What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-11 compared with 2021-05-12 · 245 added, 172 removed, 252 unchanged (62% 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 January 3, 2021 (the “Form 10-K”).

There have been no material changes as of April 4, 2021 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 July 4, 2021 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.

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and 31 foreign countries and U.S.

territories as of April 4, 2021.

territories as of July 4, 2021.

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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and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants.

Wendy’s International includes the franchising of Wendy’s restaurants in countries and territories other than the U.S.

and derives its revenues from royalties, fees and advertising fund collections from franchised restaurants.

Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S.

and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants.

Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture.

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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, quarters and months relate to fiscal periods rather than calendar periods.

Executive Overview

As of April 4, 2021, the Wendy’s restaurant system was comprised of 6,838 restaurants, with 5,885 Wendy’s restaurants in operation in the U.S.

As of July 4, 2021, the Wendy’s restaurant system was comprised of 6,866 restaurants, with 5,895 Wendy’s restaurants in operation in the U.S.

restaurants, 314 were operated by the Company and 5,581 were operated by a total of 225 franchisees.

In addition, at April 4, 2021, there were 953 Wendy’s restaurants in operation in 30 foreign countries and U.S.

territories, all of which were franchised.

In addition, at July 4, 2021, there were 971 Wendy’s restaurants in operation in 31 foreign countries and U.S.

Of the international restaurants, 970 were operated by franchisees and one was operated by the Company in the United Kingdom (the “U.K.”).

The revenues from our restaurant business are derived from two principal sources:

(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 April 4, 2021.

Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of July 4, 2021.

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.

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Wendy’s long-term growth opportunities include investing in accelerated global growth through (1) building our breakfast daypart, (2) continued implementation of consumer-facing digital platforms and technologies and (3) expanding the Company’s footprint through targeted U.S.

expansion and accelerated international expansion through same-restaurant sales growth and new restaurant development, including the Company’s plan to open Company-operated restaurants in the United Kingdom (“U.K.”) in early June of 2021.

expansion and accelerated international expansion through same-restaurant sales growth and new restaurant development, including the Company’s plan to open additional Company-operated restaurants in the U.K.

during 2021 and beyond.

Key Business Measures

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Because all companies do not calculate non-GAAP financial measures in the same way, this measure as used by other companies may not be consistent with the way the Company calculates such measure.

First Quarter 2021 Financial Highlights

• Revenue increased 13.6% to $460.2 million in the first quarter of 2021 compared to $405.0 million in the first quarter of 2020;

Second Quarter Financial Highlights

• Revenue increased 22.6% to $493.3 million in the second quarter of 2021 compared to $402.3 million in the second quarter of 2020;

• Global same-restaurant sales increased 17.4%, U.S.

same-restaurant sales increased 13.5% and international same-restaurant sales increased 7.9%;

• Company-operated restaurant margin was 17.0% in the first quarter of 2021, an increase of 690 basis points;

• Net income was $41.4 million in the first quarter of 2021 compared to $14.4 million in the first quarter of 2020.

same-restaurant sales increased 16.1% and international same-restaurant sales increased 31.4% compared to the second quarter of 2020;

• Company-operated restaurant margin was 20.3% in the second quarter of 2021, an increase of 590 basis points from the second quarter of 2020;

• Net income was $65.7 million in the second quarter of 2021 compared to $24.9 million in the second quarter of 2020.

Year-to-Date Financial Highlights

• Revenue increased 18.1% to $953.5 million in the first six months of 2021 compared to $807.3 million in the first six months of 2020;

• Global same-restaurant sales increased 15.2%, U.S.

same-restaurant sales increased 14.9% and international same-restaurant sales increased 19.0% compared to the first six months of 2020;

• Company-operated restaurant margin was 18.7% in the first six months of 2021, an increase of 650 basis points from the first six months of 2020;

• Net income was $107.1 million in the first six months of 2021 compared to $39.3 million in the first six months of 2020.

COVID-19 Update

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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.

safety as its top priority.

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

As of April 4, 2021, approximately 85% of dining rooms were open across the Wendy’s system offering carryout and, in some cases, dine in services.

Global systemwide same-restaurant sales during the first quarter of 2021 increased 13.0%, in part due to a significant increase in customer count compared with the adversely impacted fiscal month of March 2020.

As of July 4, 2021, approximately 95% of dining rooms were open across the Wendy’s system offering carryout and, in many cases, dine in services.

Global systemwide same-restaurant sales during the first six months of 2021 increased 15.2%, in part due to a significant increase in customer count compared with the adversely impacted fiscal months of March through June 2020.

Wendy’s long-term growth opportunities include investing in accelerated global growth, which includes building upon our breakfast daypart.

Since the launch of breakfast across the U.S.

system on March 2, 2020, same-restaurant sales have benefited from this new daypart, with breakfast contributing 3.7% to U.S.

same-restaurant sales during the first quarter of 2021.

The Company expects to fund $15.0 million of incremental advertising to support the breakfast daypart during 2021.

system on March 2, 2020, systemwide sales have benefited from this new daypart, with breakfast representing approximately 7.2% of U.S.

systemwide sales during the six months ended July 4, 2021.

Subsequent to July 4, 2021, the Company revised its planned 2021 advertising expenses to include an additional $10.0 million of incremental advertising to support the breakfast daypart, resulting in an expected total 2021 incremental Company investment of $25.0 million.

