(X)
|
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.)
|
|
1155
Perimeter Center West, Atlanta, GA
|
30338
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
March
29,
|
December
28,
|
|||||||
2009
|
2008(A)
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 122,434 | $ | 90,090 | ||||
Restricted
cash equivalents
|
15,050 | 20,792 | ||||||
Accounts
and notes receivable
|
93,904 | 97,258 | ||||||
Inventories
|
24,282 | 24,646 | ||||||
Prepaid
expenses and other current assets
|
46,669 | 28,990 | ||||||
Deferred
income tax benefit
|
40,073 | 37,923 | ||||||
Advertising
fund restricted assets
|
82,521 | 81,139 | ||||||
Total
current assets
|
424,933 | 380,838 | ||||||
Restricted
cash equivalents
|
28,888 | 34,032 | ||||||
Notes
receivable
|
34,307 | 34,608 | ||||||
Investments
|
116,731 | 133,052 | ||||||
Properties
|
1,734,407 | 1,770,372 | ||||||
Goodwill
|
859,007 | 853,775 | ||||||
Other
intangible assets
|
1,409,017 | 1,411,473 | ||||||
Deferred
costs and other assets
|
35,388 | 27,470 | ||||||
Total
assets
|
$ | 4,642,678 | $ | 4,645,620 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 30,732 | $ | 30,426 | ||||
Accounts
payable
|
108,861 | 139,340 | ||||||
Accrued
expenses and other current liabilities
|
258,650 | 247,334 | ||||||
Advertising
fund restricted liabilities
|
82,521 | 81,139 | ||||||
Liabilities
related to discontinued operations
|
4,225 | 4,250 | ||||||
Total
current liabilities
|
484,989 | 502,489 | ||||||
Long-term
debt
|
1,078,494 | 1,081,151 | ||||||
Deferred
income
|
43,865 | 16,859 | ||||||
Deferred
income taxes
|
478,401 | 475,243 | ||||||
Other
liabilities
|
181,997 | 186,433 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common
stock
|
47,042 | 47,042 | ||||||
Additional
paid-in capital
|
2,757,223 | 2,753,141 | ||||||
Retained
deficit
|
(375,498 | ) | (357,541 | ) | ||||
Common
stock held in treasury
|
(15,594 | ) | (15,944 | ) | ||||
Accumulated
other comprehensive loss
|
(38,241 | ) | (43,253 | ) | ||||
2,374,932 | 2,383,445 | |||||||
Total
liabilities and stockholders’ equity
|
$ | 4,642,678 | $ | 4,645,620 |
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
||||||||
Revenues:
|
||||||||
Sales
|
$ | 773,243 | $ | 281,579 | ||||
Franchise
revenues
|
90,741 | 21,275 | ||||||
863,984 | 302,854 | |||||||
Costs
and expenses:
|
||||||||
Cost
of sales
|
675,942 | 233,445 | ||||||
General
and administrative
|
109,878 | 44,911 | ||||||
Depreciation
and amortization
|
51,662 | 15,914 | ||||||
Impairment
of long-lived assets`
|
6,880 | 79 | ||||||
Facilities
relocation and corporate restructuring
|
4,161 | 935 | ||||||
Other
operating expense (income), net
|
1,527 | (487 | ) | |||||
850,050 | 294,797 | |||||||
Operating
profit
|
13,934 | 8,057 | ||||||
Interest
expense
|
(22,149 | ) | (13,491 | ) | ||||
Investment
(expense) income, net
|
(1,794 | ) | 2,164 | |||||
Other
than temporary losses on investments
|
(3,127 | ) | (68,086 | ) | ||||
Other
expense, net
|
(2,597 | ) | (4,579 | ) | ||||
Loss
before income taxes benefit
|
(15,733 | ) | (75,935 | ) | ||||
Benefit
from income taxes
|
4,809 | 8,464 | ||||||
Net
loss
|
$ | (10,924 | ) | $ | (67,471 | ) | ||
Basic
and diluted net loss per share:
|
||||||||
Class
A common stock
|
$ | (.02 | ) | $ | (.73 | ) | ||
Class
B common stock (a)
|
N/A | (.73 | ) | |||||
Dividends
declared per share:
|
||||||||
Class
A common stock
|
