (18.1 | ) | 37.1 | |||||||||||||
Advertising fund revenue | 319.2 | 12.8 | 306.4 | 306.4 | — | ||||||||||||||
Total revenues | $ | 1,404.3 | $ | 91.8 | $ | 1,312.5 | $ | 325.8 | $ | 986.7 | |||||||||
Segment profit | $ | 369.2 | $ | 13.7 | $ | 355.5 | $ | (13.9 | ) | $ | 369.4 |
2019 | 2018 | 2017 | |||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Franchise royalty revenue | $ | 45.0 | $ | 2.6 | $ | 42.4 | $ | 3.3 | $ | 39.1 | |||||||||
Franchise fees | 3.0 | (2.6 | ) | 5.6 | 1.0 | 4.6 | |||||||||||||
Advertising fund revenue | 20.2 | 0.6 | 19.6 | 19.6 | — | ||||||||||||||
Total revenues | $ | 68.2 | $ | 0.6 | $ | 67.6 | $ | 23.9 | $ | 43.7 | |||||||||
Segment profit | $ | 20.2 | $ | (5.4 | ) | $ | 25.6 | $ | 1.8 | $ | 23.8 |
2019 | 2018 | 2017 | |||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Franchise fees | $ | 3.4 | $ | (3.1 | ) | $ | 6.5 | $ | 3.6 | $ | 2.9 | ||||||||
Franchise rental income | 233.1 | 29.8 | 203.3 | 13.2 | 190.1 | ||||||||||||||
Total revenues | $ | 236.5 | $ | 26.7 | $ | 209.8 | $ | 16.8 | $ | 193.0 | |||||||||
Segment profit | $ | 107.1 | $ | (3.5 | ) | $ | 110.6 | $ | 15.8 | $ | 94.8 |
• | capital expenditures of approximately $75.0 million as discussed below in “Capital Expenditures;” |
• | quarterly cash dividends aggregating up to approximately $107.1 million as discussed below in “Dividends;” and |
• | stock repurchases of $28.8 million under our February 2019 authorization (after taking into consideration the entire initial purchase price under the 2019 ASR Agreement) and potential stock repurchases of up to $100.0 million under our February 2020 authorization as discussed below in “Stock Repurchases.” |
2019 | 2018 | 2017 | |||||||||||||||||
Amount | Change | Amount | Change | Amount | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||
Operating activities | $ | 288.9 | $ | 64.7 | $ | 224.2 | $ | (14.6 | ) | $ | 238.8 | ||||||||
Investing activities | (54.9 | ) | (417.8 | ) | 362.9 | 455.1 | (92.2 | ) | |||||||||||
Financing activities | (365.3 | ) | (59.6 | ) | (305.7 | ) | (89.9 | ) | (215.8 | ) | |||||||||
Effect of exchange rate changes on cash | 3.5 | 11.2 | (7.7 | ) | (13.8 | ) | 6.1 | ||||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (127.8 | ) | (401.5 | ) | $ | 273.7 | $ | 336.8 | $ | (63.1 | ) |
Year End | |||||||
2019 | 2018 | ||||||
Long-term debt, including current portion | $ | 2,280.3 | $ | 2,328.8 | |||
Stockholders’ equity | 516.4 | 648.4 | |||||
$ | 2,796.7 | $ | 2,977.2 |
• | stock repurchases, including the 2019 ASR Agreement, of $217.8 million; |
• | dividends paid of $96.4 million; and |
• | a net decrease in long-term debt, including current portion and unamortized debt issuance costs, of $48.5 million, primarily resulting from the completion of a refinancing transaction during the second quarter of 2019; partially offset by |
• | comprehensive income of $144.8 million; and |
• | treasury share issuances of $34.0 million for exercises and vesting of share-based compensation awards. |
Year End | |||
2019 | |||
Series 2019-1 Class A-2-I Notes | $ | 398.0 | |
Series 2019-1 Class A-2-II Notes | 447.8 | ||
Series 2018-1 Class A-2-I Notes | 441.0 | ||
Series 2018-1 Class A-2-II Notes | 465.5 | ||
Series 2015-1 Class A-2-III Notes | 478.7 | ||
7% debentures | 82.8 | ||
Unamortized debt issuance costs | (33.5 | ) | |
Total long-term debt, including current portion | $ | 2,280.3 |
Fiscal Years | ||||||||||||||||||||
2020 | 2021-2022 | 2023-2024 | After 2024 | Total | ||||||||||||||||
Long-term debt obligations (a) | $ | 118.7 | $ | 234.7 | $ | 230.8 | $ | 2,387.6 | $ | 2,971.8 | ||||||||||
Finance lease obligations (b) | 50.1 | 101.5 | 106.3 | 704.1 | 962.0 | |||||||||||||||
Operating lease obligations (c) | 90.3 | 179.7 | 178.8 | 938.4 | 1,387.2 | |||||||||||||||
Purchase obligations (d) | 73.4 | 102.6 | 78.9 | 21.1 | 276.0 | |||||||||||||||
Other | 12.1 | 1.5 | — | — | 13.6 | |||||||||||||||
Total (e) | $ | 344.6 | $ | 620.0 | $ | 594.8 | $ | 4,051.2 | $ | 5,610.6 |
(a) | The table includes interest of approximately $650.8 million. These amounts exclude the fair value adjustment related to Wendy’s 7% debentures assumed in the Wendy’s Merger. |
(b) | Includes interest of approximately $470.2 million. |
(c) | Includes interest of approximately $445.7 million. |
(d) | Includes purchase obligations related to (1) the Company’s arrangement with a third-party global IT consultant and (2) the remaining beverage purchase requirement under a beverage agreement. Also includes other purchase obligations related primarily to marketing and information technology. |
(e) | Excludes obligation for unrecognized tax benefits, including interest and penalties, of $23.4 million. We are unable to predict when and if cash payments will be required. |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Repurchases of common stock (a) (b) | $ | 202.7 | $ | 270.2 | $ | 127.4 | |||||
Number of shares repurchased | 10.2 | 15.8 | 8.6 |
(a) | Excludes commissions of $0.1 million, $0.2 million and $0.1 million for 2019, 2018 and 2017, respectively. |
(b) | 2019 includes repurchases of $85.0 million under the 2019 ASR Agreement, representing 85% of the initial purchase price of $100.0 million. |
Year End | |||
2019 | |||
Lease guarantees (a) | $ | 75.6 | |
Letters of credit (b) | 25.1 | ||
Total | $ | 100.7 |
(a) | Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees. These leases extend through 2056. |
(b) | The Company has outstanding letters of credit with various parties. The Company does not expect any material loss to result from these letters of credit because we do not believe performance will be required. |
• | Impairment of goodwill and indefinite-lived intangible assets: |
• | Impairment of long-lived assets: |
• | Our ability to realize deferred tax assets: |
• | Income tax uncertainties: |
• | Legal and environmental accruals: |
Page | |
Glossary of Defined Terms | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of December 29, 2019 and December 30, 2018 | |
Consolidated Statements of Operations for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 | |
Consolidated Statements of Comprehensive Income for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 | |
Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 | |
Consolidated Statements of Cash Flows for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 | |
(1) Summary of Significant Accounting Policies | |
(2) Revenue | |
(3) System Optimization (Gains) Losses, Net | |
(4) Acquisitions | |
(5) Reorganization and Realignment Costs | |
(6) Income Per Share | |
(7) Cash and Receivables | |
(8) Investments | |
(9) Properties | |
(10) Goodwill and Other Intangible Assets | |
(11) Accrued Expenses and Other Current Liabilities | |
(12) Long-Term Debt | |
(13) Fair Value Measurements | |
(14) Income Taxes | |
(15) Stockholders’ Equity | |
(16) Share-Based Compensation | |
(17) Impairment of Long-Lived Assets | |
(18) Investment Income, Net | |
(19) Retirement Benefit Plans | |
(20) Leases | |
(21) Guarantees and Other Commitments and Contingencies | |
(22) Transactions with Related Parties | |
(23) Legal and Environmental Matters | |
(24) Advertising Costs and Funds | |
(25) Geographic Information | |
(26) Segment Information | |
(27) Quarterly Financial Information (Unaudited) |
Defined Term | Footnote Where Defined | |
2010 Plan | (16) | Share-Based Compensation |
2018 ASR Agreement | (15) | Stockholders’ Equity |
2019 ASR Agreement | (15) | Stockholders’ Equity |
401(k) Plan | (19) | Retirement Benefit Plans |
Advertising Funds | (1) | Summary of Significant Accounting Policies |
Arby’s | (8) | Investments |
ARG Parent | (8) | Investments |
Black-Scholes Model | (1) | Summary of Significant Accounting Policies |
Brazil JV | (1) | Summary of Significant Accounting Policies |
CAP | (14) | Income Taxes |
Caracci Case | (23) | Legal and Environmental Matters |
Class A-1 Notes | (12) | Long-Term Debt |
Class A-2 Notes | (12) | Long-Term Debt |
Company | (1) | Summary of Significant Accounting Policies |
Contingent Rent | (1) | Summary of Significant Accounting Policies |
DavCo | (3) | System Optimization (Gains) Losses, Net |
DavCo and NPC Transactions | (3) | System Optimization (Gains) Losses, Net |
EBITDA | (26) | Segment Information |
Eligible Arby’s Employees | (19) | Retirement Benefit Plans |
Equity Plans | (1) | Summary of Significant Accounting Policies |
FASB | (1) | Summary of Significant Accounting Policies |
FI Case | (23) | Legal and Environmental Matters |
Fountain Beverages | (21) | Guarantees and Other Commitments and Contingencies |
Franchise Flip | (1) | Summary of Significant Accounting Policies |
G&A | (5) | Reorganization and Realignment Costs |
GAAP | (1) | Summary of Significant Accounting Policies |
GILTI | (14) | Income Taxes |
Graham Case | (23) | Legal and Environmental Matters |
Indenture | (12) | Long-Term Debt |
Inspire Brands | (8) | Investments |
IRS | (14) | Income Taxes |
IT | (5) | Reorganization and Realignment Costs |
Master Issuer | (12) | Long-Term Debt |
NPC | (3) | System Optimization (Gains) Losses, Net |
QSCC | (22) | Transactions with Related Parties |
Rent Holiday | (1) | Summary of Significant Accounting Policies |
Restricted Shares | (16) | Share-Based Compensation |
ROU | (1) | Summary of Significant Accounting Policies |
RSAs | (1) | Summary of Significant Accounting Policies |
RSUs | (1) | Summary of Significant Accounting Policies |
Securitization Entities | (12) | Long-Term Debt |
Senior Notes | (12) | Long-Term Debt |
SERP | (19) | Retirement Benefit Plans |
Straight-Line Rent | (1) | Summary of Significant Accounting Policies |
Target | (16) | Share-Based Compensation |
Defined Term | Footnote Where Defined | |
Tax Act | (14) | Income Taxes |
The Wendy’s Company | (1) | Summary of Significant Accounting Policies |
TimWen | (1) | Summary of Significant Accounting Policies |
Torres Case | (23) | Legal and Environmental Matters |
U.S. | (1) | Summary of Significant Accounting Policies |
Wendy’s | (1) | Summary of Significant Accounting Policies |
Wendy’s Co-op | (22) | Transactions with Related Parties |
Wendy’s Funding | (12) | Long-Term Debt |
Wendy’s Merger | (8) | Investments |
Wendy’s Restaurants | (1) | Summary of Significant Accounting Policies |
• | We tested the effectiveness of controls over lease accounting, including those over the adoption of ASC 842 and evaluation of new or modified leases. |
• | We evaluated the Company’s lessee and lessor lease accounting policies. |
• | We selected a sample of existing operating leases at the adoption date and recalculated the initial measurement of the lease liability and right of use asset. |
• | We selected a sample of new and modified leases and performed the following: |
• | Read the terms of the contract and evaluated whether the contract meets the definition of a lease. |
• | Evaluated whether the Company properly identified the lease and non-lease components, if any, in the contract. |
• | Evaluated the Company’s determination of lease payments, based on the terms of the lease contract. |
• | Evaluated the Company’s determination of the lease term, which required consideration of which option periods are reasonably certain to be exercised. |
• | Evaluated whether the lease is appropriately classified and recorded within the financial statements as an operating or financing lease when the Company is the lessee, or as an operating, direct financing or sales-type lease when the Company is the lessor. |
• | Recalculated the initial and subsequent measurement of the lease. |
• | With the assistance of fair value specialists, we evaluated the reasonableness of the Company’s lease-related valuations by: |
• | Assessing the Company’s valuation methodology. |
• | Evaluating the reasonableness of significant valuation inputs, including underlying source information such as comparable market data and property lives. |
• | Assessing the reasonableness of significant business assumptions, including projected store sales and contract rents. |
• | Testing the mathematical accuracy of the Company’s valuation model calculations. |
• | With the assistance of fair value specialists, we evaluated the reasonableness of the discount rates by: |
• | Testing the source information underlying the determination of the discount rates and the mathematical accuracy of the calculation. |
• | Developing a range of independent estimates and comparing those to the discount rates selected by management. |
December 29, 2019 | December 30, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Accounts and notes receivable, net | |||||||
Inventories | |||||||
Prepaid expenses and other current assets | |||||||
Advertising funds restricted assets | |||||||
Total current assets | |||||||
Properties | |||||||
Finance lease assets | |||||||
Operating lease assets | — | ||||||
Goodwill | |||||||
Other intangible assets | |||||||
Investments | |||||||
Net investment in sales-type and direct financing leases | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | $ | |||||
Current portion of finance lease liabilities | |||||||
Current portion of operating lease liabilities | — | ||||||
Accounts payable | |||||||
Accrued expenses and other current liabilities | |||||||
Advertising funds restricted liabilities | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Long-term finance lease liabilities | |||||||
Long-term operating lease liabilities | — | ||||||
Deferred income taxes | |||||||
Deferred franchise fees | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 224,889 and 231,233 shares outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Common stock held in treasury, at cost; 245,535 and 239,191 shares, respectively | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Revenues: | |||||||||||
Sales | $ | $ | $ | ||||||||
Franchise royalty revenue and fees | |||||||||||
Franchise rental income | |||||||||||
Advertising funds revenue | |||||||||||
Costs and expenses: | |||||||||||
Cost of sales | |||||||||||
Franchise support and other costs | |||||||||||
Franchise rental expense | |||||||||||
Advertising funds expense | |||||||||||
General and administrative | |||||||||||
Depreciation and amortization | |||||||||||
System optimization (gains) losses, net | ( | ) | ( | ) | |||||||
Reorganization and realignment costs | |||||||||||
Impairment of long-lived assets | |||||||||||
Other operating income, net | ( | ) | ( | ) | ( | ) | |||||
Operating profit | |||||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | |||||
Loss on early extinguishment of debt | ( | ) | ( | ) | |||||||
Investment income, net | |||||||||||
Other income, net | |||||||||||
Income before income taxes | |||||||||||
(Provision for) benefit from income taxes | ( | ) | ( | ) | |||||||
Net income | $ | $ | $ | ||||||||
Net income per share: | |||||||||||
Basic | $ | $ | $ | ||||||||
Diluted |
Year Ended | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Net income | $ | $ | $ | ||||||||
Other comprehensive income (loss), net: | |||||||||||
Foreign currency translation adjustment | ( | ) | |||||||||
Change in unrecognized pension loss: | |||||||||||
Unrealized gains arising during the period | |||||||||||
Income tax provision | ( | ) | ( | ) | |||||||
Final settlement of pension liability | |||||||||||
Effect of cash flow hedges: | |||||||||||
Reclassification of losses into Net income | |||||||||||
Income tax provision | ( | ) | |||||||||
Other comprehensive income (loss), net | ( | ) | |||||||||
Comprehensive income | $ | $ | $ |
Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||
Balance at January 1, 2017 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive income, net | |||||||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | |||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ) | |||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ) | ( | ) | |||||||||||||||||||
Cumulative effect of change in accounting principle | |||||||||||||||||||||||
Other | ( | ) | |||||||||||||||||||||
Balance at December 31, 2017 | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive loss, net | ( | ) | ( | ) | |||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Repurchases of common stock, including accelerated share repurchase | ( | ) | ( | ) | |||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ) | |||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ) | ( | ) | |||||||||||||||||||
Cumulative effect of change in accounting principle | ( | ) | ( | ) | |||||||||||||||||||
Other | |||||||||||||||||||||||
Balance at December 30, 2018 | ( | ) | ( | ) | |||||||||||||||||||
Net income | |||||||||||||||||||||||
Other comprehensive income, net | |||||||||||||||||||||||
Cash dividends | ( | ) | ( | ) | |||||||||||||||||||
Repurchases of common stock, including accelerated share repurchase | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Share-based compensation | |||||||||||||||||||||||
Common stock issued upon exercises of stock options | ( | ) | |||||||||||||||||||||
Common stock issued upon vesting of restricted shares | ( | ) | ( | ) | |||||||||||||||||||
Cumulative effect of change in accounting principle | ( | ) | ( | ) | |||||||||||||||||||
Other | ( | ) | |||||||||||||||||||||
Balance at December 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Year Ended | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Share-based compensation | |||||||||||
Impairment of long-lived assets | |||||||||||
Deferred income tax | ( | ) | ( | ) | |||||||
Non-cash rental expense (income), net | ( | ) | ( | ) | |||||||
Change in operating lease liabilities | ( | ) | |||||||||
Net (recognition) receipt of deferred vendor incentives | ( | ) | |||||||||
System optimization (gains) losses, net | ( | ) | ( | ) | |||||||
Gain on sale of investments, net | ( | ) | ( | ) | ( | ) | |||||
Distributions received from TimWen joint venture | |||||||||||
Equity in earnings in joint ventures, net | ( | ) | ( | ) | ( | ) | |||||
Long-term debt-related activities, net (see below) | |||||||||||
Other, net | ( | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts and notes receivable, net | ( | ) | |||||||||
Inventories | ( | ) | ( | ) | ( | ) | |||||
Prepaid expenses and other current assets | ( | ) | ( | ) | |||||||
Advertising funds restricted assets and liabilities | ( | ) | ( | ) | |||||||
Accounts payable | ( | ) | ( | ) | |||||||
Accrued expenses and other current liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | |||||
Acquisitions | ( | ) | ( | ) | ( | ) | |||||
Dispositions | |||||||||||
Proceeds from sale of investments | |||||||||||
Notes receivable, net | ( | ) | ( | ) | |||||||
Payments for investments | ( | ) | ( | ) | |||||||
Net cash (used in) provided by investing activities | ( | ) | ( | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from long-term debt | |||||||||||
Repayments of long-term debt | ( | ) | ( | ) | ( | ) | |||||
Repayments of finance lease liabilities | ( | ) | ( | ) | ( | ) | |||||
Deferred financing costs | ( | ) | ( | ) | ( | ) | |||||
Repurchases of common stock, including accelerated share repurchase | ( | ) | ( | ) | ( | ) | |||||
Dividends | ( | ) | ( | ) | ( | ) | |||||
Proceeds from stock option exercises | |||||||||||
Payments related to tax withholding for share-based compensation | ( | ) | ( | ) | ( | ) | |||||
Contingent consideration payment | ( | ) | |||||||||
Net cash used in financing activities | ( | ) | ( | ) | ( | ) | |||||
Net cash (used in) provided by operations before effect of exchange rate changes on cash | ( | ) | ( | ) | |||||||
Effect of exchange rate changes on cash | ( | ) | |||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | $ |
Year Ended | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Detail of cash flows from operating activities: | |||||||||||
Long-term debt-related activities, net: | |||||||||||
Loss on early extinguishment of debt | $ | $ | $ | ||||||||
Accretion of long-term debt | |||||||||||
Amortization of deferred financing costs | |||||||||||
Reclassification of unrealized losses on cash flow hedges | |||||||||||
$ | $ | $ | |||||||||
Supplemental cash flow information: | |||||||||||
Cash paid for: | |||||||||||
Interest | $ | $ | $ | ||||||||
Income taxes, net of refunds | |||||||||||