The Company expects this incremental investment will continue to drive trial and acceleration of the Company’s breakfast offering.

Wendy’s long-term growth opportunities include accelerating same-restaurant sales through continued implementation of consumer-facing digital platforms and technologies.

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The Company’s digital business continues to grow and represented approximately 7.5% of U.S.

systemwide sales during the first quarter of 2021, which is more than double the amount in the first quarter of 2020.

Operations and Field Realignment

In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”).

The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S.

restaurant operations.

We also expect to incur contract termination charges, including the planned closure of certain field offices.

The Company expects to incur total costs aggregating approximately $7.0 million to $9.0 million, of which approximately $6.5 million to $8.5 million will be cash expenditures, related to the Operations and Field Realignment Plan.

Costs related to the Operations and Field Realignment Plan are recorded to “Reorganization and realignment costs.” During the three months ended April 4, 2021, the Company recognized costs totaling $0.3 million, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $3.0 million to $5.0 million, comprised primarily of third-party and other costs.

The Company expects to recognize the majority of the remaining costs and make the majority of the remaining cash expenditures associated with the Operations and Field Realignment Plan during the remainder of 2021.

systemwide sales during the six months ended July 4, 2021.

Debt Refinancing

In June 2021, the Company completed a refinancing transaction under which the Company issued fixed rate senior secured notes in the following 2021-1 series:

Class A-2-I with an interest rate of 2.370% and initial principal amount of $450.0 million and Class A-2-II with an interest rate of 2.775% and initial principal amount of $650.0 million (collectively, the “Series 2021-1 Class A-2 Notes”).

A portion of the net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Company’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs.

The Company also entered into a revolving financing facility of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2021-1 Class A-1 Notes”), which allows for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility.

No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021.

The Series 2021-1 Class A-1 Notes replaced the Company’s $150.0 million Series 2019-1 Class A-1 Notes and $100.0 million Series 2020-1 Class A-1 Notes, which were cancelled on the closing date.

As a result of the refinancing transaction, the Company incurred a loss on the early extinguishment of debt of $17.9 million, which was comprised of a specified make-whole payment of $9.6 million and the write-off of certain unamortized deferred financing costs of $8.3 million.

See “Liquidity and Capital Resources” below and Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Company’s debt refinancing transaction.

New Restaurant Development

REEF Kitchens Development Commitment

On August 11, 2021, the Company announced a development commitment by REEF Kitchens (“REEF”) to open and operate 700 delivery kitchens over the next five years across the U.S., Canada and the U.K.

The Company expects that REEF will open approximately 50 delivery kitchens in 2021 with the remainder to be opened in 2022 through 2025.

Strategic Build to Suit Development Fund

On August 11, 2021, the Company announced the creation o f a $100.0 million strategic build to suit development fund to drive additional new restaurant growth that is being funded by the additional cash that was obtained as part of the Company’s debt refinancing transaction completed in June 2021.

The Company expects the development fund to drive approximately 80 to 90 new franchise restaurants from 2022 to 2025.

System Optimization Initiative

The Company’s system optimization initiative includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating Franchise Flips.

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.

While the Company has no plans to reduce its ownership below the approximately 5% level, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages.

During the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees, resulting in net gains totaling $30.8 million.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations.

NPC Quality Burgers, Inc.

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The Company did not acquire any restaurants as part of this transaction.

Operations and Field Realignment

restaurant operations.

The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices.

The Company expects to incur total costs aggregating approximately $6.0 million to $8.0 million, of which approximately $5.5 million to $7.5 million will be cash expenditures, related to the Operations and Field Realignment Plan.

Costs related to the Operations and Field Realignment Plan are recorded to “Reorganization and realignment costs.” During the six months ended July 4, 2021, the Company recognized costs totaling $1.5 million, which primarily included third-party and other costs.

The Company expects to incur additional costs aggregating approximately $1.0 million to $3.0 million, comprised primarily of third-party and other costs.

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 2021 and 2020.

First Quarter

2021 2020 Change

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 2021 and 2020.

Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Sales $ 193.5 $ 164.2 $ 29.3 $ 382.6 $ 331.0 $ 51.6

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Interest expense, net (28.2) (29.1) 0.9 (57.0) (57.6) 0.6

Other income, net 0.2 1.1 (0.9)

Loss on early extinguishment of debt (17.9) — (17.9) (17.9) — (17.9)

Other income (expense), net 0.2 (0.2) 0.4 0.3 0.9 (0.6)

Income before income taxes 80.8 31.4 49.4 135.3 52.7 82.6

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Net income $ 65.7 $ 24.9 $ 40.8 $ 107.1 $ 39.3 $ 67.8

First Quarter

Second Quarter Six Months

Total Revenues 2020 % of

Total Revenues 2021 % of

Total Revenues 2020 % of

Total Revenues

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$ 493.3 100.0 % $ 402.3 100.0 % $ 953.5 100.0 % $ 807.3 100.0 %

First Quarter

Second Quarter Six Months

Sales 2020 % of

Sales 2021 % of

Sales 2020 % of

Cost of sales:

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Total cost of sales $ 154.2 79.7 % $ 140.6 85.6 % $ 311.0 81.3 % $ 290.6 87.8 %