$ | .015 | $ | .08 | ||||
Class
B common stock (a)
|
N/A | .09 |
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
||||||||
Cash
flows from continuing operating activities:
|
||||||||
Net
loss
|
$ | (10,924 | ) | $ | (67,471 | ) | ||
Adjustments
to reconcile net loss to net cash provided by continuing operating
activities:
|
||||||||
Depreciation
and amortization
|
51,662 | 15,914 | ||||||
Net
receipt of deferred vendor incentive
|
29,368 | 11,530 | ||||||
Impairment
of long-lived assets
|
6,880 | 79 | ||||||
Non-cash
rent expense (income)
|
5,196 | (81 | ) | |||||
Write-off
and amortization of deferred financing costs
|
5,069 | 5,637 | ||||||
Non-cash
operating investment adjustments, net (see below)
|
4,741 | 66,413 | ||||||
Share-based
compensation provision
|
4,371 | 1,586 | ||||||
Deferred
income tax benefit
|
(4,809 | ) | (8,462 | ) | ||||
Other,
net
|
8,819 | (1,028 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
and notes receivable
|
(3,667 | ) | (2,523 | ) | ||||
Inventories
|
348 | 964 | ||||||
Prepaid
expenses and other current assets
|
(15,577 | ) | 5,286 | |||||
Accounts
payable, accrued expenses and other current liabilities
|
(23,213 | ) | (10,911 | ) | ||||
Net
cash provided by continuing operating activities
|
58,264 | 16,933 | ||||||
Cash
flows from continuing investing activities:
|
||||||||
Capital
expenditures
|
(17,203 | ) | (16,770 | ) | ||||
Proceeds
from dispositions
|
6,246 | - | ||||||
Investing
investment activities, net (see below)
|
704 | 112 | ||||||
Cost
of acquisitions, less cash acquired
|
- | (9,486 | ) | |||||
Cost
of Wendy’s Merger
|
- | (1,650 | ) | |||||
Other,
net
|
(1,390 | ) | 49 | |||||
Net
cash used in continuing investing activities
|
(11,643 | ) | (27,745 | ) | ||||
Cash
flows from continuing financing activities:
|
||||||||
Deferred
financing costs incurred
|
(11,148 | ) | - | |||||
Repayments
of notes payable and long-term debt
|
(4,495 | ) | (4,358 | ) | ||||
Proceeds
from long-term debt
|
1,451 | 4,129 | ||||||
Dividends
paid (a)
|
- | (8,045 | ) | |||||
Other,
net
|
52 | - | ||||||
Net
cash used in continuing financing activities
|
(14,140 | ) | (8,274 | ) | ||||
Net
cash provided by (used in) continuing operations before effect of exchange
rate changes on cash
|
32,481 | (19,086 | ) | |||||
Effect
of exchange rate changes on cash
|
(112 | ) | - | |||||
Net
cash provided by (used in) continuing operations
|
32,369 | (19,086 | ) | |||||
Net
cash used in operating activities of discontinued
operations
|
(25 | ) | (4 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
32,344 | (19,090 | ) | |||||
Cash
and cash equivalents at beginning of period
|
90,090 | 78,116 | ||||||
Cash
and cash equivalents at end of period
|
$ | 122,434 | $ | 59,026 |
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
||||||||
Detail
of cash flows related to investments:
|
||||||||
Operating
investment adjustments, net:
|
||||||||
Other
than temporary losses on investments (b)
|
$ | 3,127 | $ | 68,086 | ||||
Other
net recognized (gains) losses
|
1,614 | (1,673 | ) | |||||
$ | 4,741 | $ | 66,413 | |||||
Investing
investment activities, net:
|
||||||||
Proceeds
from sales of available-for-sale securities and other
investments
|
$ | 9,756 | $ | 3,555 | ||||
Decrease
in restricted cash held for investment
|
5,149 | 27,218 | ||||||
Payments
to cover short positions in securities and cost of available-for-sale