Supplemental non-cash investing and financing activities: | |||||||||||
Capital expenditures included in accounts payable | $ | $ | $ | ||||||||
Finance leases | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Reconciliation of cash, cash equivalents and restricted cash at end of period: | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Restricted cash | |||||||||||
Restricted cash, included in Advertising funds restricted assets | |||||||||||
Restricted cash, included in Other assets | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | $ |
As Previously Reported | Reclassifications | As Currently Reported | |||||||||
Properties | $ | $ | ( | ) | $ | ||||||
Finance lease assets | |||||||||||
Current portion of long-term debt | ( | ) | |||||||||
Current portion of finance lease liabilities | |||||||||||
Long-term debt | ( | ) | |||||||||
Long-term finance lease liabilities |
2018 | |||||||||||
As Previously Reported | Reclassifications | As Currently Reported | |||||||||
Repayments of long-term debt | $ | ( | ) | $ | $ | ( | ) | ||||
Repayments of finance lease liabilities | ( | ) | ( | ) |
2017 | |||||||||||
As Previously Reported | Reclassifications | As Currently Reported | |||||||||
Repayments of long-term debt | $ | ( | ) | $ | $ | ( | ) | ||||
Repayments of finance lease liabilities | ( | ) | ( | ) |
Adjustments | |||||||||||||||
As Reported | Franchise Fees | Advertising Funds | Balances Without Adoption | ||||||||||||
Consolidated Balance Sheet | |||||||||||||||
December 30, 2018 | |||||||||||||||
Accrued expenses and other current liabilities | $ | $ | ( | ) | $ | $ | |||||||||
Advertising funds restricted liabilities | ( | ) | |||||||||||||
Total current liabilities | ( | ) | ( | ) | |||||||||||
Deferred income taxes | |||||||||||||||
Deferred franchise fees | ( | ) | |||||||||||||
Total liabilities | ( | ) | ( | ) | |||||||||||
Retained earnings | |||||||||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||||||
Total stockholders’ equity | |||||||||||||||
Consolidated Statement of Operations | |||||||||||||||
Year Ended December 30, 2018 | |||||||||||||||
Franchise royalty revenue and fees (a) | $ | $ | ( | ) | $ | $ | |||||||||
Advertising funds revenue | ( | ) | |||||||||||||
Total revenues | ( | ) | ( | ) | |||||||||||
Advertising funds expense | ( | ) | |||||||||||||
Total costs and expenses | ( | ) | |||||||||||||
Operating profit | ( | ) | ( | ) | |||||||||||
Income before income taxes | ( | ) | ( | ) | |||||||||||
Provision for income taxes | ( | ) | ( | ) | |||||||||||
Net income | ( | ) | ( | ) |
(a) | The adjustments for 2018 include the reversal of franchise fees recognized over time under the new revenue recognition guidance of $ |
Adjustments | |||||||||||||||
As Reported | Franchise Fees | Advertising Funds | Balances Without Adoption | ||||||||||||
Consolidated Statement of Cash Flows | |||||||||||||||
Year Ended December 30, 2018 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | $ | ( | ) | $ | ( | ) | $ | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Deferred income tax | ( | ) | ( | ) | ( | ) | |||||||||
Other, net | ( | ) | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Advertising funds restricted assets and liabilities | |||||||||||||||
Accrued expenses and other current liabilities |
2019 | |||||||||||||||
Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||
Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||
Franchise royalty revenue | |||||||||||||||
Franchise fees | |||||||||||||||
Franchise rental income | |||||||||||||||
Advertising funds revenue | |||||||||||||||
Total revenues | $ | $ | $ | $ |
2018 | |||||||||||||||
Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||
Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||
Franchise royalty revenue | |||||||||||||||
Franchise fees | |||||||||||||||
Franchise rental income | |||||||||||||||
Advertising funds revenue | |||||||||||||||
Total revenues | $ | $ | $ | $ |
2017 | |||||||||||||||
Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||
Sales at Company-operated restaurants | $ | $ | $ | $ | |||||||||||
Franchise royalty revenue | |||||||||||||||
Franchise fees | |||||||||||||||
Franchise rental income | |||||||||||||||
Total revenues | $ | $ | $ | $ |
December 29, 2019 (a) | December 30, 2018 (a) | ||||||
Receivables, which are included in “Accounts and notes receivable, net” (b) | $ | $ | |||||
Receivables, which are included in “Advertising funds restricted assets” | |||||||
Deferred franchise fees (c) |
(a) | Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s consolidated statements of operations. |
(b) | Includes receivables related to “Sales” and “Franchise royalty revenue and fees.” |
(c) | Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ |
2019 | 2018 | ||||||
Deferred franchise fees at beginning of period | $ | $ | |||||
Revenue recognized during the period | ( | ) | ( | ) | |||
New deferrals due to cash received and other | |||||||
Deferred franchise fees at end of period | $ | $ |
Estimate for fiscal year: | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
$ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Number of restaurants sold to franchisees | |||||||||||
Proceeds from sales of restaurants | $ | $ | $ | ||||||||
Net assets sold (a) | ( | ) | |||||||||
Goodwill related to sales of restaurants | ( | ) | |||||||||
Net favorable leases | |||||||||||
Other | |||||||||||
Post-closing adjustments on sales of restaurants (b) | |||||||||||
Gain on sales of restaurants, net | |||||||||||
Gain (loss) on sales of other assets, net (c) | ( | ) | |||||||||
Loss on DavCo and NPC Transactions | ( | ) | |||||||||
System optimization gains (losses), net | $ | $ | $ | ( | ) |
(a) | Net assets sold consisted primarily of equipment. |
(b) | 2019, 2018 and 2017 include the recognition of deferred gains of $ |
(c) | During 2019, 2018 and 2017, Wendy’s received cash proceeds of $ |
Year Ended | |||
2017 | |||
Acquisition (a) | |||
Total consideration paid | $ | ||
Identifiable assets and liabilities assumed: | |||
Net assets held for sale | |||
Finance lease assets | |||
Deferred taxes | |||
Finance lease obligations | ( | ) | |
Net unfavorable leases (b) | ( | ) | |
Other liabilities (c) | ( | ) | |
Total identifiable net assets | |||
Goodwill (d) | $ | ||
Disposition | |||
Proceeds | $ | ||
Net assets sold | ( | ) | |
Goodwill (d) | ( | ) | |
Net favorable leases (e) | |||
Other (f) | ( | ) | |
Loss on DavCo and NPC Transactions | $ | ( | ) |
(a) | The fair values of the identifiable intangible assets and taxes related to the acquisition were provisional amounts as of December 31, 2017, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during 2018 with no differences from the provisional amounts previously reported. The Company utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process. |
(b) | Includes favorable lease assets of $ |
(c) | Includes a supplemental purchase price liability recorded to “Accrued expenses and other current liabilities” of $ |
(d) | Includes tax deductible goodwill of $ |
(e) | The Company recorded favorable lease assets of $ |
(f) | Includes cash payments for selling and other costs associated with the transaction. |
Year Ended | |||||||||||
2019 | 2018 (a) | 2017 | |||||||||
Restaurants acquired from franchisees | |||||||||||
Total consideration paid, net of cash received | $ | $ | $ | ||||||||
Identifiable assets acquired and liabilities assumed: | |||||||||||
Properties | |||||||||||
Acquired franchise rights | |||||||||||
Finance lease assets | |||||||||||
Other assets | |||||||||||
Finance lease liabilities | ( | ) | ( | ) | |||||||
Unfavorable leases | ( | ) | |||||||||
Other | ( | ) | ( | ) | |||||||
Total identifiable net assets | |||||||||||
Goodwill | $ | $ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
IT realignment | $ | $ | $ | ||||||||
G&A realignment | |||||||||||
System optimization initiative | |||||||||||
Reorganization and realignment costs | $ | $ | $ |
2019 | |||
Severance and related employee costs | $ | ||
Third-party and other costs | |||
Share-based compensation (a) | |||
Total IT realignment | $ |
(a) | Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our IT realignment plan. |
Balance December 30, 2018 | Charges | Payments | Balance December 29, 2019 | ||||||||||||
Severance and related employee costs | $ | $ | $ | $ | |||||||||||
Third-party and other costs | ( | ) | |||||||||||||
$ | $ | $ | ( | ) | $ |
Year Ended | Total Incurred Since Inception | ||||||||||||||
2019 | 2018 | 2017 | |||||||||||||
Severance and related employee costs | $ | $ | $ | $ | |||||||||||
Recruitment and relocation costs | |||||||||||||||
Third-party and other costs | |||||||||||||||
Share-based compensation (a) | |||||||||||||||
Termination of defined benefit plans (b) | |||||||||||||||
Total G&A realignment | $ | $ | $ | $ |
(a) | Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A realignment plan. |
(b) | During 2018, the Company terminated |
Balance December 30, 2018 | Charges | Payments | Balance December 29, 2019 | ||||||||||||
Severance and related employee costs | $ | $ | $ | ( | ) | $ | |||||||||
Recruitment and relocation costs | ( | ) | |||||||||||||
Third-party and other costs | ( | ) | |||||||||||||
$ | $ | $ | ( | ) | $ |
Balance December 31, 2017 | Charges | Payments | Balance December 30, 2018 | ||||||||||||
Severance and related employee costs | $ | $ | $ | ( | ) | $ | |||||||||
Recruitment and relocation costs | ( | ) | |||||||||||||
Third-party and other costs | ( | ) | |||||||||||||
$ | $ | $ | ( | ) | $ |
Year Ended | Total Incurred Since Inception | ||||||||||||||
2019 | 2018 | 2017 | |||||||||||||
Severance and related employee costs | $ | $ | $ | $ | |||||||||||
Professional fees | |||||||||||||||
Other | |||||||||||||||
Accelerated depreciation and amortization (a) | |||||||||||||||
Share-based compensation (b) | |||||||||||||||
Total system optimization initiative | $ | $ | $ | $ |
(a) | Primarily includes accelerated amortization of previously acquired franchise rights related to Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative. |
(b) | Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative. |
Balance January 1, 2017 | Charges | Payments | Balance December 31, 2017 | ||||||||||||
Severance and related employee costs | $ | $ | $ | ( | ) | $ | |||||||||
Recruitment and relocation costs | ( | ) | |||||||||||||
Other | ( | ) | |||||||||||||
$ | $ | $ | ( | ) | $ |
Year Ended | ||||||||
2019 | 2018 | 2017 | ||||||
Common stock: | ||||||||
Weighted average basic shares outstanding | ||||||||
Dilutive effect of stock options and restricted shares | ||||||||
Weighted average diluted shares outstanding |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Cash and cash equivalents | |||||||
Cash | $ | $ | |||||
Cash equivalents | |||||||
Restricted cash | |||||||
Accounts held by trustee for the securitized financing facility | |||||||
Trust for termination costs for former Wendy’s executives | |||||||
Other | |||||||
Advertising Funds (a) | |||||||
Total cash, cash equivalents and restricted cash | $ | $ |
(a) | Included in “Advertising funds restricted assets.” |
Year End | ||||||||
December 29, 2019 | December 30, 2018 | |||||||
Accounts and Notes Receivable, Net | ||||||||
Current | ||||||||
Accounts receivable: | ||||||||
Franchisees | $ | $ | ||||||
Other (a) | ||||||||
Notes receivable from franchisees (b) (c) | ||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||||
$ | $ | |||||||
Non-current (d) | ||||||||
Notes receivable from franchisees (c) | $ | $ | ||||||
Allowance for doubtful accounts (c) | ( | ) | ||||||
$ | $ |
(a) | Includes income tax refund receivables of $ |
(b) | Includes the current portion of sales-type and direct financing lease receivables of $ |
(c) | Includes a note receivable from a franchisee in Indonesia, of which $ |
(d) | Included in “Other assets.” |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Balance at beginning of year: | |||||||||||
Current | $ | $ | $ | ||||||||
Non-current | |||||||||||
Provision for doubtful accounts: | |||||||||||
Franchisees and other | |||||||||||
Uncollectible accounts written off, net of recoveries | ( | ) | ( | ) | ( | ) | |||||
Balance at end of year: | |||||||||||
Current | |||||||||||
Non-current | |||||||||||
Total | $ | $ | $ |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Equity method investments | $ | $ | |||||
Other investments in equity securities | |||||||
$ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Balance at beginning of period | $ | $ | $ | ||||||||
Investment | |||||||||||
Equity in earnings for the period | |||||||||||
Amortization of purchase price adjustments (a) | ( | ) | ( | ) | ( | ) | |||||
Distributions received | ( | ) | ( | ) | ( | ) | |||||
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other | ( | ) | |||||||||
Balance at end of period | $ | $ | $ |
(a) | Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Land | $ | $ | |||||
Buildings and improvements | |||||||
Leasehold improvements | |||||||
Office, restaurant and transportation equipment | |||||||
Accumulated depreciation and amortization | ( | ) | ( | ) | |||
$ | $ |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Balance at beginning of year: | |||||||
Goodwill, gross | $ | $ | |||||
Accumulated impairment losses (a) | ( | ) | ( | ) | |||
Goodwill, net | |||||||
Changes in goodwill: | |||||||
Restaurant acquisitions (b) | |||||||
Restaurant dispositions | ( | ) | |||||
Currency translation adjustment | ( | ) | |||||
Balance at end of year: | |||||||
Goodwill, gross | |||||||
Accumulated impairment losses (a) | ( | ) | ( | ) | |||
Goodwill, net | $ | $ |
(a) | Accumulated impairment losses resulted from the full impairment of goodwill of the Wendy’s international franchise restaurants during the fourth quarter of 2013. |
(b) | 2019 includes an adjustment to the fair value of net assets acquired in connection with the acquisition of franchised restaurants during 2018. See Note 4 for further information. |
Wendy’s U.S. | Wendy’s International | Global Real Estate & Development | Total | ||||||||||||
Goodwill | $ | $ | $ | $ |
Year End | |||||||||||||||||||||||
December 29, 2019 | December 30, 2018 | ||||||||||||||||||||||
Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||
Indefinite-lived: | |||||||||||||||||||||||
Trademarks | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||
Definite-lived: | |||||||||||||||||||||||
Franchise agreements | ( | ) | ( | ) | |||||||||||||||||||
Favorable leases | ( | ) | ( | ) | |||||||||||||||||||
Reacquired rights under franchise agreements | ( | ) | ( | ) | |||||||||||||||||||
Software | ( | ) | ( | ) | |||||||||||||||||||
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Aggregate amortization expense: | |||
Actual for fiscal year: | |||
2017 | $ | ||
2018 | |||
2019 | |||
Estimate for fiscal year: | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Legal reserves (a) | $ | $ | |||||
Accrued compensation and related benefits | |||||||
Accrued taxes | |||||||
Other | |||||||
$ | $ |
(a) | Includes a legal reserve of $ |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Series 2019-1 Class A-2 Notes: | |||||||
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026 | $ | $ | |||||
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029 | |||||||
Series 2018-1 Class A-2 Notes: | |||||||
3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025 | |||||||
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 | |||||||
Series 2015-1 Class A-2 Notes: | |||||||
4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with June 2019 refinancing | |||||||
4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025 | |||||||
7% debentures, due in 2025 | |||||||
Unamortized debt issuance costs | ( | ) | ( | ) | |||
Less amounts payable within one year | ( | ) | ( | ) | |||
Total long-term debt | $ | $ |
Fiscal Year | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
$ |
Year End | |||
December 29, 2019 | |||
Cash and cash equivalents | $ | ||
Restricted cash and other assets (including long-term) | |||
Accounts and notes receivable, net | |||
Inventories | |||
Properties | |||
Other intangible assets | |||
$ |
• | Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets. |
• | Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
• | Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation. |
December 29, 2019 | December 30, 2018 | ||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | Fair Value Measurements | |||||||||||||
Financial assets | |||||||||||||||||
Cash equivalents | $ | $ | $ | $ | Level 1 | ||||||||||||
Other investments in equity securities (a) | Level 3 | ||||||||||||||||
Financial liabilities | |||||||||||||||||
Series 2019-1 Class A-2-I Notes (b) | Level 2 | ||||||||||||||||
Series 2019-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||
Series 2018-1 Class A-2-I Notes (b) | Level 2 | ||||||||||||||||
Series 2018-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||
Series 2015-1 Class A-2-II Notes (b) | Level 2 | ||||||||||||||||
Series 2015-1 Class A-2-III Notes (b) | Level 2 | ||||||||||||||||
7% debentures, due in 2025 (b) | Level 2 | ||||||||||||||||
Guarantees of franchisee loan obligations (c) | Level 3 |
(a) | The fair values of our investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments. |
(b) | The fair values were based on quoted market prices in markets that are not considered active markets. |
(c) | Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage. |
Fair Value Measurements | 2019 Total Losses | ||||||||||||||||||
December 29, 2019 | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Held and used | $ | $ | $ | $ | $ | ||||||||||||||
Held for sale | |||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Fair Value Measurements | 2018 Total Losses | ||||||||||||||||||
December 30, 2018 | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Held and used | $ | $ | $ | $ | $ | ||||||||||||||
Held for sale | |||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Domestic | $ | $ | $ | ||||||||
Foreign (a) | |||||||||||
$ | $ | $ |
(a) | Excludes foreign income of domestic subsidiaries. |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Current: | |||||||||||
U.S. federal | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
State | ( | ) | ( | ) | ( | ) | |||||
Foreign | ( | ) | ( | ) | ( | ) | |||||
Current tax provision | ( | ) | ( | ) | ( | ) | |||||
Deferred: | |||||||||||
U.S. federal | |||||||||||
State | ( | ) | ( | ) | |||||||
Foreign | ( | ) | |||||||||
Deferred tax (provision) benefit | ( | ) | |||||||||
Income tax (provision) benefit | $ | ( | ) | $ | ( | ) | $ |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Deferred tax assets: | |||||||
Operating and finance lease liabilities | $ | ||||||
Net operating loss and credit carryforwards | |||||||
Unfavorable leases | |||||||
Deferred revenue | |||||||
Accrued compensation and related benefits | |||||||
Accrued expenses and reserves | |||||||
Deferred rent | |||||||
Other | |||||||
Valuation allowances | ( | ) | ( | ) | |||
Total deferred tax assets | |||||||
Deferred tax liabilities: | |||||||
Operating and finance lease assets (a) | ( | ) | ( | ) | |||
Intangible assets | ( | ) | ( | ) | |||
Fixed assets (a) | ( | ) | ( | ) | |||
Other | ( | ) | ( | ) | |||
Total deferred tax liabilities | ( | ) | ( | ) | |||
$ | ( | ) | $ | ( | ) |
(a) | The Company’s adoption of the lease accounting standard in 2019 caused additional deferred taxes to be recorded as a result of the ROU assets and lease liabilities recorded on the consolidated balance sheet. Additionally, the deferred taxes existing at December 30, 2018 related to finance leases have been reclassified from fixed assets to finance lease liabilities and finance lease assets, consistent with the reclassifications made on the consolidated balance sheet upon adoption. See “New Accounting Standards Adopted” in Note 1 for further information regarding the adoption of the lease accounting standard. |
Amount | Expiration | ||||
Tax credit carryforwards: | |||||
U.S. federal foreign tax credits | $ | 2022-2030 | |||
State tax credits | 2020-2023 | ||||
Foreign tax credits of non-U.S. subsidiaries | Not applicable | ||||
Total | $ | ||||
