What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-05 compared with 2020-05-06 · 266 added, 175 removed, 239 unchanged (65% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2019 (the “Form 10-K”).

There have been no material changes as of March 29, 2020 to the application of our critical accounting policies as described in Item 7 of the Form 10-K.

There have been no material changes as of June 28, 2020 to the application of our critical accounting policies as described in Item 7 of the Form 10-K.

Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.

See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II - Other Information” of this report.

See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II.

Other Information” of this report.

You should consider our forward-looking statements in light of the risks discussed in “Item 1A.

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Today, Wendy’s is the world’s third largest quick-service restaurant company in the hamburger sandwich segment, with 6,806 restaurants in the United States (the “U.S.”) and 30 foreign countries and U.S.

territories as of March 29, 2020 .

territories as of June 28, 2020.

Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of chicken breast sandwiches, which are prepared to order with the customer’s choice of condiments.

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The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31.

All three -month periods presented herein contain 13 weeks.

All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively.

All references to years and quarters relate to fiscal periods rather than calendar periods.

Executive Overview

As of March 29, 2020 , the Wendy’s restaurant system was comprised of 6,805 restaurants, with 5,861 Wendy’s restaurants in operation in the U.S.

As of June 28, 2020, the Wendy’s restaurant system was comprised of 6,806 restaurants, with 5,862 Wendy’s restaurants in operation in the U.S.

restaurants, 358 were operated by the Company and 5,504 were operated by a total of 239 franchisees.

In addition, at March 29, 2020 , there were 944 Wendy’s restaurants in operation in 30 foreign countries and U.S.

In addition, at June 28, 2020, there were 944 Wendy’s restaurants in operation in 30 foreign countries and U.S.

territories, all of which were franchised.

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(1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants.

Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of March 29, 2020 .

Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and decreased consumer spending levels, general economic and market trends and weather.

Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of June 28, 2020.

Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather.

The COVID-19 pandemic has had and may continue to have the effect of heightening the impact of many of these factors.

See “COVID-19 Update” below for additional information.

See “COVID-19 Update” and “Special Note Regarding Forward-Looking Statements and Projections” below for additional information.

Wendy’s long-term growth opportunities include accelerating U.S.

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On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide.

We cannot predict whether, when or the manner in which the conditions surrounding the pandemic will change and cannot currently estimate the impact on our business in the short or long-term.

We continue to monitor the dynamic nature of the COVID-19 pandemic and, in response, Wendy’s has updated its brand standard to include the closure of all dining rooms except where there are specific needs, or a drive-thru or pick-up window option is not available, subject to applicable state and local requirements.

Substantially all Wendy’s restaurants continue to offer drive-thru and delivery service to our customers.

Decisions to continue to offer carryout services at select restaurants are being made on a case-by-case basis and in compliance with applicable state or local requirements.

As of March 29, 2020 , systemwide temporary restaurant closures totaled 52 and 233 in the U.S.

and internationally, respectively, which represents approximately 4.2% of all system restaurants.

As a result of the COVID-19 pandemic, systemwide same-restaurant sales were materially adversely impacted during the month ended March 29, 2020 .

The following table shows same-restaurant sales in the first quarter, with a breakdown between the two months ended March 1, 2020 and the month ended March 29, 2020:

Two Months Ended

March 1, 2020

March 29, 2020

First Quarter 2020

systemwide same-restaurant sales

International same-restaurant sales

Global systemwide same-restaurant sales

Subsequent to March 29, 2020 through the week ended April 26, 2020, systemwide same-restaurant sales continued to be materially adversely impacted by the COVID-19 pandemic.

The following table shows same-restaurant sales by week subsequent to March 29, 2020 through the week ended April 26, 2020:

Week Ended April 5, 2020

Week Ended April 12, 2020

Week Ended April 19, 2020

Week Ended April 26, 2020

systemwide same-restaurant sales

International same-restaurant sales

Global systemwide same-restaurant sales

As of April 26, 2020, systemwide temporary restaurant closures totaled 66 and 261 in the U.S.

We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition;

however, we cannot predict whether, when or the manner in which the conditions surrounding the pandemic will change and cannot currently estimate the impact on our business in the short or long-term.

In response to the pandemic, in March 2020, Wendy’s updated its brand standard to include the closure of all dining rooms except where there were specific needs, or a drive-thru or pick-up window option was not available, subject to applicable federal, state and local requirements.

Substantially all Wendy’s restaurants continued to offer drive-thru and delivery service to our customers.

During the second quarter of 2020, the Company began to implement its restaurant and dining room reopening process through a phased approach in accordance with federal, state and local requirements, with customer and team member safety as its top priority.

Dining rooms have been re-opening at each restaurant owner’s discretion, subject to applicable regulatory restrictions.

As of August 2, 2020, over 70% of dining rooms were open across the Wendy’s system offering carryout and, in some cases, dine in services.

The COVID-19 pandemic has resulted in the temporary closure of certain restaurants across the Wendy’s system.

As of August 2, 2020, systemwide temporary restaurant closures totaled 34 and 93 in the U.S.

and internationally, respectively, which represents approximately 2% of all system restaurants.

Additionally, the COVID-19 pandemic has led, and could continue to lead, to interruptions in the delivery of food or other supplies to Wendy’s restaurants arising from delays or restrictions on shipping or manufacturing, closures of supplier or distributor facilities or other factors.

These delays or interruptions could impact the availability of certain food items at Wendy’s restaurants, including beef, chicken, pork and other core menu products.

The following table shows same-restaurant sales for the fiscal months of January through June 2020:

January through February March April May June

Same-restaurant sales:

systemwide 3.7 % (7.7) % (14.0) % (1.9) % 5.1 %

International 5.4 % (17.0) % (28.3) % (15.7) % (10.7) %

Global systemwide 3.9 % (8.6) % (15.3) % (3.3) % 3.4 %

As a result of the COVID-19 pandemic, global systemwide same-restaurant sales began to be materially adversely impacted in the fiscal month of March, with the fiscal month of April seeing the greatest impact.

The decrease in same-restaurant sales was driven by a significant decline in customer count, partially offset by an increase in average check.

Subsequently, global same-restaurant sales improved during the fiscal months of May and June, despite being impacted by the previously disclosed disruption in beef supply at the beginning of May (see “Beef Supply Update” below for further information).

The improvement in same-restaurant sales was primarily driven by a significant increase in customer traffic compared to the lows seen in March and April.