securities and other investments purchased
|
(14,201 | ) | (30,661 | ) | ||||
$ | 704 | $ | 112 | |||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid during the year from continuing operations for:
|
||||||||
Interest
|
$ | 19,675 | $ | 13,999 | ||||
Income
taxes, net of refunds
|
$ | 1,097 | $ | 625 | ||||
Supplemental
schedule of noncash investing and financing activities:
|
||||||||
Total
capital expenditures
|
$ | 18,789 | $ | 21,189 | ||||
Capital
expenditures paid in cash
|
(17,203 | ) | (16,770 | ) | ||||
Non-cash
capitalized lease and certain sales-leaseback obligations
|
$ | 1,586 | $ | 4,419 | ||||
Non-cash
additions to long-term debt from acquisitions
|
$ | - | $ | 10,953 |
Value
of shares of Wendy’s/Arby’s common stock issued in exchange for Wendy’s
common shares
|
$ | 2,476,197 | ||
Value
of Wendy’s stock options that have been converted into Wendy’s/Arby’s
options
|
18,296 | |||
Estimated
Wendy’s Merger costs
|
20,819 | |||
Total
estimated merger consideration
|
2,515,312 | |||
Net
book value of Wendy’s assets acquired and liabilities
assumed
|
796,588 | |||
Less: Wendy’s
historical goodwill acquired
|
(83,794 | ) | ||
Net
book value of Wendy’s assets acquired and liabilities
assumed
|
712,794 | |||
Excess
of merger consideration over book value of Wendy’s assets acquired and
liabilities assumed
|
1,802,518 | |||
Change
in fair values of assets and liabilities allocated to:
|
||||
(Increase)/decrease
in:
|
||||
Current
assets
|
||||
Accounts
and notes receivable
|
(694 | ) | ||
Prepaid
expenses and other current assets
|
985 | |||
Investments
|
(64,169 | ) | ||
Properties
|
(45,920 | ) | ||
Other
intangible assets
|
||||
Trademark
|
(900,109 | ) | ||
Franchise
agreements
|
(353,000 | ) | ||
Favorable
leases
|
(119,362 | ) | ||
Computer
software
|
9,566 | |||
Deferred
costs and other assets
|
(377 | ) | ||
Increase/(decrease)
in:
|
||||
Accrued
expenses and other current liabilities
|
829 | |||
Long-term
debt, including current portion of $228
|
(56,337 | ) | ||
Other
liabilities
|
(46,574 | ) | ||
Unfavorable
leases
|
64,673 | |||
Deferred
income tax liability
|
556,599 | |||
Total adjustments
|
(953,890 | ) | ||
Goodwill
|
$ | 848,628 |
Goodwill
as reported at December 28, 2008
|
$ | 845,631 | ||
Change
in total estimated merger consideration:
|
||||
Decrease
in the value of Wendy’s stock options that have been converted into
Wendy’s/Arby’s options
|
(199 | ) | ||
Increase
in Wendy’s Merger costs
|
116 | |||
Changes
to fair values of assets and liabilities:
|
||||
Increase
in properties
|
(1,002 | ) | ||
Increase
in favorable leases
|
(2,094 | ) | ||
Decrease
in accrued expenses and other current liabilities
|
(4,712 | ) | ||
Increase
in unfavorable leases
|
620 | |||
Increase
in deferred income tax liability
|
10,268 | |||
Goodwill
as reported at March 29, 2009
|
$ | 848,628 |
Three
months ended March 30, 2008
|
||||||||
As
Reported
|
As
Adjusted
|
|||||||
Revenues:
|
||||||||
Sales
|
$ | 281,579 | $ | 794,596 | ||||
Franchise
revenues
|
21,275 | 91,184 | ||||||
Total
revenues
|
302,854 | 885,780 | ||||||
Operating
profit
|
8,057 | 19,410 | ||||||
Net
loss
|
(67,471 | ) | (65,083 | ) | ||||
Basic
and diluted (loss) income per share:
|
||||||||
Class
A Common Stock:
|
(.73 | ) | (.14 | ) | ||||
Class
B Common Stock:
|
(.73 | ) | N/A |
|
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.
