Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “WEN.”
The Company’s common stock is entitled to one vote per share on all matters on which stockholders are entitled to vote. The Company has no class of equity securities currently issued and outstanding except for its common stock. However, the Company is currently authorized to issue up to 100 million shares of preferred stock.
During the first three quarters of the 2019 fiscal year, the Company paid quarterly cash dividends of $0.10 per share of common stock. During the fourth quarter of the 2019 fiscal year, the Company paid a quarterly cash dividend of $0.12 per share of common stock. During the first quarter of the 2020 fiscal year, the Company paid a quarterly cash dividend of $0.12 per share of common stock. During the second and third quarters of the 2020 fiscal year, the Company paid quarterly cash dividends of $0.05 per share of common stock. During the fourth quarter of 2020, the Company paid a quarterly cash dividend of $0.07 per share of common stock.
During the first quarter of 2021, the Company declared a dividend of $0.09 per share of common stock to be paid on March 15, 2021 to shareholders of record as of March 5, 2021. Although the Company currently intends to continue to declare and pay quarterly cash dividends, there can be no assurance that any additional quarterly cash dividends will be declared or paid or as to the amount or timing of such dividends, if any. Future dividend payments, if any, will be made at the discretion of our Board of Directors and will be based on such factors as the Company’s earnings, financial condition and cash requirements and other factors.
As of February 23, 2021, there were approximately 22,241 holders of record of the Company’s common stock.
The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the fourth fiscal quarter of 2020:
Issuer Repurchases of Equity Securities
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (2)
September 28, 2020
through
November 1, 2020 91,653 $ 23.58 86,285 $ 81,715,463
November 2, 2020
through
November 29, 2020 249,262 $ 22.56 248,033 $ 76,122,127
November 30, 2020
through
January 3, 2021 387,018 $ 22.28 377,359 $ 67,715,469
Total 727,933 $ 22.54 711,677 $ 67,715,469
(1) Includes 16,256 shares reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the fair market value of the Company’s common stock on the vesting or exercise date of such awards, as set forth in the applicable plan document.
(2) In February 2020, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible. As previously announced, in March 2020, the Company temporarily suspended all share repurchase activity in connection with the Company’s response to the COVID-19 pandemic. In July 2020, our 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. The Company resumed share repurchases in August 2020.
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Subsequent to January 3, 2021 through February 23, 2021, the Company repurchased 0.5 million shares with an aggregate purchase price of $9.6 million, excluding commissions.
Item 6. Selected Financial Data .
The following selected financial data has been derived from our consolidated financial statements. The data set forth below should be read in conjunction with “Management ’ s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto.
Year Ended (1) (2)
2020 2019 2018 2017 2016
(In millions, except per share amounts)
Sales (3) $ 722.8 $ 707.5 $ 651.6 $ 622.8 $ 920.8
Franchise royalty revenue and fees (3) 444.7 429.0 409.0 410.5 371.5
Franchise rental income (3) (4) 232.6 233.1 203.3 190.1 143.1
Advertising funds revenue 333.7 339.4 326.0 — —
Revenues 1,733.8 1,709.0 1,589.9 1,223.4 1,435.4
Cost of sales (3) 614.9 597.5 548.6 517.9 752.1
Advertising funds expense 345.4 338.1 321.9 — —
System optimization (gains) losses, net (5) (3.1) (1.3) (0.5) 39.1 (71.9)
Reorganization and realignment costs (6) 16.0 17.0 9.1 22.6 10.1
Impairment of long-lived assets (7) 8.0 7.0 4.7 4.1 16.2
Operating profit 269.3 262.6 249.9 214.8 314.8
Loss on early extinguishment of debt (8) — (8.5) (11.5) — —
Investment (loss) income, net (9) (0.2) 25.6 450.7 2.7 0.7
(Provision for) benefit from income taxes (10) (35.0) (34.6) (114.8) 93.0 (72.1)
Net income
$ 117.8 $ 136.9 $ 460.1 $ 194.0 $ 129.6
Net income per share:
Basic $ .53 $ .60 $ 1.93 $ .79 $ .49
Diluted .52 .58 1.88 .77 .49
Dividends per share $ .29 $ .42 $ .34 $ .28 $ .245
Weighted average diluted shares outstanding 228.0 235.1 245.0 252.3 266.7
Net cash provided by operating activities $ 284.4 $ 288.9 $ 224.2 $ 238.8 $ 193.8
Capital expenditures 69.0 74.5 69.9 81.7 150.0
January 3, 2021 December 29, 2019 December 30, 2018 December 31, 2017 January 1, 2017
(In millions)
Total assets (4) $ 5,040.0 $ 4,994.5 $ 4,292.0 $ 4,096.9 $ 3,939.3
Long-term debt, including current portion 2,247.1 2,280.3 2,328.8 2,286.4 2,300.6
Finance lease liabilities, including current portion 518.2 491.9 455.6 468.0 211.7
Stockholders’ equity 549.6 516.4 648.4 573.2 527.7
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(1) The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended January 3, 2021” or “2020,” (2) “the year ended December 29, 2019” or “2019,” (3) “the year ended December 30, 2018” or “2018,” (4) “the year ended December 31, 2017” or “2017” and (5) “the year ended January 1, 2017” or “2016.” 2020 consisted of 53 weeks, while each of 2019, 2018, 2017 and 2016 consisted of 52 weeks.
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(2) The Company applied the revenue recognition guidance effective at the beginning of 2018 using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, periods prior to 2018 do not reflect adjustments for the guidance and are not comparable.
(3) The decline in sales and cost of sales and the related increase in franchise royalty revenue and fees and franchise rental income during 2016 through 2017 is primarily a result of the sale of Wendy’s Company-operated restaurants to franchisees under our system optimization initiative, which began in 2013. As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system.
(4) The Company adopted the new accounting guidance for leases during the first quarter of 2019 using the effective date as the date of initial application; therefore, periods prior to 2019 do not reflect adjustments for the guidance and are not comparable.
(5) System optimization (gains) losses, net includes all gains and losses recognized on dispositions of restaurants and other assets in connection with Wendy’s system optimization initiative. See Note 3 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
(6) Reorganization and realignment costs include the impact of (1) Wendy’s operations and field realignment plan in 2020, (2) Wendy’s information technology (“IT”) realignment plan in 2019 through 2020, (3) Wendy’s May 2017 general and administrative (“G&A”) realignment plan in 2017 through 2020, (4) costs related to Wendy’s system optimization initiative in 2016 through 2020 and (5) Wendy’s November 2014 G&A realignment plan in 2016. See Note 5 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
(7) Impairment of long-lived assets primarily includes impairment charges on (1) restaurant-level assets resulting from the deterioration in operating performance of certain Company-operated restaurants, (2) restaurant-level assets resulting from the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, and (3) restaurant-level assets resulting from the closing of Company-operated restaurants and classifying such surplus properties as held for sale. See Note 17 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
(8) Loss on early extinguishment of debt primarily relates to refinancings, redemptions and repayments of long-term debt. See Note 12 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
(9) Investment (loss) income, net includes (1) a cash settlement related to a previously held investment during 2019 and (2) the gain on sale of our remaining ownership interest in Inspire Brands, Inc. (“Inspire Brands”) (formerly Arby’s) during 2018. See Note 8 and Note 18 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
(10) The benefit from income taxes in 2017 includes the impact of the Tax Cuts and Jobs Act. See Note 14 of the Financial Statements and Supplementary Data contained in Item 8 herein for further discussion.
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