Global same-restaurant sales continued to improve during the fiscal month of July, with U.S.

systemwide same-restaurant sales increasing 8.2%.

The negative impact of the COVID-19 pandemic on same-restaurant sales has been partially offset by the Company’s entry into the breakfast daypart across the U.S.

system on March 2, 2020.

Breakfast represented approximately 8% of U.S.

systemwide sales in the second quarter of 2020.

Due to the current unprecedented market and economic conditions in the U.S.

and internationally, the expected impact of the COVID-19 pandemic on the Company’s 2020 net income and cash flows cannot be reasonably estimated.

However, as of the date of this filing, we expect our net income and cash flows for the remainder of 2020 to be adversely impacted by the pandemic.

Our net income and cash flows for the remainder of 2020 could continue to be materially affected by the pandemic.

See “Item 1A.

Risk Factors” in “Part II.

Factors” in “Part II.

Other Information” for further information regarding the risks associated with the COVID-19 pandemic and the impact on our business, results and financial condition.

Also, see “Liquidity and Capital Resources” below for certain actions taken by the Company in response to the COVID-19 pandemic.

Beef Supply Update

As previously disclosed, the Company experienced disruptions to its beef supply beginning in early May as beef suppliers across North America faced production challenges.

As a result, some menu items were occasionally in short supply at some Wendy’s system restaurants.

The Company and its supply chain partners effectively managed through this disruption by allocating beef to all Wendy’s system restaurants, with deliveries occurring two or three times a week, consistent with normal delivery schedules.

The Company also shifted its marketing efforts in the short term to focus on chicken products in an effort to alleviate pressure on beef demand.

Beef supply has returned to normal levels across the Wendy’s system as of June 28, 2020.

Goodwill and Indefinite-Lived Intangible Assets

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Given the limited excess of the fair value over carrying value, this reporting unit is more sensitive to changes in assumptions regarding its fair value.

A 50 basis point increase in the discount rate, or a moderate decline in estimated future cash flows, would result in the fair value of the reporting unit being less than its carrying value.

As of March 29, 2020, the goodwill balance associated with our global real estate and development operations was $122.5 million.

As of the date of our analysis in the first quarter of 2020, a 50 basis point increase in the discount rate, or a moderate decline in estimated future cash flows, would result in the fair value of the reporting unit being less than its carrying value.

As of June 28, 2020, the goodwill balance associated with our global real estate and development operations was $122.5 million.

The Company also tested our indefinite-lived intangible assets, which represent trademarks, for impairment in March 2020.

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The Company expects that the realignment plan will reduce certain employee compensation and other related costs that the Company intends to reinvest back into IT to drive additional capabilities and capacity across all of its technology platforms.

The Company expects the majority of the impact of the realignment plan to occur at its Restaurant Support Center in Dublin, Ohio.

The Company expects to incur total costs aggregating approximately $13.0 million to $15.0 million related to the plan.

During the three months ended March 29, 2020 , the Company recognized costs totaling $3.6 million , which primarily included third-party and other costs.

The Company expects to incur additional costs aggregating approximately $1.5 million , comprised primarily of third-party and other costs.

The Company expects to recognize the majority of the remaining costs associated with the plan during the second quarter of 2020.

Additionally, in June 2020, the Company made changes to its leadership structure that included the creation of a Chief Information Officer position and the elimination of the Chief Digital Experience Officer position.

As a result, the Company now expects to incur total costs aggregating approximately $16.0 million to $17.0 million related to the plan.

During the six months ended June 28, 2020, the Company recognized costs totaling $6.4 million, which primarily included third-party and other costs and severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $1.0 million, comprised primarily of recruitment and relocation costs.

The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2020.

Results of Operations

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the first quarter of 2020 and 2019 .

First Quarter

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the second quarter and the first six months of 2020 and 2019.

Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Sales $ 164.2 $ 181.1 $ (16.9) $ 331.0 $ 348.7 $ (17.7)

Franchise royalty revenue and fees 103.1 109.1 (6.0) 204.9 211.1 (6.2)

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Advertising funds revenue 78.1 86.6 (8.5) 156.7 167.1 (10.4)

402.3 435.3 (33.0) 807.3 843.9 (36.6)

Costs and expenses:

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Other operating income, net (1.4) (3.1) 1.7 (3.3) (7.1) 3.8

341.6 354.7 (13.1) 697.9 697.1 0.8

Operating profit 60.7 80.6 (19.9) 109.4 146.8 (37.4)

Interest expense, net (29.1) (29.9) 0.8 (57.6) (59.0) 1.4

Other income, net

Loss on early extinguishment of debt — (7.2) 7.2 — (7.2) 7.2

Other (expense) income, net (0.2) 2.2 (2.4) 0.9 5.0 (4.1)

Income before income taxes

31.4 45.7 (14.3) 52.7 85.6 (32.9)

Provision for income taxes (6.5) (13.3) 6.8 (13.4) (21.3) 7.9

First Quarter

Total Revenues

Net income $ 24.9 $ 32.4 $ (7.5) $ 39.3 $ 64.3 $ (25.0)

Second Quarter Six Months

Total Revenues 2019 % of

Total Revenues 2020 % of

Total Revenues 2019 % of

Total Revenues

Sales $ 164.2 40.8 % $ 181.1 41.6 % $ 331.0 41.0 % $ 348.7 41.3 %

Franchise royalty revenue and fees:

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Total franchise royalty revenue and fees

103.1 25.6 % 109.1 25.1 % 204.9 25.4 % 211.1 25.0 %

Franchise rental income

56.9 14.2 % 58.5 13.4 % 114.7 14.2 % 117.0 13.9 %

Advertising funds revenue

78.1 19.4 % 86.6 19.9 % 156.7 19.4 % 167.1 19.8 %

Total revenues

First Quarter

$ 402.3 100.0 % $ 435.3 100.0 % $ 807.3 100.0 % $ 843.9 100.0 %

Second Quarter Six Months

Sales 2019 % of

Sales 2020 % of

Sales 2019 % of

Cost of sales:

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Occupancy, advertising and other operating costs

37.3 22.7 % 39.5 21.9 % 77.8 23.5 % 78.3 22.5 %

Total cost of sales $ 140.6 85.6 % $ 151.1 83.5 % $ 290.6 87.8 % $ 293.7 84.2 %

First Quarter

Second Quarter Six Months

Sales 2019 % of

Sales 2020 % of

Sales 2019 % of

Restaurant margin $ 23.6 14.4 % $ 30.0 16.5 % $ 40.4 12.2 % $ 55.0 15.8 %

The tables below present certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein.

