|
Wendy’s International, Inc. announces 2006 financial results
Total revenues were $2.4 billion
Income from continuing operations was $37.0 million and $0.32 per share; adjusted EBITDA from continuing operations was $220.7 million
Company finishes year with seven consecutive months of
positive same-store sales
DUBLIN, Ohio (February 2, 2007) – Wendy’s International, Inc. (NYSE: WEN) today announced its financial results for the full year 2006 and the fourth quarter ended Sunday, December 31, 2006.
The Company completed its spinoff of Tim Hortons® in the third quarter and completed the sale of Baja Fresh® Mexican Grill during the fourth quarter. During the fourth quarter, the Company also approved the prospective sale of Cafe Express. Accordingly, the after-tax operating results of Tim Hortons, Baja Fresh and Cafe Express now appear in the “Discontinued Operations” line on the income statement.
2006 Full-Year Results
- Total 2006 revenues were $2.4 billion, approximately flat with 2005.
- The Company and its franchisees opened a total of 122 new Wendy’s® restaurants during the year. The openings consisted of 25 company-operated restaurants in North America and 80 franchised restaurants in North America, as well as 16 International franchised restaurants and one International company-operated restaurant.
- Same-store sales increased 0.8% for U.S. company-owned restaurants and 0.6% for U.S. franchised restaurants in 2006. The Company ended the year with seven consecutive months and three consecutive quarters of positive same-store sales.
“Our new strategic plan, ‘Quality-Driven: Wendy’s Recipe for Success,’ enabled us to take important actions that will help us substantially enhance profitability and create additional shareholder value,” said Chief Executive Officer and President Kerrii Anderson. “Our plan focuses on the core elements that have made the Wendy’s brand synonymous with quality and freshness.
“We ended 2006 with strong momentum, positive same-store sales and significantly reduced costs,” Anderson said. “We intend to build on this momentum and drive even stronger results in 2007 and beyond, as we examine every facet of our business for improvement.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $220.7 million in 2006, compared to $260.9 million in 2005. (See “Disclosure regarding non-GAAP financial measures” for reconciliations of adjusted EBITDA and EBITDA.)
EBITDA from continuing operations was $164.0 million in 2006, compared to $304.9 million in 2005.
Reported 2006 pretax income from continuing operations was $42.5 million compared to $136.8 million in 2005. The Company reported after-tax income from continuing operations of $37.0 million, or $0.32 per share, in 2006 compared to $82.1 million, or $0.70 per share, in 2005.
The Company reported full-year net income of $94.3 million and total diluted earnings per share of $0.82 in 2006, compared to $224.1 million and total diluted earnings per share of $1.92, respectively, in 2005. The 2005 results include Tim Hortons and other discontinued operations for the full year in 2005, which contributed $141.9 million to 2005 net income, compared to a $57.3 million contribution for 2006.
Discontinued operations included Tim Hortons only for the first three quarters of 2006.
Company-operated restaurant EBITDA margins were 8.9% in 2006 compared to 8.6% in 2005, reflecting improvements in cost of sales. 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 Company’s full-year 2006 reported results from continuing operations include the impact of the following items:
- Sales – $2.2 billion in 2006, approximately flat compared to 2005. Positive same-store sales at company-operated restaurants were mostly offset by fewer U.S. company-operated stores open during the year, as the Company closed 29 underperforming company-operated restaurants in 2006.
- Franchise Revenue – $284.7 million in 2006 vs. $317.1 million in 2005. The year-over-year decrease relates primarily to:
- Approximately $16.8 million less in rental income in 2006 compared to a year ago due to the sale of Wendy’s properties leased to franchisees during 2005 and early 2006, and
- No significant gains on property sales during 2006, compared to $16.3 million in gains on the sale of properties leased to franchisees in 2005.
- Cost of Sales – $1.4 billion, or 62.8% of sales, in 2006 vs. $1.4 billion, or 63.7% of sales, in 2005. The year-over-year decrease as a percentage of sales is due to favorable commodity costs in 2006, primarily beef, and effective menu management.