Net operating loss carryforwards: | |||||
State and local net operating loss carryforwards | $ | 2020-2035 | |||
Foreign net operating loss carryforwards | 2023-2027 | ||||
Total | $ |
Year Ended | |||||||||||
2019 | 2018 (a) | 2017 (a) | |||||||||
Income tax provision at the U.S. federal statutory rate | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
State income tax provision, net of U.S. federal income tax effect | ( | ) | ( | ) | ( | ) | |||||
Federal rate change | |||||||||||
Prior years’ tax matters (b) | ( | ) | |||||||||
Excess federal tax benefits from share-based compensation | |||||||||||
Domestic tax planning initiatives | |||||||||||
Foreign and U.S. tax effects of foreign operations | ( | ) | |||||||||
Valuation allowances | ( | ) | ( | ) | |||||||
Non-deductible goodwill (c) | ( | ) | ( | ) | |||||||
Transition tax | ( | ) | |||||||||
Unrepatriated earnings | ( | ) | ( | ) | ( | ) | |||||
Non-deductible expenses and other | ( | ) | ( | ) | |||||||
$ | ( | ) | $ | ( | ) | $ |
(a) | 2018 includes the following impacts associated with the Tax Act: (1) a net expense of $ |
(b) | 2019 primarily relates to a reduction in unrecognized tax benefits due to a lapse of statute of limitations. 2018 includes expense of $ |
(c) | Substantially all of the goodwill included in the net gain (loss) on sales of restaurants in 2018 and 2017 under our system optimization initiative was non-deductible for tax purposes. See Note 3 for further information. |
Year End | |||||||||||
December 29, 2019 | December 30, 2018 | December 31, 2017 | |||||||||
Beginning balance | $ | $ | $ | ||||||||
Additions: | |||||||||||
Tax positions of current year | |||||||||||
Tax positions of prior years | |||||||||||
Reductions: | |||||||||||
Tax positions of prior years | ( | ) | ( | ) | ( | ) | |||||
Settlements | ( | ) | ( | ) | |||||||
Lapse of statute of limitations | ( | ) | ( | ) | ( | ) | |||||
Ending balance | $ | $ | $ |
Treasury Stock | ||||||||
2019 | 2018 | 2017 | ||||||
Number of shares at beginning of year | ||||||||
Repurchases of common stock | ||||||||
Common shares issued: | ||||||||
Stock options, net | ( | ) | ( | ) | ( | ) | ||
Restricted stock, net | ( | ) | ( | ) | ( | ) | ||
Director fees | ( | ) | ( | ) | ( | ) | ||
Other | ( | ) | ( | ) | ( | ) | ||
Number of shares at end of year |
Foreign Currency Translation | Cash Flow Hedges (a) | Pension (b) | Total | ||||||||||||
Balance at January 1, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Current-period other comprehensive income | |||||||||||||||
Balance at December 31, 2017 | ( | ) | ( | ) | ( | ) | |||||||||
Current-period other comprehensive (loss) income | ( | ) | ( | ) | |||||||||||
Balance at December 30, 2018 | ( | ) | ( | ) | |||||||||||
Current-period other comprehensive income | |||||||||||||||
Balance at December 29, 2019 | $ | ( | ) | $ | $ | $ | ( | ) |
(a) | During 2015, the Company terminated |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Outstanding at December 30, 2018 | $ | |||||||||||
Granted | ||||||||||||
Exercised | ( | ) | ||||||||||
Forfeited and/or expired | ( | ) | ||||||||||
Outstanding at December 29, 2019 | $ | $ | ||||||||||
Vested or expected to vest at December 29, 2019 | $ | $ | ||||||||||
Exercisable at December 29, 2019 | $ | $ |
2019 | 2018 | 2017 | ||||||
Risk-free interest rate | % | % | % | |||||
Expected option life in years | ||||||||
Expected volatility | % | % | % | |||||
Expected dividend yield | % | % | % |
Number of Restricted Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested at December 30, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Non-vested at December 29, 2019 | $ |
2019 | 2018 | 2017 | ||||||
Risk-free interest rate | % | % | % | |||||
Expected life in years | ||||||||
Expected volatility | % | % | % | |||||
Expected dividend yield (a) | % | % | % |
(a) | The Monte Carlo method assumes a reinvestment of dividends. |
Performance Condition Awards | Market Condition Awards | ||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at December 30, 2018 | $ | $ | |||||||||||
Granted | |||||||||||||
Dividend equivalent units issued (a) | |||||||||||||
Vested (b) | ( | ) | ( | ) | |||||||||
Forfeited | ( | ) | ( | ) | |||||||||
Non-vested at December 29, 2019 | $ | $ |
(a) | Dividend equivalent units are issued in lieu of cash dividends for non-vested performance shares. There is |
(b) | Performance condition awards and market condition awards exclude the vesting of an additional |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Stock options | $ | $ | $ | ||||||||
Restricted shares (a) | |||||||||||
Performance shares: | |||||||||||
Performance condition awards | |||||||||||
Market condition awards | |||||||||||
Modifications, net | |||||||||||
Share-based compensation | |||||||||||
Less: Income tax benefit | ( | ) | ( | ) | ( | ) | |||||
Share-based compensation, net of income tax benefit | $ | $ | $ |
(a) | 2019, 2018 and 2017 include $ |
Year Ended | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Restaurants leased or subleased to franchisees | $ | $ | $ | |||||||||
Company-operated restaurants | ||||||||||||
Surplus properties | ||||||||||||
$ | $ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Gain on sale of investments, net (a) (b) | $ | $ | $ | ||||||||
Other than temporary loss on other investments in equity securities | ( | ) | |||||||||
Other, net | |||||||||||
$ | $ | $ |
(a) | In October 2019, the Company received a $ |
(b) | During 2018, the Company sold its remaining ownership interest in Inspire Brands for $ |
Year Ended | |||
2019 | |||
Finance lease cost: | |||
Amortization of finance lease assets | $ | ||
Interest on finance lease liabilities | |||
Operating lease cost | |||
Variable lease cost (a) | |||
Short-term lease cost | |||
Total operating lease cost (b) | |||
Total lease cost | $ |
(a) | Includes expenses for executory costs of $ |
(b) | Includes $ |
Year Ended | |||||||
2018 | 2017 | ||||||
Rental expense: | |||||||
Minimum rentals | $ | $ | |||||
Contingent rentals | |||||||
Total rental expense (a) | $ | $ |
(a) | Amounts include rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.” |
Year Ended | |||
2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from finance leases | $ | ||
Operating cash flows from operating leases | |||
Financing cash flows from finance leases | |||
Right-of-use assets obtained in exchange for lease obligations: | |||
Finance lease liabilities | |||
Operating lease liabilities |
Year End | |||
December 29, 2019 | |||
Weighted-average remaining lease term (years): | |||
Finance leases | |||
Operating leases | |||
Weighted average discount rate: | |||
Finance leases | % | ||
Operating leases | % | ||
Supplemental balance sheet information: | |||
Finance lease assets, gross | $ | ||
Accumulated amortization | ( | ) | |
Finance lease assets | |||
Operating lease assets |
Finance Leases | Operating Leases | ||||||||||||||
Fiscal Year | Company-Operated | Franchise and Other | Company-Operated | Franchise and Other | |||||||||||
2020 | $ | $ | $ | $ | |||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
2024 | |||||||||||||||
Thereafter | |||||||||||||||
Total minimum payments | $ | $ | $ | $ | |||||||||||
Less interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Present value of minimum lease payments (a) (b) | $ | $ | $ | $ |
(a) | The present value of minimum finance lease payments of $ |
(b) | The present value of minimum operating lease payments of $ |
Finance Leases | Operating Leases | ||||||||||||||
Fiscal Year | Company-Operated | Franchise and Other | Company-Operated | Franchise and Other | |||||||||||
2019 | $ | $ | $ | $ | |||||||||||
2020 | |||||||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
Thereafter | |||||||||||||||
Total minimum payments | $ | $ | $ | $ | |||||||||||
Less interest | ( | ) | ( | ) | |||||||||||
Present value of minimum lease payments (a) | $ | $ |
(a) | The present value of minimum finance lease payments of $ |
Year Ended | |||
2019 | |||
Sales-type and direct-financing leases: | |||
Selling profit | $ | ||
Interest income (a) | |||
Operating lease income | |||
Variable lease income | |||
Franchise rental income (b) | $ |
(a) | Included in “Interest expense, net.” |
(b) | Includes sublease income of $ |
Year Ended | |||||||
2018 | 2017 | ||||||
Rental income: | |||||||
Minimum rentals | $ | $ | |||||
Contingent rentals | |||||||
Total rental income (a) | $ | $ |
(a) | Amounts include sublease income of $ |
Sales-Type and Direct Financing Leases | Operating Leases | ||||||||||||||
Fiscal Year | Subleases | Owned Properties | Subleases | Owned Properties | |||||||||||
2020 | $ | $ | $ | $ | |||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
2024 | |||||||||||||||
Thereafter | |||||||||||||||
Total future minimum receipts | $ | $ | |||||||||||||
Unearned interest income | ( | ) | ( | ) | |||||||||||
Net investment in sales-type and direct financing leases (a) | $ | $ |
(a) | The present value of minimum direct financing rental receipts of $ |
Sales-Type and Direct Financing Leases | Operating Leases | ||||||||||||||
Fiscal Year | Subleases | Owned Properties | Subleases | Owned Properties | |||||||||||
2019 | $ | $ | $ | $ | |||||||||||
2020 | |||||||||||||||
2021 | |||||||||||||||
2022 | |||||||||||||||
2023 | |||||||||||||||
Thereafter | |||||||||||||||
Total future minimum receipts | $ | $ | |||||||||||||
Unearned interest income | ( | ) | ( | ) | |||||||||||
Net investment in sales-type and direct financing leases (a) | $ | $ |
(a) | The present value of minimum direct financing rental receipts of $ |
Year End | ||||||||
December 29, 2019 | December 30, 2018 | |||||||
Land | $ | $ | ||||||
Buildings and improvements | ||||||||
Restaurant equipment | ||||||||
Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
$ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Transactions with QSCC: | |||||||||||
Wendy’s Co-Op (a) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Lease income (b) | ( | ) | ( | ) | ( | ) | |||||
TimWen lease and management fee payments (c) | $ | $ | $ |
(a) | Wendy’s has a purchasing co-op relationship agreement (the “Wendy’s Co-op”) with its franchisees which establishes Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume. QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S. and Canada. |
(b) | Pursuant to a lease agreement entered into on January 1, 2017, Wendy’s leased |
(c) | A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $ |
Year End | |||||||
December 29, 2019 | December 30, 2018 | ||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Other assets | |||||||
Advertising funds restricted assets | $ | $ | |||||
Accounts payable | $ | $ | |||||
Accrued expenses and other current liabilities | |||||||
Advertising funds restricted liabilities | $ | $ |
U.S. | Canada | Other International | Total | ||||||||||||
2019 | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Properties | |||||||||||||||
2018 | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Properties | |||||||||||||||
2017 | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Properties |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Wendy’s U.S. | $ | $ | $ | ||||||||
Wendy’s International | |||||||||||
Global Real Estate & Development | |||||||||||
Total revenues | $ | $ | $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Wendy’s U.S. | $ | $ | $ | ||||||||
Wendy’s International | |||||||||||
Global Real Estate & Development | |||||||||||
Total segment profit | $ | $ | $ | ||||||||
Advertising funds surplus | |||||||||||
Unallocated general and administrative (a) | ( | ) | ( | ) | ( | ) | |||||
Depreciation and amortization | ( | ) | ( | ) | ( | ) | |||||
System optimization gains (losses), net | ( | ) | |||||||||
Reorganization and realignment costs | ( | ) | ( | ) | ( | ) | |||||
Impairment of long-lived assets | ( | ) | ( | ) | ( | ) | |||||
Unallocated other operating income, net | |||||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | |||||
Loss on early extinguishment of debt | ( | ) | ( | ) | |||||||
Investment income, net | |||||||||||
Other income, net | |||||||||||
Income before income taxes | $ | $ | $ |
(a) | Includes corporate overhead costs, such as employee compensation and related benefits. 2018 also includes the impact of legal reserves for a settlement of the FI Case of $ |
Year Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
Wendy’s International | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Global Real Estate & Development | |||||||||||
Total net income of equity method investments | $ | $ | $ |
2019 Quarter Ended (a) | |||||||||||||||
March 31 | June 30 | September 29 | December 29 | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Operating profit | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic income per share | $ | $ | $ | $ | |||||||||||
Diluted income per share | $ | $ | $ | $ |
2018 Quarter Ended (b) | |||||||||||||||
April 1 | July 1 | September 30 | December 30 | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Operating profit | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic income per share | $ | $ | $ | $ | |||||||||||
Diluted income per share | $ | $ | $ | $ |
(a) | The Company’s consolidated statements of operations in fiscal 2019 were significantly impacted by investment income, net, franchise support and other costs, reorganization and realignment costs and loss on early extinguishment of debt. The pre-tax impact of investment income, net for the fourth quarter was $ |
(b) | The Company’s consolidated statements of operations in fiscal 2018 were significantly impacted by investment income, net, reorganization and realignment costs, loss on early extinguishment of debt and legal reserves for the FI Case. The pre-tax impact of investment income, net for the third quarter was $ |
2. | Financial Statement Schedules: |
3. | Exhibits: |
EXHIBIT NO. | DESCRIPTION |
2.1 | |
2.2 | |
2.3 | |
2.4 | |
3.1 | |
3.2 | |
4.1 | |
4.2 | |
4.3 | |
4.4 | |
4.5 | |
4.6 | |
4.7 |
EXHIBIT NO. | DESCRIPTION |
4.8 | |
10.1 | |
10.2 | |
10.3 | |
10.4 | |
10.5 | |
10.6 | |
10.7 | |
10.8 | |
10.9 | |
10.10 | |
10.11 | |
10.12 | |
10.13 | |
10.14 | |
10.15 | |
10.16 | |
10.17 |
EXHIBIT NO. | DESCRIPTION |
10.18 | |
10.19 | |
10.20 | |
10.21 | |
10.22 | |
10.23 | |
10.24 | |
10.25 | |
10.26 | |
10.27 | |
10.28 | |
10.29 | |
10.30 | |
10.31 |
EXHIBIT NO. | DESCRIPTION |
10.32 | |
10.33 | |
10.34 | |
10.35 | |
10.36 | |
10.37 | |
10.38 | |
10.39 | |
10.40 | |
10.41 | |
10.42 | |
10.43 | |
21.1 | |
23.1 | |
31.1 | |
31.2 | |
32.1 | |
101 | The following financial information from The Wendy’s Company’s Annual Report on Form 10-K for the year ended December 29, 2019 formatted in Inline eXtensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. |
104 | The cover page from The Wendy’s Company’s Annual Report on Form 10-K for the year ended December 29, 2019, formatted in Inline XBRL and contained in Exhibit 101. |
* | Filed herewith. |
** | Identifies a management contract or compensatory plan or arrangement. |
Instruments defining the rights of holders of certain issues of long-term debt of the Company and its consolidated subsidiaries have not been filed as exhibits to this Form 10-K because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish a copy of each of such instruments to the Commission upon request. |
THE WENDY’S COMPANY (Registrant) | |
February 26, 2020 | By: /s/ TODD A. PENEGOR |
Todd A. Penegor | |
President and Chief Executive Officer |
Signature | Titles | |
/s/ TODD A. PENEGOR | President, Chief Executive Officer and Director | |
(Todd A. Penegor) | (Principal Executive Officer) | |
/s/ GUNTHER PLOSCH | Chief Financial Officer | |
(Gunther Plosch) | (Principal Financial Officer) | |
/s/ LEIGH A. BURNSIDE | Senior Vice President, Finance and Chief Accounting Officer | |
(Leigh A. Burnside) | (Principal Accounting Officer) | |
/s/ NELSON PELTZ | Chairman and Director | |
(Nelson Peltz) | ||
/s/ PETER W. MAY | Vice Chairman and Director | |
(Peter W. May) | ||
/s/ KRISTIN A. DOLAN | Director | |
(Kristin A. Dolan) | ||
/s/ KENNETH W. GILBERT | Director | |
(Kenneth W. Gilbert) | ||
/s/ DENNIS M. KASS | Director | |
(Dennis M. Kass) | ||
/s/ JOSEPH A. LEVATO | Director | |
(Joseph A. Levato) | ||
/s/ MICHELLE J. MATHEWS-SPRADLIN | Director | |
(Michelle J. Mathews-Spradlin) | ||
/s/ MATTHEW H. PELTZ | Director | |
(Matthew H. Peltz) | ||
/s/ PETER H. ROTHSCHILD | Director | |
(Peter H. Rothschild) | ||
/s/ ARTHUR B. WINKLEBLACK | Director | |
(Arthur B. Winkleblack) |
By: | |
Name: | |
Title: |
SUBSIDIARY | STATE OR JURISDICTION UNDER WHICH ORGANIZED |
Wendy’s Restaurants, LLC | Delaware |
Wendy’s International, LLC | Ohio |
Scioto Insurance Company | Vermont |
Wendy’s Global Holdings C.V. | Netherlands |
Wendy’s Global Financing Partner, LLC | Delaware |
Wendy’s Global Financing LP | Ontario |
Wendy’s Ireland Financing Ltd. | Ireland |
Wendy’s Singapore Pte. Ltd. | Singapore |
Wendy’s Brazil Holdings Partner, LLC | Delaware |
Wendy’s Brasil Servicios de Consultoria em Restaurantes Ltda. | Brazil |
Wendy’s Netherlands B.V. | Netherlands |
Wendy’s Netherlands Holdings B.V. | Netherlands |
Wendy’s Restaurants of Canada Inc. | Ontario |
Wendy’s Canadian Advertising Program, Inc. | Canada |
TIMWEN Partnership (1) | Ontario |
Wendy’s Global Holdings Partner, LLC | Delaware |
Wendy’s Restaurants of U.K. Limited | United Kingdom |
Wendy’s Old Fashioned Hamburgers of New York, LLC | Ohio |
Wendy’s Restaurants of New York, LLC | Delaware |
Wendy’s International Finance, Inc. | Ohio |
Wendy’s Digital, LLC | Delaware |
Oldemark LLC | Delaware |
Wendy’s SPV Guarantor, LLC | Delaware |
Wendy’s Funding, LLC | Delaware |
Quality Is Our Recipe, LLC | Delaware |
Wendy’s Properties, LLC | Delaware |
Wendy Restaurant, Inc. | Delaware |
The Wendy’s National Advertising Program, Inc. | Ohio |
256 Gift Card Inc. | Tennessee |
Wendy’s Technology, LLC | Delaware |
SEPSCO, LLC | Delaware |
TXL Corp. | South Carolina |
Home Furnishing Acquisition Corporation | Delaware |
RCAC, LLC | Delaware |
Citrus Acquisition Corporation | Florida |
Adams Packing Association, Inc. | Delaware |
(1) | 50% owned by Wendy’s Restaurants of Canada Inc. |
1. | I have reviewed this annual report on Form 10-K 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 annual report on Form 10-K 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. | the Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Income Per Share |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Per Share | Income Per Share Basic income per share for 2019, 2018 and 2017 was computed by dividing net income amounts by the weighted average number of common shares outstanding. The weighted average number of shares used to calculate basic and diluted income per share were as follows:
Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 2,518, 1,520 and 1,168 for 2019, 2018 and 2017, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.
|
Goodwill And Other Intangible Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill and Other Intangible Assets Goodwill activity for 2019 and 2018 was as follows:
_______________
As discussed in Note 26, the realignment of our management and operating structure resulted in a change in our operating segments and reporting units as of December 29, 2019. We reallocated goodwill to the new reporting units using a relative fair value approach. In addition, we completed a quantitative assessment of any potential goodwill impairment for our previous North America reporting unit immediately prior to the reallocation and determined the reporting unit was not impaired. The following table sets forth the reallocation of goodwill to the Company’s segments as of December 29, 2019:
The following is a summary of the components of other intangible assets and the related amortization expense:
|
Quarterly Financial Information (Unaudited) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited) The tables below set forth summary unaudited consolidated quarterly financial information for 2019 and 2018. The Company reports on a fiscal year typically consisting of 52 or 53 weeks ending on the Sunday closest to December 31. All of the Company’s fiscal quarters in 2019 and 2018 contained 13 weeks.
