Price Graph
Price
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(X)
|
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
( )
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
38-0471180
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
One Dave Thomas Blvd., Dublin, Ohio
|
|
43017
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer [x]
|
Accelerated filer [ ]
|
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Non-accelerated filer [ ]
|
Smaller reporting company [ ]
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|
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Emerging growth company [ ]
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||||
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Page
|
|
|
|
|
|
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
ASSETS
|
(Unaudited)
|
||||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
634,751
|
|
|
$
|
171,447
|
|
|
Restricted cash
|
29,874
|
|
|
32,633
|
|
||
|
Accounts and notes receivable, net
|
100,148
|
|
|
114,390
|
|
||
|
Inventories
|
3,335
|
|
|
3,156
|
|
||
|
Prepaid expenses and other current assets
|
18,147
|
|
|
20,125
|
|
||
|
Advertising funds restricted assets
|
69,835
|
|
|
62,602
|
|
||
|
Total current assets
|
856,090
|
|
|
404,353
|
|
||
|
Properties
|
1,223,982
|
|
|
1,263,059
|
|
||
|
Goodwill
|
749,192
|
|
|
743,334
|
|
||
|
Other intangible assets
|
1,303,690
|
|
|
1,321,585
|
|
||
|
Investments
|
52,575
|
|
|
56,002
|
|
||
|
Net investment in direct financing leases
|
226,149
|
|
|
229,089
|
|
||
|
Other assets
|
95,754
|
|
|
79,516
|
|
||
|
Total assets
|
$
|
4,507,432
|
|
|
$
|
4,096,938
|
|
|
|
|
|
|
|
|||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
|
Current liabilities:
|
|
|
|
|
|
||
|
Current portion of long-term debt
|
$
|
31,291
|
|
|
$
|
30,172
|
|
|
Accounts payable
|
24,061
|
|
|
22,764
|
|
||
|
Income taxes payable
|
84,623
|
|
|
1,115
|
|
||
|
Accrued expenses and other current liabilities
|
120,203
|
|
|
110,509
|
|
||
|
Advertising funds restricted liabilities
|
78,925
|
|
|
62,602
|
|
||
|
Total current liabilities
|
339,103
|
|
|
227,162
|
|
||
|
Long-term debt
|
2,759,766
|
|
|
2,724,230
|
|
||
|
Deferred income taxes
|
275,312
|
|
|
299,053
|
|
||
|
Deferred franchise fees
|
92,522
|
|
|
10,881
|
|
||
|
Other liabilities
|
257,411
|
|
|
262,409
|
|
||
|
Total liabilities
|
3,724,114
|
|
|
3,523,735
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
||
|
Stockholders’ equity:
|
|
|
|
|
|||
|
Common stock, $0.10 par value; 1,500,000 shares authorized;
470,424 shares issued; 238,318 and 240,512 shares outstanding, respectively
|
47,042
|
|
|
47,042
|
|
||
|
Additional paid-in capital
|
2,883,298
|
|
|
2,885,955
|
|
||
|
Retained earnings (accumulated deficit)
|
146,983
|
|
|
(163,289
|
)
|
||
|
Common stock held in treasury, at cost; 232,106 and 229,912 shares, respectively
|
(2,242,870
|
)
|
|
(2,150,307
|
)
|
||
|
Accumulated other comprehensive loss
|
(51,135
|
)
|
|
(46,198
|
)
|
||
|
Total stockholders’ equity
|
783,318
|
|
|
573,203
|
|
||
|
Total liabilities and stockholders’ equity
|
$
|
4,507,432
|
|
|
$
|
4,096,938
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
|
(Unaudited)
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
||||||||
|
Sales
|
$
|
165,323
|
|
|
$
|
158,843
|
|
|
$
|
486,316
|
|
|
$
|
467,914
|
|
|
Franchise royalty revenue and fees
|
103,212
|
|
|
98,882
|
|
|
308,679
|
|
|
306,120
|
|
||||
|
Franchise rental income
|
50,474
|
|
|
50,275
|
|
|
152,110
|
|
|
140,127
|
|
||||
|
Advertising funds revenue
|
81,541
|
|
|
—
|
|
|
245,011
|
|
|
—
|
|
||||
|
|
400,550
|
|
|
308,000
|
|
|
1,192,116
|
|
|
914,161
|
|
||||
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
|
Cost of sales
|
139,348
|
|
|
133,631
|
|
|
409,721
|
|
|
388,755
|
|
||||
|
Franchise support and other costs
|
5,349
|
|
|
3,690
|
|
|
18,553
|
|
|
11,122
|
|
||||
|
Franchise rental expense
|
22,260
|
|
|
24,076
|
|
|
69,829
|
|
|
64,841
|
|
||||
|
Advertising funds expense
|
81,541
|
|
|
—
|
|
|
245,011
|
|
|
—
|
|
||||
|
General and administrative
|
46,545
|
|
|
51,716
|
|
|
146,064
|
|
|
153,089
|
|
||||
|
Depreciation and amortization
|
29,070
|
|
|
31,216
|
|
|
94,649
|
|
|
91,690
|
|
||||
|
System optimization (gains) losses, net
|
(486
|
)
|
|
106
|
|
|
(8
|
)
|
|
39,749
|
|
||||
|
Reorganization and realignment costs
|
941
|
|
|
2,888
|
|
|
6,691
|
|
|
20,768
|
|
||||
|
Impairment of long-lived assets
|
347
|
|
|
1,041
|
|
|
2,156
|
|
|
1,804
|
|
||||
|
Other operating income, net
|
(1,713
|
)
|
|
(2,021
|
)
|
|
(4,643
|
)
|
|
(5,828
|
)
|
||||
|
|
323,202
|
|
|
246,343
|
|
|
988,023
|
|
|
765,990
|
|
||||
|
Operating profit
|
77,348
|
|
|
61,657
|
|
|
204,093
|
|
|
148,171
|
|
||||
|
Interest expense, net
|
(29,625
|
)
|
|
(29,977
|
)
|
|
(89,939
|
)
|
|
(87,887
|
)
|
||||
|
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(11,475
|
)
|
|
—
|
|
||||
|
Investment income (loss), net
|
450,133
|
|
|
(636
|
)
|
|
450,432
|
|
|
2,086
|
|
||||
|
Other income, net
|
1,061
|
|
|
511
|
|
|
2,423
|
|
|
1,022
|
|
||||
|
Income before income taxes
|
498,917
|
|
|
31,555
|
|
|
555,534
|
|
|
63,392
|
|
||||
|
Provision for income taxes
|
(107,668
|
)
|
|
(17,298
|
)
|
|
(114,250
|
)
|
|
(28,639
|
)
|
||||
|
Net income
|
$
|
391,249
|
|
|
$
|
14,257
|
|
|
$
|
441,284
|
|
|
$
|
34,753
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income per share
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
1.65
|
|
|
$
|
.06
|
|
|
$
|
1.85
|
|
|
$
|
.14
|
|
|
Diluted
|
1.60
|
|
|
.06
|
|
|
1.79
|
|
|
.14
|
|
||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
|
(Unaudited)
|
||||||||||||||
|
Net income
|
$
|
391,249
|
|
|
$
|
14,257
|
|
|
$
|
441,284
|
|
|
$
|
34,753
|
|
|
Other comprehensive income (loss), net:
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustment
|
5,315
|
|
|
8,787
|
|
|
(5,054
|
)
|
|
16,797
|
|
||||
|
Change in unrecognized pension loss:
|
|
|
|
|
|
|
|
||||||||
|
Unrealized gains arising during the period
|
—
|
|
|
—
|
|
|
156
|
|
|
156
|
|
||||
|
Income tax provision
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
(60
|
)
|
||||
|
|
—
|
|
|
—
|
|
|
117
|
|
|
96
|
|
||||
|
Effect of cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
|
Reclassification of losses into Net income
|
—
|
|
|
723
|
|
|
—
|
|
|
2,170
|
|
||||
|
Income tax provision
|
—
|
|
|
(279
|
)
|
|
—
|
|
|
(838
|
)
|
||||
|
|
—
|
|
|
444
|
|
|
—
|
|
|
1,332
|
|
||||
|
Other comprehensive income (loss), net
|
5,315
|
|
|
9,231
|
|
|
(4,937
|
)
|
|
18,225
|
|
||||
|
Comprehensive income
|
$
|
396,564
|
|
|
$
|
23,488
|
|
|
$
|
436,347
|
|
|
$
|
52,978
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
||||
|
|
(Unaudited)
|
||||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net income