- Company Restaurant Operating Costs – $602.3 million, or 28.0% of sales, in 2006 vs. $581.9 million, or 27.2% of sales, in 2005. The year-over-year increase is due primarily to higher costs related to performance-based incentive compensation of $4.4 million for field staff in 2006, as well as higher costs for utilities, property management, insurance and supplies.
- Operating Costs – $46.7 million in 2006 compared to $20.4 million in 2005. The year-over-year increase is primarily due to $25 million incremental advertising expense in 2006.
- General and Administrative expense – $237.6 million, or 9.7% of revenues, in 2006 compared to $220.9 million, or 9.0% of revenues, in 2005. The year-over-year increase, which was partly offset by cost savings realized during 2006, is due to:
- Incremental expense for performance-based incentive compensation of $10.9 million for corporate officers and employees in 2006, as the Company will pay bonuses commensurate with stronger second-half operating results for Wendy’s core business compared to 2005.
- Approximately $7.4 million in expense for research and development primarily related to the breakfast program that is currently in approximately 150 U.S. restaurants.
- Incremental consulting fees and professional services of $9.2 million during 2006.
- Other Expense (Income) -- $37.5 million of expense in 2006 compared to income of $34.3 million in 2005. The $71.8 million year-over-year difference relates primarily to:
- $46.4 million in 2005 gains on the sale of real estate to third parties that had previously been leased to franchisees,
- Store closure and sale charges of $26.6 million in 2005, compared to $17.9 million in 2006, and
- $38.9 million in restructuring and severance charges during 2006.
- Interest -- $35.7 million of interest expense in 2006 compared to $43.1 million in 2005 and $37.9 million of interest income in 2006 compared to $4.0 million in 2005. The increase in interest income primarily relates to funds received from Tim Hortons after its initial public offering in March, while the decrease in interest expense relates primarily to the Company’s repayment of its 6.35% Notes in December 2005.
- Taxes -- An effective tax rate of 12.8% in 2006 compared to 40.0% in 2005. The 2006 rate is lower due primarily to the favorable settlement of Federal and various state tax examinations, as well as Federal tax credits for hiring employees in the Gulf Zone subsequent to Hurricane Katrina.
2006 Fourth-Quarter Results
- Total revenues were $596.4 million in the fourth quarter of 2006, compared to $602.9 million in the fourth quarter of 2005.
- The Company and its franchisees opened a total of 21 new Wendy’s restaurants during the quarter. The openings consisted of one company-owned North American restaurant and 15 franchised North American restaurants, as well as four International franchised restaurants and one International company-operated restaurant.
- Same-store sales were 3.1% for U.S. company-owned restaurants and 2.7% for U.S. franchised restaurants.
Adjusted EBITDA from continuing operations was $38.4 million in the fourth quarter of 2006, compared to $46.0 million in 2005.
EBITDA from continuing operations was $30.5 million in the fourth quarter of 2006, compared to $83.7 million in the fourth quarter of 2005.
Reported fourth-quarter pretax income from continuing operations was $3.1 million compared to $42.5 million in the fourth quarter of 2005. The Company reported after-tax income from continuing operations of $9.9 million, or $0.09 per share, in the fourth quarter of 2006 compared to $26.1 million, or $0.22 per share, in the fourth quarter of 2005.
The Company reported 2006 fourth-quarter net income of $3.0 million and total diluted earnings per share of $0.03, compared to $30.0 million and total diluted earnings per share of $0.25, respectively, in the fourth quarter of 2005. The 2005 results include the impact of Tim Hortons and other discontinued operations, which contributed approximately $3.9 million to fourth-quarter net income, compared to a $6.9 million loss in the fourth quarter of 2006. Discontinued operations did not include Tim Hortons in the fourth quarter of 2006.
Company-operated store EBITDA margins were 8.4% in the fourth quarter of 2006 compared to 7.7% in the fourth quarter of 2005, reflecting improvements in cost of sales.
