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Wendy’s Announces Strong 2007 Second-Quarter Results
Income from continuing operations increased 214.8% to $29.3 million, up from $9.3 million a year ago
Diluted EPS from continuing operations were $0.33, compared to $0.08 a year ago
Total EBITDA from continuing operations increased 90.2% to $84.7 million, up from $44.5 million a year ago
Wendy’s U.S. company-operated restaurant EBITDA margins increased 100 basis points
DUBLIN, Ohio (July 26, 2007) – Wendy’s International, Inc. (NYSE: WEN) today announced its financial results for the second quarter of 2007.
The Company reported income from continuing operations of $29.3 million and diluted earnings per share of $0.33 in the second quarter of 2007, compared to $9.3 million and $0.08 per share in the second quarter of 2006.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $84.7 million in the second quarter of 2007, up from $44.5 million in the second quarter of 2006. Excluding pension settlement charges, expenses related to the Board’s Special Committee and restructuring charges, second quarter 2007 EBITDA would have been $95.3 million. (See: “Disclosure regarding non-GAAP financial measures” below).
“We delivered significantly improved results versus a year ago,” said Chief Executive Officer and President Kerrii Anderson. “Our income and EBITDA results are encouraging and store operating margins continue to expand as we execute our strategic plan.”
Second Quarter Highlights
- Average same-store sales were up 0.7% for U.S. company-operated restaurants and 0.4% for U.S. franchise restaurants. Wendy’s® has now produced 13 consecutive months of positive same-store sales.
- The Company and its franchisees opened a total of 39 new Wendy’s restaurants during the second quarter of 2007. The openings consisted of 9 company-operated restaurants and 30 franchised restaurants. The total number of systemwide Wendy’s restaurants at the end of the second quarter in 2007 was lower at 6,661, compared to 6,673 at year-end 2006 and 6,743 at the end of the second quarter in 2006, reflecting closures of underperforming restaurants.
- Total revenues were $632.9 million in the second quarter of 2007, down 0.2% compared to $634.1 million in the second quarter of 2006.
- Company-operated restaurant EBITDA margins were 11.8% in the second quarter of 2007, compared to 11.2% one year ago. This includes U.S., Canada and International operations. U.S. company-operated restaurant EBITDA margins improved 100 basis points to 12.1% in the second quarter of 2007, compared to 11.1% in the second quarter of 2006.
- Pretax income from continuing operations was $47.4 million in the second quarter of 2007, compared to pretax income from continuing operations of $14.8 million in the second quarter of 2006. Net income increased to $29.2 million in the second quarter of 2007, compared to a loss of $29.1 million in the second quarter of 2006.
“We are revitalizing the Wendy’s brand with innovative product introductions, a new advertising campaign and improving operations,” said Anderson. “Our U.S. company-operated restaurant EBITDA margin improvement was the result of strategic initiatives we began implementing this year – an effective menu management strategy and more efficient operations. We believe that price increases, which are impacting transactions in the short term, will position us to produce profit expansion in the longer term. We have good momentum in the business as we focus on improving profits in every restaurant in the Wendy’s system.”
Wendy’s featuring innovative, high-quality products and “That’s Right.™”campaign
In the second quarter, Wendy’s rolled out several new menu offerings, including its Steakhouse Double-Melt cheeseburgers in April, its Frosty™ Float and 99-cent Buffalo Crispy Chicken sandwich in May, and its new $1.99 Triple Stack cheeseburger in June.
In May, the Company announced its new coffee: Wendy’s Custom Bean™ - a proprietary blend of Folgers Gourmet Selections™. In July, Wendy’s began promoting the Baconator™, its new hot, juicy hamburger featuring a half pound of fresh, never frozen, beef, six strips of hickory smoked bacon, American cheese, ketchup and mayonnaise.
During the quarter, Wendy’s launched its new “That’s Right” advertising campaign which highlights Wendy’s fresh, never frozen, beef.
“We are very encouraged by the positive consumer reaction to our new
‘That’s Right’ advertising campaign, and we’re stepping up the creative use of our ‘Red Wig’ icon in our marketing efforts – TV advertising, on-line, in-store and more,” said Wendy’s Chief Marketing Officer Ian Rowden. “After only six weeks, national consumer research shows more than half of the respondents can play back the ‘I deserve a hot, juicy burger’ line from our advertising campaign and immediately associate the ‘Red Wig’ with Wendy’s. This is a key reason our core hamburger business is growing.”