First Quarter

Second Quarter Six Months

2020 2019 2020 2019

Key business measures:

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Company-operated restaurants

(10.0) % 0.8 % (5.5) % 1.4 %

Franchised restaurants

(4.0) % 1.4 % (2.0) % 1.3 %

(4.4) % 1.3 % (2.3) % 1.3 %

International same-restaurant sales (a) (18.4) % 3.9 % (10.1) % 3.3 %

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Company-operated restaurants

(10.0) % 0.8 % (5.5) % 1.4 %

Franchised restaurants (a)

(5.5) % 1.6 % (2.9) % 1.5 %

Systemwide (a)

(5.8) % 1.6 % (3.1) % 1.5 %

________________

(a) Includes international franchised restaurants same-restaurant sales (excluding Argentina and Venezuela due to the impact of the highly inflationary economies of those countries).

First Quarter

Second Quarter Six Months

2020 2019 2020 2019

Key business measures (continued):

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Company-operated

$ 164.2 $ 181.1 $ 331.0 $ 348.7

franchised 2,239.2 2,321.6 4,413.4 4,471.9

2,403.4 2,502.7 4,744.4 4,820.6

International franchised (b)

220.2 301.0 492.8 574.3

Global systemwide

$ 2,623.6 $ 2,803.7 $ 5,237.2 $ 5,394.9

During the first quarter of 2020 and 2019 , global systemwide sales increased 1.0% and 3.3% , respectively, U.S.

systemwide sales increased 1.0% and 2.6% , respectively, and international franchised sales increased 1.0% and 10.2% , respectively, on a constant currency basis.

Excludes Argentina and Venezuela due to the impact of the highly inflationary economies of those countries.

First Quarter

Company-operated

International Franchised

________________

(a) During the second quarter of 2020 and 2019, global systemwide sales decreased 6.2% and increased 3.3%, respectively, U.S.

systemwide sales decreased 4.0% and increased 2.5%, respectively, and international franchised sales decreased 24.5% and increased 10.4%, respectively, on a constant currency basis.

During the first six months of 2020 and 2019, global systemwide sales decreased 2.7% and increased 3.3%, respectively, U.S.

systemwide sales decreased 1.6% and increased 2.5%, respectively, and international franchised sales decreased 12.4% and increased 10.3%, respectively, on a constant currency basis.

(b) Excludes Argentina and Venezuela due to the impact of the highly inflationary economies of those countries.

Second Quarter

Company-operated U.S.

Franchised International Franchised Systemwide

Restaurant count:

Restaurant count at December 29, 2019

Restaurant count at March 29, 2020 358 5,503 944 6,805

Opened 2 17 3 22

Closed (a) (2) (16) (3) (21)

Restaurant count at June 28, 2020 358 5,504 944 6,806

Company-operated U.S.

Franchised International Franchised Systemwide

Restaurant count at December 29, 2019 357 5,495 936 6,788

Opened 3 43 17 63

Closed (a) (2) (34) (9) (45)

Restaurant count at June 28, 2020 358 5,504 944 6,806

________________

Excludes restaurants temporarily closed due to the impact of the COVID-19 pandemic.

First Quarter

The decrease in sales for the first quarter of 2020 was primarily due to a 0.7% decrease in Company-operated same-restaurant sales.

Company-operated same-restaurant sales decreased due to the impact of the COVID-19 pandemic during March 2020, partially offset by the positive impact from the launch of breakfast on March 2, 2020.

Franchise Royalty Revenue and Fees

First Quarter

(a) Excludes restaurants temporarily closed due to the impact of the COVID-19 pandemic.

Sales Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Sales $ 164.2 $ 181.1 $ (16.9) $ 331.0 $ 348.7 $ (17.7)

The decrease in sales for the second quarter and the first six months of 2020 was primarily due to a 10.0% and 5.5% decrease in Company-operated same-restaurant sales, respectively.

Company-operated same-restaurant sales decreased due to a decrease in customer count as a result of the COVID-19 pandemic, partially offset by (1) higher average check and (2) the positive impact from the launch of breakfast on March 2, 2020.

Franchise Royalty Revenue and Fees Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Royalty revenue $ 97.2 $ 102.8 $ (5.6) $ 192.6 $ 197.7 $ (5.1)

Franchise fees 5.9 6.3 (0.4) 12.3 13.4 (1.1)

The increase in franchise royalty revenue during the first quarter of 2020 was primarily due to a net increase in the number of franchise restaurants in operation during the first quarter of 2020 compared to the first quarter of 2019.

The decrease in franchise fees during the first quarter of 2020 was primarily due to lower other miscellaneous franchise fees.

Franchise Rental Income

First Quarter

$ 103.1 $ 109.1 $ (6.0) $ 204.9 $ 211.1 $ (6.2)

The decrease in franchise royalty revenue during the second quarter and the first six months of 2020 was primarily due to a 5.5% and 2.9% decrease in franchise same-restaurant sales, respectively, which reflects the impact of the COVID-19 pandemic, partially offset by the positive impact from the launch of breakfast on March 2, 2020.

The decrease in franchise fees during the second quarter and the first six months of 2020 was primarily due to lower other miscellaneous franchise fees.

Franchise Rental Income Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Franchise rental income $ 56.9 $ 58.5 $ (1.6) $ 114.7 $ 117.0 $ (2.3)

The decrease in franchise rental income during the first quarter of 2020 was primarily due to the impact of assigning certain leases to franchisees.

Advertising Funds Revenue

First Quarter

The decrease in franchise rental income during the second quarter was primarily due to amending certain existing leases, partially offset by the impact of assigning certain leases to a franchisee during the second quarter of 2019.

The decrease in franchise rental income during the first six months of 2020 was primarily due to amending certain existing leases and the impact of assigning certain leases to a franchisee.

Advertising Funds Revenue Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Advertising funds revenue $ 78.1 $ 86.6 $ (8.5) $ 156.7 $ 167.1 $ (10.4)

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Franchisees make contributions to the national advertising funds based on a percentage of sales of the franchised restaurants.

The decrease in advertising funds revenue during the first quarter of 2020 was primarily due to (1) the impact of the COVID-19 pandemic during March 2020 and (2) the abatement of U.S.

national advertising fund contributions on breakfast sales prior to our official launch of breakfast on March 2, 2020.