_______________
(b) The Company’s consolidated statements of operations in fiscal 2018 were significantly impacted by investment income, net, reorganization and realignment costs, loss on early extinguishment of debt and legal reserves for the FI Case. The pre-tax impact of investment income, net for the third quarter was $450,133 and included the sale of our remaining ownership interest in Inspire Brands (see Note 8 for further information). The pre-tax impact of reorganization and realignment costs for the first, second, third and fourth quarters was $2,626, $3,124, $941 and $2,377, respectively (see Note 5 for further information). The pre-tax impact of loss on early extinguishment of debt for the first quarter was $11,475 (see Note 12 for further information). The pre-tax impact of legal reserves for the FI Case for the fourth quarter was $27,500 (see Note 23 for further information).
|
Segment Information Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Segment Reporting, Revenue Reconciling Item | |||||||||||
Total revenues | $ 427,191 | $ 437,880 | $ 435,348 | $ 408,583 | $ 397,820 | $ 400,550 | $ 411,002 | $ 380,564 | $ 1,709,002 | $ 1,589,936 | $ 1,223,408 |
Wendy's U.S. | |||||||||||
Segment Reporting, Revenue Reconciling Item | |||||||||||
Total revenues | 1,404,307 | 1,312,491 | 986,738 | ||||||||
Wendy's International | |||||||||||
Segment Reporting, Revenue Reconciling Item | |||||||||||
Total revenues | 68,198 | 67,630 | 43,696 | ||||||||
Global Real Estate & Development | |||||||||||
Segment Reporting, Revenue Reconciling Item | |||||||||||
Total revenues | $ 236,497 | $ 209,815 | $ 192,974 |
Legal and Environmental Matters |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Loss Contingency [Abstract] | |
Legal and Environmental Matters | Legal and Environmental Matters The Company is involved in litigation and claims incidental to our current and prior businesses. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for continuing operations for all of our legal and environmental matters, including the accrual that we recorded for the legal proceedings related to a cybersecurity incident as described below. See Note 11 for further information on the accrual. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period. The Company was named as a defendant in putative class action lawsuits alleging, among other things, that the Company failed to safeguard customer credit card information and failed to provide notice that credit card information had been compromised in connection with the cybersecurity incidents described herein. Jonathan Torres and other consumers filed an action in the U.S. District Court for the Middle District of Florida (the “Torres Case”). On August 23, 2018, the court preliminarily approved a class-wide settlement of the Torres Case. On February 26, 2019, the court granted final approval of the settlement agreement. At this time, the Torres Case has been dismissed with prejudice (with no appeal taken), all claims and other amounts payable per the terms of the settlement agreement have been paid, and the matter is considered closed. Certain financial institutions also filed class actions lawsuits in the U.S. District Court for the Western District of Pennsylvania, which seek to certify a nationwide class of financial institutions that issued payment cards that were allegedly impacted in connection with the cybersecurity incidents described herein. Those cases were consolidated into a single case (the “FI Case”). On February 26, 2019, the court preliminarily approved a class-wide settlement of the FI Case. On November 6, 2019, the court granted final approval of the settlement agreement. Under the terms of the settlement agreement, a settlement class of financial institutions received $50,000, inclusive of attorneys’ fees and costs. After exhaustion of applicable insurance, the Company paid approximately $24,650 of this amount in January 2020. In exchange, the Company and its franchisees received a full release of all claims that have or could have been brought by financial institutions who did not opt out of the settlement. During 2018, the Company recorded a liability of $50,000 and insurance receivables of $22,500 for the FI Case. During 2019, as a result of cost savings related to the settlement of the Torres Case, the Company adjusted its insurance receivables for the FI Case to approximately $25,000. See Note 11 for further information. |
System Optimization (Gains) Losses, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Disposition Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
System Optimization | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Disposition Activity | The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
_______________
(c) During 2019, 2018 and 2017, Wendy’s received cash proceeds of $3,448, $1,781 and $10,534, respectively, primarily from the sale of surplus properties. 2017 also includes the recognition of a deferred gain of $375 related to the sale of a share in an aircraft.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of DavCo and NPC Transactions | The following is a summary of the activity recorded as a result of the DavCo and NPC Transactions:
_______________
|
Quarterly Financial Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information (Unaudited) | The tables below set forth summary unaudited consolidated quarterly financial information for 2019 and 2018. The Company reports on a fiscal year typically consisting of 52 or 53 weeks ending on the Sunday closest to December 31. All of the Company’s fiscal quarters in 2019 and 2018 contained 13 weeks.
_______________
(b) The Company’s consolidated statements of operations in fiscal 2018 were significantly impacted by investment income, net, reorganization and realignment costs, loss on early extinguishment of debt and legal reserves for the FI Case. The pre-tax impact of investment income, net for the third quarter was $450,133 and included the sale of our remaining ownership interest in Inspire Brands (see Note 8 for further information). The pre-tax impact of reorganization and realignment costs for the first, second, third and fourth quarters was $2,626, $3,124, $941 and $2,377, respectively (see Note 5 for further information). The pre-tax impact of loss on early extinguishment of debt for the first quarter was $11,475 (see Note 12 for further information). The pre-tax impact of legal reserves for the FI Case for the fourth quarter was $27,500 (see Note 23 for further information).
|
Guarantees and Other Commitments and Contingencies Other Loan Guarantees (Details) - New store development and equipment financing $ in Thousands |
Dec. 29, 2019
USD ($)
|
---|---|
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 6 |
Other liabilities | |
Guarantor Obligations | |
Guarantor Obligations, Current Carrying Value | $ 1 |
Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity during 2019:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | The weighted average grant date fair value of stock options was determined using the following assumptions:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes activity of Restricted Shares during 2019:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Performance Share Awards, Valuation Assumptions | The input variables are noted in the table below:
_______________ (a) The Monte Carlo method assumes a reinvestment of dividends.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Performance-based Units Activity | The following table summarizes activity of performance shares at Target during 2019:
_______________
(b) Performance condition awards and market condition awards exclude the vesting of an additional 169 and 157 shares, respectively, which resulted from the performance of the awards exceeding Target.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Total share-based compensation and the related income tax benefit recognized in the Company’s consolidated statements of operations were as follows:
_______________ (a) 2019, 2018 and 2017 include $396, $319 and $197, respectively, related to retention awards in connection with the Company’s G&A realignment plan, which is included in “Reorganization and realignment costs.” See Note 5 for further information.
|
Leases Supplemental Cash Flow and Non-cash Information (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
| |
Cash Flow, Operating Activities, Lessee | |
Operating cash flows from finance leases | $ 39,887 |
Operating cash flows from operating leases | 91,824 |
Cash Flow, Financing Activities, Lessee | |
Financing cash flows from finance leases | 6,835 |
Lessee, Lease, Description | |
Right-of-use assets obtained in exchange for finance lease liabilities | 50,061 |
Right-of-use asset obtained in exchange for operating lease liabilities | $ 15,411 |
Leases Components of Prior Year Lease Income (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Leases [Abstract] | ||
Interest income from direct financing leases | $ 27,638 | $ 22,869 |
Operating Leased Assets | ||
Rental income, Minimum rentals | 184,154 | 169,857 |
Rental income, Contingent rentals | 19,143 | 20,246 |
Total rental income | 203,297 | 190,103 |
Sublease income | $ 138,363 | $ 126,814 |
Transactions with Related Parties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions by Related Party | The following is a summary of transactions between the Company and its related parties:
_______________ Transactions with QSCC
Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend. Wendy’s recorded its share of patronage dividends of $504, $470 and $987 in 2019, 2018 and 2017, respectively, which are included as a reduction of “Cost of sales.”
TimWen lease and management fee payments (c) A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $16,867, $13,256 and $12,572 under these lease agreements during 2019, 2018 and 2017, respectively. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $207, $212 and $212 during 2019, 2018 and 2017, respectively, which has been included as a reduction to “General and administrative.”
|
System Optimization (Gains) Losses, Net Assets Held for Sale (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Long Lived Assets Held-for-sale | ||
Assets Held for sale | $ 1,437 | $ 2,435 |
Contract Balances (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
|
Contract balances | ||
Receivables, which are included in Accounts and notes receivable, net | $ 39,188 | $ 40,300 |
Receivables, which are included in Advertising funds restricted assets | 54,394 | 47,332 |
Deferred franchise fees at beginning of period | 102,205 | 102,492 |
Revenue recognized during the period | (9,487) | (9,641) |
New deferrals due to cash received and other | 7,971 | 9,354 |
Deferred franchise fees at end of period | 100,689 | 102,205 |
Deferred franchisee fees, current | 8,899 | 9,973 |
Deferred franchise fees, noncurrent | $ 91,790 | $ 92,232 |
Retirement Benefit Plans Defined Benefit Plans (Details) $ in Thousands |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Jul. 31, 2011
USD ($)
|
Dec. 29, 2019
USD ($)
|
Dec. 30, 2018
USD ($)
Pension_Plans
|
|
G&A Realignment | Termination of defined benefit plans | |||
Defined Benefit Plan Disclosure | |||
Restructuring and Related Cost, Incurred Cost | $ 1,335 | ||
Pension Plans, Defined Benefit | |||
Defined Benefit Plan Disclosure | |||
Defined Benefit Plans, Number of Plans | Pension_Plans | 2 | ||
Defined Benefit Plan, Amortization of Prior Service Cost | $ 0 | ||
Arby's Restaurant Group, Inc | Pension Plans, Defined Benefit | |||
Defined Benefit Plan Disclosure | |||
Defined Benefit Plan, Proceeds Received from Buyer for Unfunded Liability | $ 400 |
Properties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties |
|
Reorganization and Reorganization Costs (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following is a summary of the initiatives included in “Reorganization and realignment costs:”
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IT Realignment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following is a summary of the activity recorded as a result of the IT realignment plan:
_______________ (a) Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our IT realignment plan.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The table below presents a rollforward of our accruals for the plan, which are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $8,025 and $599 as of December 29, 2019, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G&A Realignment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following is a summary of the activity recorded as a result of the G&A realignment plan:
_______________
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,504 and $855 as of December 29, 2019, respectively, and $6,280 and $1,044 as of December 30, 2018, respectively. The tables below present a rollforward of our accruals for the plan.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
System Optimization | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following is a summary of the costs recorded as a result of our system optimization initiative:
_______________
(b) Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” and “Other liabilities.” As of both December 29, 2019 and December 30, 2018, no accrual remained.
|
Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
_______________
(c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets and liabilities (other than cash and cash equivalents) measure at fair value on a nonrecurring basis |
|
Leases Components of Lease Cost (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
| |
Finance Lease, Cost | |
Amortization of finance lease assets | $ 11,241 |
Interest on finance lease liabilities | 37,012 |
Total finance lease cost | 48,253 |
Lease, Cost | |
Operating lease cost | 90,537 |
Variable lease cost | 58,978 |
Short-term lease cost | 4,717 |
Total operating lease cost | 154,232 |
Total lease cost | 202,485 |
Franchise rental expense | |
Lease, Cost | |
Franchise rental expense | 123,899 |
Cost of sales | |
Lease, Cost | |
Total operating lease cost | 27,419 |
Executory costs paid by lessee | |
Lease, Cost | |
Variable lease cost | $ 37,758 |
Investments Other Investments in Equity Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Oct. 31, 2019 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Proceeds from sale of investment | $ 24,496 | $ 450,000 | $ 4,111 | |
Gain on sale of investment | $ 24,496 | $ 450,000 | $ 2,570 | |
Other investments in equity securities | ||||
Proceeds from sale of investment | $ 25,000 | |||
Other investments in equity securities | Investment Income | ||||
Gain on sale of investment | 24,366 | |||
Other investments in equity securities | General and administrative | ||||
Gain on sale of investment | $ 634 |
Long-Term Debt Assets Pledged as Collateral (Details) $ in Thousands |
Dec. 29, 2019
USD ($)
|
---|---|
Assets Pledged as Collateral | |
Assets pledged as collateral | $ 1,232,149 |
Cash and cash equivalents | |
Assets Pledged as Collateral | |
Assets pledged as collateral | 33,042 |
Restricted Cash and other assets (including long-term) | |
Assets Pledged as Collateral | |
Assets pledged as collateral | 34,214 |
Accounts and notes receivable, net | |
Assets Pledged as Collateral | |
Assets pledged as collateral | 31,879 |
Inventories | |
Assets Pledged as Collateral | |
Assets pledged as collateral | 3,859 |
Properties | |
Assets Pledged as Collateral | |
Assets pledged as collateral | 67,550 |
Other intangible assets | |
Assets Pledged as Collateral | |
Assets pledged as collateral | $ 1,061,605 |
Summary of Significant Accounting Policies Other Intangible Assets and Deferred Financing Costs (Details) |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Computer software | Minimum | |
Finite-Lived Intangible Assets | |
Finite-Lived Intangible Asset, Useful Life | 1 year |
Computer software | Maximum | |
Finite-Lived Intangible Assets | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Reacquired rights under franchise agreements | Minimum | |
Finite-Lived Intangible Assets | |
Finite-Lived Intangible Asset, Useful Life | 4 years |
Reacquired rights under franchise agreements | Maximum | |
Finite-Lived Intangible Assets | |
Finite-Lived Intangible Asset, Useful Life | 20 years |
Franchise agreements | |
Finite-Lived Intangible Assets | |
Finite-Lived Intangible Asset, Useful Life | 20 years |
Income Taxes (Provision For) Benefit from Continuing Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Current: | |||
U.S. federal | $ (18,421) | $ (109,078) | $ (13,092) |
State | (6,093) | (2,661) | (4,055) |
Foreign | (9,190) | (9,630) | (9,173) |
Current tax provision | (33,704) | (121,369) | (26,320) |
Deferred: | |||
U.S. federal | 1,585 | 5,071 | 127,592 |
State | (2,449) | 441 | (7,729) |
Foreign | 27 | 1,056 | (533) |
Deferred tax (provision) benefit | (837) | 6,568 | 119,330 |
Income tax (provision) benefit | $ (34,541) | $ (114,801) | $ 93,010 |
Revenue (Notes) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer | Revenue Nature of Goods and Services The Company generates revenues from sales at Company-operated restaurants and earns fees and rental income from franchised restaurants. Revenues are recognized upon delivery of food to the customer at Company-operated restaurants or upon the fulfillment of terms outlined in the franchise agreement for franchised restaurants. The franchise agreement provides the franchisee the right to construct, own and operate a Wendy’s restaurant upon a site accepted by Wendy’s and to use the Wendy’s system in connection with the operation of the restaurant at that site. The franchise agreement generally provides for a 20-year term and a 10-year renewal subject to certain conditions. The initial term may be extended up to 25 years and the renewal extended up to 20 years for qualifying restaurants under certain new restaurant development and reimaging programs. The franchise agreement requires that the franchisee pay a royalty based on a percentage of sales at the franchised restaurant, as well as make contributions to the Advertising Funds based on a percentage of sales. Wendy’s may offer development incentive programs from time to time that provide for a discount or lesser royalty amount or Advertising Fund contribution for a limited period of time. The agreement also typically requires that the franchisee pay Wendy’s a technical assistance fee. The technical assistance fee is used to defray some of the costs to Wendy’s for training, start-up and transitional services related to new and existing franchisees acquiring restaurants and in the development and opening of new restaurants. Wendy’s also enters into development agreements with certain franchisees. The development agreement generally provides the franchisee with the right to develop a specified number of new Wendy’s restaurants using the Image Activation design within a stated, non-exclusive territory for a specified period, subject to the franchisee meeting interim new restaurant development requirements. Wendy’s owns and leases sites from third parties, which it leases and/or subleases to franchisees. Noncancelable lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. The initial lease term for properties leased or subleased to franchisees is generally set to be coterminous with the initial 20-year term of the related franchise agreement and any renewal term is coterminous with the 10-year renewal term of the related franchise agreement. Royalties and contributions to the Advertising Funds are generally due within the month subsequent to which the revenue was generated through sales at the franchised restaurant. Technical assistance fees and renewal fees are generally due upon execution of the related franchise agreement. Rental income is due in accordance with the terms of each lease, which is generally at the beginning of each month. Disaggregation of Revenue The following tables disaggregate revenue by segment and source for 2019, 2018 and 2017:
Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:
_______________
Significant changes in deferred franchise fees are as follows:
Anticipated Future Recognition of Deferred Franchise Fees The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
|
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Net income | $ 136,940 | $ 460,115 | $ 194,029 |
Other comprehensive income (loss), net: | |||
Foreign currency translation adjustment | 7,845 | (16,524) | 15,150 |
Change in unrecognized pension loss; Unrealized gains arising during the period | 0 | 156 | 156 |
Change in unrecognized pension loss; Income tax provision | 0 | (39) | (60) |
Change in unrecognized pension loss; Final settlement of pension liability | 0 | 932 | 0 |
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax | 0 | 1,049 | 96 |
Effect of cash flow hedges; Reclassification of losses into Net Income | 0 | 0 | 2,894 |
Effect of cash flow hedges; Income tax provision | 0 | 0 | (1,097) |
Effect of cash flow hedges; Reclassification of losses into Net Income, net of tax | 0 | 0 | 1,797 |
Other comprehensive income (loss), net | 7,845 | (15,475) | 17,043 |
Comprehensive income | $ 144,785 | $ 444,640 | $ 211,072 |
Geographic Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Revenues from External Customers and Long-Lived Assets | |||||||||||
Revenues | $ 427,191 | $ 437,880 | $ 435,348 | $ 408,583 | $ 397,820 | $ 400,550 | $ 411,002 | $ 380,564 | $ 1,709,002 | $ 1,589,936 | $ 1,223,408 |
Properties | 977,000 | 1,023,267 | 977,000 | 1,023,267 | 1,062,869 | ||||||
U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Revenues | 1,606,619 | 1,495,639 | 1,154,873 | ||||||||
Properties | 941,607 | 990,992 | 941,607 | 990,992 | 1,032,151 | ||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Revenues | 80,903 | 74,626 | 50,431 | ||||||||
Properties | 35,283 | 32,155 | 35,283 | 32,155 | 30,586 | ||||||
Other International | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Revenues | 21,480 | 19,671 | 18,104 | ||||||||
Properties | $ 110 | $ 120 | $ 110 | $ 120 | $ 132 |
Transactions with Related Parties |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Related Parties | Transactions with Related Parties The following is a summary of transactions between the Company and its related parties:
_______________ Transactions with QSCC
Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend. Wendy’s recorded its share of patronage dividends of $504, $470 and $987 in 2019, 2018 and 2017, respectively, which are included as a reduction of “Cost of sales.”