In addition, Wendy’s raised $1.2 million for the Dave Thomas Foundation for Adoption in connection with its Father’s Day Frosty Weekend promotion.
The Company reiterated that it is on track with its breakfast expansion and expects to offer its new breakfast menu in more than 650 Wendy’s restaurants by the end of August 2007 as it expands into additional markets.
Second Quarter Financial and Income Statement Information
Wendy’s completed its spinoff of Tim Hortons® in the third quarter of 2006 and completed the sale of Baja Fresh® Mexican Grill during the fourth quarter of 2006. During the second quarter of 2007, the Company also entered into a definitive agreement to sell Cafe Express. Accordingly, the after-tax operating results of Tim Hortons, Baja Fresh and Cafe Express appear in the “Discontinued Operations” line on the income statement.
The Company’s second-quarter 2007 reported results from continuing operations include the impact of:
- Sales – $558.3 million in the second quarter of 2007, compared to $557.8 million in the second quarter of 2006. Sales are up slightly due to positive same-store sales, but Wendy’s had 31 fewer company-operated restaurants open at the end of the second quarter of 2007 compared to the same quarter a year ago.
- Franchise revenues – $74.6 million in the second quarter of 2007, compared to $76.3 million in the second quarter of 2006. The year-over-year decrease is due primarily to fewer open franchise restaurants compared to 2006.
- Cost of sales – $337.2 million in the second quarter of 2007, compared to $345.8 million in the second quarter of 2006, a 160 basis point improvement as a percentage of sales. The year-over-year improvement is due primarily to higher menu pricing tied to the Company’s market-based pricing strategy and improved product mix.
- Company restaurant operating costs – $152.4 million, or 27.3% of sales, in the second quarter of 2007, compared to $147.6 million, or 26.5% of sales, in the second quarter of 2006. The year-over-year dollar increase is due primarily to higher insurance charges offset by other cost savings.
- Operating costs – $4.9 million in the second quarter of 2007, compared to $14.4 million in the second quarter of 2006. The year-over-year improvement is due primarily to $10 million in incremental pretax advertising expense in the second quarter of 2006 that did not recur in 2007.
- General and administrative expense – $51.4 million, or 8.1% of revenue, in the second quarter of 2007, compared to $52.4 million, or 8.3% of revenue, in the second quarter of 2006. The year-over-year improvement is due primarily to a reduction in salaries and benefits as a result of the elimination of positions in 2006, partially offset by higher stock compensation, consulting fees, professional services expenses and additional breakfast advertising expense.
- Restructuring and Special Committee related charges – $10.6 million in the second quarter of 2007 includes $5.5 million in pension settlement charges and $4.7 million in expenses related to the Board’s Special Committee. The non-cash pension plan settlement charges in the quarter of $5.5 million represent a portion of the up to $60 million in pension settlement charges disclosed in the Company’s previous SEC filings and press releases. Of the non-cash $5.5 million in pension settlement charges, $4.0 million consists of a non-cash adjustment identified in the second quarter of 2007 that relates to the first quarter 2007. The $29.0 million in expense in 2006 is comprised of restructuring costs, which included voluntary early retirement costs, severance expenses and consulting fees.
- Other expense/income – $8.0 million of income in the second quarter of 2007 includes $4.5 million in insurance reimbursements for Hurricane Katrina claims and $2.7 million in income from the Company's 50/50 joint venture with Tim Hortons. In 2007 the joint venture is accounted for under the equity method. Prior to the spin-off of Tim Hortons, the joint venture was fully consolidated.
- Interest – The $2.1 million increase in interest expense in the second quarter 2007 is primarily due to the sale of approximately 40% of the U.S. royalty stream for a 14-month period entered into in the fourth quarter of 2006 that was recorded as debt. The $8.4 million decrease in interest income reflects a reduction in cash balances as a result of the completion of a modified "Dutch Auction" tender offer in the fourth quarter of 2006, using approximately $800 million, and the completion of an accelerated share repurchase in the first quarter of 2007 for approximately $280 million.