First Quarter

Second Quarter Six Months

Sales 2020 % of

Sales 2021 % of

Sales 2020 % of

Restaurant margin $ 39.3 20.3 % $ 23.6 14.4 % $ 71.6 18.7 % $ 40.4 12.2 %

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

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

Second Quarter Six Months

2021 2020 2021 2020

Key business measures:

same-restaurant sales:

Company-operated restaurants

Company-operated 23.9 % (10.0) % 18.3 % (5.5) %

Franchised 15.6 % (4.0) % 14.6 % (2.0) %

16.1 % (4.4) % 14.9 % (2.3) %

Franchised restaurants

International same-restaurant sales (a) 31.4 % (18.4) % 19.0 % (10.1) %

Global same-restaurant sales:

Company-operated restaurants

13.0 % (0.7) %

Franchised restaurants (a)

13.0 % (0.1) %

Company-operated 23.9 % (10.0) % 18.3 % (5.5) %

Franchised (a) 17.0 % (5.5) % 15.0 % (2.9) %

Systemwide (a) 17.4 % (5.8) % 15.2 % (3.1) %

13.0 % (0.2) %

________________

(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

Key business measures (continued):

Systemwide sales:

Company-operated $ 193.3 $ 164.2 $ 382.4 $ 331.0

$ 189.1 $ 166.8

franchised 2,704.1 2,239.2 5,162.4 4,413.4

2,897.4 2,403.4 5,544.8 4,744.4

International franchised (b)

Global systemwide

$ 2,951.0 $ 2,613.6

International Company-operated 0.2 — 0.2 —

International franchised (a) 353.4 220.2 657.0 492.8

International systemwide (a) 353.6 220.2 657.2 492.8

Global systemwide (a) $ 3,251.0 $ 2,623.6 $ 6,202.0 $ 5,237.2

________________

(a) During the first quarter of 2021 and 2020, global systemwide sales increased 12.5% and 1.0%, respectively, U.S.

systemwide sales increased 13.1% and 1.0%, respectively, and international franchised sales increased 7.3% and 1.0%, respectively, on a constant currency basis.

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

First Quarter

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

(b) During the second quarter of 2021 and 2020, global systemwide sales increased 22.9% and decreased 6.2%, respectively, U.S.

systemwide sales increased 20.6% and decreased 4.0%, respectively, and international systemwide sales increased 48.2% and decreased 24.5%, respectively, on a constant currency basis.

During the first six months of 2021 and 2020, global systemwide sales increased 17.7% and decreased 2.7%, respectively, U.S.

systemwide sales increased 16.9% and decreased 1.6%, respectively, and international systemwide sales increased 25.6% and decreased 12.4%, respectively, on a constant currency basis.

Second Quarter

Company-operated U.S.

Franchised International Franchised Systemwide

Franchised International Company-operated International Franchised Systemwide

Restaurant count:

Restaurant count at April 4, 2021 362 5,523 — 953 6,838

Opened 1 21 1 20 43

Closed (a) (1) (11) — (3) (15)

Net (sold to) purchased by franchisees (48) 48 — — —

Restaurant count at July 4, 2021

314 5,581 1 970 6,866

Company-operated U.S.

Franchised International Company-operated International Franchised Systemwide

Restaurant count at January 3, 2021

361 5,520 — 947 6,828

Opened 3 39 1 38 81

Closed (a) (2) (26) — (15) (43)

Restaurant count at April 4, 2021

Net (sold to) purchased by franchisees (48) 48 — — —

Restaurant count at July 4, 2021

314 5,581 1 970 6,866

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

Sales First Quarter

2021 2020 Change

Sales Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Sales $ 193.5 $ 164.2 $ 29.3 $ 382.6 $ 331.0 $ 51.6

The increase in sales for the first quarter of 2021 was primarily due to a 13.0% increase in Company-operated same-restaurant sales.

Company-operated same-restaurant sales increased due to (1) higher average check and (2) the positive impact from the breakfast daypart, partially offset by a decrease in customer count.

Company-operated same-restaurant sales benefited from government stimulus payments to consumers during the first quarter of 2021.

Franchise Royalty Revenue and Fees First Quarter

2021 2020 Change

The increase in sales for the second quarter and the first six months of 2021 was primarily due to a 23.9% and 18.3% increase in Company-operated same-restaurant sales, respectively, partially offset by the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021.

Company-operated same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check.

Company-operated same-restaurant sales during the first six months of 2021 also benefited from (1) government stimulus payments to consumers during the first quarter of 2021 and (2) the positive impact from the breakfast daypart.

Franchise Royalty Revenue and Fees Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Franchise royalty revenue $ 119.5 $ 97.2 $ 22.3 $ 227.9 $ 192.6 $ 35.3

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$ 136.6 $ 103.1 $ 33.5 $ 259.5 $ 204.9 $ 54.6

The increase in franchise royalty revenue during the first quarter of 2021 was primarily due to a 13.0% increase in global franchise same-restaurant sales.

Franchise same-restaurant sales increased due to (1) higher average check and (2) the positive impact from the breakfast daypart, partially offset by a decrease in customer count.

Franchise same-restaurant sales benefited from government stimulus payments to consumers during the first quarter of 2021.

The increase in franchise fees during the first quarter of 2021 was primarily due to (1) an increase in fees for providing information technology services to franchisees and (2) the accelerated recognition of fees associated with development agreements that were canceled primarily as a result of the NPC bankruptcy sale process.