|
$
|
441,284
|
|
|
$
|
34,753
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
|
Depreciation and amortization
|
94,649
|
|
|
91,690
|
|
||
|
Share-based compensation
|
14,401
|
|
|
16,356
|
|
||
|
Impairment of long-lived assets
|
2,156
|
|
|
1,804
|
|
||
|
Deferred income tax
|
(1,527
|
)
|
|
945
|
|
||
|
Non-cash rental income, net
|
(10,868
|
)
|
|
(8,348
|
)
|
||
|
Net receipt of deferred vendor incentives
|
2,689
|
|
|
4,547
|
|
||
|
System optimization (gains) losses, net
|
(8
|
)
|
|
39,749
|
|
||
|
Gain on sale of investments, net
|
(450,000
|
)
|
|
(1,807
|
)
|
||
|
Distributions received from TimWen joint venture
|
9,060
|
|
|
5,524
|
|
||
|
Equity in earnings in joint ventures, net
|
(5,810
|
)
|
|
(6,113
|
)
|
||
|
Long-term debt-related activities, net (see below)
|
16,860
|
|
|
9,051
|
|
||
|
Other, net
|
4,596
|
|
|
2,023
|
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
||||
|
Accounts and notes receivable, net
|
11,382
|
|
|
(14,193
|
)
|
||
|
Inventories
|
(82
|
)
|
|
(44
|
)
|
||
|
Prepaid expenses and other current assets
|
2,754
|
|
|
(1,281
|
)
|
||
|
Advertising funds restricted assets and liabilities
|
8,879
|
|
|
(15,823
|
)
|
||
|
Accounts payable
|
(559
|
)
|
|
(1,557
|
)
|
||
|
Accrued expenses and other current liabilities
|
89,806
|
|
|
3,039
|
|
||
|
Net cash provided by operating activities
|
229,662
|
|
|
160,315
|
|
||
|
Cash flows from investing activities:
|
|
|
|
|
|
||
|
Capital expenditures
|
(39,717
|
)
|
|
(53,711
|
)
|
||
|
Acquisitions
|
(21,401
|
)
|
|
(86,788
|
)
|
||
|
Dispositions
|
2,863
|
|
|
80,058
|
|
||
|
Proceeds from sale of investments
|
450,000
|
|
|
3,282
|
|
||
|
Notes receivable, net
|
(283
|
)
|
|
(4,174
|
)
|
||
|
Payments for investments
|
(13
|
)
|
|
(375
|
)
|
||
|
Net cash provided by (used in) investing activities
|
391,449
|
|
|
(61,708
|
)
|
||
|
Cash flows from financing activities:
|
|
|
|
|
|
||
|
Proceeds from long-term debt
|
934,837
|
|
|
22,675
|
|
||
|
Repayments of long-term debt
|
(893,039
|
)
|
|
(42,966
|
)
|
||
|
Deferred financing costs
|
(17,340
|
)
|
|
(1,069
|
)
|
||
|
Repurchases of common stock
|
(140,199
|
)
|
|
(90,065
|
)
|
||
|
Dividends
|
(60,786
|
)
|
|
(51,464
|
)
|
||
|
Proceeds from stock option exercises
|
42,299
|
|
|
10,419
|
|
||
|
Payments related to tax withholding for share-based compensation
|
(10,464
|
)
|
|
(4,484
|
)
|
||
|
Contingent consideration payment
|
(6,269
|
)
|
|
—
|
|
||
|
Net cash used in financing activities
|
(150,961
|
)
|
|
(156,954
|
)
|
||
|
Net cash provided by (used in) operations before effect of exchange rate changes on cash
|
470,150
|
|
|
(58,347
|
)
|
||
|
Effect of exchange rate changes on cash
|
(2,195
|
)
|
|
6,910
|
|
||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
467,955
|
|
|
(51,437
|
)
|
||
|
Cash, cash equivalents and restricted cash at beginning of period
|
212,824
|
|
|
275,949
|
|
||
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
680,779
|
|
|
$
|
224,512
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
||||
|
|
(Unaudited)
|
||||||
|
Detail of cash flows from operating activities:
|
|
|
|
||||
|
Long-term debt-related activities, net:
|
|
|
|
||||
|
Loss on early extinguishment of debt
|
$
|
11,475
|
|
|
$
|
—
|
|
|
Accretion of long-term debt
|
940
|
|
|
927
|
|
||
|
Amortization of deferred financing costs
|
4,445
|
|
|
5,954
|
|
||
|
Reclassification of unrealized losses on cash flow hedges
|
—
|
|
|
2,170
|
|
||
|
|
$
|
16,860
|
|
|
$
|
9,051
|
|
|
|
|
|
|
||||
|
Supplemental cash flow information:
|
|
|
|
||||
|
Cash paid for:
|
|
|
|
|
|
||
|
Interest
|
$
|
103,240
|
|
|
$
|
93,701
|
|
|
Income taxes, net of refunds
|
5,925
|
|
|
22,092
|
|
||
|
|
|
|
|
||||
|
Supplemental non-cash investing and financing activities:
|
|
|
|
||||
|
Capital expenditures included in accounts payable
|
$
|
9,588
|
|
|
$
|
9,621
|
|
|
Capitalized lease obligations
|
6,569
|
|
|
239,721
|
|
||
|
Accrued debt issuance costs
|
332
|
|
|
—
|
|
||
|
|
|
|
|
||||
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
Reconciliation of cash, cash equivalents and restricted cash at end of period:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
634,751
|
|
|
$
|
171,447
|
|
|
Restricted cash
|
29,874
|
|
|
32,633
|
|
||
|
Restricted cash, included in Advertising funds restricted assets
|
16,154
|
|
|
8,579
|
|
||
|
Restricted cash, included in Other assets
|
—
|
|
|
165
|
|
||
|
Total cash, cash equivalents and restricted cash
|
$
|
680,779
|
|
|
$
|
212,824
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
|
|
Reclassifications
|
|
|
||||||||||
|
|
As Previously Reported
|
|
Franchise support and other costs
|
|
Restaurant operational costs
|
|
As Currently Reported
|
||||||||
|
Cost of sales
|
$
|
132,387
|
|
|
$
|
—
|
|
|
$
|
1,244
|
|
|
$
|
133,631
|
|
|
Franchise support and other costs
|
—
|
|
|
3,690
|
|
|
—
|
|
|
3,690
|
|
||||
|
General and administrative
|
52,960
|
|
|
—
|
|
|
(1,244
|
)
|
|
51,716
|
|
||||
|
Other operating expense (income), net
|
1,669
|
|
|
(3,690
|
)
|
|
—
|
|
|
(2,021
|
)
|
||||
|
|
$
|
187,016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
187,016
|
|
|
|
Nine Months Ended
|
||||||||||||||
|
|
|
|
Reclassifications
|
|
|
||||||||||
|
|
As Previously Reported
|
|
Franchise support and other costs
|
|
Restaurant operational costs
|
|
As Currently Reported
|
||||||||
|
Cost of sales
|
$
|
385,154
|
|
|
$
|
—
|
|
|
$
|
3,601
|
|
|
$
|
388,755
|
|
|
Franchise support and other costs
|
—
|
|
|
11,122
|
|
|
—
|
|
|
11,122
|
|
||||
|
General and administrative
|
156,690
|
|
|
—
|
|
|
(3,601
|
)
|
|
153,089
|
|
||||
|
Other operating expense (income), net
|
5,294
|
|
|
(11,122
|
)
|
|
—
|
|
|
(5,828
|
)
|
||||
|
|
$
|
547,138
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
547,138
|
|
|
|
|
|
Adjustments
|
|
|
||||||||||
|
|
As Reported
|
|
Franchise Fees
|
|
Advertising Funds
|
|
Balances Without Adoption
|
||||||||
|
Condensed Consolidated Balance Sheet
|
|
|
|
|
|
|
|
||||||||
|
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Accrued expenses and other current liabilities
|
$
|
120,203
|
|
|
$
|
(1,664
|
)
|
|
$
|
—
|
|
|
$
|
118,539
|
|
|
Advertising funds restricted liabilities
|
78,925
|
|
|
—
|
|
|
(6,645
|
)
|
|
72,280
|
|
||||
|
Total current liabilities
|
339,103
|
|
|
(1,664
|
)
|
|
(6,645
|
)
|
|
330,794
|
|
||||
|
Deferred income taxes
|
275,312
|
|
|
21,463
|
|
|
—
|
|
|
296,775
|
|
||||
|
Deferred franchise fees
|
92,522
|
|
|
(81,686
|
)
|
|
—
|
|
|
10,836
|
|
||||
|
Total liabilities
|
3,724,114
|
|
|
(61,887
|
)
|
|
(6,645
|
)
|
|
3,655,582
|
|
||||
|
Retained earnings
|
146,983
|
|
|
62,011
|
|
|
6,645
|
|
|
215,639
|
|
||||
|
Accumulated other comprehensive loss
|
(51,135
|
)
|
|
(124
|
)
|
|
—
|
|
|
(51,259
|
)
|
||||
|