- Taxes – The Company’s effective tax rate was 38.2% in the second quarter of 2007, compared to 37.0% in the second quarter of 2006.
- Shares outstanding – A lower share count of 88.3 million average shares in the second quarter of 2007, compared to 117.8 million average shares in the second quarter of 2006. The Company repurchased 22.4 million shares in a modified “Dutch Auction” tender offer in the fourth quarter of 2006, and repurchased 9.0 million shares in an accelerated share repurchase in the first quarter of 2007.
- Joint venture with Tim Hortons – As a result of its 2006 spinoff of Tim Hortons, the Company, in accordance with generally accepted accounting principles (GAAP), now accounts for its 50% share of the restaurant real estate joint venture with Tim Hortons (Wendy’s and Tim Hortons’ combination units) under the equity method of accounting, rather than consolidating the results of the joint venture in the Company’s financial statements. Without this change, company-operated restaurant EBITDA margins would have been 12.1% during the second quarter of 2007. This change in accounting for the Company’s joint venture with Tim Hortons resulted in an overall reduction to second-quarter 2007 operating income of $2.2 million compared to the second quarter 2006.
Company Reiterates Revised Outlook for 2007
On June 18 the Company announced its revised 2007 outlook for EBITDA and diluted earnings per share (EPS) from continuing operations.
The Company’s range for EBITDA is $295-315 million, which is a 33-42% increase over 2006 adjusted EBITDA from continuing operations of $221 million. The Company’s range for EPS is $1.09-1.23 per share.
The primary reasons the Company lowered its outlook were lower-than-planned same-store sales and higher-than-expected commodity costs. The outlook excludes expenses related to the Board’s Special Committee activities ($4.7 million of these expenses were recorded in the second quarter of 2007), up to $60 million in pension settlement costs that the Company noted in February ($5.5 million of these costs were recorded in the second quarter of 2007, and more are expected in the second half of the year), and any potential restructuring charges.
As stated in the June 18 press release, in view of the strategic review process now under way, the Company has suspended its previous earnings guidance for 2008 and 2009. Management does not plan to provide additional details on its earnings guidance or to update it.
Board approves 118th consecutive dividend
The Board of Directors approved a quarterly dividend of 12.5 cents per share, payable August 20 to shareholders of record as of August 6. The dividend payment will represent the Company’s 118th consecutive dividend.
Company plans second-quarter conference call for July 26
The Company will hold a conference call and webcast to discuss the Company’s second quarter results at 4 p.m. ET today. The dial-in number is (877) 572-6014 (U.S. and Canada) or (706) 679-4852 (International).
A simultaneous webcast of the conference call will also be available at www.wendys-invest.com. The call will also be archived at that site.
Disclosure regarding non-GAAP financial measures
EBITDA is used by management as a performance measure for benchmarking against its peers and competitors. The Company believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the restaurant industry. EBITDA is not a recognized term under GAAP. The Company also uses adjusted EBITDA, which accounts for certain items unrelated to ongoing operations, as an internal measure of business operating performance. Management believes adjusted EBITDA provides a meaningful perspective of the underlying operating performance of the business.
Company EBITDA margins from continuing operations consist of operating income plus depreciation and amortization divided by revenue. Company-operated restaurant EBITDA margins consist of sales from company-operated restaurants minus cost of sales from company-operated restaurants minus company restaurant operating costs divided by sales from company-operated restaurants.
The following is a reconciliation of 2007 estimated operating income to 2007 estimated EBITDA used to arrive at the Company's revised 2007 earnings outlook previously announced. As previously announced, the following estimated amounts exclude expenses related to the Board’s Special Committee activities, up to $60 million in pension settlement costs, and any potential restructuring charges.