|
March
29,
|
Fair
Value Measurements
|
|||||||||||||||
2009
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Assets
|
||||||||||||||||
Available-for-sale
securities:
|
||||||||||||||||
Short-term
investments (included in “Prepaid expenses and
other current assets”)
|
$ | 124 | $ | 124 | $ | - | $ | - | ||||||||
Investments
– restricted (included in “Investments-other”)
|
18,755 | 18,755 | - | - | ||||||||||||
Total
assets
|
$ | 18,879 | $ | 18,879 | $ | - | $ | - | ||||||||
Liabilities
|
||||||||||||||||
Securities
sold with an obligation to purchase-restricted
|
$ | 3,923 | $ | 3,923 | $ | - | $ | - | ||||||||
Other
derivatives in liability positions-restricted
|
3,984 | 3,984 | - | - | ||||||||||||
Total
liabilities (included in “Other liabilities”)
|
$ | 7,907 | $ | 7,907 | $ | - | $ | - |
|
(4)
|
Impairment
of Long-lived Assets
|
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Arby’s
restaurant segment:
|
||||||||
Impairment
of Company-owned restaurants:
|
||||||||
Properties
|
$ | 5,894 | $ | 48 | ||||
Favorable
leases
|
232 | - | ||||||
Franchise
agreements
|
318 | - | ||||||
Other
|
17 | 31 | ||||||
6,461 | 79 | |||||||
Wendy’s
restaurant segment:
|
||||||||
Impairment
of surplus properties:
|
419 | - | ||||||
Total
impairment of long-lived assets
|
$ | 6,880 | $ | 79 |
(5)
|
Facilities
Relocation and Corporate
Restructuring
|
Three
Months Ended
|
||||||||||||||||||||||||
March
29, 2009
|
||||||||||||||||||||||||
Balance
December
28,
|
Balance
March
29,
|
Total
Expected to be
|
Total
Incurred
|
|||||||||||||||||||||
2008
|
Provision
|
Payments
|
2009
|
Incurred
|
to
Date
|
|||||||||||||||||||
Wendy’s
restaurant segment:
|
||||||||||||||||||||||||
Cash
obligations:
|
||||||||||||||||||||||||
Severance
costs
|
$ | 3,101 | $ | 4,161 | $ | (1,197 | ) | $ | 6,065 | $ | 10,452 | $ | 7,262 | |||||||||||
Total
Wendy’s restaurant segment
|
3,101 | 4,161 | (1,197 | ) | 6,065 | 10,452 | 7,262 | |||||||||||||||||
Arby’s
restaurant segment:
|
||||||||||||||||||||||||
Cash
obligations:
|
||||||||||||||||||||||||
Employee
relocation costs
|
72 | - | - | 72 | 4,651 | 4,651 | ||||||||||||||||||
Other
|
- | - | - | - | 7,471 | 7,471 | ||||||||||||||||||
72 | - | - | 72 | 12,122 | 12,122 | |||||||||||||||||||
Non-cash
charges
|
- | - | - | - | 719 | 719 | ||||||||||||||||||
Total
Arby’s restaurant segment
|
72 | - | - | 72 | 12,841 | 12,841 | ||||||||||||||||||
Corporate:
|
||||||||||||||||||||||||
Cash
obligations:
|
||||||||||||||||||||||||
Severance
and retention incentive compensation
|
962 | - | (126 | ) | 836 | 84,622 | 84,622 | |||||||||||||||||
Non-cash
charges
|
- | - | - | - | 835 | 835 | ||||||||||||||||||
Total
corporate
|
962 | - | (126 | ) | 836 | 85,457 | 85,457 | |||||||||||||||||
$ | 4,135 | $ | 4,161 | $ | (1,323 | ) | $ | 6,973 | $ | 108,750 | $ | 105,560 |
|
(6)
|
Discontinued
Operations
|
March
29,
|
December
28,
|
|||||||
2009
|
2008
|
|||||||
Accrued
expenses, including accrued income taxes, of the Beverage Discontinued
Operations
|
$ | 3,805 | $ | 3,805 | ||||
Other
|
420 | 445 | ||||||
$ | 4,225 | $ | 4,250 |
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Service
cost (consisting entirely of plan administrative expenses)
|
$ | 22 | $ | 24 | ||||
Interest
cost
|
56 | 55 | ||||||
Expected
return on the plans’ assets
|
(38 | ) | (55 | ) | ||||
Amortization
of unrecognized net loss
|