These decreases were partially offset by a net increase in the number of franchise restaurants in operation in the first quarter of 2020 compared with the first quarter of 2019.

Cost of Sales, as a Percent of Sales

First Quarter

The decrease in advertising funds revenue during the second quarter and the first six months of 2020 was primarily due to a decrease in franchise same-restaurant sales as a result of the COVID-19 pandemic.

Cost of Sales, as a Percent of Sales Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Food and paper 30.0 % 31.9 % (1.9) % 30.8 % 31.5 % (0.7) %

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Occupancy, advertising and other operating costs 22.7 % 21.9 % 0.8 % 23.5 % 22.5 % 1.0 %

The increase in cost of sales, as a percent of sales, during the first quarter of 2020 was primarily due to (1) restaurant labor rate inflation, (2) an increase in commodity costs, (3) incremental training costs incurred as a result of launching the breakfast daypart and (4) an increase in maintenance costs.

Franchise Support and Other Costs

First Quarter

85.6 % 83.5 % 2.1 % 87.8 % 84.2 % 3.6 %

The increase in cost of sales, as a percent of sales, during the second quarter and the first six months of 2020 was primarily due to (1) a decrease in customer count, reflecting the impact of the COVID-19 pandemic, and (2) restaurant labor rate increases, which included incremental recognition pay during April and May.

These impacts were partially offset by (1) higher average check and (2) labor efficiencies and other dining room closure related efficiencies.

Franchise Support and Other Costs Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Franchise support and other costs $ 5.5 $ 4.0 $ 1.5 $ 13.5 $ 10.1 $ 3.4

The increase in franchise support and other costs during the first quarter of 2020 was primarily due to investments to support U.S.

franchisees in preparation of the national launch of breakfast on March 2, 2020.

Franchise Rental Expense

First Quarter

The increase in franchise support and other costs during the second quarter was primarily due to higher costs incurred to provide information technology and other services to our franchisees.

The increase in franchise support and other costs during the first six months of 2020 was primarily due to (1) investments to support U.S.

franchisees in preparation of the launch of breakfast across the U.S.

system on March 2, 2020 and (2) higher costs incurred to provide information technology and other services to our franchisees.

Franchise Rental Expense Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Franchise rental expense $ 31.3 $ 28.0 $ 3.3 $ 60.6 $ 60.5 $ 0.1

The decrease in franchise rental expense during the first quarter of 2020 was primarily due to the impact of assigning certain leases to franchisees.

Advertising Funds Expense

First Quarter

The increase in franchise rental expense during the second quarter and the first six months of 2020 was primarily due to the impact of assigning certain leases to a franchisee in 2019.

Advertising Funds Expense Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Advertising funds expense $ 81.3 $ 88.7 $ (7.4) $ 161.3 $ 169.1 $ (7.8)

The decrease in advertising funds expense during the first quarter of 2020 was primarily due to the same factors as described above for “Advertising Funds Revenue.” On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue.

During the first quarter of 2020, advertising funds expense exceeded advertising funds revenue by $1.4 million, reflecting a portion of the expected advertising spend in excess of advertising funds revenue for 2020.

This excess for 2020 is expected to approximate the amount by which advertising funds revenue exceeded advertising funds expense in 2019 and 2018.

General and Administrative

First Quarter

The decrease in advertising funds expense during the second quarter and the first six months of 2020 was primarily due to the same factor as described above for “Advertising Funds Revenue.” On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue.

During the second quarter and the first six months of 2020, advertising funds expense exceeded advertising funds revenue by $3.2 million and $4.6 million, respectively, reflecting a portion of the expected advertising spend in excess of advertising funds revenue for 2020.

The second quarter and the first six months of 2020 include $2.2 million related to the Company’s decision in June to fund incremental advertising during 2020.

The excess of advertising funds expense over advertising funds revenue for 2020 is expected to be approximately $20.0 million, which includes (1) up to $15.0 million of Company funding of incremental advertising and (2) the amount by which advertising funds revenue exceeded advertising funds expense in 2019 and 2018 of approximately $5.0 million.

General and Administrative Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Employee compensation and related benefits $ 26.9 $ 27.7 $ (0.8) $ 57.2 $ 56.2 $ 1.0

Incentive compensation

Severance expense — 0.3 (0.3) 1.2 0.4 0.8

The increase in general and administrative expenses during the first quarter of 2020 was primarily due to increases in (1) salaries and benefits, (2) severance expense and (3) other miscellaneous charges largely consisting of meeting cancellation expenses due to the COVID-19 pandemic.

These increases were partially offset by a decrease in incentive compensation accruals.

Depreciation and Amortization

First Quarter

Travel-related expenses 0.8 3.2 (2.4) 3.9 5.8 (1.9)

Other, net 20.9 19.6 1.3 37.9 37.7 0.2

$ 48.6 $ 50.8 (2.2) $ 100.2 $ 100.1 0.1

The decrease in general and administrative expenses during the second quarter of 2020 was primarily due to a decrease in travel-related expenses as a result of reduced travel during the COVID-19 pandemic.

The increase in general and administrative expenses during the first six months of 2020 was primarily due to increases in (1) employee compensation and related benefits and (2) severance expense.

These increases were offset by a decrease in travel-related expenses as a result of reduced travel during the COVID-19 pandemic.

Depreciation and Amortization Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Restaurants $ 23.0 $ 20.0 $ 3.0 $ 42.5 $ 41.9 $ 0.6

Corporate and other 11.7 11.5 0.2 23.3 22.8 0.5

The decrease in depreciation and amortization during the first quarter of 2020 was primarily due to (1) assets becoming fully depreciated and (2) a decrease in depreciation on assets classified as held for sale resulting from the expected sale of 43 restaurants in New York to franchisees in the next 12 months.

System Optimization Gains, Net

First Quarter

$ 34.7 $ 31.5 $ 3.2 $ 65.8 $ 64.7 $ 1.1

The increase in depreciation and amortization during the second quarter and the first six months of 2020 was primarily due to (1) changes in useful lives for certain asset categories and (2) the assignment of certain leases to a franchisee in 2019, resulting in the write-off of the related net investment in the leases.

These increases were partially offset by (1) assets becoming fully depreciated and (2) a decrease in depreciation on assets classified as held for sale resulting from the expected sale of 43 restaurants in New York to franchisees in the first quarter of 2021.