| 2007 estimated operating income: |
$ 186 million to $206 million |
| 2007 estimated depreciation and amortization: |
$ 109 million |
| 2007 estimated EBITDA from continuing ops: |
$ 295 million to $315 million |
The following is a reconciliation of 2007 second-quarter operating income to 2007 second quarter EBITDA and adjusted EBITDA on a basis consistent with the Company's above revised full year 2007 outlook:
| 2007 2Q operating income: |
$ 55.7 million |
| 2007 2Q depreciation and amortization: |
$ 29.0 million |
| 2007 2Q EBITDA from continuing ops: |
$ 84.7 million |
| 2007 Special Committee expense: |
$ 4.7 million |
| 2007 pension settlement charges: |
$ 5.5 million |
| 2007 restructuring costs: |
$ .4 million |
| 2007 2Q adjusted EBITDA from continuing ops: |
$ 95.3 million |
The following is a reconciliation of 2007 year-to-date operating income to 2007 year-to-date EBITDA and adjusted EBITDA on a basis consistent with the Company's above revised full year 2007 outlook:
| 2007 YTD operating income: |
$ 84.3 million |
| 2007 YTD depreciation and amortization: |
$ 57.4 million |
| 2007 YTD EBITDA from continuing ops: |
$ 141.7 million |
| 2007 YTD Special Committee expense: |
$ 4.7 million |
| 2007 YTD pension settlement charges: |
$ 5.5 million |
| 2007 YTD restructuring costs: |
$ 1.4 million |
| 2007 YTD adjusted EBITDA from continuing ops: |
$ 153.3 million |
Below is a reconciliation of 2006 reported operating income to 2006 EBITDA and 2006 adjusted EBITDA:
| 2006 reported operating income: |
$ 40.3 million |
| 2006 depreciation and amortization: |
$123.7 million |
| 2006 EBITDA from continuing ops: |
$164.0 million |
| 2006 restructuring charges |
$ 38.9 million |
| 2006 incremental advertising expense: |
$ 25.0 million |
| 2006 joint venture impact1: |
$ (7.2 million) |
| 2006 adjusted EBITDA from continuing ops: |
$220.7 million |
The following is a reconciliation of 2006 second quarter operating income to 2006 second quarter EBITDA:
| 2006 2Q operating income: |
$ 12.6 million |
| 2006 2Q depreciation and amortization: |
$ 31.9 million |
| 2006 2Q EBITDA: |
$ 44.5 million |
¹After the spinoff of Tim Hortons, the joint venture with Tim Hortons is no longer consolidated in the Company’s financial statements and Wendy’s 50% share of the joint venture income is included in Other (income) expense, net as an equity investment in accordance with GAAP.
Safe Harbor statement
Certain information in this news release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, is forward looking. Factors set forth in our Safe Harbor under the Private Securities Litigation Reform Act of 1995, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company’s Safe Harbor statement at http://www.wendys-invest.com/safeharbor.
Wendy’s International, Inc. overview
Wendy's International, Inc. is one of the world's largest and most successful restaurant operating and franchising companies.
Wendy’s recently received brand, food and operations accolades from:
- Zagat Survey®, a leading global provider of consumer survey content, which recently named Wendy's as having the best hamburgers in the quick-service restaurant industry. In addition, Wendy's ranked first among quick-service "mega-chains" (i.e., those with at least 5,000 outlets) for food, facilities and popularity.
- This year's American Customer Satisfaction Index (ACSI) survey, produced by the University of Michigan's Stephen M. Ross Business School, ranked Wendy's in the top spot for customer satisfaction in the "limited service restaurants" category.
- QSR® Magazine's 2007 Consumer Survey recently rated Wendy’s as consumers' favorite quick-service restaurant (QSR) for the second-straight year.
More information about the Company is available at www.wendys-invest.com.