The Company’s fourth-quarter 2006 reported results from continuing operations include the impact of the following items:
- Sales – $526.7 million in the fourth quarter of 2006 vs. $515.6 million in the fourth quarter of 2005. The year-over-year increase is due to positive same-store sales at company-operated restaurants, partly offset by 22 fewer average U.S. company stores open during the fourth quarter.
- Franchise Revenue – $69.7 million in the fourth quarter of 2006, compared to $87.3 million in the fourth quarter of 2005. The decrease is due primarily to:
- A $4.7 million decline in rental income due to sales of U.S. leased properties in 2005 and early 2006, and
- A $14.9 million reduction in gains on sales of properties to franchisees.
- Cost of Sales -- $331.0 million, or 62.8% of sales, in the fourth quarter of 2006 vs. $328.0 million, or 63.6% of sales, in the fourth quarter of 2005. The year-over-year percentage decrease is due to favorable commodity costs, primarily beef, and effective menu management.
- Company Restaurant Operating Costs – $149.5 million, or 28.4% of sales, in the fourth quarter of 2006 vs. $145.1 million, or 28.1% of sales, in the fourth quarter of 2005. The slight year-over-year increase as a percentage of sales is due to rent expense paid by Wendy’s to the 50/50 joint venture between Wendy’s and Tim Hortons. Due to the September spinoff of Tim Hortons, the joint venture is no longer consolidated, and therefore the rent expense is no longer eliminated.
- Operating Costs – $4.2 million in the fourth quarter of 2006 compared to $5.9 million in the fourth quarter of 2005. The year-over-year decrease is primarily due to $1.7 million in rental expense paid by the 50/50 joint venture between Wendy’s and Tim Hortons. Due to the September spinoff of Tim Hortons, the joint venture is no longer consolidated, and therefore this rent expense is no longer reflected in operating costs.
- General and Administrative expense – $67.4 million, or 11.3% of revenues, in the fourth quarter of 2006 compared to $65.4 million, or 10.8% of revenues, in the fourth quarter of 2005. The year-over-year increase, which was largely offset by cost savings realized during the quarter, relates to:
- Incremental expense for performance-based incentive compensation of $5.5 million in the fourth quarter of 2006, and
- Approximately $5.7 million in expense for research and development primarily related to the Company’s breakfast expansion.
- Other Expense (Income) – $14.0 million of expense in the fourth quarter of 2006 compared to $24.9 million of income in the fourth quarter of 2005. The $38.9 million year-over-year difference relates primarily to:
- A $46.4 million gain in the fourth quarter of 2005 from the sale of real estate to third parties that had previously been leased to franchisees.
- $7.9 million in restructuring and severance charges during the fourth quarter of 2006.
- Store closures and sale charges of $24.9 million in the fourth quarter of 2005 compared to $10.1 million in the fourth quarter of 2006.
- Interest – $9.0 million of interest expense in the fourth quarter of 2006, compared to $10.7 million in the fourth quarter of 2005 and $10.2 million of interest income in the fourth quarter of 2006 compared to $1.4 million in the fourth quarter of 2005. The increase in interest income primarily relates to funds received from Tim Hortons after its initial public offering in March.
- Taxes – Taxes benefited net income in the fourth quarter of 2006, compared to a 38.7% tax expense rate in the fourth quarter of 2005. The year-over-year difference is due to the December 2006 reauthorization of the Work Opportunity Tax Credit by Congress for the full year 2006, which resulted in the entire retroactive annual impact being recorded in the fourth quarter. Also impacting the fourth quarter rate was the favorable settlement of certain tax examinations.
- Share Count – A lower diluted share count (108.8 million average shares in the fourth quarter of 2006 vs. 118.4 million average shares in the fourth quarter of 2005).
Company repurchased 26.2 million shares for more than $1 billion in 2006
As part of its plan to return more than $1 billion in cash to shareholders, the Company repurchased 26.2 million shares during 2006, including 22.4 million shares for $803.4 million in a modified Dutch tender offer in the fourth quarter.