Total stockholders’ equity
|
783,318
|
|
|
61,887
|
|
|
6,645
|
|
|
851,850
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Franchise royalty revenue and fees (a)
|
$
|
103,212
|
|
|
$
|
(497
|
)
|
|
$
|
—
|
|
|
$
|
102,715
|
|
|
Advertising funds revenue
|
81,541
|
|
|
—
|
|
|
(81,541
|
)
|
|
—
|
|
||||
|
Total revenues
|
400,550
|
|
|
(497
|
)
|
|
(81,541
|
)
|
|
318,512
|
|
||||
|
Advertising funds expense
|
81,541
|
|
|
—
|
|
|
(81,541
|
)
|
|
—
|
|
||||
|
Total costs and expenses
|
323,202
|
|
|
—
|
|
|
(81,541
|
)
|
|
241,661
|
|
||||
|
Operating profit
|
77,348
|
|
|
(497
|
)
|
|
—
|
|
|
76,851
|
|
||||
|
Income before income taxes
|
498,917
|
|
|
(497
|
)
|
|
—
|
|
|
498,420
|
|
||||
|
Provision for income taxes
|
(107,668
|
)
|
|
124
|
|
|
—
|
|
|
(107,544
|
)
|
||||
|
Net income
|
391,249
|
|
|
(373
|
)
|
|
—
|
|
|
390,876
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Franchise royalty revenue and fees (a)
|
$
|
308,679
|
|
|
$
|
(2,087
|
)
|
|
$
|
—
|
|
|
$
|
306,592
|
|
|
Advertising funds revenue
|
245,011
|
|
|
—
|
|
|
(245,011
|
)
|
|
—
|
|
||||
|
Total revenues
|
1,192,116
|
|
|
(2,087
|
)
|
|
(245,011
|
)
|
|
945,018
|
|
||||
|
Advertising funds expense
|
245,011
|
|
|
—
|
|
|
(245,011
|
)
|
|
—
|
|
||||
|
Total costs and expenses
|
988,023
|
|
|
—
|
|
|
(245,011
|
)
|
|
743,012
|
|
||||
|
Operating profit
|
204,093
|
|
|
(2,087
|
)
|
|
—
|
|
|
202,006
|
|
||||
|
Income before income taxes
|
555,534
|
|
|
(2,087
|
)
|
|
—
|
|
|
553,447
|
|
||||
|
Provision for income taxes
|
(114,250
|
)
|
|
533
|
|
|
—
|
|
|
(113,717
|
)
|
||||
|
Net income
|
441,284
|
|
|
(1,554
|
)
|
|
—
|
|
|
439,730
|
|
||||
|
(a)
|
The adjustments for the
three and nine months ended
September 30, 2018
include the reversal of franchise fees recognized over time under the new revenue recognition guidance of
$2,266
and
$7,393
, respectively, as well as franchisee fees that would have been recognized under the previous revenue recognition guidance when the license agreements were signed and the restaurant opened of
$1,769
and
$5,306
, respectively. See
Note 3
for further information.
|
|
|
|
|
Adjustments
|
|
|
||||||||||
|
|
As Reported
|
|
Franchise Fees
|
|
Advertising Funds
|
|
Balances Without Adoption
|
||||||||
|
Condensed Consolidated Statement of Cash Flows
|
|
|
|
|
|
|
|||||||||
|
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
|
Net income
|
$
|
441,284
|
|
|
$
|
(1,554
|
)
|
|
$
|
—
|
|
|
$
|
439,730
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
|
Deferred income tax
|
(1,527
|
)
|
|
(533
|
)
|
|
—
|
|
|
(2,060
|
)
|
||||
|
Other, net
|
4,596
|
|
|
(219
|
)
|
|
—
|
|
|
4,377
|
|
||||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Accrued expenses and other current liabilities
|
89,806
|
|
|
2,306
|
|
|
—
|
|
|
92,112
|
|
||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
September 30,
2018 |
|
September 30,
2018 |
||||
|
Primary geographical markets
|
|
|
|
||||
|
United States
|
$
|
375,938
|
|
|
$
|
1,121,518
|
|
|
Canada
|
19,738
|
|
|
56,156
|
|
||
|
International
|
4,874
|
|
|
14,442
|
|
||
|
Total revenue
|
$
|
400,550
|
|
|
$
|
1,192,116
|
|
|
|
|
|
|
||||
|
Sources of revenue
|
|
|
|
||||
|
Sales at Company-operated restaurants
|
$
|
165,323
|
|
|
$
|
486,316
|
|
|
Franchise royalty revenue
|
95,501
|
|
|
283,602
|
|
||
|
Franchise fees
|
7,711
|
|
|
25,077
|
|
||
|
Franchise rental income
|
50,474
|
|
|
152,110
|
|
||
|
Advertising funds revenue
|
81,541
|
|
|
245,011
|
|
||
|
Total revenue
|
$
|
400,550
|
|
|
$
|
1,192,116
|
|
|
|
September 30,
2018 (a)
|
||
|
Receivables, which are included in “Accounts and notes receivable, net” (b)
|
$
|
39,281
|
|
|
Receivables, which are included in “Advertising funds restricted assets”
|
42,226
|
|
|
|
Deferred franchise fees (c)
|
103,012
|
|
|
|
(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 statement of operations.
|
|
(b)
|
Includes receivables related to “
Sales
” and “
Franchise royalty revenue and fees
.”
|
|
(c)
|
Deferred franchise fees of
$10,490
and
$92,522
are included in “
Accrued expenses and other current liabilities
” and “
Deferred franchise fees
,” respectively.
|
|
|
Nine Months Ended
|
||
|
|
September 30,
2018 |
||
|
Deferred franchise fees at beginning of period
|
$
|
102,492
|
|
|
Revenue recognized during the period
|
(7,393
|
)
|
|
|
New deferrals due to cash received and other
|
7,913
|
|
|
|
Deferred franchise fees at end of period
|
$
|
103,012
|
|
|
Estimate for fiscal year:
|
|
||
|
2018 (a)
|
$
|
2,445
|
|
|
2019
|
7,774
|
|
|
|
2020
|
6,282
|
|
|
|
2021
|
5,749
|
|
|
|
2022
|
5,559
|
|
|
|
Thereafter
|
75,203
|
|
|
|
|
$
|
103,012
|
|
|
(a)
|
Represents franchise fees expected to be recognized for the remainder of the 2018 fiscal year, which includes development-related franchise fees expected to be recognized over a duration of one year or less.
|
|
|
Nine Months Ended
|
||
|
|
September 30,
2018 |
||
|
Restaurants acquired from franchisee
|
16
|
|
|
|
|
|
||
|
Total consideration paid, net of cash received
|
$
|
21,401
|
|
|
Identifiable assets acquired and liabilities assumed:
|
|
||
|
Properties
|
4,363
|
|
|
|
Acquired franchise rights
|
10,127
|
|
|
|
Capital lease assets
|
5,360
|
|
|
|
Other assets
|
621
|
|
|
|
Capital lease obligations
|
(3,135
|
)
|
|
|
Unfavorable leases
|
(733
|
)
|
|
|
Other liabilities
|
(1,960
|
)
|
|
|
Total identifiable net assets
|
14,643
|
|
|
|
Goodwill
|
$
|
6,758
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
Gain on sale of restaurants, net (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
89
|
|
|
$
|
—
|
|
|
Post-closing adjustments on sales of restaurants (b)
|
279
|
|
|
418
|
|
|
54
|
|
|
1,345
|
|
||||
|
Gain (loss) on sales of other assets, net (c)
|
207
|
|
|
(539
|
)
|
|
(135
|
)
|
|
2,040
|
|
||||
|
Gain (loss) on DavCo and NPC Transactions (d)
|
—
|
|
|
15
|
|
|
—
|
|
|
(43,134
|
)
|
||||
|
System optimization gains (losses), net
|
$
|
486
|
|
|
$
|
(106
|
)
|
|
$
|
8
|
|
|
$
|
(39,749
|
)
|
|
(a)
|
During the
nine months ended
September 30, 2018
, the Company received cash proceeds of
$1,436
from the sale of
three
Company-operated restaurants. Net assets sold totaled
$1,139
and consisted primarily of equipment. In addition, goodwill of
$208
was written off in connection with the sale.
|
|
(b)
|
The nine months ended
September 30, 2018
includes cash proceeds, net of payments of
$6
. The
three and nine months ended
October 1, 2017
includes cash payments, net of proceeds received, of
$333
and
$33
, respectively, related to post-closing reconciliations with franchisees. The
three and nine months ended
September 30, 2018
and the
nine months ended
October 1, 2017
include the recognition of deferred gains of
$503
and
$312
, respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.