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Second Quarter Ended
7/1/2007 7/2/2006 $ Change % Change
---------- --------- -------- ---------
REVENUES
Sales $558,312 $557,771 $541 0.1%
Franchise revenues 74,600 76,342 (1,742) -2.3%
---------- --------- -------- ---------
TOTAL REVENUES 632,912 634,113 (1,201) -0.2%
---------- --------- -------- ---------
COSTS & EXPENSES
Cost of sales 337,177 345,803 (8,626) -2.5%
Company restaurant operating
costs 152,405 147,613 4,792 3.2%
Operating costs 4,852 14,363 (9,511) -66.2%
Depreciation of property &
equipment 28,749 31,575 (2,826) -9.0%
General & administrative
expenses 51,391 52,438 (1,047) -2.0%
Restructuring and special
committee related charges 10,605 28,998 (18,393) -63.4%
Other expense (income), net (8,011) 702 (8,713) n/m
---------- --------- -------- ---------
TOTAL COSTS & EXPENSES 577,168 621,492 (44,324) -7.1%
---------- --------- -------- ---------
OPERATING INCOME 55,744 12,621 43,123 n/m
Interest expense (10,898) (8,848) (2,050) -23.2%
Interest income 2,551 10,989 (8,438) -76.8%
---------- --------- -------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 47,397 14,762 32,635 n/m
INCOME TAXES 18,115 5,460 12,655 n/m
---------- --------- -------- ---------
INCOME from continuing
operations $29,282 $9,302 $19,980 n/m
LOSS from discontinued
operations ($49) ($38,417) $38,368 n/m
---------- --------- -------- ---------
NET INCOME (LOSS) $29,233 ($29,115) $58,348
========== ========= ========
Diluted earnings per common
share from continuing
operations $0.33 $0.08 $0.25
========== ========= ========
Diluted (loss) per common
share from discontinued
operations ($0.00) ($0.33) $0.33
========== ========= ========
Total diluted earnings (loss)
per common share $0.33 ($0.25) $0.58
========== ========= ========
Diluted shares 88,316 117,768
========== =========
n/m - not meaningful
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Year-to-Date Ended
7/1/2007 7/2/2006 $Change % Change
----------- ----------- --------- ---------
REVENUES
Sales $1,081,256 $1,071,206 $10,050 0.9%
Franchise revenues 141,820 141,585 235 0.2%
----------- ----------- --------- ---------
TOTAL REVENUES 1,223,076 1,212,791 10,285 0.8%
----------- ----------- --------- ---------
COSTS & EXPENSES
Cost of sales 661,238 675,527 (14,289) -2.1%
Company restaurant
operating costs 304,793 297,530 7,263 2.4%
Operating costs 8,787 34,174 (25,387) -74.3%
Depreciation of property &
equipment 56,801 62,684 (5,883) -9.4%
General & administrative
expenses 102,213 107,735 (5,522) -5.1%
Restructuring and special
committee related charges 11,636 28,998 (17,362) -59.9%
Other expense (income),
net (6,693) (5,900) (793) 13.4%
----------- ----------- --------- ---------
TOTAL COSTS & EXPENSES 1,138,775 1,200,748 (61,973) -5.2%
----------- ----------- --------- ---------
OPERATING INCOME 84,301 12,043 72,258 n/m
Interest expense (23,105) (17,881) (5,224) -29.2%
Interest income 7,967 13,022 (5,055) -38.8%
----------- ----------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 69,163 7,184 61,979 n/m
INCOME TAXES 25,400 3,779 21,621 n/m
----------- ----------- --------- ---------
INCOME from continuing
operations $43,763 $3,405 $40,358 n/m
INCOME from discontinued
operations $157 $18,712 ($18,555) -99.2%
----------- ----------- --------- ---------
NET INCOME $43,920 $22,117 $21,803
=========== =========== =========
Diluted earnings per
common share from
continuing operations $0.48 $0.03 $0.45
=========== =========== =========
Diluted earnings per
common share from
discontinued operations $0.00 $0.16 ($0.16)
=========== =========== =========
Total diluted earnings per
common share $0.48 $0.19 $0.29
=========== =========== =========
Diluted shares 92,011 117,082
=========== ===========
n/m - not meaningful
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 1, December 31,
2007 2006
----------- ------------
(Unaudited)
(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents $216,092 $457,614
Accounts receivable, net 83,496 84,841
Deferred income taxes 18,728 29,651
Inventories and other 30,508 30,252
Advertising fund restricted assets 63,207 36,207
Assets held for disposition 12,233 15,455
Current assets of discontinued operations 3,291 2,712
----------- ------------
427,555 656,732
----------- ------------
Property and equipment 2,047,646 2,024,715
Accumulated depreciation (837,540) (798,387)
----------- ------------
1,210,106 1,226,328
----------- ------------
Goodwill 85,629 85,353
Deferred income taxes 5,370 4,316