“Our share repurchase program has increased liquidity for our shareholders, and it was consistent with the commitment we made to shareholders in 2005, which is to use the cash generated from our strategic initiatives to return value to our shareholders,” Anderson said.
The Company purchased the shares using existing cash on its balance sheet.
Board approves 116th consecutive dividend
The Board of Directors approved a quarterly dividend of 8.5 cents per share, payable on February 27, 2007 to shareholders of record as of February 12, 2007. The dividend will be the Company’s 116th consecutive dividend.
Company to host analyst meeting on Monday, February 5
The Company will host a meeting for analysts and investors to discuss its updated strategic plan and financial outlook for 2007 on Monday, February 5 from 11:00 a.m. to approximately 3:30 p.m. EST. The meeting, which will be available as a conference call and webcast, will be held at the Company’s headquarters in Dublin, Ohio. The webcast will begin at approximately 11:50 a.m.
The dial-in number is (877) 572-6014 (North America) or (706) 679-4852 (outside of North America). No need to register in advance. Interested parties may also listen to a simultaneous web cast at www.wendys-invest.com; the call will 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.
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
Below is a reconciliation of 2006 4Q reported operating income to 2006 4Q EBITDA and 2006 4Q adjusted EBITDA:
2006 4Q reported operating income $ 1.8 million
2006 4Q depreciation and amortization $ 28.7 million
2006 4Q EBITDA from continuing ops $ 30.5 million
2006 4Q restructuring charges $ 7.9 million
2006 adjusted 4Q EBITDA from continuing ops $ 38.4 million
Below is a reconciliation of 2005 reported operating income to 2005 EBITDA and 2005 adjusted EBITDA:
2005 reported operating income: $175.9 million
2005 depreciation and amortization: $129.0 million
2005 EBITDA from continuing ops: $304.9 million
2005 net gain on property sales $ (35.6 million)
2005 joint venture impact1 $ (8.4 million)
2005 adjusted EBITDA from continuing ops $260.9 million
Below is a reconciliation of 2005 4Q reported operating income to 2005 4Q EBITDA and 2005 4Q adjusted EBITDA:
2005 4Q reported operating income: $ 51.8 million
2005 4Q depreciation and amortization: $ 31.9 million
2005 4Q EBITDA from continuing ops: $ 83.7 million
2005 4Q net gain on property sales $ (35.6 million)
2005 4Q joint venture impact1 $ (2.1 million)
2005 adjusted 4Q EBITDA from continuing ops $ 46.0 million
1 With the spinoff of Tim Hortons, the Company will lose 50% of the income from its 50/50 joint venture with Tim Hortons.
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. 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)
Year-to-Date Ended
12/31/2006 1/1/2006 $ Change % Change
----------- ----------- --------- ---------
REVENUES
Sales $2,154,607 $2,138,365 $16,242 0.8%
Franchise revenues 284,670 317,053 (32,383) -10.2%
----------- ----------- --------- ---------
TOTAL REVENUES 2,439,277 2,455,418 (16,141) -0.7%
----------- ----------- --------- ---------
COSTS & EXPENSES
Cost of sales 1,352,312 1,362,631 (10,319) -0.8%
Company restaurant
operating costs 602,298 581,869 20,429 3.5%
Operating costs 46,674 20,419 26,255 128.6%
Depreciation of property &
equipment 122,636 127,998 (5,362) -4.2%
General & administrative
expenses 237,575 220,891 16,684 7.6%
Other expense (income), net 37,468 (34,263) 71,731 n/m
----------- ----------- --------- ---------
TOTAL COSTS & EXPENSES 2,398,963 2,279,545 119,418 5.2%
----------- ----------- --------- ---------
OPERATING INCOME 40,314 175,873 (135,559) -77.1%
Interest expense (35,711) (43,076) 7,365 17.1%
Interest income 37,876 3,987 33,889 n/m
----------- ----------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 42,479 136,784 (94,305) -68.9%
INCOME TAXES 5,433 54,657 (49,224) n/m
----------- ----------- --------- ---------
INCOME from continuing
operations 37,046 82,127 (45,081) -54.9%
INCOME from discontinued
operations 57,266 141,940 (84,674) -59.7%
----------- ----------- --------- ---------
NET INCOME 94,312 224,067 (129,755) -57.9%
=========== =========== ========= =========
Diluted earnings per common
share from continuing
operations $0.32 $0.70 ($0.38) -54.3%
=========== =========== ========= =========
Diluted earnings per common
share from discontinued
operations $0.50 $1.22 ($0.72) -59.0%
=========== =========== ========= =========
Total Diluted earnings per
common share $0.82 $1.92 ($1.10) -57.3%
=========== =========== ========= =========
Diluted shares 115,325 116,819 (1,494) -1.3%
=========== =========== ========= =========
n/m - not meaningful
Note: The financial statements include a revision in the presentation
of the impact of kids' meal toys sold to franchisees. The revised
presentation includes a "gross-up" of sales and cost of sales for
these items. Previously these amounts were "netted". This revision
has no impact to operating income or net income.