|
|
(c)
|
During the three and nine months ended
September 30, 2018
, the Company received cash proceeds, primarily from the sale of surplus properties, of
$1,049
and
$1,421
, respectively, and received cash proceeds of
$2,411
and
$9,403
during the
three and nine months ended
October 1, 2017
, respectively. The
nine months ended
October 1, 2017
also includes the recognition of a deferred gain of
$375
related to the sale of a share in an aircraft.
|
|
(d)
|
As part of our system optimization initiative, the Company acquired
140
Wendy’s restaurants on May 31, 2017 from DavCo Restaurants, LLC (“DavCo”) for total net cash consideration of
$86,788
, which were immediately sold to NPC International, Inc. (“NPC”), an existing franchisee of the Company, for cash proceeds of
$70,688
(the “DavCo and NPC Transactions”). The acquisition of Wendy’s restaurants from DavCo was not contingent on executing the sale agreement with NPC; as such, the Company accounted for the transactions as an acquisition and subsequent disposition of a business. As part of the transactions, the Company retained leases for purposes of subleasing such properties to NPC.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
G&A realignment
|
$
|
629
|
|
|
$
|
2,656
|
|
|
$
|
6,375
|
|
|
$
|
19,901
|
|
|
System optimization initiative
|
312
|
|
|
232
|
|
|
316
|
|
|
867
|
|
||||
|
Reorganization and realignment costs
|
$
|
941
|
|
|
$
|
2,888
|
|
|
$
|
6,691
|
|
|
$
|
20,768
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Total
Incurred Since Inception |
||||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
|
|||||||||||
|
Severance and related employee costs
|
$
|
57
|
|
|
$
|
1,210
|
|
|
$
|
3,168
|
|
|
$
|
14,436
|
|
|
$
|
18,124
|
|
|
Recruitment and relocation costs
|
200
|
|
|
145
|
|
|
708
|
|
|
145
|
|
|
1,197
|
|
|||||
|
Third-party and other costs
|
39
|
|
|
496
|
|
|
971
|
|
|
821
|
|
|
2,062
|
|
|||||
|
|
296
|
|
|
1,851
|
|
|
4,847
|
|
|
15,402
|
|
|
21,383
|
|
|||||
|
Share-based compensation (a)
|
333
|
|
|
805
|
|
|
1,528
|
|
|
4,499
|
|
|
6,655
|
|
|||||
|
Total G&A realignment
|
$
|
629
|
|
|
$
|
2,656
|
|
|
$
|
6,375
|
|
|
$
|
19,901
|
|
|
$
|
28,038
|
|
|
(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.
|
|
|
Balance
December 31,
2017
|
|
Charges
|
|
Payments
|
|
Balance
September 30, 2018
|
||||||||
|
Severance and related employee costs
|
$
|
12,093
|
|
|
$
|
3,168
|
|
|
$
|
(7,103
|
)
|
|
$
|
8,158
|
|
|
Recruitment and relocation costs
|
177
|
|
|
708
|
|
|
(794
|
)
|
|
91
|
|
||||
|
Third-party and other costs
|
—
|
|
|
971
|
|
|
(971
|
)
|
|
—
|
|
||||
|
|
$
|
12,270
|
|
|
$
|
4,847
|
|
|
$
|
(8,868
|
)
|
|
$
|
8,249
|
|
|
|
Balance
January 1,
2017
|
|
Charges
|
|
Payments
|
|
Balance
October 1, 2017
|
||||||||
|
Severance and related employee costs
|
$
|
—
|
|
|
$
|
14,436
|
|
|
$
|
(1,350
|
)
|
|
$
|
13,086
|
|
|
Recruitment and relocation costs
|
—
|
|
|
145
|
|
|
(36
|
)
|
|
109
|
|
||||
|
Third-party and other costs
|
—
|
|
|
821
|
|
|
(821
|
)
|
|
—
|
|
||||
|
|
$
|
—
|
|
|
$
|
15,402
|
|
|
$
|
(2,207
|
)
|
|
$
|
13,195
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
||||
|
Balance at beginning of period
|
$
|
55,363
|
|
|
$
|
54,545
|
|
|
|
|
|
|
||||
|
Investment
|
13
|
|
|
375
|
|
||
|
|
|
|
|
||||
|
Equity in earnings for the period
|
7,566
|
|
|
7,844
|
|
||
|
Amortization of purchase price adjustments (a)
|
(1,756
|
)
|
|
(1,731
|
)
|
||
|
|
5,810
|
|
|
6,113
|
|
||
|
Distributions received (b)
|
(9,060
|
)
|
|
(8,128
|
)
|
||
|
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other
|
(191
|
)
|
|
4,304
|
|
||
|
Balance at end of period
|
$
|
51,935
|
|
|
$
|
57,209
|
|
|
(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
21
years.
|
|
(b)
|
The
nine months ended
October 1, 2017
included a distribution receivable from TimWen of
$2,604
, which was included in “
Accounts and notes receivable, net
.”
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
Series 2018-1 Class A-2 Notes:
|
|
|
|
||||
|
3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025
|
$
|
446,625
|
|
|
$
|
—
|
|
|
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028
|
471,438
|
|
|
—
|
|
||
|
Series 2015-1 Class A-2 Notes:
|
|
|
|
||||
|
3.371% Series 2015-1 Class A-2-I Notes, repaid with 2018 refinancing
|
—
|
|
|
855,313
|
|
||
|
4.080% Series 2015-1 Class A-2-II Notes, anticipated repayment date 2022
|
873,000
|
|
|
879,750
|
|
||
|
4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025
|
485,000
|
|
|
488,750
|
|
||
|
7% debentures, due in 2025
|
90,454
|
|
|
89,514
|
|
||
|
Capital lease obligations, due through 2045
|
458,347
|
|
|
467,964
|
|
||
|
Unamortized debt issuance costs
|
(33,807
|
)
|
|
(26,889
|
)
|
||
|
|
2,791,057
|
|
|
2,754,402
|
|
||
|
Less amounts payable within one year
|
(31,291
|
)
|
|
(30,172
|
)
|
||
|
Total long-term debt
|
$
|
2,759,766
|
|
|
$
|
2,724,230
|
|
|
•
|
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.