TimWen lease and management fee payments (c) A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $16,867, $13,256 and $12,572 under these lease agreements during 2019, 2018 and 2017, respectively. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $207, $212 and $212 during 2019, 2018 and 2017, respectively, which has been included as a reduction to “General and administrative.”
|
Guarantees and Other Commitments and Contingencies Insurance (Details) $ in Thousands |
Dec. 29, 2019
USD ($)
|
---|---|
Other commitments | |
Accrued Risk Insurance | $ 20,588 |
Accrued Health Insurance | 2,349 |
Insurance Claims | |
Other commitments | |
Loss Contingency, Range of Possible Loss per Occurrence, Maximum | $ 500 |
Income Taxes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income before income taxes is set forth below:
_______________
The (provision for) benefit from income taxes is set forth below:
Deferred tax assets (liabilities) are set forth below:
_______________
The amounts and expiration dates of net operating loss and tax credit carryforwards are as follows:
The Company’s valuation allowances of $45,183 and $42,175 as of December 29, 2019 and December 30, 2018, respectively, relate to foreign and state tax credit carryforwards and net operating loss carryforwards. Valuation allowances increased $3,008 and $35,895 during 2019 and 2017, respectively, and decreased $5,120 during 2018. The change during 2017 was primarily a result of the Tax Cuts and Jobs Act (the “Tax Act”) and our system optimization initiative. The reduction in the U.S. corporate rate from 35% to 21% decreases our ability to utilize foreign tax credit carryforwards after 2017 and we expect them to expire unused. The relative presence of Company-operated restaurants in various states impacts expected future state taxable income available to utilize state net operating loss carryforwards. Major Tax Legislation On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code that affects 2017 and subsequent years, including but not limited to (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, (2) bonus depreciation that will allow for full expensing of qualified property, (3) reducing the U.S. federal corporate tax rate from 35% to 21% in years 2018 and forward, (4) a tax on global intangible low-taxed income (“GILTI”) and (5) limitations on the deductibility of certain executive compensation. During 2017, we recorded a net tax benefit of $140,379 primarily consisting of a benefit of $164,893 for the impact of the corporate rate reduction on our net deferred tax liabilities, partially offset by a net expense of $22,209 for the international-related provisions of the Tax Act. In 2018, we recorded a net tax expense of $2,159 consisting of $2,454 related to the impact of the corporate rate reduction on our net deferred tax liabilities and state taxes and a net expense of $991 related to the limitations on the deductibility of certain executive compensation, partially offset by $1,286 for the net benefit of foreign tax credits. _______________ The current portion of refundable income taxes was $13,555 and $14,475 as of December 29, 2019 and December 30, 2018, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of December 29, 2019 and December 30, 2018. The reconciliation of income tax computed at the U.S. federal statutory rate of 21% for 2019 and 2018 and 35% for 2017 to reported income tax is set forth below:
_______________
2017 primarily relates to certain state net operating loss carryforwards, previously considered worthless, that existed at the beginning of the year. The Company changed its judgment during 2017 regarding the likelihood of the utilization of these carryforwards. Because of this change, the Company recognized a deferred tax asset of $16,643, net of federal benefit, which was partially offset by an expense reported in “Valuation allowances” of $13,667.
The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”). As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our tax returns for fiscal years 2009 through 2017 have been settled. The statute of limitations for the Company’s state tax returns vary, but generally the Company’s state income tax returns from its 2016 fiscal year and forward remain subject to examination. We believe that adequate provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations. Unrecognized Tax Benefits As of December 29, 2019, the Company had unrecognized tax benefits of $22,323, which, if resolved favorably would reduce income tax expense by $17,987. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
The increase in unrecognized tax benefits in 2019 was primarily related to the uncertainty of the income tax consequences of a cash settlement related to a previously held investment. The addition of unrecognized tax benefits in 2018 was primarily related to the sale of our ownership interest in Inspire Brands, and the reduction of unrecognized benefits in 2018 was primarily related to settlements with various taxing jurisdictions, including amended returns that were filed in 2017. The addition of unrecognized tax benefits in 2017 was primarily related to the filing of amended returns in various jurisdictions, as well as an unfavorable court decision which caused us to change our judgment about the technical merits of a filing position. During 2020, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $1,661 due primarily to the lapse of statutes of limitations and expected settlements. During 2019, 2018 and 2017, the Company recognized $(489), $(12) and $161 of (income) expense for interest and $81, $309 and $106 of income for penalties, respectively, related to uncertain tax positions. The Company has $946 and $1,428 accrued for interest and $118 and $199 accrued for penalties as of December 29, 2019 and December 30, 2018, respectively.
|
Investment Income, Net (Notes) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Income, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Income, Net | Investment Income, Net
_______________
(b) During 2018, the Company sold its remaining ownership interest in Inspire Brands for $450,000. See Note 8 for further information.
|
Guarantees and Other Commitments and Contingencies Marketing Agreement (Details) |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
Broadcasters
| |
Long-term Purchase Commitment | |
Number of National Broadcasters | Broadcasters | 2 |
Marketing Agreement | |
Long-term Purchase Commitment | |
Purchase Obligation, Purchases During Period | $ 11,000 |
Purchase Obligation, Due in Next Twelve Months | 15,500,000 |
Purchase Obligation, Due in Second Year | 12,400,000 |
Purchase Obligation, Due in Third Year | 12,900,000 |
Purchase Obligation, Due in Fourth Year | 13,400,000 |
Purchase Obligation, Due in Fifth Year | $ 12,700,000 |
Leases Components of Operating Lease Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Operating Leased Assets | ||
Rental expense, Minimum rentals | $ 95,749 | $ 90,889 |
Rental expense, Contingent rentals | 18,971 | 19,021 |
Total rental expense | $ 114,720 | $ 109,910 |
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | Income before income taxes is set forth below:
_______________
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax (Expense) Benefit | The (provision for) benefit from income taxes is set forth below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets (liabilities) are set forth below:
_______________
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Operating Loss and Tax Credit Carryforwards | The amounts and expiration dates of net operating loss and tax credit carryforwards are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of income tax computed at the U.S. federal statutory rate of 21% for 2019 and 2018 and 35% for 2017 to reported income tax is set forth below:
_______________
2017 primarily relates to certain state net operating loss carryforwards, previously considered worthless, that existed at the beginning of the year. The Company changed its judgment during 2017 regarding the likelihood of the utilization of these carryforwards. Because of this change, the Company recognized a deferred tax asset of $16,643, net of federal benefit, which was partially offset by an expense reported in “Valuation allowances” of $13,667.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unrecognized Tax Benefits Roll Forward | As of December 29, 2019, the Company had unrecognized tax benefits of $22,323, which, if resolved favorably would reduce income tax expense by $17,987. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
|
Goodwill And Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Goodwill activity for 2019 and 2018 was as follows:
_______________
(b) 2019 includes an adjustment to the fair value of net assets acquired in connection with the acquisition of franchised restaurants during 2018. See Note 4 for further information.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill, Segment Allocation | The following table sets forth the reallocation of goodwill to the Company’s segments as of December 29, 2019:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Finite Lived And Indefinite Lived Intangible Assets | The following is a summary of the components of other intangible assets and the related amortization expense:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense |
|
Retirement Benefit Plans Executive Plan (Details) - Supplemental Employee Retirement Plans, Defined Benefit - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Liability, Defined Benefit Plan | $ 662 | $ 1,257 |
Deferred Compensation Arrangements, Recorded Liability | $ 774 | $ 444 |
Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | $ 6,999 | $ 4,697 | $ 4,097 |
Restaurants leased or subleased to franchisees | |||
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | 5,308 | 283 | 244 |
Company-operated restaurants | |||
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | 294 | 4,060 | 3,169 |
Surplus properties | |||
Impairment of Long-Lived Assets | |||
Impairment of long-lived assets | $ 1,397 | $ 354 | $ 684 |
Income Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of shares used to calculate basic and diluted income per share | The weighted average number of shares used to calculate basic and diluted income per share were as follows:
|
Investments Indirect Investment in Inspire Brands (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 31, 2018 |
Dec. 30, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
Feb. 28, 2018 |
Dec. 29, 2013 |
Jan. 01, 2012 |
|
Inspire Brands carrying value | $ 639 | $ 639 | $ 639 | |||||
Gain on sale of investment | 24,496 | 450,000 | $ 2,570 | |||||
Income Tax Expense (Benefit) | $ 34,541 | $ 114,801 | $ (93,010) | |||||
Arby's Restaurant Group, Inc | ||||||||
Proceeds from Divestiture of Business, Percentage of Buyer Stock Received | 18.50% | |||||||
Inspire Brands carrying value | $ 0 | |||||||
Inspire Brands, Inc | ||||||||
Percentage of Arby's Stock after Dilutive Effect of Acquisition | 12.30% | |||||||
Gain on sale of investment | $ 450,000 | |||||||
Sale of Other Investments in Equity Securities, Transaction Costs | 55 | |||||||
Income Tax Expense (Benefit) | $ 97,501 | |||||||
Income Taxes Paid | $ 95,038 |
Summary of Significant Accounting Policies Properties and Depreciation and Amortization (Details) |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Office and restaurant equipment | Minimum | |
Properties | |
Property, Plant and Equipment, Useful Life | 3 years |
Office and restaurant equipment | Maximum | |
Properties | |
Property, Plant and Equipment, Useful Life | 20 years |
Transportation equipment | Minimum | |
Properties | |
Property, Plant and Equipment, Useful Life | 3 years |
Transportation equipment | Maximum | |
Properties | |
Property, Plant and Equipment, Useful Life | 15 years |
Buildings and improvements | Minimum | |
Properties | |
Property, Plant and Equipment, Useful Life | 7 years |
Buildings and improvements | Maximum | |
Properties | |
Property, Plant and Equipment, Useful Life | 30 years |
Income Taxes Income from Operations before Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Income before income taxes | |||
Domestic | $ 160,474 | $ 560,776 | $ 86,892 |
Foreign | 11,007 | 14,140 | 14,127 |
Income before income taxes | $ 171,481 | $ 574,916 | $ 101,019 |
Summary of Significant Accounting Policies Leases (Details) |
Dec. 29, 2019 |
---|---|
Minimum | |
Operating Leased Assets | |
Lessee, Operating Lease, Term of Contract | 15 years |
Maximum | |
Operating Leased Assets | |
Lessee, Operating Lease, Term of Contract | 20 years |
Goodwill And Other Intangible Assets Schedule of Goodwill by Segment (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Schedule of Goodwill, Segment Allocation | |||
Goodwill | $ 755,911 | $ 747,884 | $ 743,334 |
Wendy's U.S. | |||
Schedule of Goodwill, Segment Allocation | |||
Goodwill | 602,491 | ||
Wendy's International | |||
Schedule of Goodwill, Segment Allocation | |||
Goodwill | 30,872 | ||
Global Real Estate & Development | |||
Schedule of Goodwill, Segment Allocation | |||
Goodwill | $ 122,548 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies | Summary of Significant Accounting Policies Corporate Structure The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC and its subsidiaries (“Wendy’s”). Wendy’s franchises and operates Wendy’s quick-service restaurants specializing in hamburger sandwiches throughout the United States of America (“U.S.”) and also franchises Wendy’s quick-service restaurants in 30 foreign countries and U.S. territories. At December 29, 2019, Wendy’s operated and franchised 357 and 6,431 restaurants, respectively. As a result of the realignment of our management and operating structure during 2019 as discussed in Note 5, the Company adopted a new segment reporting structure beginning in the fourth quarter of 2019. As part of this new structure, the Company made the following changes: (1) it combined its Canadian business with its International segment and (2) it separated its real estate and development operations into its own segment. The Company is now comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Certain prior period financial information has been revised to align with the new segment reporting structure. See Note 26 for further information. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all of the Company’s subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Fiscal Year The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2019” or “2019,” (2) “the year ended December 30, 2018” or “2018” and (3) “the year ended December 31, 2017” or “2017,” all of which consisted of 52 weeks. Reclassifications Certain balance sheet reclassifications have been made to the prior year presentation to conform to the current year presentation. See “New Accounting Standards Adopted” below for further information. Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Company’s cash and cash equivalents principally consist of cash in bank and money market mutual fund accounts and are primarily not in Federal Deposit Insurance Corporation insured accounts. We believe that our vulnerability to risk concentrations in our cash equivalents is mitigated by (1) our policies restricting the eligibility, credit quality and concentration limits for our placements in cash equivalents and (2) insurance from the Securities Investor Protection Corporation of up to $500 per account, as well as supplemental private insurance coverage maintained by substantially all of our brokerage firms, to the extent our cash equivalents are held in brokerage accounts. Restricted Cash In accordance with the Company’s securitized financing facility, certain cash accounts have been established with the trustee for the benefit of the trustee and the noteholders and are restricted in their use. Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of principal, interest and commitment fees required for the Company’s senior secured notes. Restricted cash also includes cash collected by the Company’s national advertising funds for the U.S. and Canada (the “Advertising Funds”), usage of which is restricted for advertising activities. Refer to Note 7 for further information. Accounts and Notes Receivable, Net Accounts and notes receivable, net, consist primarily of royalties, rents, property taxes and franchise fees due principally from franchisees, credit card receivables, insurance receivables and refundable income taxes. The need for an allowance for doubtful accounts is reviewed on a specific identification basis based upon past due balances and the financial strength of the obligor. Inventories The Company’s inventories are stated at the lower of cost or net realizable value, with cost determined in accordance with the first-in, first-out method and consist primarily of restaurant food items and paper supplies. Properties and Depreciation and Amortization Properties are stated at cost, including capitalized internal costs of employees to the extent such employees are dedicated to specific restaurant construction projects, less accumulated depreciation and amortization. Depreciation and amortization of properties is computed principally on the straight-line basis using the following estimated useful lives of the related major classes of properties: 3 to 20 years for office and restaurant equipment (including technology), 3 to 15 years for transportation equipment and 7 to 30 years for buildings and improvements. When the Company commits to a plan to cease using certain properties before the end of their estimated useful lives, depreciation expense is accelerated to reflect the use of the assets over their shortened useful lives. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. The Company reviews properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If such review indicates an asset group may not be recoverable, an impairment loss is recognized for the excess of the carrying amount over the fair value of an asset group to be held and used or over the fair value less cost to sell of an asset to be disposed. See “Impairment of Long-Lived Assets” below for further information. The Company classifies assets as held for sale and ceases depreciation of the assets when there is a plan for disposal of the assets and those assets meet the held for sale criteria. Assets held for sale are included in “Prepaid expenses and other current assets” in the consolidated balance sheets. Goodwill Goodwill, representing the excess of the cost of an acquired entity over the fair value of the acquired net assets, is not amortized. Goodwill associated with our Company-operated restaurants is reduced as a result of restaurant dispositions based on the relative fair values and is included in the carrying value of the restaurant in determining the gain or loss on disposal. If a Company-operated restaurant is sold within two years of being acquired from a franchisee, the goodwill associated with the acquisition is written off in its entirety. Goodwill has been assigned to reporting units for purposes of impairment testing. The Company tests goodwill for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Our annual impairment test of goodwill may be completed through a qualitative assessment to determine if the fair value of the reporting unit is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment for any reporting units, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value of a reporting unit exceeds its fair value, we perform a two-step quantitative goodwill impairment test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and we must perform step two of the impairment test (measurement). Step two of the impairment test, if necessary, requires the estimation of the fair value for the assets and liabilities of a reporting unit in order to calculate the implied fair value of the reporting unit’s goodwill. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we use, we may be required to recognize goodwill impairment charges in future years. Impairment of Long-Lived Assets Our long-lived assets include (1) properties and related definite-lived intangible assets (e.g., favorable leases) that are leased and/or subleased to franchisees, (2) Company-operated restaurant assets and related definite-lived intangible assets, which include reacquired rights under franchise agreements, and (3) finance and operating lease assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the carrying amount of the asset group to future undiscounted net cash flows expected to be generated through leases and/or subleases or by our individual Company-operated restaurants. If the carrying amount of the long-lived asset group is not recoverable on an undiscounted cash flow basis, then impairment is recognized to the extent that the carrying amount exceeds its fair value and is included in “Impairment of long-lived assets.” Our critical estimates in this review process include the anticipated future cash flows from leases and/or subleases or individual Company-operated restaurants, which is used in assessing the recoverability of the respective long-lived assets. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we used, we may be required to recognize additional impairment charges in future years. Other Intangible Assets Definite-lived intangible assets are amortized on a straight-line basis using the following estimated useful lives of the related classes of intangibles: for favorable leases, the terms of the respective leases, including periods covered by renewal options that the Company as lessee is reasonably assured of exercising; 1 to 5 years for computer software; 4 to 20 years for reacquired rights under franchise agreements; and 20 years for franchise agreements. Trademarks have an indefinite life and are not amortized. The Company reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. Our annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, we test for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. Our estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenues of Company-operated and franchised restaurants and the resulting cash flows. Investments The Company has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). In addition, the Company has a 20% share in a joint venture in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.” Other investments in equity securities, including investments in limited partnerships, in which the Company does not have significant influence, and for which there is not a readily determinable fair value, are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Realized gains and losses are reported as income or loss in the period in which the securities are sold or otherwise disposed. Cash distributions and dividends received that are determined to be returns of capital are recorded as a reduction of the carrying value of our investments and returns on our investments are recorded to “Investment income, net.” The difference between the carrying value of our TimWen equity investment and the underlying equity in the historical net assets of the investee is accounted for as if the investee were a consolidated subsidiary. Accordingly, the carrying value difference is amortized over the estimated lives of the assets of the investee to which such difference would have been allocated if the equity investment were a consolidated subsidiary. To the extent the carrying value difference represents goodwill, it is not amortized. Share-Based Compensation The Company has granted share-based compensation awards to certain employees under several equity plans (the “Equity Plans”). The Company measures the cost of employee services received in exchange for an equity award, which include grants of employee stock options and restricted shares, based on the fair value of the award at the date of grant. Share-based compensation expense is recognized net of estimated forfeitures, determined based on historical experience. The Company recognizes share-based compensation expense over the requisite service period unless the awards are subject to performance conditions, in which case we recognize compensation expense over the requisite service period to the extent performance conditions are considered probable. The Company determines the grant date fair value of stock options using a Black-Scholes-Merton option pricing model (the “Black-Scholes Model”). The grant date fair value of restricted share awards (“RSAs”), restricted share units (“RSUs”) and performance-based awards are determined using the average of the high and low trading prices of our common stock on the date of grant, unless the awards are subject to market conditions, in which case we use a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. Foreign Currency Translation The Company’s primary foreign operations are in Canada where the functional currency is the Canadian dollar. Financial statements of foreign subsidiaries are prepared in their functional currency and then translated into U.S. dollars. Assets and liabilities are translated at the exchange rate as of the balance sheet date and revenues, costs and expenses are translated at a monthly average exchange rate. Net gains or losses resulting from the translation are recorded to the “Foreign currency translation adjustment” component of “Accumulated other comprehensive loss.” Gains and losses arising from the impact of foreign currency exchange rate fluctuations on transactions in foreign currency are included in “General and administrative.” Income Taxes The Company accounts for income taxes under the asset and liability method. A deferred tax asset or liability is recognized whenever there are (1) future tax effects from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (2) operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the years in which those differences are expected to be recovered or settled. Deferred tax assets are recognized to the extent the Company believes these assets will more likely than not be realized. In evaluating the realizability of deferred tax assets, the Company considers all available positive and negative evidence, including the interaction and the timing of future reversals of existing temporary differences, projected future taxable income, recent operating results and tax-planning strategies. When considered necessary, a valuation allowance is recorded to reduce the carrying amount of the deferred tax assets to their anticipated realizable value. The Company records uncertain tax positions on the basis of a two-step process whereby we first determine if it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is then measured for purposes of financial statement recognition as the largest amount of benefit that is greater than 50% likely of being realized upon being effectively settled. Interest accrued for uncertain tax positions is charged to “Interest expense, net.” Penalties accrued for uncertain tax positions are charged to “General and administrative.” Restaurant Acquisitions and Dispositions The Company accounts for the acquisition of restaurants from franchisees using the acquisition method of accounting for business combinations. The acquisition method of accounting involves the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process requires the use of estimates and assumptions to derive fair values and to complete the allocation. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed represents goodwill derived from the acquisition. See “Goodwill” above for further information. In connection with the sale of Company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise, development, relationship and lease agreements. The Company typically sells restaurants’ cash, inventory and equipment and retains ownership or the leasehold interest to the real estate to lease and/or sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as such, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants, technical assistance fees and development fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company obtains third-party evidence to estimate the relative selling price of the stated rent under the lease and/or sublease agreements which is primarily based upon comparable market rents. Based on the Company’s review of the third-party evidence, the Company records favorable or unfavorable lease assets/liabilities with a corresponding offset to the gain or loss on the sale of the restaurants. The cash consideration per restaurant for technical assistance fees and development fees is consistent with the amounts stated in the related franchise agreements which are charged for separate standalone arrangements. The Company recognizes the technical assistance and development fees over the contractual term of the franchise agreements. Future royalty income is also recognized in revenue as earned. See “Revenue Recognition” below for further information. Revenue Recognition “Sales” includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. “Sales” excludes taxes collected from the Company’s customers. Revenue is recognized when the food is purchased by the customer, which is when our performance obligation is satisfied. “Sales” also includes income for gift cards. Gift card payments are recorded as deferred income when received and are recognized as revenue in proportion to actual gift card redemptions. “Franchise royalty revenue and fees” includes royalties, new build technical assistance fees, renewal fees, franchisee-to- franchisee restaurant transfer (“Franchise Flip”) technical assistance fees, Franchise Flip advisory fees and development fees. Royalties from franchised restaurants are based on a percentage of sales of the franchised restaurant and are recognized as earned. New build technical assistance fees, renewal fees and Franchise Flip technical assistance fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Franchise Flip advisory fees include valuation services and fees for selecting pre-approved buyers for Franchise Flips. Franchise Flip advisory fees are paid by the seller and are recognized as revenue at closing of the Franchise Flip transaction. “Advertising funds revenue” includes contributions to the Advertising Funds by franchisees. Revenue related to these contributions is based on a percentage of sales of the franchised restaurants and is recognized as earned. “Franchise rental income” includes rental income from properties owned and leased by the Company and leased or subleased to franchisees. Rental income is recognized on a straight-line basis over the respective operating lease terms. Favorable and unfavorable lease amounts related to the leased and/or subleased properties are amortized to rental income on a straight-line basis over the remaining term of the leases. See “New Accounting Standards Adopted” below for a description of changes to our revenue recognition policies resulting from the adoption of the new accounting guidance for revenue recognition effective January 1, 2018. Cost of Sales Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs relating to Company-operated restaurants. Cost of sales excludes depreciation and amortization expense. Vendor Incentives The Company receives incentives from certain vendors. These incentives are recognized as earned and are classified as a reduction of “Cost of sales.” Advertising Costs Advertising costs are expensed as incurred and are included in “Cost of sales” and “Advertising funds expense.” Production costs of advertising are expensed when the advertisement is first released. Franchise Support and Other Costs The Company incurs costs to provide direct support services to our franchisees, as well as certain other direct and incremental costs to the Company’s franchise operations. These costs primarily relate to franchise development services, facilitating Franchise Flips and information technology services, which are charged to “Franchise support and other costs,” as incurred. Self-Insurance The Company is self-insured for most workers’ compensation losses and health care claims and purchases insurance for general liability and automotive liability losses, all subject to a $500 per occurrence retention or deductible limit. The Company provides for their estimated cost to settle both known claims and claims incurred but not yet reported. Liabilities associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to us, as well as industry-wide loss experience and other actuarial assumptions. We determine our insurance obligations with the assistance of actuarial firms. Since there are many estimates and assumptions involved in recording insurance liabilities and in the case of workers’ compensation a significant period of time elapses before the ultimate resolution of claims, differences between actual future events and prior estimates and assumptions could result in adjustments to these liabilities. Leases Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Concentration of Risk Wendy’s had no customers which accounted for 10% or more of consolidated revenues in 2019, 2018 or 2017. As of December 29, 2019, Wendy’s had one main in-line distributor of food, packaging and beverage products, excluding breads, that serviced approximately 52% of Wendy’s restaurants in the U.S. and five additional in-line distributors that, in the aggregate, serviced approximately 47% of Wendy’s restaurants in the U.S. We believe that our vulnerability to risk concentrations related to significant vendors and sources of our raw materials is mitigated as we believe that there are other vendors who would be able to service our requirements. However, if a disruption of service from any of our main in-line distributors was to occur, we could experience short-term increases in our costs while distribution channels were adjusted. Wendy’s restaurants are principally located throughout the U.S. and to a lesser extent, in 30 foreign countries and U.S. territories with the largest number in Canada. Wendy’s U.S. restaurants are located in 50 states and the District of Columbia, with the largest number in Florida, Texas, Ohio, Georgia, California, North Carolina, Pennsylvania and Michigan. Because our restaurant operations are generally located throughout the U.S. and to a much lesser extent, Canada and other foreign countries and U.S. territories, we believe the risk of geographic concentration is not significant. We could be adversely affected by changing consumer preferences resulting from concerns over nutritional or safety aspects of beef, chicken, french fries or other products we sell or the effects of food safety events or disease outbreaks. Our exposure to foreign exchange risk is primarily related to fluctuations in the Canadian dollar relative to the U.S. dollar for our Canadian operations. However, our exposure to Canadian dollar foreign currency risk is mitigated by the fact that there are no Company-operated restaurants in Canada and less than 10% of Wendy’s franchised restaurants are in Canada. The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees for royalties, franchise fees and rent. In addition, we have notes receivable from certain of our franchisees. The financial condition of these franchisees is largely dependent upon the underlying business trends of the Wendy’s brand and market conditions within the quick-service restaurant industry. This concentration of credit risk is mitigated, in part, by the number of franchisees and the short-term nature of the franchise receivables. New Accounting Standards Adopted Cloud Computing In August 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for implementation costs of a cloud computing arrangement that is a service contract. The new guidance aligns the accounting for such implementation costs of a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Nonemployee Share-Based Payments In June 2018, the FASB issued new guidance on nonemployee share-based payment arrangements. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Leases In February 2016, the FASB issued new guidance on leases, which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases. The Company adopted the new guidance during the first quarter of 2019 using the effective date as the date of initial application; therefore, the comparative periods have not been adjusted and continue to be reported under the previous lease guidance. The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did not recognize ROU assets or liabilities, which included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient for lessees to account for lease components and nonlease components as a single lease component for all underlying classes of assets. In addition, the Company elected the practical expedient for lessors to account for lease components and nonlease components as a single lease component in instances where the lease component is predominant, the timing and pattern of transfer for the lease component and nonlease component are the same and the lease component, if accounted for separately, would be classified as an operating lease. The Company did not elect the use-of-hindsight practical expedient. The standard had a material impact on our consolidated balance sheets and related disclosures. Upon adoption at the beginning of 2019, we recognized operating lease liabilities of $1,011,000 based on the present value of the remaining minimum rental payments, with corresponding ROU assets of $934,000. The measurement of the operating lease ROU assets included, among other items, favorable lease amounts of $23,000 and unfavorable lease amounts of $30,000, which were previously included in “Other intangible assets” and “Other liabilities,” respectively, as well as the excess of rent expense recognized on a straight-line basis over the minimum rents paid of $67,000, which was previously included in “Other liabilities.” In addition, the standard requires lessors to recognize lessees’ payments to the Company for executory costs on a gross basis as revenue with a corresponding expense, which resulted in an increase of approximately $38,000 to our 2019 franchise rental income and expense. The Company also recognized a decrease to retained earnings of $1,105 as a result of impairing newly recognized ROU assets upon transition to the new guidance. The adoption of the guidance did not have a material impact on our consolidated statement of cash flows. In connection with the adoption of the standard, the Company has reclassified finance lease ROU assets to “Finance lease assets,” which were previously recorded to “Properties.” The Company also reclassified the current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively, which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior period amounts in the consolidated balance sheet and in the related notes to the financial statements reflect the reclassifications of these assets and liabilities to conform to the current year presentation. The following table illustrates the reclassifications made to the consolidated balance sheet as of December 30, 2018:
In addition, the Company reclassified repayments of finance lease liabilities to “Repayments of finance lease liabilities,” which were previously recorded to “Repayments of long-term debt.” The prior period amounts in the consolidated statements of cash flows reflect the reclassifications of these cash flows to conform to the current year presentation. The following tables illustrate the reclassifications made to the consolidated statements of cash flows for 2018 and 2017:
Revenue Recognition In May 2014, the FASB issued amended guidance for revenue recognition. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. The Company adopted the new guidance on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied the new guidance using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The details of the significant changes and quantitative impact of the changes are discussed below. Franchise Fees Under previous revenue recognition guidance, new build technical assistance fees and development fees were recognized as revenue when a franchised restaurant opened, as all material services and conditions related to the franchise fee had been substantially performed upon the restaurant opening. In addition, under previous guidance, technical assistance fees received in connection with sales of Company-operated restaurants to franchisees and facilitating Franchise Flips, as well as renewal fees, were recognized as revenue when the franchise agreements were signed and the restaurants opened. Under the new guidance, these franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. As such, these franchise fees are recognized over the contractual term of the franchise agreement. National Advertising Funds Previously, the revenue, expenses and cash flows of the Advertising Funds were not included in the Company’s consolidated statements of operations and statements of cash flows because the contributions to the Advertising Funds were designated for specific purposes and the Company acted as an agent, in substance, with regard to these contributions as a result of industry-specific guidance. Under the new guidance, which superseded the previous industry-specific guidance, the revenue, expenses and cash flows of the Advertising Funds are fully consolidated into the Company’s consolidated statements of operations and statements of cash flows. Impacts on Financial Statements The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s consolidated financial statements:
_______________
New Accounting Standards Income Taxes In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and the simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard is effective beginning with our 2021 fiscal year. The Company does not expect the guidance to have a material impact on our consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued new guidance on disclosure requirements for fair value measurements, which is effective beginning with our 2020 fiscal year. The objective of the new guidance is to provide additional information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements. New incremental disclosure requirements include the amount of fair value hierarchy level 3 changes in unrealized gains and losses and the range and weighted average used to develop significant unobservable inputs for level 3 fair value measurements. The Company does not expect the amendment to have a material impact on our consolidated financial statements. Goodwill Impairment In January 2017, the FASB issued an amendment that simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. The Company does not expect the amendment, which is effective beginning with our 2020 fiscal year, to have a material impact on our consolidated financial statements. Credit Losses In June 2016, the FASB issued an amendment that will require the Company to use a current expected credit loss model that will result in the immediate recognition of an estimate of credit losses that are expected to occur over the life of the financial instruments that are within the scope of the guidance, including trade receivables. The amendment is effective beginning with our 2020 fiscal year. The Company does not expect the amendment to have a material impact on our consolidated financial statements.
|
Fair Value Measurements |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:
Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
_______________
The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents and guarantees are the only financial assets and liabilities measured and recorded at fair value on a recurring basis. Non-Recurring Fair Value Measurements Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our consolidated statements of operations. Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and ROU assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale, which primarily include surplus properties. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 17 for further information on impairment of our long-lived assets.
|
Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands |
Dec. 29, 2019
USD ($)
|
---|---|
Property Lease Guarantee | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 75,626 |
Guarantees and Other Commitments and Contingencies IT Services Agreement (Details) - IT Services Agreement $ in Thousands |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
| |
Long-term Purchase Commitment | |
Purchase Obligation, Purchases During Period | $ 1,386 |
Purchase Obligation, Due in Next Twelve Months | 16,800 |
Purchase Obligation, Due in Second Year | 17,200 |
Purchase Obligation, Due in Third Year | 15,400 |
Purchase Obligation, Due in Fourth Year | 13,000 |
Purchase Obligation, Due in Fifth Year | 12,200 |
Accrued Liabilities | |
Long-term Purchase Commitment | |
Amount Due from (to) Vendors for Purchase and Capital Commitments | $ (1,046) |
Impairment of Long-Lived Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Impairment Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company records impairment charges as a result of (1) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, (2) the deterioration in operating performance of certain Company-operated restaurants and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale. The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”
|
Guarantees and Other Commitments and Contingencies |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees and Other Commitments and Contingencies | Guarantees and Other Commitments and Contingencies Guarantees and Contingent Liabilities Franchisee Image Activation Incentive Programs In order to promote new restaurant development, Wendy’s has an incentive program for franchisees that provides for reductions in royalty and national advertising payments for up to the first two years of operation for qualifying new restaurants opened by December 31, 2020, with the value of the incentives declining in the later years of the program. In addition, during 2018, Wendy’s announced a restaurant development incentive program that provides for incremental reductions in royalty and national advertising payments for up to the first two years of operation for qualifying new restaurants for existing franchisees that sign up for the program and commit to incremental development of new Wendy’s restaurants under a new development agreement. Wendy’s also provides franchisees with the option of an early 20-year renewal of their franchise agreement upon completion of reimaging utilizing certain approved Image Activation remodel designs. Wendy’s also had incentive programs for 2017 available to franchisees that commenced Image Activation restaurant remodels by December 15, 2017. The remodel incentive programs provided for reductions in royalty payments for one year after the completion of construction. Other Loan Guarantees Wendy’s provides loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. Wendy’s has accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage established at the inception of each program which has been adjusted for a history of defaults. Wendy’s potential recourse for the aggregate amount of these loans amounted to $6 as of December 29, 2019. As of December 29, 2019, the fair value of these guarantees totaled $1 and is included in “Other liabilities.” Lease Guarantees Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $75,626 as of December 29, 2019. These leases extend through 2056. We have not received any notice of default related to these leases as of December 29, 2019. In the event of default by a franchise owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations. Insurance Wendy’s is self-insured for most workers’ compensation losses and purchases insurance for general liability and automotive liability losses, all subject to a $500 per occurrence retention or deductible limit. Wendy’s determines its liability for claims incurred but not reported for the insurance liabilities on an actuarial basis. As of December 29, 2019, the Company had $20,588 recorded for these insurance liabilities. Wendy’s is self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations and determines its liability for health care claims incurred but not reported based on historical claims runoff data. As of December 29, 2019, the Company had $2,349 recorded for these health care insurance liabilities. Letters of Credit As of December 29, 2019, the Company had outstanding letters of credit with various parties totaling $25,106. The outstanding letters of credit include amounts outstanding against the Class A-1 Notes. See Note 12 for further information. We do not expect any material loss to result from these letters of credit. Purchase and Capital Commitments Beverage Agreement The Company has an agreement with a beverage vendor, which provides fountain beverage products and certain marketing support funding to the Company and its franchisees. This agreement requires minimum purchases of certain fountain beverages (“Fountain Beverages”) by the Company and its franchisees at agreed upon prices until the total contractual gallon volume usage is reached. This agreement also provides for an annual advance to be paid to the Company based on the vendor’s expectation of the Company’s annual Fountain Beverages usage, which is amortized over actual usage during the year. In January 2019, the Company amended its contract with the beverage vendor, which now expires at the later of reaching a minimum usage requirement or December 31, 2025. Beverage purchases made by the Company under this agreement during 2019, 2018 and 2017 were $11,440, $10,108 and $9,370, respectively. The Company estimates future annual purchases to be approximately $11,000 in 2020, $11,300 in 2021, $11,800 in 2022, $12,300 in 2023 and $12,800 in 2024 based on current pricing and the expected ratio of usage at Company-operated restaurants to franchised restaurants. As of December 29, 2019, $2,542 is due to the beverage vendor and is included in “Accounts payable,” principally for annual estimated payments that exceeded usage under this agreement. IT Services Agreement In December 2019, the Company entered into an agreement to partner with a third-party global IT consultant on the Company’s new IT organization structure to leverage the consultant’s global capabilities, which the Company believes will enable a more seamless integration between its digital and corporate IT assets. Costs incurred by the Company under this agreement were $1,386 during 2019. The Company’s unconditional purchase obligations under the agreement are approximately $16,800 in 2020, $17,200 in 2021, $15,400 in 2022, $13,000 in 2023 and $12,200 in 2024. As of December 29, 2019, $1,046 is due to the consultant and is included in “Accrued expenses and other current liabilities.” Marketing Agreement The Company has an agreement with two national broadcasters that grants the Company certain marketing and media rights. Costs incurred by the Company under this agreement were approximately $11,000 in each of 2019 and 2018, which are included in “Advertising funds expense.” The Company’s unconditional purchase obligations under the agreement are approximately $15,500 in 2020, $12,400 in 2021, $12,900 in 2022, $13,400 in 2023 and $12,700 in 2024.
|
Advertising Costs and Funds (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Restricted Assets and Liabilities | |||
Advertising funds restricted assets | $ 82,376 | $ 76,509 | |
Accounts payable | 22,701 | 21,741 | |
Accrued expenses and other current liabilities | 165,272 | 150,636 | |
Advertising funds restricted liabilities | 84,195 | 80,153 | |
Cost of sales | |||
Restricted Assets and Liabilities | |||
Advertising Expense | 29,954 | 27,939 | $ 27,921 |
Restricted Assets and Liabilities | |||
Restricted Assets and Liabilities | |||
Cash and cash equivalents | 23,973 | 25,247 | |
Accounts receivable, net | 54,394 | 47,332 | |
Other assets | 4,009 | 3,930 | |
Advertising funds restricted assets | 82,376 | 76,509 | |
Accounts payable | 66,749 | 62,033 | |
Accrued expenses and other current liabilities | 17,446 | 18,120 | |
Advertising funds restricted liabilities | $ 84,195 | $ 80,153 |
Label | Element | Value |
---|---|---|
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 25,247,000 |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | 8,579,000 |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | 23,973,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 0 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 165,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 0 |
Reorganization and Reorganization Costs |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realignment and Reorganization Costs | Reorganization and Realignment Costs The following is a summary of the initiatives included in “Reorganization and realignment costs:”
Information Technology (“IT”) Realignment In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth. The Company is partnering with a third-party global IT consultant on this new structure to leverage their global capabilities, which the Company believes will enable a more seamless integration between its digital and corporate IT assets. The Company expects that the realignment plan will reduce certain employee compensation and other related costs that the Company intends to reinvest back into IT to drive additional capabilities and capacity across all of its technology platforms. The Company expects the majority of the impact of the realignment plan to occur at its Restaurant Support Center in Dublin, Ohio. The Company expects to incur total costs aggregating approximately $13,000 to $15,000 related to the plan. During 2019, the Company recognized costs totaling $9,127, which primarily included severance and related employee costs and third-party and other costs. The Company expects to incur additional costs aggregating approximately $5,500, comprised of (1) severance and related employee costs of approximately $1,000 and (2) third-party and other costs of approximately $4,500. The Company expects to recognize the majority of the remaining costs associated with the plan during the first half of 2020. The following is a summary of the activity recorded as a result of the IT realignment plan:
_______________
The table below presents a rollforward of our accruals for the plan, which are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $8,025 and $599 as of December 29, 2019, respectively.