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Fourth Quarter Ended
12/31/2006 1/1/2006 $ Change % Change
----------- --------- --------- ---------
REVENUES
Sales $526,720 $515,597 $11,123 2.2%
Franchise revenues 69,658 87,270 (17,612) -20.2%
----------- --------- --------- ---------
TOTAL REVENUES 596,378 602,867 (6,489) -1.1%
----------- --------- --------- ---------
COSTS & EXPENSES
Cost of sales 331,034 327,964 3,070 0.9%
Company restaurant operating
costs 149,517 145,065 4,452 3.1%
Operating costs 4,177 5,888 (1,711) -29.1%
Depreciation of property &
equipment 28,437 31,669 (3,232) -10.2%
General & administrative
expenses 67,413 65,380 2,033 3.1%
Other expense (income), net 13,984 (24,862) 38,846 n/m
----------- --------- --------- ---------
TOTAL COSTS & EXPENSES 594,562 551,104 43,458 7.9%
----------- --------- --------- ---------
OPERATING INCOME 1,816 51,763 (49,947) -96.5%
Interest expense (8,958) (10,658) 1,700 16.0%
Interest income 10,222 1,437 8,785 n/m
----------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 3,080 42,542 (39,462) -92.8%
INCOME TAXES (6,869) 16,463 (23,332) n/m
----------- --------- --------- ---------
INCOME from continuing
operations $9,949 $26,079 ($16,130) -61.9%
(LOSS) INCOME from
discontinued operations ($6,922) $3,884 (10,806) -278.2%
----------- --------- --------- ---------
NET INCOME $3,027 $29,963 ($26,936) -89.9%
=========== ========= ========= =========
Diluted earnings per common
share from continuing
operations $0.09 $0.22 ($0.13) -59.1%
=========== ========= ========= =========
Diluted earnings per common
share from discontinued
operations ($0.06) $0.03 ($0.09) -300.0%
=========== ========= ========= =========
Total Diluted earnings per
common share $0.03 $0.25 ($0.22) -88.0%
=========== ========= ========= =========
Diluted shares 108,795 118,398 (9,603) -8.1%
=========== ========= ========= =========
n/m - not meaningful
Note: The financial statements include a revision in the presentation
of the impact of kids' meal toys sold to franchisees. The revised
presentation includes a "gross-up" of sales and cost of sales for
these items. Previously these amounts were "netted". This revision
has no impact to operating income or net income.