|
|
|
September 30,
2018 |
|
December 31,
2017 |
|
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Fair Value
Measurements
|
||||||||
|
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cash equivalents
|
$
|
444,012
|
|
|
$
|
444,012
|
|
|
$
|
338
|
|
|
$
|
338
|
|
|
Level 1
|
|
Non-current cost method investments (a)
|
640
|
|
|
2,409
|
|
|
639
|
|
|
327,710
|
|
|
Level 3
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
|
Series 2018-1 Class A-2-I Notes (b)
|
446,625
|
|
|
425,678
|
|
|
—
|
|
|
—
|
|
|
Level 2
|
||||
|
Series 2018-1 Class A-2-II Notes (b)
|
471,438
|
|
|
449,186
|
|
|
—
|
|
|
—
|
|
|
Level 2
|
||||
|
Series 2015-1 Class A-2-I Notes (b)
|
—
|
|
|
—
|
|
|
855,313
|
|
|
856,510
|
|
|
Level 2
|
||||
|
Series 2015-1 Class A-2-II Notes (b)
|
873,000
|
|
|
866,714
|
|
|
879,750
|
|
|
897,961
|
|
|
Level 2
|
||||
|
Series 2015-1 Class A-2-III Notes (b)
|
485,000
|
|
|
481,654
|
|
|
488,750
|
|
|
513,188
|
|
|
Level 2
|
||||
|
7% debentures, due in 2025 (b)
|
90,454
|
|
|
104,500
|
|
|
89,514
|
|
|
107,000
|
|
|
Level 2
|
||||
|
Guarantees of franchisee loan obligations (c)
|
22
|
|
|
22
|
|
|
37
|
|
|
37
|
|
|
Level 3
|
||||
|
(a)
|
The fair value of our indirect investment in Arby’s as of December 31, 2017 was based on applying a multiple to Arby’s adjusted earnings before income taxes, depreciation and amortization per its current unaudited financial information. The carrying value of our indirect investment in Arby’s was reduced to
zero
during 2013 in connection with the receipt of a dividend. On February 5, 2018, a subsidiary of ARG Parent acquired Buffalo Wild Wings, Inc. As a result, our ownership interest included both the Arby’s and Buffalo Wild Wings brands under the newly formed combined company, Inspire Brands. On August 16, 2018, the Company sold its remaining ownership interest to Inspire Brands for
$450,000
. See
Note 7
for further information. The fair values of our remaining 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
|
||||||||||||
|
|
September 30,
2018 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Held and used
|
$
|
226
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
226
|
|
|
Held for sale
|
1,115
|
|
|
—
|
|
|
—
|
|
|
1,115
|
|
||||
|
Total
|
$
|
1,341
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,341
|
|
|
|
|
|
Fair Value Measurements
|
||||||||||||
|
|
December 31,
2017 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Held and used
|
$
|
757
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
757
|
|
|
Held for sale
|
1,560
|
|
|
—
|
|
|
—
|
|
|
1,560
|
|
||||
|
Total
|
$
|
2,317
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,317
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
Surplus properties
|
$
|
229
|
|
|
$
|
113
|
|
|
$
|
270
|
|
|
$
|
658
|
|
|
Restaurants leased or subleased to franchisees
|
118
|
|
|
95
|
|
|
283
|
|
|
95
|
|
||||
|
Company-operated restaurants
|
—
|
|
|
833
|
|
|
1,603
|
|
|
1,051
|
|
||||
|
|
$
|
347
|
|
|
$
|
1,041
|
|
|
$
|
2,156
|
|
|
$
|
1,804
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||
|
Common stock:
|
|
|
|
|
|
|
|
||||
|
Weighted average basic shares outstanding
|
237,696
|
|
|
243,354
|
|
|
238,872
|
|
|
245,073
|
|
|
Dilutive effect of stock options and restricted shares
|
7,070
|
|
|
8,383
|
|
|
7,574
|
|
|
8,103
|
|
|
Weighted average diluted shares outstanding
|
244,766
|
|
|
251,737
|
|
|
246,446
|
|
|
253,176
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
Balance at beginning of period
|
$
|
430,539
|
|
|
$
|
487,049
|
|
|
$
|
573,203
|
|
|
$
|
527,736
|
|
|
Comprehensive income
|
396,564
|
|
|
23,488
|
|
|
436,347
|
|
|
52,978
|
|
||||
|
Cash dividends ($.085 and $.07 per share for the three months and $.255 and $.21 per share for the nine months ended September 30, 2018 and October 1, 2017, respectively)
|
(20,141
|
)
|
|
(17,017
|
)
|
|
(60,786
|
)
|
|
(51,464
|
)
|
||||
|
Repurchases of common stock
|
(56,421
|
)
|
|
(38,463
|
)
|
|
(141,615
|
)
|
|
(90,964
|
)
|
||||
|
Share-based compensation
|
4,810
|
|
|
4,984
|
|
|
14,401
|
|
|
16,356
|
|
||||
|
Exercises of stock options
|
29,075
|
|
|
4,033
|
|
|
35,889
|
|
|
10,194
|
|
||||
|
Vesting of restricted shares
|
(1,168
|
)
|
|
(1,528
|
)
|
|
(4,089
|
)
|
|
(4,260
|
)
|
||||
|
Cumulative effect of change in accounting principle (a)
|
—
|
|
|
—
|
|
|
(70,210
|
)
|
|
1,880
|
|
||||
|
Other
|
60
|
|
|
49
|
|
|
178
|
|
|
139
|
|
||||
|
Balance at end of period
|
$
|
783,318
|
|
|
$
|
462,595
|
|
|
$
|
783,318
|
|
|
$
|
462,595
|
|
|
(a)
|
During the
nine
months ended September 30, 2018, the Company recognized a net increase to “Accumulated deficit” of
$70,210
as a result of adoption of amended guidance for revenue recognition. The net increase resulted from an increase to deferred franchise fees of
$85,561
and a decrease to “
Deferred income taxes
” of
$21,996
as a result of now deferring franchise fees over the contractual term of the franchise agreements. Additionally, an increase to “
Advertising funds restricted liabilities
” of
$6,645
was recognized as a result of a reclassification of the total stockholders’ deficit of the Advertising Funds as of December 31, 2017. See
Note 2
for further information.
|
|
|
Foreign Currency Translation
|
|
Cash Flow Hedges (a)
|
|
Pension
|
|
Total
|
||||||||
|
Balance at December 31, 2017
|
$
|
(45,149
|
)
|
|
$
|
—
|
|
|
$
|
(1,049
|
)
|
|
$
|
(46,198
|
)
|
|
Current-period other comprehensive (loss) income
|
(5,054
|
)
|
|
—
|
|
|
117
|
|
|
(4,937
|
)
|
||||
|
Balance at September 30, 2018
|
$
|
(50,203
|
)
|
|
$
|
—
|
|
|
$
|
(932
|
)
|
|
$
|
(51,135
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at January 1, 2017
|
$
|
(60,299
|
)
|
|
$
|
(1,797
|
)
|
|
$
|
(1,145
|
)
|
|
$
|
(63,241
|
)
|
|
Current-period other comprehensive income
|
16,797
|
|
|
1,332
|
|
|
96
|
|
|
18,225
|
|
||||
|
Balance at October 1, 2017
|
$
|
(43,502
|
)
|
|
$
|
(465
|
)
|
|
$
|
(1,049
|
)
|
|
$
|
(45,016
|
)
|
|
(a)
|
Current-period other comprehensive income included the reclassification of unrealized losses on cash flow hedges from “Accumulated other comprehensive loss” to our condensed consolidated statements of operations of
$444
and
$1,332
for the three and nine months ended October 1, 2017, respectively. The reclassification of unrealized losses on cash flow hedges consisted of
$723
and
$2,170
for the three and nine months ended October 1, 2017, respectively, recorded to “Interest expense, net,” net of the related income tax benefit of
$279
and
$838
for the three and nine months ended October 1, 2017, respectively, recorded to “Provision for income taxes.”
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
Rental expense:
|
|
|
|
|
|
|
|
||||||||
|
Minimum rentals
|
$
|
22,814
|
|
|
$
|
23,997
|
|
|
$
|
72,738
|
|
|
$
|
66,701
|
|
|
Contingent rentals
|
5,061
|
|
|
5,395
|
|
|
14,522
|
|
|
14,405
|
|
||||
|
Total rental expense (a) (b)
|
$
|
27,875
|
|
|
$
|
29,392
|
|
|
$
|
87,260
|
|
|
$
|
81,106
|
|
|
(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.”
|
|
(b)
|
Amounts exclude sublease income of
$34,097
and
$103,353
recognized during the
three and nine months ended
September 30, 2018
, respectively, and
$35,022
and
$92,434
recognized during the
three and nine months ended
October 1, 2017
, respectively.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
|
Rental income:
|
|
|
|
|
|
|
|
||||||||
|
Minimum rentals
|
$
|
45,291
|
|
|
$
|
44,682
|
|
|
$
|
137,549
|
|
|
$
|
124,847
|
|
|
Contingent rentals
|
5,183
|
|
|
5,593
|
|
|
14,561
|
|
|
15,280
|
|
||||
|
Total rental income
|
$
|
50,474
|
|
|
$
|
50,275
|
|
|
$
|
152,110
|
|
|
$
|
140,127
|
|
|
|
Rental Payments
|
|
Rental Receipts
|
||||||||||||||||
|
Fiscal Year
|
Capital
Leases
|
|
Operating
Leases
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Owned
Properties
|
||||||||||
|
2018 (a)
|
$
|
12,967
|
|
|
$
|
25,217
|
|
|
$
|
16,007
|
|
|
$
|
18,911
|
|
|
$
|
13,488
|
|
|
2019
|
45,323
|
|
|
95,216
|
|
|
64,376
|
|
|
76,044
|
|
|
54,736
|
|
|||||
|
2020
|
46,252
|
|
|
94,079
|
|
|
65,467
|
|
|
75,810
|
|
|
55,348
|
|
|||||
|
2021
|
47,849
|
|
|
93,580
|
|
|
67,267
|
|
|
75,771
|
|
|
56,943
|
|
|||||
|
2022
|
48,937
|
|
|
93,304
|
|
|
68,451
|
|
|
76,222
|
|
|
58,514
|
|
|||||
|
Thereafter
|
751,317
|
|
|
1,145,074
|
|
|
1,034,322
|
|
|
935,083
|
|
|
948,620
|
|
|||||
|
Total minimum payments
|
$
|
952,645
|
|
|
$
|
1,546,470
|
|
|
$
|
1,315,890
|
|
|
$
|
1,257,841
|
|
|
$
|
1,187,649
|
|
|
Less interest
|
(494,298
|
)
|
|
|
|
|
|
|
|
|
|||||||||
|
Present value of minimum capital lease payments (b)
|
$
|
458,347
|
|
|
|
|
|
|
|
|
|
||||||||
|
(a)
|
Represents future minimum rental payments and rental receipts for non-cancelable leases and subleases for the remainder of the 2018 fiscal year.