General and Administrative (“G&A”) Realignment In May 2017, the Company initiated a plan to further reduce its G&A expenses. Additionally, the Company announced in May 2019 changes to its management and operating structure that included the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer, and the elimination of the Chief Operations Officer position. During 2019, 2018 and 2017, the Company recognized costs related to the plan totaling $7,749, $8,785 and $21,663, respectively, which primarily included severance and related employee costs and share-based compensation. The Company does not expect to incur any additional material costs under the plan. As discussed in Note 26, the realignment of our management and operating structure described above resulted in a change in our operating segments as of December 29, 2019. The following is a summary of the activity recorded as a result of the G&A realignment plan:
_______________
The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,504 and $855 as of December 29, 2019, respectively, and $6,280 and $1,044 as of December 30, 2018, respectively. The tables below present a rollforward of our accruals for the plan.
System Optimization Initiative The Company has recognized costs related to its system optimization initiative, which includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating Franchise Flips. The Company does not expect to incur any material additional costs under the plan. The following is a summary of the costs recorded as a result of our system optimization initiative:
_______________
The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” and “Other liabilities.” As of both December 29, 2019 and December 30, 2018, no accrual remained.
|
Properties (Notes) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties | Properties
Depreciation and amortization expense related to properties was $81,219, $79,009 and $81,946 during 2019, 2018 and 2017, respectively.
|
Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from franchisees:
_______________ (a) The fair values of the identifiable intangible assets related to restaurants acquired in 2018 were provisional amounts as of December 30, 2018, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months ended March 31, 2019, which resulted in a decrease in the fair value of acquired franchise rights of $2,989 and an increase in deferred tax assets of $140.
|
Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation, Policy | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all of the Company’s subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates, Policy | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal Year, Policy | Fiscal Year The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 29, 2019” or “2019,” (2) “the year ended December 30, 2018” or “2018” and (3) “the year ended December 31, 2017” or “2017,” all of which consisted of 52 weeks.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications, Policy | Reclassifications Certain balance sheet reclassifications have been made to the prior year presentation to conform to the current year presentation. See “New Accounting Standards Adopted” below for further information. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents, Policy | Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Company’s cash and cash equivalents principally consist of cash in bank and money market mutual fund accounts and are primarily not in Federal Deposit Insurance Corporation insured accounts. We believe that our vulnerability to risk concentrations in our cash equivalents is mitigated by (1) our policies restricting the eligibility, credit quality and concentration limits for our placements in cash equivalents and (2) insurance from the Securities Investor Protection Corporation of up to $500 per account, as well as supplemental private insurance coverage maintained by substantially all of our brokerage firms, to the extent our cash equivalents are held in brokerage accounts. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash, Policy | Restricted Cash In accordance with the Company’s securitized financing facility, certain cash accounts have been established with the trustee for the benefit of the trustee and the noteholders and are restricted in their use. Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of principal, interest and commitment fees required for the Company’s senior secured notes. Restricted cash also includes cash collected by the Company’s national advertising funds for the U.S. and Canada (the “Advertising Funds”), usage of which is restricted for advertising activities. Refer to Note 7 for further information. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Notes Receivable, Net, Policy | Accounts and Notes Receivable, Net Accounts and notes receivable, net, consist primarily of royalties, rents, property taxes and franchise fees due principally from franchisees, credit card receivables, insurance receivables and refundable income taxes. The need for an allowance for doubtful accounts is reviewed on a specific identification basis based upon past due balances and the financial strength of the obligor. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Policy | Inventories The Company’s inventories are stated at the lower of cost or net realizable value, with cost determined in accordance with the first-in, first-out method and consist primarily of restaurant food items and paper supplies.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties and Depreciation and Amortization, Policy | Properties and Depreciation and Amortization Properties are stated at cost, including capitalized internal costs of employees to the extent such employees are dedicated to specific restaurant construction projects, less accumulated depreciation and amortization. Depreciation and amortization of properties is computed principally on the straight-line basis using the following estimated useful lives of the related major classes of properties: 3 to 20 years for office and restaurant equipment (including technology), 3 to 15 years for transportation equipment and 7 to 30 years for buildings and improvements. When the Company commits to a plan to cease using certain properties before the end of their estimated useful lives, depreciation expense is accelerated to reflect the use of the assets over their shortened useful lives. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. The Company reviews properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If such review indicates an asset group may not be recoverable, an impairment loss is recognized for the excess of the carrying amount over the fair value of an asset group to be held and used or over the fair value less cost to sell of an asset to be disposed. See “Impairment of Long-Lived Assets” below for further information. The Company classifies assets as held for sale and ceases depreciation of the assets when there is a plan for disposal of the assets and those assets meet the held for sale criteria. Assets held for sale are included in “Prepaid expenses and other current assets” in the consolidated balance sheets.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Policy | Goodwill Goodwill, representing the excess of the cost of an acquired entity over the fair value of the acquired net assets, is not amortized. Goodwill associated with our Company-operated restaurants is reduced as a result of restaurant dispositions based on the relative fair values and is included in the carrying value of the restaurant in determining the gain or loss on disposal. If a Company-operated restaurant is sold within two years of being acquired from a franchisee, the goodwill associated with the acquisition is written off in its entirety. Goodwill has been assigned to reporting units for purposes of impairment testing. The Company tests goodwill for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Our annual impairment test of goodwill may be completed through a qualitative assessment to determine if the fair value of the reporting unit is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment for any reporting units, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value of a reporting unit exceeds its fair value, we perform a two-step quantitative goodwill impairment test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and we must perform step two of the impairment test (measurement). Step two of the impairment test, if necessary, requires the estimation of the fair value for the assets and liabilities of a reporting unit in order to calculate the implied fair value of the reporting unit’s goodwill. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we use, we may be required to recognize goodwill impairment charges in future years.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets, Policy | Impairment of Long-Lived Assets Our long-lived assets include (1) properties and related definite-lived intangible assets (e.g., favorable leases) that are leased and/or subleased to franchisees, (2) Company-operated restaurant assets and related definite-lived intangible assets, which include reacquired rights under franchise agreements, and (3) finance and operating lease assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the carrying amount of the asset group to future undiscounted net cash flows expected to be generated through leases and/or subleases or by our individual Company-operated restaurants. If the carrying amount of the long-lived asset group is not recoverable on an undiscounted cash flow basis, then impairment is recognized to the extent that the carrying amount exceeds its fair value and is included in “Impairment of long-lived assets.” Our critical estimates in this review process include the anticipated future cash flows from leases and/or subleases or individual Company-operated restaurants, which is used in assessing the recoverability of the respective long-lived assets. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we used, we may be required to recognize additional impairment charges in future years. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets, Policy | Other Intangible Assets Definite-lived intangible assets are amortized on a straight-line basis using the following estimated useful lives of the related classes of intangibles: for favorable leases, the terms of the respective leases, including periods covered by renewal options that the Company as lessee is reasonably assured of exercising; 1 to 5 years for computer software; 4 to 20 years for reacquired rights under franchise agreements; and 20 years for franchise agreements. Trademarks have an indefinite life and are not amortized. The Company reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. Our annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, we test for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. Our estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenues of Company-operated and franchised restaurants and the resulting cash flows. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Policy | Investments The Company has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). In addition, the Company has a 20% share in a joint venture in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.” Other investments in equity securities, including investments in limited partnerships, in which the Company does not have significant influence, and for which there is not a readily determinable fair value, are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Realized gains and losses are reported as income or loss in the period in which the securities are sold or otherwise disposed. Cash distributions and dividends received that are determined to be returns of capital are recorded as a reduction of the carrying value of our investments and returns on our investments are recorded to “Investment income, net.” The difference between the carrying value of our TimWen equity investment and the underlying equity in the historical net assets of the investee is accounted for as if the investee were a consolidated subsidiary. Accordingly, the carrying value difference is amortized over the estimated lives of the assets of the investee to which such difference would have been allocated if the equity investment were a consolidated subsidiary. To the extent the carrying value difference represents goodwill, it is not amortized.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Policy | Share-Based Compensation The Company has granted share-based compensation awards to certain employees under several equity plans (the “Equity Plans”). The Company measures the cost of employee services received in exchange for an equity award, which include grants of employee stock options and restricted shares, based on the fair value of the award at the date of grant. Share-based compensation expense is recognized net of estimated forfeitures, determined based on historical experience. The Company recognizes share-based compensation expense over the requisite service period unless the awards are subject to performance conditions, in which case we recognize compensation expense over the requisite service period to the extent performance conditions are considered probable. The Company determines the grant date fair value of stock options using a Black-Scholes-Merton option pricing model (the “Black-Scholes Model”). The grant date fair value of restricted share awards (“RSAs”), restricted share units (“RSUs”) and performance-based awards are determined using the average of the high and low trading prices of our common stock on the date of grant, unless the awards are subject to market conditions, in which case we use a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Translation, Policy | Foreign Currency Translation The Company’s primary foreign operations are in Canada where the functional currency is the Canadian dollar. Financial statements of foreign subsidiaries are prepared in their functional currency and then translated into U.S. dollars. Assets and liabilities are translated at the exchange rate as of the balance sheet date and revenues, costs and expenses are translated at a monthly average exchange rate. Net gains or losses resulting from the translation are recorded to the “Foreign currency translation adjustment” component of “Accumulated other comprehensive loss.” Gains and losses arising from the impact of foreign currency exchange rate fluctuations on transactions in foreign currency are included in “General and administrative.”
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes, Policy | Income Taxes The Company accounts for income taxes under the asset and liability method. A deferred tax asset or liability is recognized whenever there are (1) future tax effects from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (2) operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the years in which those differences are expected to be recovered or settled. Deferred tax assets are recognized to the extent the Company believes these assets will more likely than not be realized. In evaluating the realizability of deferred tax assets, the Company considers all available positive and negative evidence, including the interaction and the timing of future reversals of existing temporary differences, projected future taxable income, recent operating results and tax-planning strategies. When considered necessary, a valuation allowance is recorded to reduce the carrying amount of the deferred tax assets to their anticipated realizable value. The Company records uncertain tax positions on the basis of a two-step process whereby we first determine if it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is then measured for purposes of financial statement recognition as the largest amount of benefit that is greater than 50% likely of being realized upon being effectively settled. Interest accrued for uncertain tax positions is charged to “Interest expense, net.” Penalties accrued for uncertain tax positions are charged to “General and administrative.” |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Acquisitions, Policy | Restaurant Acquisitions and Dispositions The Company accounts for the acquisition of restaurants from franchisees using the acquisition method of accounting for business combinations. The acquisition method of accounting involves the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process requires the use of estimates and assumptions to derive fair values and to complete the allocation. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed represents goodwill derived from the acquisition. See “Goodwill” above for further information.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Dispositions, Policy | In connection with the sale of Company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise, development, relationship and lease agreements. The Company typically sells restaurants’ cash, inventory and equipment and retains ownership or the leasehold interest to the real estate to lease and/or sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as such, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants, technical assistance fees and development fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company obtains third-party evidence to estimate the relative selling price of the stated rent under the lease and/or sublease agreements which is primarily based upon comparable market rents. Based on the Company’s review of the third-party evidence, the Company records favorable or unfavorable lease assets/liabilities with a corresponding offset to the gain or loss on the sale of the restaurants. The cash consideration per restaurant for technical assistance fees and development fees is consistent with the amounts stated in the related franchise agreements which are charged for separate standalone arrangements. The Company recognizes the technical assistance and development fees over the contractual term of the franchise agreements. Future royalty income is also recognized in revenue as earned. See “Revenue Recognition” below for further information. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition, Policy | Revenue Recognition “Sales” includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. “Sales” excludes taxes collected from the Company’s customers. Revenue is recognized when the food is purchased by the customer, which is when our performance obligation is satisfied. “Sales” also includes income for gift cards. Gift card payments are recorded as deferred income when received and are recognized as revenue in proportion to actual gift card redemptions. “Franchise royalty revenue and fees” includes royalties, new build technical assistance fees, renewal fees, franchisee-to- franchisee restaurant transfer (“Franchise Flip”) technical assistance fees, Franchise Flip advisory fees and development fees. Royalties from franchised restaurants are based on a percentage of sales of the franchised restaurant and are recognized as earned. New build technical assistance fees, renewal fees and Franchise Flip technical assistance fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Franchise Flip advisory fees include valuation services and fees for selecting pre-approved buyers for Franchise Flips. Franchise Flip advisory fees are paid by the seller and are recognized as revenue at closing of the Franchise Flip transaction. “Advertising funds revenue” includes contributions to the Advertising Funds by franchisees. Revenue related to these contributions is based on a percentage of sales of the franchised restaurants and is recognized as earned. “Franchise rental income” includes rental income from properties owned and leased by the Company and leased or subleased to franchisees. Rental income is recognized on a straight-line basis over the respective operating lease terms. Favorable and unfavorable lease amounts related to the leased and/or subleased properties are amortized to rental income on a straight-line basis over the remaining term of the leases. See “New Accounting Standards Adopted” below for a description of changes to our revenue recognition policies resulting from the adoption of the new accounting guidance for revenue recognition effective January 1, 2018. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of Sales, Policy | Cost of Sales Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs relating to Company-operated restaurants. Cost of sales excludes depreciation and amortization expense.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vendor Incentives, Policy | Vendor Incentives The Company receives incentives from certain vendors. These incentives are recognized as earned and are classified as a reduction of “Cost of sales.”