21 | 6 | ||||||
Net
periodic pension cost
|
$ | 61 | $ | 30 |
(8)
|
Other
Than Temporary Losses on
Investments
|
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Cost
method investments
|
$ | 2,326 | $ | - | ||||
Available-for-sale
security
|
801 | - | ||||||
Deerfield Capital Corp. (“DFR”)
common stock
|
- | 68,086 | ||||||
$ | 3,127 | $ | 68,086 |
(9)
|
Income
Taxes
|
(10)
|
Loss
Per Share
|
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Class
A Common Stock
|
469,237 | 28,884 | ||||||
Class
B Common Stock
|
N/A | 63,660 |
(11)
|
Stockholder’s
Equity
|
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Beginning
balance
|
$ | 2,383,291 | $ | 448,874 | ||||
Effect
of change in accounting for minority interests
|
154 | 972 | ||||||
Beginning
balance, as adjusted
|
2,383,445 | 449,846 | ||||||
Comprehensive
loss (1)
|
(5,912 | ) | (64,340 | ) | ||||
Dividend
declared
|
(7,033 | ) | - | |||||
DFR
stock dividend
|
- | (14,464 | ) | |||||
Dividend
paid
|
- | (8,044 | ) | |||||
Share-based
compensation expense
|
4,371 | 1,585 | ||||||
Other
|
61 | (25 | ) | |||||
Ending
balance
|
$ | 2,374,932 | $ | 364,558 |
Three
Months Ended
|
||||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Net
loss
|
$ | (10,924 | ) | $ | (67,471 | ) | ||
Net
change in currency translation adjustment (a)
|
5,752 | (152 | ) | |||||
Net
unrealized (losses) gains on available-for-sale securities
(b)
|
(740 | ) | 4,436 | |||||
Net
unrealized losses on cash flow hedges (c)
|
- | (1,153 | ) | |||||
Other
comprehensive loss
|
5,012 | 3,131 | ||||||
Comprehensive
loss
|
$ | (5,912 | ) | $ | (64,340 | ) | ||
_______________________
|
|
(a)
|
The
2009 amount is primarily due to changes to the allocation of the Wendy’s
merger consideration. See Note 2 for further
information.
|
(b) Net unrealized
(losses) gains on available-for-sale securities:
|
Three
Months Ended
|
|||||||
March
29,
|
March
30,
|
|||||||
2009
|
2008
|
|||||||
Unrealized
holding losses arising during the period
|
$ | (993 | ) | $ | (3,920 | ) | ||
Reclassifications
of prior period unrealized holding (gains) losses into net
loss
|
(178 | ) | 11,074 | |||||
Change
in unrealized holding gains and losses arising during the period from
investments under the equity method of accounting
|
- | (201 | ) | |||||
(1,171 | ) | 6,953 | ||||||
Income
tax benefit (provision)
|
431 | (2,517 | ) | |||||
$ | (740 | ) | $ | 4,436 |
(c) Net unrealized losses
on cash flow hedges:
|
Three
Months Ended
|
|||
March
30,
|
||||
2008
|
||||
Unrealized
holding losses arising during the period
|
$ | (1,916 | ) | |
Reclassifications
of prior period unrealized holding losses into net loss
|
28 | |||
Change
in unrealized holding gains and losses arising during the period from
investments under the equity method of accounting
|
3 | |||
(1,885 | ) | |||
Income
tax benefit
|
732 | |||
$ | (1,153 | ) |
(12)
|
Business
Segments
|
Three
months ended March 29, 2009
|
||||||||||||||||
Wendy’s
|
Arby’s
|
|||||||||||||||
restaurants
|
restaurants
|
Corporate
|
Total
|
|||||||||||||
Revenues:
|
||||||||||||||||
Sales
|
$ | 507,003 | $ | 266,240 | $ | - | $ | 773,243 | ||||||||
Franchise
revenues
|
71,238 | 19,503 | - | 90,741 | ||||||||||||
578,241 | 285,743 | - | 863,984 | |||||||||||||
Depreciation
and amortization
|
36,687 | 14,517 | 458 | 51,662 | ||||||||||||
Operating
profit (loss)
|