|
|
(b)
|
The present value of minimum capital lease payments of
$8,041
and
$450,306
are included in “Current portion of long-term debt” and “Long-term debt,” respectively.
|
|
|
September 30,
2018 |
|
December 31, 2017
|
||||
|
Land
|
$
|
272,730
|
|
|
$
|
272,411
|
|
|
Buildings and improvements
|
313,706
|
|
|
313,108
|
|
||
|
Restaurant equipment
|
2,443
|
|
|
2,444
|
|
||
|
|
588,879
|
|
|
587,963
|
|
||
|
Accumulated depreciation and amortization
|
(139,802
|
)
|
|
(128,003
|
)
|
||
|
|
$
|
449,077
|
|
|
$
|
459,960
|
|
|
|
September 30,
2018 |
|
December 31, 2017
|
||||
|
Future minimum rental receipts
|
$
|
633,039
|
|
|
$
|
662,889
|
|
|
Unearned interest income
|
(406,230
|
)
|
|
(433,175
|
)
|
||
|
Net investment in direct financing leases
|
226,809
|
|
|
229,714
|
|
||
|
Net current investment in direct financing leases (a)
|
(660
|
)
|
|
(625
|
)
|
||
|
Net non-current investment in direct financing leases
|
$
|
226,149
|
|
|
$
|
229,089
|
|
|
(a)
|
Included in “Accounts and notes receivable, net.”
|
|
•
|
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. Same-restaurant sales exclude the impact of currency translation.
|
|
•
|
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 restaurant 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 therefore on the Company’s profitability.
|
|
|
Third Quarter
|
|
Nine Months
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Sales
|
$
|
165.3
|
|
|
$
|
158.8
|
|
|
$
|
6.5
|
|
|
$
|
486.3
|
|
|
$
|
467.9
|
|
|
$
|
18.4
|
|
|
Franchise royalty revenue and fees
|
103.2
|
|
|
98.9
|
|
|
4.3
|
|
|
308.7
|
|
|
306.1
|
|
|
2.6
|
|
||||||
|
Franchise rental income
|
50.5
|
|
|
50.3
|
|
|
0.2
|
|
|
152.1
|
|
|
140.2
|
|
|
11.9
|
|
||||||
|
Advertising funds revenue
|
81.6
|
|
|
—
|
|
|
81.6
|
|
|
245.0
|
|
|
—
|
|
|
245.0
|
|
||||||
|
|
400.6
|
|
|
308.0
|
|
|
92.6
|
|
|
1,192.1
|
|
|
914.2
|
|
|
277.9
|
|
||||||
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cost of sales
|
139.3
|
|
|
133.6
|
|
|
5.7
|
|
|
409.7
|
|
|
388.8
|
|
|
20.9
|
|
||||||
|
Franchise support and other costs
|
5.4
|
|
|
3.7
|
|
|
1.7
|
|
|
18.6
|
|
|
11.1
|
|
|
7.5
|
|
||||||
|
Franchise rental expense
|
22.3
|
|
|
24.1
|
|
|
(1.8
|
)
|
|
69.8
|
|
|
64.8
|
|
|
5.0
|
|
||||||
|
Advertising funds expense
|
81.6
|
|
|
—
|
|
|
81.6
|
|
|
245.0
|
|
|
—
|
|
|
245.0
|
|
||||||
|
General and administrative
|
46.5
|
|
|
51.7
|
|
|
(5.2
|
)
|
|
146.1
|
|
|
153.1
|
|
|
(7.0
|
)
|
||||||
|
Depreciation and amortization
|
29.1
|
|
|
31.2
|
|
|
(2.1
|
)
|
|
94.6
|
|
|
91.7
|
|
|
2.9
|
|
||||||
|
System optimization (gains) losses, net
|
(0.5
|
)
|
|
0.1
|
|
|
(0.6
|
)
|
|
—
|
|
|
39.7
|
|
|
(39.7
|
)
|
||||||
|
Reorganization and realignment costs
|
0.9
|
|
|
2.9
|
|
|
(2.0
|
)
|
|
6.7
|
|
|
20.8
|
|
|
(14.1
|
)
|
||||||
|
Impairment of long-lived assets
|
0.3
|
|
|
1.0
|
|
|
(0.7
|
)
|
|
2.2
|
|
|
1.8
|
|
|
0.4
|
|
||||||
|
Other operating income, net
|
(1.6
|
)
|
|
(2.0
|
)
|
|
0.4
|
|
|
(4.7
|
)
|
|
(5.8
|
)
|
|
1.1
|
|
||||||
|
|
323.3
|
|
|
246.3
|
|
|
77.0
|
|
|
988.0
|
|
|
766.0
|
|
|
222.0
|
|
||||||
|
Operating profit
|
77.3
|
|
|
61.7
|
|
|
15.6
|
|
|
204.1
|
|
|
148.2
|
|
|
55.9
|
|
||||||
|
Interest expense, net
|
(29.6
|
)
|
|
(30.0
|
)
|
|
0.4
|
|
|
(89.9
|
)
|
|
(87.9
|
)
|
|
(2.0
|
)
|
||||||
|
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
|
|
(11.5
|
)
|
||||||
|
Investment income (loss), net
|
450.1
|
|
|
(0.6
|
)
|
|
450.7
|
|
|
450.4
|
|
|
2.1
|
|
|
448.3
|
|
||||||
|
Other income, net
|
1.1
|
|
|
0.5
|
|
|
0.6
|
|
|
2.4
|
|
|
1.0
|
|
|
1.4
|
|
||||||
|
Income before income taxes
|
498.9
|
|
|
31.6
|
|
|
467.3
|
|
|
555.5
|
|
|
63.4
|
|
|
492.1
|
|
||||||
|
Provision for income taxes
|
(107.7
|
)
|
|
(17.3
|
)
|
|
(90.4
|
)
|
|
(114.2
|
)
|
|
(28.6
|
)
|
|
(85.6
|
)
|
||||||
|
Net income
|
$
|
391.2
|
|
|
$
|
14.3
|
|
|
$
|
376.9
|
|
|
$
|
441.3
|
|
|
$
|
34.8
|
|
|
$
|
406.5
|
|
|
|
Third Quarter
|
|
Nine Months
|
||||||||||||||||||||||||
|
|
2018
|
|
% of
Total Revenues
|
|
2017
|
|
% of
Total Revenues
|
|
2018
|
|
% of
Total Revenues
|
|
2017
|
|
% of
Total Revenues
|
||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Sales
|
$
|
165.3
|
|
|
41.3
|
%
|
|
$
|
158.8
|
|
|
51.6
|
%
|
|
$
|
486.3
|
|
|
40.8
|
%
|
|
$
|
467.9
|
|
|
51.2
|
%
|
|
Franchise royalty revenue and fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Royalty revenue
|
95.5
|
|
|
23.8
|
%
|
|
93.7
|
|
|
30.4
|
%
|
|
283.6
|
|
|
23.8
|
%
|
|
275.0
|
|
|
30.1
|
%
|
||||
|
Franchise fees
|
7.7
|
|
|
1.9
|
%
|
|
5.2
|
|
|
1.7
|
%
|
|
25.1
|
|
|
2.1
|
%
|
|
31.1
|
|
|
3.4
|
%
|
||||
|
Total franchise royalty revenue and fees
|
103.2
|
|
|
25.7
|
%
|
|
98.9
|
|
|
32.1
|
%
|
|
308.7
|
|
|
25.9
|
%
|
|
306.1
|
|
|
33.5
|
%
|
||||
|
Franchise rental income
|
50.5
|
|
|
12.6
|
%
|
|
50.3
|
|
|
16.3
|
%
|
|
152.1
|
|
|
12.8
|
%
|
|
140.2
|
|
|
15.3
|
%
|
||||
|
Advertising funds revenue
|
81.6
|
|
|
20.4
|
%
|
|
—
|
|
|
—
|
%
|
|
245.0
|
|
|
20.5
|
%
|
|
—
|
|
|
—
|
%
|
||||
|
Total revenues
|
$
|
400.6
|
|
|
100.0
|
%
|
|
$
|
308.0
|
|
|
100.0
|
%
|
|
$
|
1,192.1
|
|
|
100.0
|
%
|
|
$
|
914.2
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Third Quarter
|
|
Nine Months
|
||||||||||||||||||||||||
|
|
2018
|
|
% of
Sales |
|
2017
|
|
% of
Sales |
|
2018
|
|
% of
Sales |
|
2017
|
|
% of
Sales |
||||||||||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Food and paper
|
$
|
53.0
|
|
|
32.1
|
%
|
|
$
|
51.8
|
|
|
32.6
|
%
|
|
$
|
154.8
|
|
|
31.8
|
%
|
|
$
|
147.1
|
|
|
31.4
|
%
|
|
Restaurant labor
|
48.4
|
|
|
29.3
|
%
|
|
46.3
|
|
|
29.2
|
%
|
|
144.1
|
|
|
29.6
|
%
|
|
137.7
|
|
|
29.5
|
%
|
||||
|
Occupancy, advertising and other operating costs
|
37.9
|
|
|
22.9
|
%
|
|
35.5
|
|
|
22.3
|
%
|
|
110.8
|
|
|
22.8
|
%
|
|
104.0
|
|
|
22.2
|
%
|
||||
|
Total cost of sales
|
$
|
139.3
|
|
|
84.3
|
%
|
|
$
|
133.6
|
|
|
84.1
|
%
|
|
$
|
409.7
|
|
|
84.2
|
%
|
|
$
|
388.8
|
|
|
83.1
|
%
|
|
|
Third Quarter
|
|
Nine Months
|
||||||||||||||||||||||||
|
|
2018
|
|
% of
Sales
|
|
2017
|
|
% of
Sales
|
|
2018
|
|
% of
Sales
|
|
2017
|
|
% of
Sales
|
||||||||||||
|
Restaurant margin
|
$
|
26.0
|
|
|
15.7
|
%
|
|
$
|
25.2
|
|
|
15.9
|
%
|
|
$
|
76.6
|
|
|
15.8
|
%
|
|
$
|
79.1
|
|
|
16.9
|
%
|
|
|
Third Quarter
|
|
Nine Months
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
Key business measures:
|
|
|
|
|
|
|
|
||||
|
North America same-restaurant sales:
|
|
|
|
|
|
|
|
||||
|
Company-operated
|
1.2
|
%
|
|
(0.5
|
)%
|
|
1.4
|
%
|
|
0.7
|
%
|
|
Franchised
|
(0.3
|
)%
|
|
2.1
|
%
|
|
1.1
|
%
|
|
2.4
|
%
|
|
Systemwide
|
(0.2
|
)%
|
|
2.0
|
%
|
|
1.1