Franchise Rental Income First Quarter

2021 2020 Change

The increase in franchise royalty revenue during the second quarter and the first six months of 2021 was primarily due to (1) a 17.0% and 15.0% increase in global franchise same-restaurant sales, respectively, and (2) a net increase in the number of franchise restaurants in operation during 2021 compared to 2020.

Franchise same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check.

Franchise same-restaurant sales during the first six months of 2021 also benefited from (1) government stimulus payments to consumers during the first quarter of 2021 and (2) the positive impact from the breakfast daypart.

The increase in franchise fees during the second quarter and the first six months of 2021 was primarily due to an increase in fees for providing information technology services to franchisees.

Franchise fees during the first six months of 2021 also

benefited from the accelerated recognition of fees associated with development agreements that were canceled primarily as a result of the NPC bankruptcy sale process.

Franchise Rental Income Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Franchise rental income $ 60.9 $ 56.9 $ 4.0 $ 119.7 $ 114.7 $ 5.0

The increase in franchise rental income during the first quarter of 2021 was primarily due to assigning certain leases to a franchisee during 2020.

Advertising Funds Revenue First Quarter

2021 2020 Change

The increase in franchise rental income during the second quarter and the first six months of 2021 was primarily due to (1) an increase in percent rent, reflecting higher systemwide sales compared with 2020, and (2) the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021.

Advertising Funds Revenue Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Advertising funds revenue $ 102.3 $ 78.1 $ 24.2 $ 191.7 $ 156.7 $ 35.0

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

The increase in advertising funds revenue during the first quarter of 2021 was primarily due to an increase in franchise same-restaurant sales in the U.S.

Cost of Sales, as a Percent of Sales First Quarter

2021 2020 Change

The increase in advertising funds revenue during the second quarter and the first six months of 2021 was primarily due to (1) an increase in franchise same-restaurant sales in the U.S.

and Canada and (2) the prior year abatement of national advertising fund contributions on breakfast sales.

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

2021 2020 Change 2021 2020 Change

Food and paper 28.9 % 30.0 % (1.1) % 28.9 % 30.8 % (1.9) %

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79.7 % 85.6 % (5.9) % 81.3 % 87.8 % (6.5) %

The decrease in cost of sales, as a percent of sales, during the first quarter of 2021 was primarily due to (1) higher average check and (2) lower commodity costs.

These impacts were partially offset by (1) restaurant labor rate increases and (2) a decrease in customer count.

Franchise Support and Other Costs First Quarter

2021 2020 Change

The decrease in cost of sales, as a percent of sales, during the second quarter and the first six months of 2021 was primarily due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, (2) higher average check and (3) incremental recognition pay during April and May of 2020.

These impacts were partially offset by restaurant labor rate increases.

In addition, cost of sales, as a percent of sales, during the second quarter of 2021 was negatively impacted by higher commodity costs.

Franchise Support and Other Costs Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Franchise support and other costs $ 8.9 $ 5.5 $ 3.4 $ 16.6 $ 13.5 $ 3.1

The decrease in franchise support and other costs during the first quarter of 2021 was primarily due to investments made during the first quarter of 2020 to support U.S.

The increase in franchise support and other costs during the second quarter and the first six months of 2021 was primarily due to an increase in costs incurred to provide information technology and other services to our franchisees.

These increases were partially offset by investments made during the first six months of 2020 to support U.S.

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

This decrease was partially offset by an increase in costs incurred to provide information technology services to our franchisees.

Franchise Rental Expense First Quarter

2021 2020 Change

Franchise Rental Expense Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Franchise rental expense $ 34.1 $ 31.3 $ 2.8 $ 66.6 $ 60.6 $ 6.0

The increase in franchise rental expense during the first quarter of 2021 was primarily due to the impact of assigning certain leases to a franchisee in 2020.

Advertising Funds Expense First Quarter

2021 2020 Change

The increase in franchise rental expense during the second quarter and the first six months of 2021 was primarily due to an increase in percent rent, reflecting higher systemwide sales compared with 2020.

Franchise rental expense for the first six months of 2021 also increased due to the impact of assigning certain leases to a franchisee in 2020.

Advertising Funds Expense Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Advertising funds expense $ 107.9 $ 81.3 $ 26.6 $ 202.1 $ 161.3 $ 40.8

On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue.

The Company expects advertising funds expense to exceed advertising funds revenue by approximately $21.0 million for 2021, which includes (1) the Company’s decision to fund up to $15.0 million of incremental advertising and (2) the amount by which advertising funds revenue exceeded advertising funds expense in 2020 (excluding the Company’s funding of $14.6 million of incremental advertising) and 2019 of approximately $6.0 million.

During the first quarter of 2021, advertising funds expense increased due to (1) an increase in franchise same-restaurant sales in the U.S.

and Canada and (2) the recognition of $4.8 million of the expected advertising spend in excess of advertising funds revenue.

General and Administrative First Quarter

2021 2020 Change

As of July 4, 2021, the Company expected advertising funds expense to exceed advertising funds revenue by approximately $21.0 million for 2021, which includes (1) the Company’s decision to fund up to $15.0 million of incremental advertising and (2) the amount by which advertising funds revenue exceeded advertising funds expense in 2020 (excluding the Company’s funding of $14.6 million of incremental advertising) and 2019 of approximately $6.0 million.