System Optimization Gains, Net Second Quarter Six Months

2020 2019 Change 2020 2019 Change

System optimization gains, net $ (2.0) $ (0.1) $ (1.9) $ (2.3) $ (0.1) $ (2.2)

System optimization gains, net for the first quarter of 2020 were primarily comprised of post-closing adjustments on previous sales of restaurants.

Reorganization and Realignment Costs

First Quarter

System optimization gains, net for the second quarter and the first six months of 2020 were primarily comprised of gains on the sale of surplus and other properties.

Reorganization and Realignment Costs Second Quarter Six Months

2020 2019 Change 2020 2019 Change

IT realignment $ 2.8 $ — $ 2.8 $ 6.4 $ — $ 6.4

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System optimization initiative — 0.1 (0.1) 0.1 0.1 —

$ 2.9 $ 3.6 $ (0.7) $ 6.8 $ 4.4 $ 2.4

In December 2019, the Company’s Board of Directors approved a plan to realign and reinvest resources in its IT organization to strengthen its ability to accelerate growth.

During the first quarter of 2020, the Company recognized costs associated with this plan totaling $3.5 million, which primarily included third-party and other costs.

During the second quarter and the first six months of 2020, the Company recognized costs associated with this plan totaling $2.8 million and $6.4 million, respectively, which primarily included third-party and other costs of $1.9 million and $5.1 million, respectively, and severance and related employee costs of $0.8 million and $1.0 million, respectively.

In May 2017, the Company initiated a plan to further reduce its G&A expenses.

In addition, the Company announced changes to its leadership structure in May 2019.

G&A realignment costs for the first quarter of 2020 and 2019 were primarily comprised of severance and related employee costs and share-based compensation.

In addition, in May 2019, the Company announced changes to its management and operating structure.

G&A realignment costs for the second quarter and the first six months of 2020 were primarily comprised of share-based compensation.

G&A realignment costs for the second quarter and the first six months 2019 were primarily comprised of severance and related employee costs and share-based compensation.

The Company does not expect to incur any additional material costs under the plan.

Impairment of Long-Lived Assets

First Quarter

Impairment of Long-Lived Assets Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Impairment of long-lived assets $ 0.1 $ 0.2 $ (0.1) $ 4.7 $ 1.7 $ 3.0

The increase in impairment charges during the first quarter of 2020 was primarily driven by the Company testing its Company-operated restaurant long-lived assets for recoverability as a result of the adverse impacts of the COVID-19 pandemic.

As a result of this analysis, the Company recorded impairment charges due to the expected deterioration in operating performance of certain Company-operated restaurants.

Other Operating Income, Net

First Quarter

Gains on sales-type leases

The increase in impairment charges during the first six months of 2020 was primarily driven by the Company testing its Company-operated restaurant long-lived assets for recoverability as a result of the adverse impacts of the COVID-19 pandemic.

As a result of this analysis, the Company recorded impairment charges due primarily to the expected deterioration in operating performance of certain Company-operated restaurants.

Other Operating Income, Net Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Equity in earnings in joint ventures, net $ (0.9) $ (3.1) $ 2.2 $ (2.4) $ (4.9) $ 2.5

The change in other operating income, net during the first quarter of 2020 was primarily due to decreases in (1) gains on new and modified sales-type leases and (2) the equity in earnings from our TimWen joint venture.

Interest Expense, Net

First Quarter

Gains on sales-type leases (0.6) — (0.6) (1.2) (2.0) 0.8

Other, net 0.1 — 0.1 0.3 (0.2) 0.5

$ (1.4) $ (3.1) $ 1.7 $ (3.3) $ (7.1) $ 3.8

The change in other operating income, net during the second quarter and the first six months of 2020 was primarily due to a decrease in the equity in earnings from our TimWen joint venture.

Interest Expense, Net Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Interest expense, net $ 29.1 $ 29.9 $ (0.8) $ 57.6 $ 59.0 $ (1.4)

Interest expense, net decreased during the first quarter of 2020 primarily due to lower outstanding principal amounts of long-term debt, reflecting the impact of the completion of refinancing a portion of the Company’s securitized financing facility in June 2019.

Other Income, Net

First Quarter

Other income, net

Other income, net decreased during the first quarter of 2020 primarily due to lower interest income earned on our cash equivalents.

Provision for Income Taxes

First Quarter

Interest expense, net decreased during the second quarter and the first six months of 2020 primarily due to the impact of the completion of refinancing a portion of the Company’s securitized financing facility in June 2019.

Loss on Early Extinguishment of Debt Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Loss on early extinguishment of debt $ — $ 7.2 $ (7.2) $ — $ 7.2 $ (7.2)

During the second quarter of 2019, in connection with the refinancing of a portion of the Company’s securitized financing facility, the Company incurred a loss on the early extinguishment of debt as a result of repaying its outstanding Series 2015-1 Class A-2-II Notes primarily with the proceeds from the issuance of its Series 2019-1 Class A-2 Notes.

The loss on the early extinguishment of debt of $7.2 million was comprised of the write-off of certain deferred financing costs.

Other (Expense) Income, Net Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Other (expense) income, net $ (0.2) $ 2.2 $ (2.4) $ 0.9 $ 5.0 $ (4.1)

Other (expense) income, net decreased during the second quarter and the first six months of 2020 primarily due to lower interest income earned on our cash equivalents.

Provision for Income Taxes Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Income before income taxes $ 31.4 $ 45.7 $ (14.3) $ 52.7 $ 85.6 $ (32.9)

Provision for income taxes

(6.5) (13.3) 6.8 (13.4) (21.3) 7.9

Effective tax rate on income

Our effective tax rates for the first quarter of 2020 and 2019 were impacted by variations in income before income taxes, including uncertainty in 2020 income before income taxes arising from the COVID-19 pandemic, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items.

The increase in the effective tax rate for the first quarter of 2020 compared with the first quarter of 2019 was primarily due to (1) an increase in tax on our foreign operations, (2) an increase in state income taxes, including non-recurring changes to state deferred taxes net of federal benefits, and (3) a reduction in the benefit of share-based compensation.

20.8 % 29.2 % (8.4) % 25.4 % 24.9 % 0.5 %

Our effective tax rates for the second quarter of 2020 and 2019 were impacted by variations in income before income taxes, including uncertainty in 2020 income before income taxes arising from the COVID-19 pandemic, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items.