20,025 | (2,047 | ) | (4,044 | ) | 13,934 | ||||||||||
Interest
expense
|
(22,149 | ) | ||||||||||||||
Investment
expense, net
|
(1,794 | ) | ||||||||||||||
Other
than temporary losses on investments
|
(3,127 | ) | ||||||||||||||
Other
expense, net
|
(2,597 | ) | ||||||||||||||
Loss
before income tax benefit
|
(15,733 | ) | ||||||||||||||
Benefit
from income taxes
|
4,809 | |||||||||||||||
Net
loss
|
$ | (10,924 | ) |
Three
months ended March 30, 2008
|
||||||||||||
Arby’s
|
||||||||||||
restaurants
|
Corporate
|
Total
|
||||||||||
Revenues:
|
||||||||||||
Sales
|
$ | 281,579 | $ | - | $ | 281,579 | ||||||
Franchise
revenues
|
21,275 | 21,275 | ||||||||||
302,854 | - | 302,854 | ||||||||||
Depreciation
and amortization
|
14,838 | 1,076 | 15,914 | |||||||||
Operating
profit (loss)
|
17,349 | (9,292 | ) | 8,057 | ||||||||
Interest
expense
|
(13,491 | ) | ||||||||||
Investment
income, net
|
2,164 | |||||||||||
Other
than temporary loss on investment
|
(68,086 | ) | ||||||||||
Other
expense, net
|
(4,579 | ) | ||||||||||
Loss
before income tax benefit
|
(75,935 | ) | ||||||||||
Benefit
from income taxes
|
8,464 | |||||||||||
Net
loss
|
$ | (67,471 | ) |
Wendy’s
|
Arby’s
|
|||||||||||||||
restaurants
|
restaurants
|
Corporate
|
Total
|
|||||||||||||
Three
months ended March 29, 2009
|
||||||||||||||||
Cash
capital expenditures
|
$ | 8,743 | $ | 7,825 | $ | 635 | $ | 17,203 | ||||||||
Three
months ended March 30, 2008
|
||||||||||||||||
Cash
capital expenditures
|
$ | 16,770 | $ | - | $ | 16,770 |
(13)
|
Legal
and Environmental Matters
|
(14)
|
Accounting
Standards
|
|
·
|
Significant
decreases in general consumer confidence in the economy as well as
decreases in many consumers’ discretionary income caused by factors such
as continuing deterioration in the financial markets and in economic
conditions, including high unemployment levels and significant
displacement in the real estate market, volatility in fuel costs, and high
food costs;
|
|
·
|
Increasing
price competition in the quick service restaurant (“QSR”) industry, as
evidenced by (1) value menu concepts, which offer comparatively lower
prices on some menu items, (2) the use of coupons and other price
discounting, (3) many recent product promotions focused on lower prices of
certain menu items and (4) combination meal concepts (“combos”), which
offer a complete meal at an aggregate price lower than the price of
individual food and beverage items;
|
|
·
|
Competitive
pressures due to extended hours of operation by many QSR competitors,
including breakfast and late night
hours;
|
|
·
|
Competitive
pressures from operators outside the QSR industry, such as the deli
sections and in-store cafes of major grocery and other retail store
chains, convenience stores and casual dining outlets offering take-out
food;
|
|
·
|
Increased
availability to consumers of product choices, including (1) healthy
products driven by a greater consumer awareness of nutritional issues, (2)
products that tend to offer a variety of portion sizes and more
ingredients; (3) beverage programs which offer a wider selection of
premium non-carbonated beverages, including coffee and tea products; and
(4) sandwiches with perceived higher levels of freshness, quality and
customization; and
|
|
·
|
Competitive
pressures from an increasing number of franchise opportunities seeking to
attract qualified franchisees.