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, January 1,
2006 2006
------------ -----------
(Unaudited)
(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents $457,614 $230,560
Accounts receivable, net 84,841 62,190
Deferred income taxes 58,407 23,847
Inventories and other 30,252 29,798
Advertising fund restricted assets 36,207 35,651
Assets held for disposition 15,455 65,693
Current assets of discontinued operations 2,712 308,827
------------ -----------
685,488 756,566
------------ -----------
Property and equipment 2,024,715 2,093,933
Accumulated depreciation (798,387) (745,459)
------------ -----------
1,226,328 1,348,474
------------ -----------
Goodwill 85,353 81,875
Deferred income taxes 4,316 2,855
Intangible assets, net 3,855 4,843
Other assets 82,738 77,097
Non current assets of discontinued operations 9,978 1,168,608
------------ -----------
$2,098,056 $3,440,318
============ ===========
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, January 1,
2006 2006
------------ -----------
(Unaudited)
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $93,465 $92,340
Accrued expenses:
Salaries and wages 47,329 34,871
Taxes 46,138 60,984
Insurance 57,353 58,147
Other 32,199 34,079
Advertising fund restricted liabilities 28,568 35,651
Current portion of long-term obligations 94,109 2,497
Current liabilities of discontinued
operations 2,218 264,783
------------ -----------
401,379 583,352
------------ -----------
Long-term obligations
Term debt 530,426 521,800
Capital leases 18,963 18,336
------------ -----------
549,389 540,136
------------ -----------
Deferred income taxes 81,627 78,065
Other long-term liabilities 66,163 68,017
Non current liabilities of discontinued
operations 1,519 112,159
Commitments and contingencies
Shareholders' equity
Preferred stock, Authorized: 250,000 shares
Common stock, $.10 stated value per share,
Authorized: 200,000,000 shares,
Issued: 129,548,000 and 125,490,000 shares,
respectively 12,955 12,549
Capital in excess of stated value 1,089,825 405,588
Retained earnings 1,241,489 1,858,743
Accumulated other comprehensive income
(expense):
Cumulative translation adjustments and other 9,100 115,252
Pension liability (36,244) (1,096)
------------ -----------
2,317,125 2,391,036
Treasury stock, at cost:
33,844,000 and 7,681,000 shares,
respectively (1,319,146) (294,669)
Unearned compensation - restricted stock 0 (37,778)
------------ -----------
997,979 2,058,589
------------ -----------
$2,098,056 $3,440,318
============ ===========
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SYSTEMWIDE RESTAURANTS
Increase/ Increase/
As of As of (Decrease) As of (Decrease)
December 31, October 1, From Prior January 1, From Prior
2006 2006 Quarter 2006 Year
--------------------------------------------------------
Wendy's
--------------
U.S.
Company 1,310 1,320 (10) 1,345 (35)
Franchise 4,638 4,692 (54) 4,673 (35)
--------------------------------------------------------
5,948 6,012 (64) 6,018 (70)
Canada
Company 146 148 (2) 152 (6)
Franchise 231 231 0 225 6
--------------------------------------------------------
377 379 (2) 377 0
Other
International
Company 9 5 4 5 4
Franchise 340 345 (5) 346 (6)
--------------------------------------------------------
349 350 (1) 351 (2)
Total Wendy's
Company 1,465 1,473 (8) 1,502 (37)
Franchise 5,209 5,268 (59) 5,244 (35)
--------------------------------------------------------
6,674 6,741 (67) 6,746 (72)
========================================================
WENDY'S INTERNATIONAL, INC.
Income Statement Definitions
Sales Includes sales from company operated restaurants.
Also included are the sales to franchisees from
Wendy's bun baking facilities.
Franchise Revenues Consists primarily of royalties, rental income 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 goods
sold to franchisees from Wendy's bun baking
facilities.
Company Restaurant Consists of all costs necessary to manage and
Operating Costs 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 Costs that cannot be directly related to
Administrative generating revenue.
Expenses
Other Income and Includes expenses (income) that are not directly
Expense 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 restructuring costs.
Income from Reflects net income from Tim Hortons Inc, Baja
Discontinued Fresh and Cafe Express.