The decrease in the effective tax rate for the second quarter of 2020 compared with the second quarter of 2019 was primarily due to (1) an increase in the benefit of share-based compensation and (2) a reduction in state income taxes, including non-recurring changes to state deferred taxes net of federal benefits.

Our effective tax rates for the first six months of 2020 and 2019 were impacted by variations in income before income taxes, including uncertainty in 2020 income before income taxes arising from the COVID-19 pandemic, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items.

The increase in the effective tax rate for the first six months of 2020 compared with the first six months of 2019 was primarily due to an increase in tax on our foreign operations, offset by (1) an increase in the benefit of share-based compensation and (2) a reduction in state income taxes, including non-recurring changes to state deferred taxes net of federal benefits.

Segment Information

See Note 19 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.

First Quarter

Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Sales $ 164.2 $ 181.1 $ (16.9) $ 331.0 $ 348.7 $ (17.7)

Franchise royalty revenue 88.1 91.5 (3.4) 173.0 175.8 (2.8)

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The decrease in Wendy’s U.S.

revenues during the first quarter of 2020 was primarily due to (1) a decrease in same-restaurant sales resulting from the impact of the COVID-19 pandemic in March 2020 and (2) the abatement of U.S.

national advertising fund contributions on breakfast sales prior to our official launch of breakfast on March 2, 2020.

These decreases were partially offset by (1) a net increase in the number of restaurants in operation during the first quarter of 2020 compared to the first quarter of 2019 and (2) the positive impact from the launch of breakfast on March 2, 2020.

revenues during the second quarter and the first six months of 2020 was primarily due to a decrease in same-restaurant sales resulting from the impact of the COVID-19 pandemic.

This decrease in same-restaurant sales was driven by a decrease in customer count, partially offset by (1) higher average check and (2) the positive impact from the launch of breakfast on March 2, 2020.

The decrease in Wendy’s U.S.

segment profit during the first quarter of 2020 was primarily due to (1) lower revenues and (2) higher cost of sales, as a percent of sales, for Company-operated restaurants driven by the same factors as described above for “Cost of Sales, as a Percent of Sales.”

segment profit during the second quarter and the first six months of 2020 was primarily due to (1) lower revenues and (2) higher cost of sales, as a percent of sales, for Company-operated restaurants driven by the same factors as described above for “Cost of Sales, as a Percent of Sales.”

Wendy’s International

First Quarter

Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Franchise royalty revenue $ 9.1 $ 11.4 $ (2.3) $ 19.6 $ 21.8 $ (2.2)

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Segment profit $ 3.6 $ 5.5 $ (1.9) $ 8.7 $ 11.2 $ (2.5)

The decrease in Wendy’s International revenues and segment profit during the first quarter of 2020 was primarily due to a decrease in franchise fees reflecting lower other miscellaneous franchise fees.

The decrease in Wendy’s International revenues during the second quarter and the first six months of 2020 was primarily due to a decrease in same-restaurant sales resulting from the impact of the COVID-19 pandemic.

The decrease in Wendy’s International segment profit during the second quarter and the first six months of 2020 was primarily due to lower revenues, partially offset by a decrease in travel-related expenses as a result of reduced travel during the COVID-19 pandemic.

Global Real Estate & Development

First Quarter

Second Quarter Six Months

2020 2019 Change 2020 2019 Change

Franchise fees $ 0.1 $ 0.7 $ (0.6) $ 0.8 $ 1.3 $ (0.5)

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Segment profit $ 23.7 $ 29.9 $ (6.2) $ 50.2 $ 56.9 $ (6.7)

The decrease in Global Real Estate & Development revenues during the first quarter of 2020 was primarily due to the assignment of certain leases to franchisees.

The decrease in Global Real Estate & Development segment profit was primarily due to (1) a decrease in gains on new and modified sales-type leases and (2) higher general and administrative expenses.

These unfavorable impacts were partially offset by lower franchise rental expense due to the assignment of certain leases to franchisees.

The decrease in Global Real Estate & Development revenues during the second quarter and the first six months of 2020 was primarily due to lower franchise rental income.

See “Franchise Rental Income” above for further information.

The decrease in Global Real Estate & Development segment profit during the second quarter and the first six months of 2020 was primarily due to (1) a decrease in net rental income, reflecting the impact of assigning certain leases to a franchisee during 2019 and (2) a decrease in the equity in earnings from the TimWen joint venture.

Liquidity and Capital Resources

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Principal uses of cash are operating expenses, capital expenditures, repurchases of common stock and dividends to stockholders.

During the three months ended March 29, 2020, the Company made a payment of $24.7 million related to the settlement of the financial institutions class action (the “FI Case”) (see Note 23 of the Financial Statements and Supplementary Data contained in Item 8 of the Form 10-K for further information).

In response to the COVID-19 pandemic, the Company has taken the following actions impacting its liquidity and capital resources:

increased its cash position by draw downs under the Company’s Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”) and the Company’s other lines of credit in March 2020 as discussed below in “Long-Term Debt, Including Current Portion;”

reduced its quarterly cash dividend from $.12 per share in the first quarter to $.05 per share in the second quarter as discussed below in “Dividends;”

suspended all share repurchase activity under the February 2020 share repurchase authorization as discussed below in “Stock Repurchases;”

evaluated its planned 2020 general and administrative expenses and capital plan and identified approximately $10.0 million and $20.0 million, respectively, for a total of $30.0 million in savings, and revised its planned 2020 advertising expenses to remove incremental advertising for breakfast;

During the six months ended June 28, 2020, the Company made a payment of $24.7 million related to the settlement of the financial institutions class action (the “FI Case”) (see Note 23 of the Financial Statements and Supplementary Data contained in Item 8 of the Form 10-K for further information).

In response to the COVID-19 pandemic, the Company has taken the following actions impacting its liquidity and capital resources during and subsequent to the six months ended June 28, 2020:

• increased its cash position by draw downs of its Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “2019-1 Class A-1 Notes”), which was repaid subsequent to June 28, 2020, and the Company’s other lines of credit in March 2020, as discussed below in “Long-Term Debt, Including Current Portion;”

• enhanced its debt capacity by issuing $100.0 million of Series 2020-1 Variable Funding Senior Secured Notes, Class A-1 (the “2020-1 Class A-1 Notes”) in June 2020, which remain undrawn as of the date of this report, as discussed below in “Long-Term Debt, Including Current Portion;”

• reduced its quarterly cash dividend from $.12 per share in the first quarter of 2020 to $.05 per share in the second and third quarters of 2020, as discussed below in “Dividends;”

• temporarily suspended all share repurchase activity under the February 2020 share repurchase authorization.