During the second quarter and the first six months of 2021, advertising funds expense increased due to (1) an increase in franchise same-restaurant sales in the U.S.

and Canada and (2) the recognition of $5.6 million and $10.4 million, respectively, of the expected advertising spend in excess of advertising funds revenue.

Subsequent to July 4, 2021, the Company revised its planned 2021 advertising expenses to include an additional $10.0 million of incremental advertising, resulting in an expected total 2021 incremental Company investment of $25.0 million.

General and Administrative Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Incentive compensation $ 15.1 $ 6.0 $ 9.1 22.5 9.0 13.5

Professional fees 9.1 6.5 2.6 17.8 12.8 5.0

Share-based compensation 5.9 4.7 1.2 11.0 9.2 1.8

Travel-related expenses 1.5 0.8 0.7 2.0 3.9 (1.9)

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$ 63.1 $ 48.6 $ 14.5 $ 115.7 $ 100.2 $ 15.5

The increase in general and administrative expenses during the first quarter of 2021 was primarily due to an increase in incentive compensation accruals due to higher operating performance in the first quarter of 2021 versus the first quarter of 2020, partially offset by a decrease in travel-related expenses as a result of reduced travel.

Depreciation and Amortization First Quarter

2021 2020 Change

The increase in general and administrative expenses during the second quarter and the first six months of 2021 was primarily due to (1) an increase in incentive compensation accruals and higher share-based compensation, reflecting higher operating performance in the first six months of 2021 compared to the first six months of 2020, and (2) higher professional fees, primarily as a result of costs associated with the Company’s enterprise resource planning implementation.

During the first six months of 2021, these increases were partially offset by a decrease in travel-related expenses as a result of reduced travel.

Depreciation and Amortization Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Restaurants $ 18.7 $ 23.0 $ (4.3) $ 38.1 $ 42.5 $ (4.4)

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$ 30.8 $ 34.7 $ (3.9) $ 62.3 $ 65.8 $ (3.5)

The increase in depreciation and amortization during the first quarter of 2021 was primarily due to an increase in depreciation and amortization for technology investments.

System Optimization Gains, Net First Quarter

2021 2020 Change

The decrease in depreciation and amortization during the second quarter and the first six months of 2021 was primarily due to (1) assets becoming fully depreciated and (2) the impact of a prior year change in useful lives for certain asset categories.

These decreases were partially offset by an increase in depreciation and amortization for technology investments.

System Optimization Gains, Net Second Quarter Six Months

2021 2020 Change 2021 2020 Change

System optimization gains, net $ (30.8) $ (2.0) $ (28.8) $ (31.3) $ (2.3) $ (29.0)

System optimization gains, net for the first quarter of 2021 and 2020 were primarily comprised of post-closing adjustments on previous sales of restaurants.

Reorganization and Realignment Costs First Quarter

2021 2020 Change

System optimization gains, net for the second quarter and the first six months of 2021 were primarily comprised of a gain on the sale of 47 Company-operated restaurants in New York.

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

See Note 4 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the sale of the Company-operated restaurants in New York.

Reorganization and Realignment Costs Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Operations and field realignment $ 1.2 $ — $ 1.2 $ 1.5 $ — $ 1.5

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$ 2.1 $ 2.9 $ (0.8) $ 7.0 $ 6.8 $ 0.2

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

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

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

The Company does not expect to incur any material additional costs under the IT Realignment Plan.

As part of the Company’s system optimization initiative, the Company expects to continue to optimize the Wendy’s system through strategic restaurant acquisitions and dispositions, as well as by facilitating franchisee-to-franchisee restaurant transfers.

During the first quarter of 2021, the Company recognized costs associated with its system optimization initiative totaling $4.7 million, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process.

In September 2020, the Company initiated the Operations and Field Realignment Plan.

restaurant operations.

The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices.

During the second quarter and the first six months of 2021, the Company recognized costs totaling $1.2 million and $1.5 million, respectively, which primarily included third-party and other costs.

The Company expects to incur additional costs aggregating approximately $1.0 million to $3.0 million, comprised primarily of third-party and other costs.

The Company expects to recognize the majority of the remaining costs associated with the Operations and Field Realignment Plan during the remainder of 2021.

During the second quarter of 2021, the Company recognized costs associated with its system optimization initiative totaling $0.9 million, which were primarily comprised of severance and related employee costs and professional fees associated with the sale of 47 Company-operated restaurants in New York.

During the six months ended July 4, 2021, the Company recognized costs associated with its system optimization initiative totaling $5.5 million, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process.

The Company expects to recognize a gain of approximately $1.0 million related to the write-off of certain NPC-related lease liabilities upon final termination of the leases.

Impairment of Long-Lived Assets First Quarter

2021 2020 Change

Impairment of Long-Lived Assets Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Impairment of long-lived assets $ 0.6 $ 0.1 $ 0.5 $ 1.3 $ 4.7 $ (3.4)

The decrease in impairment charges during the first quarter of 2021 was primarily driven by the expected deterioration in operating performance of certain Company-operated restaurants in the first quarter of 2020 as a result of the COVID-19 pandemic.

Other Operating Income, Net First Quarter

2021 2020 Change

The change in impairment charges during the second quarter of 2021 was primarily driven by higher impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants when compared to the second quarter of 2020.