Operations
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Year-to-Date Ended
-------------------------------------------------------
12/31/2006 1/1/2006 1/2/2005 12/28/2003 12/29/2002
-------------------------------------------------------
REVENUES
Sales $2,154,607 $2,138,365 $2,194,031 1,960,345 $1,781,159
Franchise
revenues 284,670 317,053 308,127 291,510 279,100
-------------------------------------------------------
TOTAL REVENUES 2,439,277 2,455,418 2,502,158 2,251,855 2,060,259
-------------------------------------------------------
COSTS &
EXPENSES
Cost of sales 1,352,312 1,362,631 1,369,509 1,200,627 1,070,548
Company
restaurant
operating
costs 602,298 581,869 577,294 496,735 444,697
Operating costs 46,674 20,419 21,058 18,245 17,477
Depreciation of
property &
equipment 122,636 127,998 109,712 115,760 106,189
General &
administrative
expenses 237,575 220,891 210,156 199,066 194,407
Other (income)
expense, net 37,468 (34,263) (1,329) 1,793 (492)
-------------------------------------------------------
TOTAL COSTS &
EXPENSES 2,398,963 2,279,545 2,286,400 2,032,226 1,832,826
-------------------------------------------------------
OPERATING
INCOME 40,314 175,873 215,758 219,629 227,433
Interest
expense (35,711) (43,076) (42,006) (41,091) (44,663)
Interest income 37,876 3,987 2,438 3,456 8,923
-------------------------------------------------------
INCOME FROM
CONTINUING
OPERATIONS
BEFORE INCOME
TAXES 42,479 136,784 176,190 181,994 191,693
INCOME TAXES 5,433 54,657 72,694 65,510 74,290
-------------------------------------------------------
INCOME from
continuing
operations 37,046 82,127 103,496 116,484 117,403
INCOME (LOSS)
from
discontinued
operations 57,266 141,940 (51,461) 119,515 101,378
-------------------------------------------------------
NET INCOME 94,312 224,067 52,035 235,999 218,781
=======================================================
Diluted
earnings per
common share
from
continuing
operations $0.32 $0.70 $0.89 $1.01 $1.01
=======================================================
Diluted
earnings per
common share
from
discontinued
operations $0.50 $1.22 ($0.44) $1.04 $0.80
=======================================================
Total diluted
earnings per
common share $0.82 $1.92 $0.45 $2.05 $1.89
=======================================================
Diluted shares 115,325 116,819 115,685 115,021 116,558
=======================================================
Note: The financial statements include a revision in the presentation
of the impact of kids' meal toys sold to franchisees. The revised
presentation includes a "gross-up" of sales and cost of sales for
these items. Previously these amounts were "netted". This revision
has no impact to operating income or net income.
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Full Year
Quarters Ended Ended
--------------------------------------- -----------
12/31/2006 10/1/2006 7/2/2006 4/2/2006 12/31/2006
--------------------------------------- -----------
REVENUES
Sales $526,720 $556,681 $557,771 $513,435 2,154,607
Franchise
revenues 69,658 73,427 76,342 65,243 284,670
--------------------------------------- -----------
TOTAL REVENUES 596,378 630,108 634,113 578,678 2,439,277
--------------------------------------- -----------
COSTS & EXPENSES
Cost of sales 331,034 345,751 345,803 329,724 1,352,312
Company
restaurant
operating costs 149,517 155,251 147,613 149,917 602,298
Operating costs 4,177 8,323 14,363 19,811 46,674
Depreciation of
property &
equipment 28,437 31,515 31,575 31,109 122,636
General &
administrative
expenses 67,413 62,427 52,438 55,297 237,575
Other (income)
expense, net 13,984 386 29,700 (6,602) 37,468
--------------------------------------- -----------
TOTAL COSTS &
EXPENSES 594,562 603,653 621,492 579,256 2,398,963
--------------------------------------- -----------
OPERATING INCOME
(LOSS) 1,816 26,455 12,621 (578) 40,314
Interest expense (8,958) (8,872) (8,848) (9,033) (35,711)
Interest income 10,222 14,632 10,989 2,033 37,876
--------------------------------------- -----------
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
BEFORE INCOME
TAXES 3,080 32,215 14,762 (7,578) 42,479
INCOME TAXES (6,869) 8,523 5,460 (1,681) 5,433
--------------------------------------- -----------
INCOME (LOSS)
from continuing
operations 9,949 23,692 9,302 (5,897) 37,046
(LOSS) INCOME
from
discontinued
operations (6,922) 45,476 (38,417) 57,129 57,266
--------------------------------------- -----------
NET INCOME (LOSS) 3,027 69,168 (29,115) 51,232 94,312
======================================= ===========
Diluted earnings
per common share
from continuing
operations $0.09 $0.20 $0.08 ($0.05) $0.32
Diluted earnings
per common share
from
discontinued
operations ($0.06) $0.38 ($0.33) $0.50 $0.50
--------------------------------------- -----------
Total diluted
earnings per
common share $0.03 $0.58 ($0.25) $0.45 0.82
======================================= ===========
Diluted shares 108,795 118,290 117,768 114,722 (a) 115,325
======================================= ===========
(a) Due to loss from continuing operations, basic shares are used for
earnings per share calculations.