|
|
·
|
Higher
commodity prices which increased our food costs during 2008, with some
moderation in recent months;
|
|
·
|
The
recent volatility in fuel prices which, when at much higher than current
levels, contributed to an increase in utility, distribution, and freight
costs;
|
|
·
|
Federal,
state and local legislative activity, such as minimum wage increases and
mandated health and welfare benefits which is expected to continue to
increase wages and related fringe benefits, including health care and
other insurance costs; and
|
|
·
|
Legal
or regulatory activity related to nutritional content or menu labeling
which results in increased operating
costs.
|
|
Other
|
|
·
|
Dislocation
and weakness in the overall credit markets and higher borrowing costs in
the lending markets typically used to finance new unit development and
remodels. These tightened credit conditions could negatively
impact the renewal of franchisee licenses as well as the ability of a
franchisee to meet their commitments under development, rental and
franchise license agreements;
|
|
·
|
A
significant portion of both our Wendy’s and Arby’s restaurants are
franchised and, as a result, we receive revenue in the form of royalties
(which are generally based on a percentage of sales at franchised
restaurants), rent and fees from franchisees. Franchisee related accounts
receivable and estimated reserves for uncollectibility have increased, and
may continue to increase, as a result of the deteriorating financial
condition of some of our franchisees;
and
|
|
·
|
Continued
competition for development sites among QSR competitors and other
businesses.
|
|
·
|
improving
the quality and affordability of our core menu items;
|
·
|
increasing same store sales in the restaurants and revitalizing the Wendy’s and Arby’s brands with new marketing programs, menu development and an improved customer experience; |
|
·
|
improving
Company-owned restaurant margins;
|
|
·
|
achieving
significant progress on synergies and efficiencies related to the Wendy’s
Merger;
|
|
·
|
expanding
the breakfast daypart at many Wendy’s and Arby’s locations over the next
several years; and
|
|
·
|
possibily
acquiring other restaurant brands.
|
|
·
|
Same-Store
Sales
|
|
·
|
Restaurant
Margin
|
Three
Months Ended
|
||||||||||||
March
29,
|
March
30,
|
Change
|
||||||||||
2009
|
2008
|
Amount
|
||||||||||
(In
Millions Except Restaurant Count and Percents)
|
||||||||||||
Revenues:
|
||||||||||||
Sales
|
$ | 773.2 | $ | 281.6 | $ | 491.6 | ||||||
Franchise
revenues
|
90.8 | 21.3 | 69.5 | |||||||||
864.0 | 302.9 | 561.1 | ||||||||||
Costs
and expenses:
|
||||||||||||
Cost
of sales
|
676.0 | 233.5 | 442.5 | |||||||||
General
and administrative
|
109.8 | 44.9 | 64.9 | |||||||||
Depreciation
and amortization
|
51.7 | 15.9 | 35.8 | |||||||||
Impairment
of long-lived assets
|
6.9 | 0.1 | 6.8 | |||||||||
Facilities
relocation and corporate restructuring
|
4.2 | 0.9 | 3.3 | |||||||||
Other
operating expense (income), net
|
1.5 | (0.5 | ) | 2.0 | ||||||||
850.1 | 294.8 | 555.3 | ||||||||||
Operating
profit
|
13.9 | 8.1 | 5.8 | |||||||||
Interest
expense
|
(22.1 | ) | (13.5 | ) | (8.6 | ) | ||||||
Investment
(expense) income, net
|
(1.8 | ) | 2.2 | (4.0 | ) | |||||||
Other
than temporary losses on investments
|
(3.1 | ) | (68.1 | ) | 65.0 | |||||||
Other
expense, net
|