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising Costs, Policy | Advertising Costs Advertising costs are expensed as incurred and are included in “Cost of sales” and “Advertising funds expense.” Production costs of advertising are expensed when the advertisement is first released.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Franchise Support and Other Costs, Policy | Franchise Support and Other Costs The Company incurs costs to provide direct support services to our franchisees, as well as certain other direct and incremental costs to the Company’s franchise operations. These costs primarily relate to franchise development services, facilitating Franchise Flips and information technology services, which are charged to “Franchise support and other costs,” as incurred.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Self-insurance, Policy | Self-Insurance The Company is self-insured for most workers’ compensation losses and health care claims and purchases insurance for general liability and automotive liability losses, all subject to a $500 per occurrence retention or deductible limit. The Company provides for their estimated cost to settle both known claims and claims incurred but not yet reported. Liabilities associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to us, as well as industry-wide loss experience and other actuarial assumptions. We determine our insurance obligations with the assistance of actuarial firms. Since there are many estimates and assumptions involved in recording insurance liabilities and in the case of workers’ compensation a significant period of time elapses before the ultimate resolution of claims, differences between actual future events and prior estimates and assumptions could result in adjustments to these liabilities.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Leases, Policy | Leases Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, Leases, Policy | Leases Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Risk, Policy | Concentration of Risk Wendy’s had no customers which accounted for 10% or more of consolidated revenues in 2019, 2018 or 2017. As of December 29, 2019, Wendy’s had one main in-line distributor of food, packaging and beverage products, excluding breads, that serviced approximately 52% of Wendy’s restaurants in the U.S. and five additional in-line distributors that, in the aggregate, serviced approximately 47% of Wendy’s restaurants in the U.S. We believe that our vulnerability to risk concentrations related to significant vendors and sources of our raw materials is mitigated as we believe that there are other vendors who would be able to service our requirements. However, if a disruption of service from any of our main in-line distributors was to occur, we could experience short-term increases in our costs while distribution channels were adjusted. Wendy’s restaurants are principally located throughout the U.S. and to a lesser extent, in 30 foreign countries and U.S. territories with the largest number in Canada. Wendy’s U.S. restaurants are located in 50 states and the District of Columbia, with the largest number in Florida, Texas, Ohio, Georgia, California, North Carolina, Pennsylvania and Michigan. Because our restaurant operations are generally located throughout the U.S. and to a much lesser extent, Canada and other foreign countries and U.S. territories, we believe the risk of geographic concentration is not significant. We could be adversely affected by changing consumer preferences resulting from concerns over nutritional or safety aspects of beef, chicken, french fries or other products we sell or the effects of food safety events or disease outbreaks. Our exposure to foreign exchange risk is primarily related to fluctuations in the Canadian dollar relative to the U.S. dollar for our Canadian operations. However, our exposure to Canadian dollar foreign currency risk is mitigated by the fact that there are no Company-operated restaurants in Canada and less than 10% of Wendy’s franchised restaurants are in Canada. The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees for royalties, franchise fees and rent. In addition, we have notes receivable from certain of our franchisees. The financial condition of these franchisees is largely dependent upon the underlying business trends of the Wendy’s brand and market conditions within the quick-service restaurant industry. This concentration of credit risk is mitigated, in part, by the number of franchisees and the short-term nature of the franchise receivables.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Standards and New Accounting Standards Adopted, Policy | New Accounting Standards Adopted Cloud Computing In August 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for implementation costs of a cloud computing arrangement that is a service contract. The new guidance aligns the accounting for such implementation costs of a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Nonemployee Share-Based Payments In June 2018, the FASB issued new guidance on nonemployee share-based payment arrangements. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. Leases In February 2016, the FASB issued new guidance on leases, which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases. The Company adopted the new guidance during the first quarter of 2019 using the effective date as the date of initial application; therefore, the comparative periods have not been adjusted and continue to be reported under the previous lease guidance. The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did not recognize ROU assets or liabilities, which included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient for lessees to account for lease components and nonlease components as a single lease component for all underlying classes of assets. In addition, the Company elected the practical expedient for lessors to account for lease components and nonlease components as a single lease component in instances where the lease component is predominant, the timing and pattern of transfer for the lease component and nonlease component are the same and the lease component, if accounted for separately, would be classified as an operating lease. The Company did not elect the use-of-hindsight practical expedient. The standard had a material impact on our consolidated balance sheets and related disclosures. Upon adoption at the beginning of 2019, we recognized operating lease liabilities of $1,011,000 based on the present value of the remaining minimum rental payments, with corresponding ROU assets of $934,000. The measurement of the operating lease ROU assets included, among other items, favorable lease amounts of $23,000 and unfavorable lease amounts of $30,000, which were previously included in “Other intangible assets” and “Other liabilities,” respectively, as well as the excess of rent expense recognized on a straight-line basis over the minimum rents paid of $67,000, which was previously included in “Other liabilities.” In addition, the standard requires lessors to recognize lessees’ payments to the Company for executory costs on a gross basis as revenue with a corresponding expense, which resulted in an increase of approximately $38,000 to our 2019 franchise rental income and expense. The Company also recognized a decrease to retained earnings of $1,105 as a result of impairing newly recognized ROU assets upon transition to the new guidance. The adoption of the guidance did not have a material impact on our consolidated statement of cash flows. In connection with the adoption of the standard, the Company has reclassified finance lease ROU assets to “Finance lease assets,” which were previously recorded to “Properties.” The Company also reclassified the current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively, which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior period amounts in the consolidated balance sheet and in the related notes to the financial statements reflect the reclassifications of these assets and liabilities to conform to the current year presentation. The following table illustrates the reclassifications made to the consolidated balance sheet as of December 30, 2018:
In addition, the Company reclassified repayments of finance lease liabilities to “Repayments of finance lease liabilities,” which were previously recorded to “Repayments of long-term debt.” The prior period amounts in the consolidated statements of cash flows reflect the reclassifications of these cash flows to conform to the current year presentation. The following tables illustrate the reclassifications made to the consolidated statements of cash flows for 2018 and 2017:
Revenue Recognition In May 2014, the FASB issued amended guidance for revenue recognition. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. The Company adopted the new guidance on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied the new guidance using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The details of the significant changes and quantitative impact of the changes are discussed below. Franchise Fees Under previous revenue recognition guidance, new build technical assistance fees and development fees were recognized as revenue when a franchised restaurant opened, as all material services and conditions related to the franchise fee had been substantially performed upon the restaurant opening. In addition, under previous guidance, technical assistance fees received in connection with sales of Company-operated restaurants to franchisees and facilitating Franchise Flips, as well as renewal fees, were recognized as revenue when the franchise agreements were signed and the restaurants opened. Under the new guidance, these franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. As such, these franchise fees are recognized over the contractual term of the franchise agreement. National Advertising Funds Previously, the revenue, expenses and cash flows of the Advertising Funds were not included in the Company’s consolidated statements of operations and statements of cash flows because the contributions to the Advertising Funds were designated for specific purposes and the Company acted as an agent, in substance, with regard to these contributions as a result of industry-specific guidance. Under the new guidance, which superseded the previous industry-specific guidance, the revenue, expenses and cash flows of the Advertising Funds are fully consolidated into the Company’s consolidated statements of operations and statements of cash flows. Impacts on Financial Statements The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s consolidated financial statements:
_______________
New Accounting Standards Income Taxes In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and the simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard is effective beginning with our 2021 fiscal year. The Company does not expect the guidance to have a material impact on our consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued new guidance on disclosure requirements for fair value measurements, which is effective beginning with our 2020 fiscal year. The objective of the new guidance is to provide additional information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements. New incremental disclosure requirements include the amount of fair value hierarchy level 3 changes in unrealized gains and losses and the range and weighted average used to develop significant unobservable inputs for level 3 fair value measurements. The Company does not expect the amendment to have a material impact on our consolidated financial statements. Goodwill Impairment In January 2017, the FASB issued an amendment that simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. The Company does not expect the amendment, which is effective beginning with our 2020 fiscal year, to have a material impact on our consolidated financial statements. Credit Losses In June 2016, the FASB issued an amendment that will require the Company to use a current expected credit loss model that will result in the immediate recognition of an estimate of credit losses that are expected to occur over the life of the financial instruments that are within the scope of the guidance, including trade receivables. The amendment is effective beginning with our 2020 fiscal year. The Company does not expect the amendment to have a material impact on our consolidated financial statements.
|
Advertising Costs and Funds |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing and Advertising Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising Costs and Funds | Advertising Costs and Funds We maintain U.S. and Canadian national advertising funds established to collect and administer funds contributed for use in advertising and promotional programs. Contributions to the Advertising Funds are required from both Company-operated and franchised restaurants and are based on a percentage of restaurant sales. In addition to the contributions to the Advertising Funds, Company-operated and franchised restaurants make additional contributions to other local and regional advertising programs. Restricted assets and related liabilities of the Advertising Funds at December 29, 2019 and December 30, 2018 are as follows:
Advertising expenses included in “Cost of sales” totaled $29,954, $27,939 and $27,921 in 2019, 2018 and 2017, respectively.
|
Segment Information Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Segment Reporting Information | |||||||||||
Segment profit | $ 36,717 | $ 79,023 | $ 80,573 | $ 66,266 | $ 45,799 | $ 77,348 | $ 71,483 | $ 55,262 | $ 262,579 | $ 249,892 | $ 214,758 |
Advertising funds surplus | 1,337 | 4,153 | 0 | ||||||||
Unallocated general and administrative | (200,206) | (217,489) | (203,593) | ||||||||
Depreciation and amortization | (131,693) | (128,879) | (125,687) | ||||||||
System optimization gains (losses), net | 1,283 | 463 | (39,076) | ||||||||
Reorganization and realignment costs | (12,194) | (2,377) | (941) | $ (3,124) | (2,626) | (16,965) | (9,068) | (22,574) | |||
Impairment of long-lived assets | (6,999) | (4,697) | (4,097) | ||||||||
Unallocated other operating income, net | 11,418 | 6,387 | 8,652 | ||||||||
Interest expense, net | (115,971) | (119,618) | (118,059) | ||||||||
Loss on early extinguishment of debt | (1,346) | $ (7,150) | $ (11,475) | (8,496) | (11,475) | 0 | |||||
Investment income, net | $ 24,599 | $ 450,133 | 25,598 | 450,736 | 2,703 | ||||||
Other income, net | 7,771 | 5,381 | 1,617 | ||||||||
Income before income taxes | 171,481 | 574,916 | 101,019 | ||||||||
Impact of legal reserves - FI case settlement | $ 27,500 | ||||||||||
Corporate and Other | |||||||||||
Segment Reporting Information | |||||||||||
Unallocated general and administrative | (81,230) | (104,208) | (82,188) | ||||||||
Unallocated other operating income, net | 291 | 444 | 333 | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information | |||||||||||
Segment profit | 496,555 | 491,684 | 488,047 | ||||||||
Operating Segments | Wendy's U.S. | |||||||||||
Segment Reporting Information | |||||||||||
Segment profit | 369,193 | 355,455 | 369,432 | ||||||||
Operating Segments | Wendy's International | |||||||||||
Segment Reporting Information | |||||||||||
Segment profit | 20,246 | 25,597 | 23,833 | ||||||||
Operating Segments | Global Real Estate & Development | |||||||||||
Segment Reporting Information | |||||||||||
Segment profit | $ 107,116 | $ 110,632 | $ 94,782 |
Leases Capital Leases, Balance Sheet and Other Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Capital Leased Assets | ||
Capital Leases, Accumulated Amortization | $ 33,187 | |
Capital Leases, Income Statement of Lessee | ||
Capital Leases, Income Statement, Amortization Expense | $ 11,603 | $ 9,025 |
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Treasury Stock | There were 470,424 shares of common stock issued at the beginning and end of 2019, 2018 and 2017. Treasury stock activity for 2019, 2018 and 2017 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides a rollforward of the components of accumulated other comprehensive income (loss), net of tax as applicable:
_______________
|
Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The components of lease cost for 2019 are as follows:
_______________
(b) Includes $123,899 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $27,419 recorded to “Cost of sales” for leases for Company-operated restaurants.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent Expense | The components of rental expense for operating leases for 2018 and 2017, as accounted for under previous guidance, were as follows:
_______________
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow and Non-cash Information Related to Leases | The following table includes supplemental cash flow and non-cash information related to leases:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Information Related to Leases | The following table includes supplemental information related to leases:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 29, 2019:
_______________
(b) The present value of minimum operating lease payments of $43,775 and $897,737 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 29, 2019:
_______________
(b) The present value of minimum operating lease payments of $43,775 and $897,737 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:
_______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018:
_______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales-type Lease, Lease Income | The components of lease income for 2019 are as follows:
_______________
(b) Includes sublease income of $171,126 recognized during 2019, of which $37,739 represents lessees’ variable payments to the Company for executory costs.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Direct Financing Lease, Lease Income | The components of lease income for 2019 are as follows:
_______________
(b) Includes sublease income of $171,126 recognized during 2019, of which $37,739 represents lessees’ variable payments to the Company for executory costs.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease, Lease Income | The components of lease income for 2019 are as follows:
_______________
(b) Includes sublease income of $171,126 recognized during 2019, of which $37,739 represents lessees’ variable payments to the Company for executory costs.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent Income | The components of rental income for operating leases and subleases for 2018 and 2017, as accounted for under previous guidance, were as follows:
_______________ (a) Amounts include sublease income of $138,363 and $126,814 recognized during 2018 and 2017, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales-type and Direct Financing Leases, Lease Receivable, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 29, 2019:
_______________ (a) The present value of minimum direct financing rental receipts of $3,146 and $256,606 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $197.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, Operating Lease, Payments to be Received, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 29, 2019:
_______________ (a) The present value of minimum direct financing rental receipts of $3,146 and $256,606 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $197.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Direct Financing Leases, Lease Receivable, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:
_______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, Operating Lease, Lease Receivable, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018:
_______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property Subject To Operating Lease | Properties owned by the Company and leased to franchisees and other third parties under operating leases include:
|
Leases Components of Lease Income (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
| |
Lessor Lease Income | |
Sales-type leases, selling profit | $ 2,285 |
Sales-type and direct-financing leases, interest income | 26,333 |
Operating lease rental income | 176,629 |
Variable lease income | 56,436 |
Franchise rental income | 233,065 |
Sublease income | 171,126 |
Executory costs paid to lessor | |
Lessor Lease Income | |
Variable lease income | $ 37,739 |
Guarantees and Other Commitments and Contingencies Franchisee Image Activation Programs (Details) - Maximum |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
New Build Incentive Program | |
Other commitments | |
Years of reduction in royalty payment attributable to new builds | 2 years |
2018 New Build Incentive Program | |
Other commitments | |
Years of reduction in royalty payment attributable to new builds | 2 years |
Remodel Incentive Program | |
Other commitments | |
Years of reduction in royalty payment attributable to incentive program | 1 year |
Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | Revenues by segment were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table reconciles profit by segment to the Company’s consolidated income before income taxes:
_______________ (a) Includes corporate overhead costs, such as employee compensation and related benefits. 2018 also includes the impact of legal reserves for a settlement of the FI Case of $27,500.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Other Significant Reconciling Items from Segments to Consolidated | Net income (loss) of our equity method investments for the Brazil JV and TimWen are included in segment profit for the Wendy’s International and Global Real Estate & Development segments, respectively. Net income (loss) of equity method investments by segment was as follows:
|
Acquisitions (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2019
USD ($)
|
Dec. 29, 2019
USD ($)
number_of_restaurants
|
Dec. 30, 2018
USD ($)
number_of_restaurants
|
Dec. 31, 2017
USD ($)
number_of_restaurants
|
|
Business Acquisition | ||||
Goodwill | $ 755,911 | $ 747,884 | $ 743,334 | |
Acquisitions | ||||
Business Acquisition | ||||
Restaurants acquired from franchisees | number_of_restaurants | 5 | 16 | 0 | |
Total consideration paid, net of cash received | $ 5,052 | $ 21,401 | $ 0 | |
Properties | 666 | 4,363 | 0 | |
Acquired franchise rights | 1,354 | 10,127 | 0 | |
Finance lease assets | 5,350 | 5,360 | 0 | |
Other assets | 0 | 621 | 0 | |
Finance lease liabilities | (4,084) | |||
Finance lease liabilities | (3,135) | 0 | ||
Unfavorable leases | 0 | (733) | 0 | |
Other | (2,316) | (2,240) | 0 | |
Total identifiable net assets | 970 | 14,363 | 0 | |
Goodwill | $ 4,082 | $ 7,038 | $ 0 | |
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles | $ (2,989) | |||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Assets | $ 140 |
Goodwill And Other Intangible Assets Aggregate Amortization Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Finite-Lived Intangible Assets | |||
Amortization of intangible assets | $ 53,182 | $ 52,064 | $ 47,302 |
Future amortization, 2020 | 46,666 | ||
Future amortization, 2021 | 41,362 | ||
Future amortization, 2022 | 37,048 | ||
Future amortization, 2023 | 33,854 | ||
Future amortization, 2024 | 29,383 | ||
Future amortization, Thereafter | $ 155,899 |
Summary of Significant Accounting Policies New Accounting Standards Adopted (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 29, 2019 |
|
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease assets | $ 857,199 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease liabilities | $ 1,011,000 | |
Operating lease assets | 934,000 | |
Favorable leases | 23,000 | |
Unfavorable leases | 30,000 | |
Straight-line rent in excess of minimum rents paid | 67,000 | |
Effect on future earnings, amount | 38,000 | |
Effect on future earnings, offset amount | $ 38,000 | |
Cumulative effect on retained earnings, net of tax | $ 1,105 |
Income Taxes Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Deferred Tax Assets | ||
Operating and finance lease liabilities | $ 345,173 | $ 115,322 |
Net operating loss and credit carryforwards | 59,597 | 59,690 |
Unfavorable leases | 26,020 | 35,801 |
Deferred revenue | 23,907 | 23,904 |
Accrued compensation and related benefits | 18,477 | 14,804 |
Accrued expenses and reserves | 13,786 | 14,840 |
Deferred rent | 492 | 16,807 |
Other | 3,757 | 5,016 |
Valuation allowances | (45,183) | (42,175) |
Total deferred tax assets | 446,026 | 244,009 |
Deferred Tax Liabilities | ||
Operating and finance lease assets | (313,803) | (56,798) |
Intangible assets | (311,596) | (324,394) |
Fixed assets | (60,788) | (105,545) |
Other | (30,598) | (26,432) |
Total deferred tax liabilities | (716,785) | (513,169) |
Total deferred tax liabilities, net | $ (270,759) | $ (269,160) |
Summary of Significant Accounting Policies Corporate Structure (Details) |
Dec. 29, 2019
countries
number_of_restaurants
|
---|---|
Franchisor Disclosure | |
Number of Restaurants | 6,788 |
Entity Operated Units | |
Franchisor Disclosure | |
Number of Restaurants | 357 |
Franchised Units | |
Franchisor Disclosure | |
Number of Restaurants | 6,431 |
International | |
Franchisor Disclosure | |
Number of Countries Entity Operates | countries | 30 |
International | Entity Operated Units | |
Franchisor Disclosure | |
Number of Restaurants | 0 |
H
M4 &,3 AD?WEN?G!Z_^ U!+ P04
M " !K.EI0>1L5C_0' #$+ & 'AL+W=O SGGW \NZ6#L
MLVL /'G5JG49;;SOCHRYH@$MW(WIH,6;RE@M/)JV9JZS(,I(THKQS>:6:2%;
MFJ?1=[9Y:GJO9 MG2UROM;!_3Z#,D-$M?7,\RKKQP<'RM!,U_ +_NSM;M-BL
M4DH-K9.F)1:JC-YOCZ A' @;./OPB1K29=X.W^C/WKMJ.7$#-PK
M\8>WMJ_(CD0M=.PB[).:OL&B)R/1(OX'7$%@N.L$:S1*&/^-FHNQ2BX4;$6R
MUWGD@Q^G>27/EK1P0K(D)&O")O5:YD*^\P=F65UJ-45ZWON1N5^\V2>X-XUS
M^JWP:]B\0>^USHJTI%<'6F(.POV/D5EJ+5!SD:P94/M46B@-&1@"%CSJY$'24]\:$V@CC2!]
MI)=W:H..SD%MDG5 13'D6#.$HWC0:UM4RY1"Y8P;B*GJ[-5)='X<#Z8;0 ?3
M#:"#F=+B["CGIM\]'H[)[F=WP\MVG$Y$GGW[=A3W/4U'0<7WC7W7'0_4?FOF
M>+[WU^7N<;7=SSX-XSAL#L=!'X9A[(M-\T,9WJ=^>?_V8=T_C-.OL?R^.YZK
M/7X8A^?3F>'%V\'EVW\!4$L#!!0 ( &LZ6E"0H*\JM $ -(# 8
M>&PO=V]R:W-H965T
ZS=UW(6
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MQOD;4$L#!!0 ( &LZ6E#:'"?QMP$ -(# 9 >&PO=V]R:W-H965T
MD"N(MYV)0H*O_$'2]S@R,Q4^]['IYX
M=TA];ZK@C*V(=UZ\]=Y+F277.;L$HCGF.,6DJYC=$L$\^Y(BW4IQ3/^!I]OP
M;%-A%N'9'PIOM@GVFP3[2+#_;XE;,;=_)6&KGBHP;9PF2RH<=)SDE7<9V/OX
MB.QW^#3MC]RT0EMR1N=?-O:_073@I217?H0Z_\$60T+CPO'6G\TT9I/AL)]_
M$%N^&PO=V]R:W-H
M965T
@+-<*&:AS?)\RN_$3U/G_M1@"&A>.>W\VTY1-AM/]_('(\HO+_U!+ P04 " !K
M.EI0&^2RQ-\! !!0 &0 'AL+W=O_1*X\_-R1SBR4:I7W0(8]"9XKW/<&C,<"-%E"X+I.SE ;[_4
M4@EF;*@:H@<%K/(DP0F-HCT1K.MQD?G<2169O!C>]7!22%^$8.KW$;@<
47^3:BD-V%*B.]MP
M:Y^*)>!0&[?]8/=J&I@I,'*8WP*R/$C%'U!+ P04 " !K.EI0$V#N@;D!
M #2 P &0 'AL+W=O