The change in impairment charges during the first six months of 2021 was primarily driven by the expected deterioration in operating performance of certain Company-operated restaurants in the first six months of 2020 as a result of the COVID-19 pandemic.

Other Operating Income, Net Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Gains on sales-type leases $ (1.6) $ (0.6) $ (1.0) $ (3.5) $ (1.2) $ (2.3)

Lease buyout (0.8) 0.1 (0.9) (0.9) 0.1 (1.0)

Equity in earnings in joint ventures, net (1.7) (0.9) (0.8) (3.3) (2.4) (0.9)

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$ (4.3) $ (1.4) $ (2.9) $ (7.7) $ (3.3) $ (4.4)

The change in other operating income, net during the first quarter of 2021 was primarily due to gains on new and modified sales-type leases.

Interest Expense, Net First Quarter

2021 2020 Change

The change in other operating income, net during the second quarter and the first six months of 2021 was primarily due to (1) gains on new and modified sales-type leases, (2) lease buyout activity and (3) an increase in the equity in earnings from our TimWen joint venture.

Interest Expense, Net Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Interest expense, net $ 28.2 $ 29.1 $ (0.9) $ 57.0 $ 57.6 $ (0.6)

Interest expense, net increased during the first quarter of 2021 primarily due to higher commitment fees on our Class A-1 Notes.

Other Income, Net First Quarter

2021 2020 Change

Other income, net $ 0.2 $ 1.1 $ (0.9)

Other income, net decreased during the first quarter of 2021 primarily due to lower interest income earned on our cash equivalents.

Provision for Income Taxes First Quarter

2021 2020 Change

Interest expense, net decreased during the second quarter and the first six months of 2021 primarily due to the impact of completing the refinancing of a portion of the Company’s securitized financing facility in the second quarter of 2021.

Loss on Early Extinguishment of Debt Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Loss on early extinguishment of debt $ 17.9 $ — $ 17.9 $ 17.9 $ — $ 17.9

During the second quarter of 2021, 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 the outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes with the proceeds from the issuance of its Series 2021-1 Class A-2 Notes.

The loss on the early extinguishment of debt of $17.9 million was comprised of a specified make-whole payment of $9.6 million and the write-off of certain unamortized deferred financing costs of $8.3 million.

Other Income (Expense), Net Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Other income (expense), net $ 0.2 $ (0.2) $ 0.4 $ 0.3 $ 0.9 $ (0.6)

The change in other income (expense), net during the second quarter and the first six months of 2021 was primarily due to fluctuations in interest income earned on our cash equivalents.

Provision for Income Taxes Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Income before income taxes $ 80.8 $ 31.4 $ 49.4 $ 135.3 $ 52.7 $ 82.6

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18.6 % 20.8 % (2.2) % 20.8 % 25.4 % (4.6) %

Our effective tax rates for the first quarter of 2021 and 2020 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 first quarter of 2021 compared with the first quarter of 2020 was primarily due to a decrease in the tax effect of our foreign operations, partially offset by a reduction in the benefit of share-based compensation.

Our effective tax rates for the second quarter and the first six months of 2021 and 2020 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 2021 compared with the second quarter of 2020 was primarily due to an increase in the benefit of share-based compensation, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes.

The decrease in the effective tax rate for the first six months of 2021 compared with the first six months of 2020 was primarily due to a decrease in the tax effects of our foreign operations, partially offset by an increase due to state income taxes, including discrete changes to state deferred taxes.

Segment Information

See Note 17 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.

First Quarter

2021 2020 Change

Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Sales $ 193.3 $ 164.2 $ 29.1 $ 382.4 $ 331.0 $ 51.4

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The increase in Wendy’s U.S.

revenues during the first quarter of 2021 was primarily due to an increase in systemwide same-restaurant sales.

Same-restaurant sales increased due to (1) higher average check and (2) the positive impact from the breakfast daypart, partially offset by a decrease in customer count.

revenues also benefited from higher franchise fees, primarily due to an increase in fees for providing information technology services to franchisees.

revenues during the second quarter and the first six months of 2021 was primarily due to an increase in systemwide same-restaurant sales, partially offset by the impact of the sale of 47 Company-operated restaurants in New York during the second quarter of 2021.

Same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check.

Same-restaurant sales during the first six months of 2021 also benefited from the positive impact from the breakfast daypart.

In addition, during the second quarter and the first six months of 2021, Wendy’s U.S.

revenues benefited from higher franchise fees, primarily due to an increase in fees for providing information technology services to franchisees.

The increase in Wendy’s U.S.

segment profit during the first quarter of 2021 was primarily due to (1) higher revenues and (2) lower 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.” These changes were partially offset by advertising funds expense of $3.5 million related to the expected Company funding of incremental advertising during 2021.

segment profit during the second quarter and the first six months of 2021 was primarily due to (1) higher revenues and (2) lower 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.” These changes were partially offset by higher general and administrative expenses.

Wendy’s International

First Quarter

2021 2020 Change

Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Sales $ 0.2 $ — $ 0.2 $ 0.2 $ — $ 0.2

Franchise royalty revenue 13.6 9.1 4.5 25.1 19.6 5.5

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Segment profit $ 6.5 $ 3.6 $ 2.9 $ 14.2 $ 8.7 $ 5.5

The increase in Wendy’s International revenues during the first quarter of 2021 was primarily due to an increase in same-restaurant sales.