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
Total same-restaurant sales:
|
|
|
|
|
|
|
|
||||
|
Company-operated
|
1.2
|
%
|
|
(0.5
|
)%
|
|
1.4
|
%
|
|
0.7
|
%
|
|
Franchised (a)
|
(0.1
|
)%
|
|
2.1
|
%
|
|
1.3
|
%
|
|
2.4
|
%
|
|
Systemwide (a)
|
0.0
|
%
|
|
1.9
|
%
|
|
1.3
|
%
|
|
2.3
|
%
|
|
|
Third Quarter
|
|
Nine Months
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Key business measures (continued):
|
|
|
|
|
|
|
|
||||||||
|
Systemwide sales: (a)
|
|
|
|
|
|
|
|
||||||||
|
Company-operated
|
$
|
165.3
|
|
|
$
|
158.8
|
|
|
$
|
486.3
|
|
|
$
|
467.9
|
|
|
North America franchised
|
2,358.5
|
|
|
2,347.2
|
|
|
7,043.4
|
|
|
6,897.4
|
|
||||
|
International franchised (b)
|
126.5
|
|
|
119.4
|
|
|
385.8
|
|
|
351.6
|
|
||||
|
Global systemwide sales
|
$
|
2,650.3
|
|
|
$
|
2,625.4
|
|
|
$
|
7,915.5
|
|
|
$
|
7,716.9
|
|
|
(a)
|
During the
third
quarter of
2018
and
2017
, North America systemwide sales increased
1.2%
and
3.0%
, respectively, international franchised sales increased
13.2%
and
13.4%
, respectively, and global systemwide sales increased
1.7%
and
3.4%
, respectively, on a constant currency basis. During the first
nine months
of
2018
and
2017
, North America systemwide sales increased
2.2%
and
3.2%
, respectively, international franchised sales increased
13.2%
and
15.0%
, respectively, and global systemwide sales increased
2.7%
and
3.7%
, 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.
|
|
|
Third Quarter
|
||||||||||
|
|
Company-operated
|
|
North America Franchised
|
|
International Franchised
|
|
Systemwide
|
||||
|
Restaurant count:
|
|
|
|
|
|
|
|
||||
|
Restaurant count at July 1, 2018
|
332
|
|
|
5,802
|
|
|
522
|
|
|
6,656
|
|
|
Opened
|
2
|
|
|
21
|
|
|
14
|
|
|
37
|
|
|
Closed
|
—
|
|
|
(16
|
)
|
|
(8
|
)
|
|
(24
|
)
|
|
Net purchased from (sold by) franchisees
|
16
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
Restaurant count at September 30, 2018
|
350
|
|
|
5,791
|
|
|
528
|
|
|
6,669
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Nine Months
|
||||||||||
|
|
Company-operated
|
|
North America Franchised
|
|
International Franchised
|
|
Systemwide
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Restaurant count at December 31, 2017
|
337
|
|
|
5,793
|
|
|
504
|
|
|
6,634
|
|
|
Opened
|
3
|
|
|
61
|
|
|
42
|
|
|
106
|
|
|
Closed
|
(4
|
)
|
|
(49
|
)
|
|
(18
|
)
|
|
(71
|
)
|
|
Net purchased from (sold by) franchisees
|
14
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
Restaurant count at September 30, 2018
|
350
|
|
|
5,791
|
|
|
528
|
|
|
6,669
|
|
|
Sales
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Sales
|
$
|
6.5
|
|
|
$
|
18.4
|
|
|
Franchise Royalty Revenue and Fees
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Royalty revenue
|
$
|
1.8
|
|
|
$
|
8.6
|
|
|
Franchise fees
|
2.5
|
|
|
(6.0
|
)
|
||
|
|
$
|
4.3
|
|
|
$
|
2.6
|
|
|
Franchise Rental Income
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Franchise rental income
|
$
|
0.2
|
|
|
$
|
11.9
|
|
|
Advertising Funds Revenue
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Advertising funds revenue
|
$
|
81.6
|
|
|
$
|
245.0
|
|
|
Cost of Sales, as a Percent of Sales
|
Change
|
||||
|
|
Third
Quarter |
|
Nine
Months |
||
|
Food and paper
|
(0.5
|
)%
|
|
0.4
|
%
|
|
Restaurant labor
|
0.1
|
%
|
|
0.1
|
%
|
|
Occupancy, advertising and other operating costs
|
0.6
|
%
|
|
0.6
|
%
|
|
|
0.2
|
%
|
|
1.1
|
%
|
|
Franchise Support and Other Costs
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Franchise support and other costs
|
$
|
1.7
|
|
|
$
|
7.5
|
|
|
Franchise Rental Expense
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Franchise rental expense
|
$
|
(1.8
|
)
|
|
$
|
5.0
|
|
|
Advertising Funds Expense
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Advertising funds expense
|
$
|
81.6
|
|
|
$
|
245.0
|
|
|
General and Administrative
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Employee compensation and related expenses
|
$
|
(3.4
|
)
|
|
$
|
(4.3
|
)
|
|
Professional services
|
0.1
|
|
|
(1.8
|
)
|
||
|
Other, net
|
(1.9
|
)
|
|
(0.9
|
)
|
||
|
|
$
|
(5.2
|
)
|
|
$
|
(7.0
|
)
|
|
Depreciation and Amortization
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Restaurants
|
$
|
(2.8
|
)
|
|
$
|
(0.3
|
)
|
|
Corporate and other
|
0.7
|
|
|
3.2
|
|
||
|
|
$
|
(2.1
|
)
|
|
$
|
2.9
|
|
|
System Optimization (Gains) Losses, Net
|
Third Quarter
|
|
Nine Months
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
System optimization (gains) losses, net
|
$
|
(0.5
|
)
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
39.7
|
|
|
Reorganization and Realignment Costs
|
Third Quarter
|
|
Nine Months
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
G&A realignment
|
$
|
0.6
|
|
|
$
|
2.7
|
|
|
$
|
6.4
|
|
|
$
|
19.9
|
|
|
System optimization initiative
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
|
0.9
|
|
||||
|
|
$
|
0.9
|
|
|
$
|
2.9
|
|
|
$
|
6.7
|
|
|
$
|
20.8
|
|
|
Impairment of Long-Lived Assets
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Impairment of long-lived assets
|
$
|
(0.7
|
)
|
|
$
|
0.4
|
|
|
Other Operating Income, Net
|
Third Quarter
|
|
Nine Months
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Lease buyout
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
$
|
0.9
|
|
|
$
|
0.1
|
|
|
Equity in earnings in joint ventures, net
|
(2.2
|
)
|
|
(2.3
|
)
|
|
(5.8
|
)
|
|
(6.1
|
)
|
||||
|
Other, net
|
0.3
|
|
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
||||
|
|
$
|
(1.6
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(4.7
|
)
|
|
$
|
(5.8
|
)
|
|
Interest Expense, Net
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Interest expense, net
|
$
|
(0.4
|
)
|
|
$
|
2.0
|
|
|
Loss on Early Extinguishment of Debt
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Loss on early extinguishment of debt
|
$
|
—
|
|
|
$
|
11.5
|
|
|
Investment Income (Loss), Net
|
Change
|
||||||
|
|
Third
Quarter |
|
Nine
Months |
||||
|
Investment income (loss), net
|
$
|
450.7
|
|
|
$
|
448.3
|
|
|
Provision for Income Taxes
|
Third Quarter
|
|
Nine Months
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Income before income taxes
|
$
|
498.9
|
|
|
$
|
31.6
|
|
|
$
|
555.5
|
|
|
$
|
63.4
|
|
|
Provision for income taxes
|
107.7
|
|
|
17.3
|
|
|
114.2
|
|
|
28.6
|
|
||||
|
Effective tax rate on income
|
21.6
|
%
|
|
54.8
|
%
|
|
20.6
|
%
|
|
45.2
|
%
|
||||
|
•
|
capital expenditures of approximately $30.0 million to $35.0 million, resulting in total anticipated cash capital expenditures for the year of approximately $70.0 million to $75.0 million.