Note: The financial statements include a revision in the presentation
of the impact of kids' meal toys sold to franchisees. The revised
presentation includes a "gross-up" of sales and cost of sales for
these items. Previously these amounts were "netted". This revision
has no impact to operating income or net income.
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Full Year
Quarters Ended Ended
---------------------------------------- ----------
1/1/2006 10/2/2005 7/3/2005 4/3/2005 1/1/2006
--------- ---------- --------- --------- ----------
REVENUES
Sales $515,597 $539,594 $554,302 $528,872 2,138,365
Franchise revenues 87,270 77,639 77,311 74,833 317,053
--------- ---------- --------- --------- ----------
TOTAL REVENUES 602,867 617,233 631,613 603,705 2,455,418
--------- ---------- --------- --------- ----------
COSTS & EXPENSES
Cost of sales 327,964 343,643 352,601 338,423 1,362,631
Company restaurant
operating costs 145,065 143,973 148,016 144,815 581,869
Operating costs 5,888 4,722 4,927 4,882 20,419
Depreciation of
property &
equipment 31,669 32,479 32,240 31,610 127,998
General &
administrative
expenses 65,380 51,152 50,766 53,593 220,891
Other (income)
expense, net (24,862) (3,871) (2,298) (3,232) (34,263)
--------- ---------- --------- --------- ----------
TOTAL COSTS &
EXPENSES 551,104 572,098 586,252 570,091 2,279,545
--------- ---------- --------- --------- ----------
OPERATING INCOME 51,763 45,135 45,361 33,614 175,873
Interest expense (10,658) (11,497) (10,285) (10,636) (43,076)
Interest income 1,437 1,160 809 581 3,987
--------- ---------- --------- --------- ----------
INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES 42,542 34,798 35,885 23,559 136,784
INCOME TAXES 16,463 14,364 13,810 10,020 54,657
--------- ---------- --------- --------- ----------
INCOME from
continuing
operations 26,079 20,434 22,075 13,539 82,127
INCOME from
discontinued
operations 3,884 51,654 48,685 37,717 141,940
--------- ---------- --------- --------- ----------
NET INCOME 29,963 72,088 70,760 51,256 224,067
========= ========== ========= ========= ==========
Diluted earnings
per common share
from continuing
operations $0.22 $0.17 $0.19 $0.12 $0.70
========= ========== ========= ========= ==========
Diluted earnings
per common share
from discontinued
operations $0.03 $0.44 $0.42 $0.33 $1.22
========= ========== ========= ========= ==========
Total diluted
earnings per
common share $0.25 $0.61 $0.61 $0.45 $1.92
========= ========== ========= ========= ==========
Diluted shares 118,398 117,656 116,632 114,596 116,819
========= ========== ========= ========= ==========
Note: The financial statements include a revision in the presentation
of the impact of kids' meal toys sold to franchisees. The revised
presentation includes a "gross-up" of sales and cost of sales for
these items. Previously these amounts were "netted". This revision
has no impact to operating income or net income.
|