Same-restaurant sales increased due to higher average check, partially offset by a decrease in customer count.

The increase in Wendy’s International segment profit during the first quarter of 2021 was primarily due to higher revenues.

The increase in Wendy’s International revenues during the second quarter and the first six months of 2021 was primarily due to an increase in same-restaurant sales.

Same-restaurant sales increased due to (1) an increase in customer count, reflecting the prior year impact of the COVID-19 pandemic, and (2) higher average check.

The increase in Wendy’s International segment profit during the second quarter and the first six months of 2021 was primarily due to higher revenues, partially offset by higher general and administrative expenses.

Global Real Estate & Development

First Quarter

2021 2020 Change

Second Quarter Six Months

2021 2020 Change 2021 2020 Change

Franchise fees $ 1.3 $ 0.1 $ 1.2 $ 2.5 $ 0.8 $ 1.7

2 unchanged sentences

Segment profit $ 26.6 $ 23.7 $ 2.9 $ 52.8 $ 50.2 $ 2.6

The increase in Global Real Estate & Development revenues during the first quarter of 2021 was primarily due to higher franchise rental income.

The increase in Global Real Estate & Development revenues during the second quarter and the first six months of 2021 was primarily due to higher franchise rental income.

See “Franchise Rental Income” above for further information.

The decrease in Global Real Estate & Development segment profit during the first quarter of 2021 was primarily due to a decrease in net rental income, reflecting the impact of assigning certain leases to a franchisee during 2020, partially offset by gains on new and modified sales-type leases.

The increase in Global Real Estate & Development segment profit during the second quarter and the first six months of 2021 was primarily due to (1) gains on new and modified sales-type leases, (2) lease buyout activity and (3) an increase in the equity in earnings from the TimWen joint venture.

These increases were partially offset by higher general and administrative expenses.

Liquidity and Capital Resources

4 unchanged sentences

• cash dividends aggregating approximately $53.5 million as discussed below in “Dividends;” and

• potential stock repurchases of up to $61.7 million, of which $11.7 million was repurchased subsequent to April 4, 2021 through May 5, 2021, as discussed below in “Stock Repurchases.”

• potential stock repurchases of up to $104.4 million, of which $4.4 million was repurchased subsequent to July 4, 2021 through August 4, 2021, as discussed below in “Stock Repurchases.”

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.

1 unchanged sentence

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 three months of 2021 and 2020:

First Quarter

The table below summarizes our cash flows from operating, investing and financing activities for the first six months of 2021 and 2020:

2021 2020 Change

4 unchanged sentences

Effect of exchange rate changes on cash 2.2 (3.2) 5.4

Net (decrease) increase in cash, cash equivalents and restricted cash $ (10.1) $ 26.8 $ (36.9)

Net increase in cash, cash equivalents and restricted cash $ 221.9 $ 50.8 $ 171.1

Operating Activities

Cash provided by (used in) 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 (used in) operating activities was $85.8 million and $(19.4) million in the first quarter of 2021 and 2020, respectively.

The change was primarily due to (1) higher net income, adjusted for non-cash expenses, (2) a cash payment of $24.7 million related to the settlement of the financial institutions class action in January 2020, (3) the timing of receipt of franchisee rental payments, (4) the timing of receipt of vendor incentives and (5) a decrease in payments for incentive compensation for the 2020 fiscal year paid in 2021.

These changes were partially offset by the timing of payments for marketing expenses of the national advertising funds.

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 $158.8 million and $30.6 million in the first six months of 2021 and 2020, respectively.

The increase was primarily due to (1) higher net income, adjusted for non-cash expenses, (2) the prior year extension of payment terms for royalties beginning in April 2020 for a three month period, (3) a cash payment of $24.7 million related to the settlement of the financial institutions class action in January 2020, (4) the timing of receipt of franchisee rental payments and (5) a decrease in payments for incentive compensation for the 2020 fiscal year paid in 2021.

These increases were partially offset by (1) the timing of payments for marketing expenses of the national advertising funds and (2) an increase in cash paid for income taxes.

Investing Activities

Cash used in investing activities was $5.1 million and $12.1 million in the first quarter of 2021 and 2020, respectively.

The change was primarily due to (1) the net settlement of deposits associated with the Company’s consortium bid to acquire NPC’s Wendy’s restaurants of $4.9 million in the first quarter of 2021 and (2) a decrease in capital expenditures of $2.3 million.

Cash provided by (used in) investing activities was $32.0 million and $(24.9) million in the first six months of 2021 and 2020, respectively.

The change was primarily due to (1) an increase in proceeds from dispositions of $46.2 million associated with the sale of 47 Company-operated restaurants in New York during the second quarter of 2021, (2) a decrease in capital expenditures of $5.3 million and (3) the net settlement of deposits associated with the Company’s consortium bid to acquire NPC’s Wendy’s restaurants of $4.9 million in the first quarter of 2021.

Financing Activities

Cash (used in) provided by financing activities was $(91.7) million and $63.4 million in the first quarter of 2021 and 2020, respectively.

The change was primarily due to (1) the impact of the draw downs under the 2019-1 Class A-1 Notes and the Company’s other lines of credit in the first quarter of 2020 of $153.3 million and (2) an increase in repurchases of common stock of $10.5 million.