Intangible assets, net 3,288 3,855
Other assets 84,107 82,738
Non current assets of discontinued operations 1,185 1,025
----------- ------------
$1,817,240 $2,060,347
=========== ============
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 1, December 31,
2007 2006
----------- ------------
(Unaudited)
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $83,604 $93,465
Accrued expenses:
Salaries and wages 31,487 47,329
Taxes 30,966 46,138
Insurance 61,142 57,353
Other 43,536 32,199
Advertising fund restricted liabilities 63,207 28,568
Current portion of long-term obligations 67,096 87,396
Current liabilities of discontinued
operations 2,139 2,218
----------- ------------
383,177 394,666
----------- ------------
Long-term obligations
Term debt 521,262 537,139
Capital leases 19,046 18,963
----------- ------------
540,308 556,102
----------- ------------
Deferred income taxes 37,920 30,220
Other long-term liabilities 88,006 66,163
Non current liabilities of discontinued
operations 1,415 1,519
Commitments and contingencies
Shareholders' equity
Preferred stock, Authorized: 250,000
shares
Common stock, $.10 stated value per share,
Authorized: 200,000,000 shares,
Issued: 130,180,000 and 129,548,000
shares, respectively 13,018 12,955
Capital in excess of stated value 1,103,828 1,089,825
Retained earnings 1,266,124 1,241,489
Accumulated other comprehensive income
(expense):
Cumulative translation adjustments and
other 18,773 9,100
Pension liability (18,151) (22,546)
----------- ------------
2,383,592 2,330,823
Treasury stock, at cost:
42,844,000 and 33,844,000 shares,
respectively (1,617,178) (1,319,146)
----------- ------------
766,414 1,011,677
----------- ------------
$1,817,240 $2,060,347
=========== ============
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SYSTEMWIDE RESTAURANTS
Increase/ Increase/
As of As of (Decrease) As of (Decrease)
July 1, April 2, From Prior July 2, From Prior
2007 2007 Quarter 2006 Year
----------------------------------------------
Wendy's
-----------------------
U.S.
Company 1,297 1,308 (11) 1,322 (25)
Franchise 4,661 4,641 20 4,693 (32)
----------------------------------------------
5,958 5,949 9 6,015 (57)
Canada
Company 145 145 0 148 (3)
Franchise 231 231 0 233 (2)
----------------------------------------------
376 376 0 381 (5)
Other International
Company 2 2 0 5 (3)
Franchise 325 331 (6) 342 (17)
----------------------------------------------
327 333 (6) 347 (20)
Total Wendy's
Company 1,444 1,455 (11) 1,475 (31)
Franchise 5,217 5,203 14 5,268 (51)
----------------------------------------------
6,661 6,658 3 6,743 (82)
==============================================
WENDY'S INTERNATIONAL, INC.
Income Statement Definitions
Sales Includes sales from company operated
restaurants. Also included are sales of
kids' meal toys and the sales to
franchisees from Wendy's bun baking
facilities.
Franchise Revenues Consists primarily of royalties, rental
income, gains from the sales of properties
to franchisees and franchise fees.
Franchise fees include charges for various
costs and expenses related to establishing
a franchisee's business.
Cost of Sales Includes food, paper and labor costs for
restaurants. Also included are the cost of
kids' meal toys and cost of goods sold to
franchisees from Wendy's bun baking
facilities.
Company Restaurant Consists of all costs necessary to manage
Operating Costs and operate restaurants, except cost of
sales and depreciation. These include
advertising, insurance, maintenance, rent,
etc., as well as support costs for
personnel directly related to restaurant
operations.
Operating Costs Includes rent expense related to properties
leased to franchisees and costs to operate
and maintain Wendy's bun baking
facilities.
General and Administrative Costs that cannot be directly related to
Expenses generating revenue.
Restructuring and Special Includes restructuring costs and costs
Committee Related Charges related to the Special Committee of the
Board of Directors, which was formed to
explore strategic alternatives for the
Company.
Other Income and Expense Includes expenses (income) that are not
directly derived from the Company's
primary businesses. This includes income
from the Company's investments in joint
ventures and other minority investments.
Expenses include store closures, other
asset write-offs, and sales of properties
to non-franchisees.
Income from Discontinued Reflects net income from Tim Hortons Inc.,
Operations Baja Fresh and Cafe Express.
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