|
|
•
|
cash dividends aggregating up to approximately
$20.1 million
as discussed below in “Dividends;” and
|
|
•
|
potential stock repurchases as discussed below in “Stock Repurchases.”
|
|
|
Nine Months
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
|
Net cash provided by (used in):
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
229.7
|
|
|
$
|
160.3
|
|
|
$
|
69.4
|
|
|
Investing activities
|
391.4
|
|
|
(61.7
|
)
|
|
453.1
|
|
|||
|
Financing activities
|
(151.0
|
)
|
|
(156.9
|
)
|
|
5.9
|
|
|||
|
Effect of exchange rate changes on cash
|
(2.1
|
)
|
|
6.9
|
|
|
(9.0
|
)
|
|||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
468.0
|
|
|
$
|
(51.4
|
)
|
|
$
|
519.4
|
|
|
Announced
|
|
Expiration Date
|
|
Authorization
|
|
Utilization
|
|
Availability Remaining
|
||||||
|
February 2018
|
|
March 3, 2019
|
|
$
|
175.0
|
|
|
$
|
118.9
|
|
|
$
|
56.1
|
|
|
August 2018
|
|
December 27, 2019
|
|
100.0
|
|
|
—
|
|
|
100.0
|
|
|||
|
|
|
|
|
$
|
275.0
|
|
|
$
|
118.9
|
|
|
$
|
156.1
|
|
|
•
|
competition, including pricing pressures, couponing, aggressive marketing and the potential impact of competitors’ new unit openings on sales of Wendy’s restaurants;
|
|
•
|
consumers’ perceptions of the relative quality, variety, affordability and value of the food products we offer;
|
|
•
|
food safety events, including instances of food-borne illness (such as salmonella or E. coli) involving Wendy’s or its supply chain;
|
|
•
|
consumer concerns over nutritional aspects of beef, poultry, french fries or other products we sell, concerns regarding the ingredients in our products and/or cooking processes used in our restaurants, or concerns regarding the effects of disease outbreaks, epidemics or pandemics impacting the Company’s customers or food supplies;
|
|
•
|
the effects of negative publicity that can occur from increased use of social media;
|
|
•
|
success of operating and marketing initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors;
|
|
•
|
the impact of general economic conditions and increases in unemployment rates on consumer spending, particularly in geographic regions that contain a high concentration of Wendy’s restaurants;
|
|
•
|
changes in consumer tastes and preferences, and in discretionary consumer spending;
|
|
•
|
changes in spending patterns and demographic trends, such as the extent to which consumers eat meals away from home;
|
|
•
|
certain factors affecting our franchisees, including the business and financial viability of franchisees, the timely payment of such franchisees’ obligations due to us or to national or local advertising organizations, and the ability of our franchisees to open new restaurants and remodel existing restaurants in accordance with their development and franchise commitments, including their ability to finance restaurant development and remodels;
|
|
•
|
increased labor costs due to competition or increased minimum wage or employee benefit costs;
|
|
•
|
changes in commodity costs (including beef, chicken, pork, cheese and grains), labor, supplies, fuel, utilities, distribution and other operating costs;
|
|
•
|
availability, location and terms of sites for restaurant development by us and our franchisees;
|
|
•
|
development costs, including real estate and construction costs;
|
|
•
|
delays in opening new restaurants or completing reimages of existing restaurants, including risks associated with the Image Activation program;
|
|
•
|
the timing and impact of acquisitions and dispositions of restaurants;
|
|
•
|
anticipated or unanticipated restaurant closures by us and our franchisees;
|
|
•
|
our ability to identify, attract and retain potential franchisees with sufficient experience and financial resources to develop and operate Wendy’s restaurants successfully;
|
|
•
|
availability of qualified restaurant personnel to us and to our franchisees, and the ability to retain such personnel;
|
|
•
|
our ability, if necessary, to secure alternative distribution of supplies of food, equipment and other products to Wendy’s restaurants at competitive rates and in adequate amounts, and the potential financial impact of any interruptions in such distribution;
|
|
•
|
availability and cost of insurance;
|
|
•
|
adverse weather conditions;
|
|
•
|
availability, terms (including changes in interest rates) and deployment of capital;
|
|
•
|
changes in, and our ability to comply with, legal, regulatory or similar requirements, including franchising laws, payment card industry rules, overtime rules, minimum wage rates, wage and hour laws, tax legislation, federal ethanol policy and accounting standards (including the new guidance on leases that will become effective for fiscal year 2019);
|
|
•
|
the costs, uncertainties and other effects of legal, environmental and administrative proceedings;
|
|
•
|
the effects of charges for impairment of goodwill or for the impairment of other long-lived assets;
|
|
•
|
the effects of war or terrorist activities;
|
|
•
|
risks associated with failures, interruptions or security breaches of the Company’s computer systems or technology, or the occurrence of cyber incidents or a deficiency in cybersecurity that impacts the Company or its franchisees, including the cybersecurity incident described in Item 2 above;
|
|
•
|
the difficulty in predicting the ultimate costs that will be incurred in connection with the Company’s plan to reduce its general and administrative expense, and the future impact on the Company’s earnings;
|
|
•
|
risks associated with the Company’s securitized financing facility, including the ability to generate sufficient cash flow to meet increased debt service obligations, compliance with operational and financial covenants, and restrictions on the Company’s ability to raise additional capital;
|
|
•
|
risks associated with the amount and timing of share repurchases under the share repurchase programs approved by the Board of Directors; and
|
|
•
|
other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2017
(the “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 SEC.
|
|
Period
|
Total Number of Shares Purchased (1)
|
Average
Price Paid
per Share
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plans
|
Approximate Dollar
Value of Shares
that May Yet Be
Purchased Under
the Plans (2)
|
||||||
|
July 2, 2018
through August 5, 2018 |
1,136,233
|
|
|
$17.20
|
|
1,128,554
|
|
|
$93,114,300
|
|
|
August 6, 2018
through September 2, 2018 |
815,688
|
|
|
$17.89
|
|
747,288
|
|
|
$179,716,861
|
|
|
September 3, 2018
through September 30, 2018 |
1,345,861
|
|
|
$17.55
|
|
1,344,926
|
|
|
$156,134,246
|
|
|
Total
|
3,297,782
|
|
|
$17.51
|
|
3,220,768
|
|
|
$156,134,246
|
|
|
(1)
|
Includes
77,014
shares reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective awards. 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 2018, our Board of Directors authorized the repurchase of up to
$175.0 million
of our common stock through March 3, 2019, when and if market conditions warrant and to the extent legally permissible. In August 2018, our Board of Directors authorized an additional share repurchase program for up to
$100.0 million
of our common stock through December 27, 2019, when and if market conditions warrant and to the extent legally
permissible
.
|
|
EXHIBIT NO.
|
DESCRIPTION
|
|
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
|
*
|
Filed herewith.
|
|
|
THE WENDY’S COMPANY
(Registrant)
|
|
Date: November 6, 2018
|
By:
/s/ Gunther Plosch
|
|
|
Gunther Plosch
|
|
|
Chief Financial Officer
|
|
|
(On behalf of the registrant)
|
|
|
|
|
Date: November 6, 2018
|
By:
/s/ Leigh A. Burnside
|
|
|
Leigh A. Burnside
|
|
|
Chief Accounting Officer
|
|
|
(Principal Accounting Officer)
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
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