Wendy's Co 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk. This “Quantitative and Qualitative Disclosures about Market Risk” should be read in conjunction with “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Form 10-K. As of September 27, 2020, there were no material changes from the information contained in the Form 10-K, except as described below. Interest Rate Risk Our long-term debt, including the current portion, aggregated $2,299.5 million as of September 27, 2020 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings and cash flows. The Company is exposed to interest rate increases under its 2019-1 Class A-1 Notes and its 2020-1 Class A-1 Notes (collectively, the “Class A-1 Notes”), as well as its U.S. advertising fund revolving line of credit; however, the Company had no outstanding borrowings under the Class A-1 Notes or U.S. advertising fund revolving line of credit as of September 27, 2020. The Company has outstanding borrowings of C$5.5 million under a Canadian subsidiary’s revolving credit facility as of September 27, 2020, which bears interest at the Bank of Montreal Prime Rate. An increase or decrease of 1.0% in the effective interest rate applied to the outstanding borrowings under our Canadian subsidiary’s revolving credit facility would result in a pre-tax interest expense fluctuation of approximately C$0.1 million on an annualized basis. In addition, LIBOR is expected to be discontinued after 2021. If LIBOR is discontinued, we may need to renegotiate certain loan documents and we cannot predict what alternative index would be negotiated with our lenders or the resulting impact on our interest expense. 49