These changes were partially offset by a decrease in dividends of $6.6 million.

Cash provided by financing activities was $28.9 million and $48.3 million in the first six months of 2021 and 2020, respectively.

The decrease was primarily due to (1) an increase in repurchases of common stock of $38.5 million and (2) an increase in dividends of $4.3 million.

These changes were partially offset by (1) an increase in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $14.6 million and (2) a net increase in cash provided by long-term debt activities of $11.0 million, reflecting the respective impacts of the completion of the Company’s debt refinancing transaction during the second quarter of 2021 and the draw downs under the 2019-1 Class A-1 Notes and the Company’s other lines of credit in the first quarter of 2020.

Long-Term Debt, Including Current Portion

Except as described below, there were no material changes to the terms of any debt obligations since January 3, 2021.

The Company was in compliance with its debt covenants as of April 4, 2021.

See Note 7 of the Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

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, which the Company fully repaid through repayments of C$3.0 million in the fourth quarter of 2020 and C$2.5 million in the first quarter of 2021.

As a result, as of April 4, 2021, the Company had no outstanding borrowings under the Canadian revolving credit facility.

On March 15, 2021, the Company paid quarterly cash dividends per share of $.09, aggregating $20.2 million.

On May 12, 2021, the Company announced a dividend of $.10 per share to be paid on June 15, 2021 to stockholders of record as of June 1, 2021.

If the Company pays regular quarterly cash dividends for the remainder of 2021 at the same rate as declared in the second quarter of 2021, the Company’s total cash requirement for dividends for the remainder of 2021 will be approximately $66.4 million based on the number of shares of its common stock outstanding at May 5, 2021.

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.

In June 2021, the Master Issuer completed a refinancing transaction with respect to this facility under which the Master Issuer issued the Series 2021-1 Class A-2 Notes with initial principal amounts totaling $1.1 billion.

The net proceeds from the sale of the Series 2021-1 Class A-2 Notes were used to repay in full the Master Issuer’s outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes, including the payment of prepayment and transaction costs.

The remaining funds will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders, or additional debt retirement.

In connection with the issuance of the Series 2021-1 Class A-2 Notes, the Master Issuer also issued the Series 2021-1 Class A-1 Notes, which allow for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility.

No amounts were borrowed under the Series 2021-1 Class A-1 Notes during the three months ended July 4, 2021.

The Series 2021-1 Class A-1 Notes replaced the Company’s $150.0 million Series 2019-1 Class A-1 Notes and $100.0 million Series 2020-1 Class A-1 Notes, which were cancelled on the closing date, and the letters of credit outstanding against the Series 2019-1 Class A-1 Notes were transferred to the Series 2021-1 Class A-1 Notes.

Except as described above, there were no material changes to the terms of any debt obligations since January 3, 2021.

The Company was in compliance with its debt covenants as of July 4, 2021.

See Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

On March 15, 2021 and June 15, 2021, the Company paid quarterly cash dividends per share of $.09 and $0.10, respectively, aggregating $42.3 million.

On August 11, 2021, the Company announced a dividend of $.12 per share to be paid on September 15, 2021 to stockholders of record as of September 1, 2021.

If the Company pays regular quarterly cash dividends for the remainder of 2021 at the same rate as declared in the third quarter of 2021, the Company’s total cash requirement for dividends for the remainder of 2021 will be approximately $53.5 million based on the number of shares of its common stock outstanding at August 4, 2021.

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

5 unchanged sentences

The Company resumed share repurchases in August 2020.

During the three months ended April 4, 2021, the Company repurchased 2.8 million shares under the February 2020 repurchase authorization with an aggregate purchase price of $56.0 million, of which $1.2 million was accrued at April 4, 2021, and excluding commissions.

As of April 4, 2021, the Company had $11.7 million of availability remaining under its February 2020 authorization.

Subsequent to April 4, 2021 through May 5, 2021, the Company repurchased 0.5 million shares under the February 2020 authorization with an aggregate purchase price of $11.7 million, excluding commissions.

In addition, in May 2021, the Board of Directors approved an increase of $50.0 million to the February 2020 authorization, resulting in an aggregate authorization of $150.0 million that continues to expire on February 28, 2022.

The Company has $50.0 million of availability remaining under the authorization as of May 12, 2021.

During the six months ended July 4, 2021, the Company repurchased 4.0 million shares under the February 2020 repurchase authorization with an aggregate purchase price of $83.3 million, of which $0.4 million was accrued at July 4, 2021, and excluding commissions of $0.1 million.

As of July 4, 2021, the Company had $34.4 million of availability remaining under its February 2020 authorization.

Subsequent to July 4, 2021 through August 4, 2021, the Company repurchased 0.2 million shares under the February 2020 authorization with an aggregate purchase price of $4.4 million, excluding commissions.

In addition, in August 2021, the Board of Directors approved an increase of $70.0 million to the February 2020 authorization, resulting in an aggregate authorization of $220.0 million that continues to expire on February 28, 2022.

The Company has availability of $100.0 million remaining under the authorization as of August 11, 2021.

General Inflation, Commodities and Changing Prices

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Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Quantitative and Qualitative Disclosures about Market Risk.

As of April 4, 2021, there were no material changes from the information contained in “Item 7A.

Quantitative and Qualitative Disclosures about Market Risk” in the Form 10-K.

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