The Company now intends to resume share repurchases in 2020, subject to market conditions and prevailing economic factors, as discussed below in “Stock Repurchases;”

• evaluated its planned 2020 general and administrative expenses and capital plan and identified approximately $10.0 million and $20.0 million, respectively, for a total of $30.0 million in savings.

The Company now expects to realize approximately $5.0 million of the previously identified general and administrative expense savings, primarily as a result of a higher incentive compensation accrual;

• revised its planned 2020 advertising expenses in March 2020 to eliminate Company funding of incremental advertising.

In June 2020, the Company reevaluated its marketing plans and now plans to fund up to $15.0 million of incremental advertising during the remainder of 2020;

• deferred payment of the Company’s share of Social Security payroll taxes as permitted under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which allows for the deferral of these payments through the end of 2020 and requires repayment of the deferred amounts in 2021 and 2022;

to support the franchise system, (1) extended payment terms for royalties and national advertising funds contributions by 45 days beginning in April for a three month period, (2) abated national advertising fund contributions on breakfast sales for the remainder of 2020, (3) offered to defer base rent payments on properties owned by Wendy’s and leased to franchisees by 50% beginning in May for a three month period, which will be repaid over 12 months, and (4) extended Image Activation and new restaurant development requirements by one year;

to support Company-operated restaurant employees, (1) implemented a new emergency paid sick leave policy with up to 14 days paid leave in the event an employee is unable to work as a result of the COVID-19 pandemic and (2) announced that hourly crew members, shift managers and assistant general managers will receive a 10% increase in hourly pay for the months of April and May, and the Company will protect part of the monthly bonus through May for general managers and district managers.

• to support the franchise system, (1) extended payment terms for royalties and national advertising funds contributions by 45 days beginning in April for a three month period, (2) abated national advertising fund contributions on breakfast sales for the remainder of 2020, (3) offered to defer base rent payments on properties owned by Wendy’s and leased to franchisees by 50% beginning in May for a three month period, which will be repaid over 12 months beginning in August, and (4) extended Image Activation and new restaurant development requirements by one year;

• to support Company-operated restaurant employees, (1) implemented a new emergency paid sick leave policy with up to 14 days paid leave in the event an employee is unable to work as a result of the COVID-19 pandemic and (2) increased hourly pay by 10% for the months of April and May for hourly crew members, shift managers and assistant general managers, and protected part of the monthly bonus through May for general managers and district managers.

In addition, the Company expects to benefit from the technical amendments under the CARES Act by treating qualified improvement property (“QIP”) as 15-year property and allowing such property to be eligible for the 100 percent bonus depreciation for QIP placed in service after December 31, 2017.

Based on current levels of operations and certain actions taken, including the draw down of the Class A-1 Notes, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.

Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.

We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes.

Due to the uncertainty in the credit markets caused by the COVID-19 pandemic, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.

The table below summarizes our cash flows from operating, investing and financing activities for the first three months of 2020 and 2019:

Net cash (used in) provided by:

However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.

The table below summarizes our cash flows from operating, investing and financing activities for the first six months of 2020 and 2019:

2020 2019 Change

Net cash provided by (used in):

Operating activities $ 30.6 $ 154.1 $ (123.5)

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Operating Activities

Cash (used in) provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities.

Cash (used in) provided by operating activities was $(19.4) million and $62.0 million in the first quarter of 2020 and 2019, respectively.

The change was primarily due to (1) a cash payment of $24.7 million related to the settlement of the FI Case in January 2020, (2) lower net income, adjusted for non-cash expenses, (3) an increase in payments for incentive compensation for the 2019 fiscal year paid in 2020, (4) the timing of payments for marketing expenses of the national advertising funds and (5) a reduction in deferred vendor incentives driven by the timing of receipt of an annual advance.

Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities.

Cash provided by operating activities was $30.6 million and $154.1 million in the first six months of 2020 and 2019, respectively.

The change was primarily due to (1) the extension of payment terms for royalties beginning in April 2020 for a three month period, (2) lower net income, adjusted for non-cash expenses, (3) a cash payment of $24.7 million related to the settlement of the FI Case in January 2020 and (4) an increase in payments for incentive compensation for the 2019 fiscal year paid in 2020.

Investing Activities

Cash used in investing activities was $12.1 million and $15.9 million in the first quarter of 2020 and 2019, respectively.

The change was primarily due to no acquisitions of restaurants from franchisees in the first quarter of 2020 compared with cash used for acquisitions of $5.1 million in the first quarter of 2019.

This change was partially offset by an increase in capital expenditures of $1.4 million.

Cash used in investing activities was $24.9 million and $29.9 million in the first six months of 2020 and 2019, respectively.

The change was primarily due to (1) no acquisitions of restaurants from franchisees in the first six months of 2020 compared with cash used for acquisitions of $5.1 million in the first six months of 2019 and (2) an increase in proceeds from dispositions of $3.1 million.

These changes were partially offset by an increase in capital expenditures of $3.9 million.

Financing Activities

Cash provided by (used in) financing activities was $63.4 million and $(62.5) million in the first quarter of 2020 and 2019, respectively.

The change was primarily due to a net increase in cash provided by long-term debt activities of $144.8 million, reflecting the impact of the draw downs under the Class A-1 Notes and the Company’s other lines of credit.

See “Long-Term Debt, Including Current Portion” for additional details on the long-term debt activities in the first quarter of 2020.

These changes were partially offset by (1) an increase in repurchases of common stock of $14.2 million and (2) an increase in dividends of $3.7 million.

Cash provided by (used in) financing activities was $48.3 million and $(130.2) million in the first six months of 2020 and 2019, respectively.

The change was primarily due to (1) a net increase in cash provided by long-term debt activities of $168.8 million, reflecting the impact of the draw downs under the 2019-1 Class A-1 Notes and certain other lines of credit, (2) a decrease in dividends of $8.2 million and (3) a decrease in repurchases of common stock of $5.6 million.

These changes were partially offset by a decrease in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $4.0 million.

Long-Term Debt, Including Current Portion

Except as described below, there were no material changes to the terms of any debt obligations since December 29, 2019.

The Company was in compliance with its debt covenants as of March 29, 2020 .

The Company was in compliance with its debt covenants as of June 28, 2020.

See Note 9 of the Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015.

Under this facility, in June 2019, the Master Issuer also issued outstanding Class A-1 Notes, which allowed for the borrowing of up to $150.0 million from time to time on a revolving basis using various credit instruments, including a letter of credit facility.

Under this facility, in June 2019, the Master Issuer also issued outstanding 2019-1 Class A-1 Notes, which allow for the borrowing of up to $150.0 million from time to time on a revolving basis using various credit instruments, including a letter of credit facility.

In March 2020, the Company drew down $120.0 million under the 2019-1 Class A-1 Notes.

As a result, as of March 29, 2020 , the Company had outstanding borrowings of $120.0 million under the Class A-1 Notes.

As a result, as of June 28, 2020, the Company had outstanding borrowings of $120.0 million under the 2019-1 Class A-1 Notes.

Subsequent to June 28, 2020, the Company repaid the $120.0 million outstanding balance under the 2019-1 Class A-1 Notes.

In June 2020, the Master Issuer also issued outstanding 2020-1 Class A-1 Notes, which allow for the borrowing of up to $100.0 million from time to time on a revolving basis using various credit instruments.

The Company had no outstanding borrowings under the 2020-1 Class A-1 Notes as of June 28, 2020.

A Canadian subsidiary of Wendy’s has a revolving credit facility of C$6.0 million.

In March 2020, the Company drew down C$5.5 million under the revolving credit facility.

As a result, as of March 29, 2020 , the Company had outstanding borrowings of C$5.5 million under the revolving credit facility.

advertising fund has a revolving line of credit of $25.0 million , which was established to fund the advertising fund operations.

As a result, as of June 28, 2020, the Company had outstanding borrowings of C$5.5 million under the revolving credit facility.

advertising fund has a revolving line of credit of $25.0 million, which was established to support the advertising fund operations.

In February 2020, the Company drew down $4.4 million under the revolving line of credit, which the Company repaid in February 2020.

In March 2020, the Company drew down $25.0 million under the revolving line of credit.

As a result, as of March 29, 2020 , the Company had outstanding borrowings of $25.0 million under the revolving line of credit.

As a result, as of June 28, 2020, the Company had outstanding borrowings of $25.0 million under the revolving line of credit.

Subsequent to June 28, 2020, the Company renewed the revolving line of credit, which is now guaranteed by Wendy’s.

The increased borrowings were taken as precautionary measures to provide enhanced financial flexibility considering the uncertain market conditions arising from the COVID-19 pandemic.

On March 16, 2020, the Company paid quarterly cash dividends of $.12 per share on its common stock, aggregating $26.8 million .

On May 6, 2020, the Company declared a dividend of $.05 per share to be paid on June 15, 2020 to stockholders of record as of June 1, 2020.

If the Company pays regular quarterly cash dividends for the remainder of 2020 at the same rate as declared in the second quarter of 2020, the Company’s total cash requirement for dividends for the remainder of 2020 will be approximately $33.4 million based on the number of shares of its common stock outstanding at April 29, 2020 .

On March 16, 2020 and June 15, 2020, the Company paid quarterly cash dividends per share of $.12 and $.05, respectively, aggregating $38.0 million.

On August 5, 2020, the Company announced a dividend of $.05 per share to be paid on September 15, 2020 to stockholders of record as of September 1, 2020.

If the Company pays regular quarterly cash dividends for the remainder of 2020 at the same rate as declared in the third quarter of 2020, the Company’s total cash requirement for dividends for the remainder of 2020 will be approximately $22.4 million based on the number of shares of its common stock outstanding at July 29, 2020.

The Company currently intends to continue to declare and pay quarterly cash dividends;

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Stock Repurchases

In February 2020, our Board of Directors authorized a repurchase program for up to $100.0 million of our common stock through February 28, 2021, when and if market conditions warrant and to the extent legally permissible.

During the three months ended March 29, 2020 , the Company repurchased 0.8 million shares under the February 2020 repurchase authorization with an aggregate purchase price of $14.5 million , excluding commissions.

As of March 29, 2020 , the Company had $85.5 million of availability remaining under its February 2020 authorization.

As previously announced, beginning in March 2020, the Company suspended all share repurchase activity under the February 2020 authorization in connection with the Company’s response to the COVID-19 pandemic.

In July 2020, the Company’s Board of Directors approved an extension of the February 2020 authorization by one year, through February 28, 2022, when and if market and economic conditions warrant and to the extent legally permissible.

During the six months ended June 28, 2020, the Company repurchased 0.8 million shares under the February 2020 repurchase authorization with an aggregate purchase price of $14.5 million, excluding commissions.

As of June 28, 2020, the Company had $85.5 million of availability remaining under its February 2020 authorization.

As previously announced, beginning in March 2020, the Company temporarily suspended all share repurchase activity under the February 2020 authorization in connection with the Company’s response to the COVID-19 pandemic.

The Company now intends to resume share repurchases in 2020, subject to market conditions and prevailing economic factors.

In February 2019, our Board of Directors authorized a repurchase program for up to $225.0 million of our common stock through March 1, 2020, when and if market conditions warranted and to the extent legally permissible.

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In total, 4.7 million shares were delivered under the 2019 ASR Agreement at an average purchase price of $21.37 per share.

In addition to the shares repurchased in connection with the 2019 ASR Agreement, during the three months ended March 29, 2020 , the Company repurchased 1.3 million shares with an aggregate purchase price of $28.8 million, excluding commissions, under the February 2019 authorization.

In addition to the shares repurchased in connection with the 2019 ASR Agreement, during the six months ended June 28, 2020, the Company repurchased 1.3 million shares with an aggregate purchase price of $28.8 million, excluding commissions, under the February 2019 authorization.

After taking into consideration these repurchases, with the completion of the 2019 ASR Agreement in February 2020, the Company completed its February 2019 authorization.

During the three months ended March 31, 2019 , the Company repurchased 1.7 million shares with an aggregate purchase price of $29.3 million , of which $0.3 million was accrued at March 31, 2019 , and excluding commissions, under the February 2019 authorization and the Company’s previous November 2018 authorization for up to $220.0 million of common stock.

During the six months ended June 30, 2019, the Company repurchased 2.8 million shares with an aggregate purchase price of $49.7 million, of which $0.8 million was accrued at June 30, 2019, and excluding commissions, under the February 2019 authorization and the Company’s previous November 2018 authorization to repurchase up to $220.0 million of our common stock.

General Inflation, Commodities and Changing Prices

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis