What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-10 compared with 2022-05-11 · 173 added, 112 removed, 540 unchanged (35% of the section changed)

57 unchanged sentences

(In Thousands Except Per Share Amounts)

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Sales $ 230,869 $ 193,525 $ 440,144 $ 382,582

17 unchanged sentences

Interest expense, net ( 32,125 ) ( 28,204 ) ( 58,490 ) ( 56,990 )

Investment income, net 2,111 3

Loss on early extinguishment of debt — ( 17,917 ) — ( 17,917 )

Investment (loss) income, net ( 4 ) 3 2,107 6

Other income, net 1,238 158 1,445 284

9 unchanged sentences

(In Thousands)

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Net income $ 48,151 $ 65,724 $ 85,553 $ 107,090

Other comprehensive income:

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 7,455 ) 3,347 ( 6,337 ) 5,567

Other comprehensive income 1,118 2,220

Other comprehensive (loss) income ( 7,455 ) 3,347 ( 6,337 ) 5,567

Comprehensive income $ 40,696 $ 69,071 $ 79,216 $ 112,657

$ 38,520 $ 43,586

See accompanying notes to condensed consolidated financial statements.

16 unchanged sentences

Balance at April 3, 2022 $ 47,042 $ 2,922,042 $ 354,681 $ ( 2,822,148 ) $ ( 47,082 ) $ 454,535

Net income — — 48,151 — — 48,151

Other comprehensive loss — — — — ( 7,455 ) ( 7,455 )

Cash dividends — — ( 26,635 ) — — ( 26,635 )

Repurchases of common stock — — — ( 51,950 ) — ( 51,950 )

Share-based compensation — 6,122 — — — 6,122

Common stock issued upon exercises of stock options

— ( 300 ) — 399 — 99

Common stock issued upon vesting of restricted shares

— ( 1,178 ) — 1,073 — ( 105 )

Other — 53 ( 10 ) 58 — 101

Balance at July 3, 2022 $ 47,042 $ 2,926,739 $ 376,187 $ ( 2,872,568 ) $ ( 54,537 ) $ 422,863

See accompanying notes to condensed consolidated financial statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(In Thousands)

Stock Additional

Capital Retained Earnings Common Stock Held in Treasury Accumulated Other Comprehensive Loss Total

Balance at January 3, 2021 $ 47,042 $ 2,899,276 $ 238,674 $ ( 2,585,755 ) $ ( 49,641 ) $ 549,596

10 unchanged sentences

Balance at April 4, 2021 $ 47,042 $ 2,901,460 $ 259,879 $ ( 2,640,295 ) $ ( 47,421 ) $ 520,665

Net income — — 65,724 — — 65,724

Other comprehensive income — — — — 3,347 3,347

Cash dividends — — ( 22,123 ) — — ( 22,123 )

Repurchases of common stock — — — ( 27,291 ) — ( 27,291 )

Share-based compensation — 5,882 — — — 5,882

Common stock issued upon exercises of stock options

— 850 — 23,466 — 24,316

Common stock issued upon vesting of restricted shares

— ( 959 ) — 714 — ( 245 )

Other — 41 ( 5 ) 45 — 81

Balance at July 4, 2021 $ 47,042 $ 2,907,274 $ 303,475 $ ( 2,643,361 ) $ ( 44,074 ) $ 570,356

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Three Months Ended

2022 April 4,

Six Months Ended

Cash flows from operating activities:

20 unchanged sentences

Notes receivable, net 2,445 611

Net cash used in investing activities ( 13,047 ) ( 5,085 )

Net cash (used in) provided by investing activities ( 28,792 ) 31,952

Cash flows from financing activities:

7 unchanged sentences

Payments related to tax withholding for share-based compensation ( 1,904 ) ( 3,197 )

Net cash provided by (used in) financing activities 452,802 ( 91,662 )

Net cash provided by (used in) operations before effect of exchange rate changes on cash 460,737 ( 10,917 )

Net cash provided by financing activities 362,707 28,929

Net cash provided by operations before effect of exchange rate changes on cash 432,110 219,632

Effect of exchange rate changes on cash ( 2,428 ) 2,283

Net increase (decrease) in cash, cash equivalents and restricted cash 461,042 ( 10,094 )

Net increase in cash, cash equivalents and restricted cash 429,682 221,915

Cash, cash equivalents and restricted cash at beginning of period 366,966 418,241

6 unchanged sentences

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements.

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of April 3, 2022 and the results of our operations and cash flows for the three months ended April 3, 2022 and April 4, 2021.

The results of operations for the three months ended April 3, 2022 are not necessarily indicative of the results to be expected for the full 2022 fiscal year.

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of July 3, 2022, the results of our operations for the three and six months ended July 3, 2022 and July 4, 2021 and cash flows for the six months ended July 3, 2022 and July 4, 2021.

The results of operations for the six months ended July 3, 2022 are not necessarily indicative of the results to be expected for the full 2022 fiscal year.

The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022 (the “Form 10-K”).

7 unchanged sentences

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on 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.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

Reclassifications

The Company has reclassified payments for cloud computing arrangements to “Cloud computing arrangements expenditures,” which were previously recorded to “Changes in operating assets and liabilities and other, net.” The prior period amounts in the condensed consolidated statement of cash flows reflect the reclassification of these cash flows to conform to the current year presentation.

There was no impact to “Net cash provided by operating activities.”

The following table illustrates the reclassifications made to the condensed consolidated statement of cash flows for the six months ended July 4, 2021:

As Previously Reported Reclassifications As Currently Reported

Cloud computing arrangements expenditures $ — $ ( 2,412 ) $ ( 2,412 )

Changes in operating assets and liabilities and other, net ( 13,536 ) 2,412 ( 11,124 )

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Disaggregation of Revenue

1 unchanged sentence

Wendy’s International Global Real Estate & Development Total

Three Months Ended April 3, 2022

Three Months Ended July 3, 2022

Sales at Company-operated restaurants $ 227,903 $ 2,966 $ — $ 230,869

4 unchanged sentences

Total revenues $ 450,440 $ 27,463 $ 59,880 $ 537,783

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Wendy’s International Global Real Estate & Development Total

Three Months Ended April 4, 2021

Six Months Ended July 3, 2022

Sales at Company-operated restaurants $ 434,404 $ 5,740 $ — $ 440,144

4 unchanged sentences

Total revenues $ 857,751 $ 50,369 $ 118,306 $ 1,026,426

Three Months Ended July 4, 2021

Sales at Company-operated restaurants $ 193,279 $ 246 $ — $ 193,525

Franchise royalty revenue 106,006 13,560 — 119,566

Franchise fees 14,331 1,454 1,310 17,095

Franchise rental income — — 60,868 60,868

Advertising funds revenue 96,227 6,056 — 102,283

Total revenues $ 409,843 $ 21,316 $ 62,178 $ 493,337

Six Months Ended July 4, 2021

Sales at Company-operated restaurants $ 382,336 $ 246 $ — $ 382,582

Franchise royalty revenue 202,770 25,130 — 227,900

Franchise fees 26,261 2,897 2,433 31,591

Franchise rental income — — 119,744 119,744

Advertising funds revenue 180,430 11,293 — 191,723

Total revenues $ 791,797 $ 39,566 $ 122,177 $ 953,540

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Contract Balances

9 unchanged sentences

(b) Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 9,953 and $ 88,476 , respectively, as of April 3, 2022, and $ 9,084 and $ 88,102 , respectively, as of January 2, 2022.

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 9,862 and $ 89,246 , respectively, as of July 3, 2022, and $ 9,084 and $ 88,102 , respectively, as of January 2, 2022.

Significant changes in deferred franchise fees are as follows:

Three Months Ended

2022 April 4,

Six Months Ended

Deferred franchise fees at beginning of period $ 97,186 $ 97,785

3 unchanged sentences

Deferred franchise fees at end of period $ 99,108 $ 98,409

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Anticipated Future Recognition of Deferred Franchise Fees

5 unchanged sentences

(a) Represents franchise fees expected to be recognized for the remainder of 2022, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(3) Acquisitions

The Company completed no significant acquisitions of restaurants from franchisees during the three months ended April 3, 2022 and April 4, 2021.

The Company completed no significant acquisitions of restaurants from franchisees during the six months ended July 3, 2022 and July 4, 2021.

During 2021, the Company acquired 93 restaurants from a franchisee for total net cash consideration of $ 127,948 .

5 unchanged sentences

While the Company has no plans to move its ownership away from approximately 5 % of the total system, 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 April 3, 2022, the Company facilitated five Franchise Flips.

During the three months ended April 4, 2021, the Company facilitated no Franchise Flips.

During the six months ended July 3, 2022 and July 4, 2021, the Company facilitated 46 and 19 Franchise Flips, respectively.

In addition, 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.

No Company-operated restaurants were sold to franchisees during the six months ended July 3, 2022.

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

1 unchanged sentence

All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

Three Months Ended

2022 April 4,

Post-closing adjustments on sales of restaurants (a) $ 3,447 $ 515

Gain on sales of other assets, net (b) 87 1

Three Months Ended Six Months Ended

Number of restaurants sold to franchisees — 47 — 47

Proceeds from sales of restaurants (a) $ — $ 50,518 $ — $ 50,518

Net assets sold (b) — ( 16,939 ) — ( 16,939 )

Goodwill related to sales of restaurants — ( 4,847 ) — ( 4,847 )

Net unfavorable leases (c) — ( 2,939 ) — ( 2,939 )

Gain on sales-type leases — 7,156 — 7,156

Other (d) — ( 2,148 ) — ( 2,148 )

— 30,801 — 30,801

Post-closing adjustments on sales of restaurants (e) 75 — 3,522 515

Gain on sales of restaurants, net 75 30,801 3,522 31,316

Gain (loss) on sales of other assets, net (f) 77 ( 35 ) 164 ( 34 )

System optimization gains, net $ 152 $ 30,766 $ 3,686 $ 31,282

_______________

(a) Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(b) During the three months ended April 3, 2022 and April 4, 2021, the Company received net cash proceeds of $ 168 and $ 3 , respectively, primarily from the sale of surplus and other properties.

The Company also received cash proceeds of $ 95 during the three months ended April 3, 2022 related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants during 2021.

(a) In addition to the proceeds noted herein, the Company received cash proceeds of $ 63 and $ 158 during the three and six months ended July 3, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(b) Net assets sold consisted primarily of equipment.

(c) During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $ 3,799 and unfavorable lease liabilities of $ 6,738 as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(d) The three and six months ended July 4, 2021 include a deferred gain of $ 3,500 as a result of certain contingencies related to the extension of lease terms.

(e) Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(f) During the three and six months ended July 3, 2022, the Company received net cash proceeds of $ 690 and $ 858 , respectively, primarily from the sale of surplus and other properties.

During the three and six months ended July 4, 2021, the Company received net cash proceeds of $ 10 and $ 13 , respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of April 3, 2022 and January 2, 2022, the Company had assets held for sale of $ 3,485 and $ 3,541 , respectively, primarily consisting of surplus properties.

As of July 3, 2022 and January 2, 2022, the Company had assets held for sale of $ 3,754 and $ 3,541 , respectively, primarily consisting of surplus properties.

Assets held for sale are included in “Prepaid expenses and other current assets.”

1 unchanged sentence

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

System optimization initiative $ 134 $ 897 $ 541 $ 5,575

3 unchanged sentences

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative.

During the three months ended April 3, 2022, the Company recognized costs totaling $ 407 , which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021.

During the three months ended April 4, 2021, the Company recognized costs totaling $ 4,678 , which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the bankruptcy sale process of NPC Quality Burgers, Inc.

During the six months ended July 3, 2022, the Company recognized costs totaling $ 541 , which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021.

During the six months ended July 4, 2021, the Company recognized costs totaling $ 5,575 , which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the bankruptcy sale process of NPC Quality Burgers, Inc.

As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and completed a process during the three months ended April 4, 2021 under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees.

4 unchanged sentences

The following is a summary of the costs recorded as a result of our system optimization initiative:

Three Months Ended Total

Three Months Ended Six Months Ended Total

Incurred Since Inception

2022 April 4,

Severance and related employee costs $ — $ 661 $ — $ 661 $ 18,898

7 unchanged sentences

_______________

(a) The three months ended April 4, 2021 includes transaction fees of $ 1,350 associated with the NPC bankruptcy sale process.

(a) The six months ended July 4, 2021 includes transaction fees of $ 1,350 associated with the NPC bankruptcy sale process.

(b) Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c) The three months ended April 4, 2021 includes the write-off of lease assets of $ 1,609 and lease termination fees paid of $ 1,480 .

(c) The six months ended July 4, 2021 includes the write-off of lease assets of $ 1,341 and lease termination fees paid of $ 1,480 .

(d) Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of April 4, 2021.

The tables below present a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

2022 Charges Payments Balance

3 unchanged sentences

2021 Charges Payments Balance

Severance and related employee costs $ — $ 661 $ ( 661 ) $ —

Professional fees 1,230 739 ( 1,969 ) —

2 unchanged sentences

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three months ended April 3, 2022 and April 4, 2021.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the six months ended July 3, 2022 and July 4, 2021.

The Company does not expect to incur any material additional costs under these plans.

14 unchanged sentences

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

Three Months Ended

2022 April 4,

Six Months Ended

Balance at beginning of period $ 39,870 $ 44,574

2 unchanged sentences

Distributions received ( 5,389 ) ( 5,617 )

Foreign currency translation adjustment included in “Other comprehensive income” and other

Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other

( 674 ) 1,456

Balance at end of period $ 38,088 $ 43,676

3 unchanged sentences

During 2021, the Company made an investment in equity securities of $ 10,000 .

During the three months ended April 3, 2022, the Company recognized a gain of $ 2,107 as a result of an observable price change for a similar investment of the same issuer.

During the six months ended July 3, 2022, the Company recognized a gain of $ 2,107 as a result of an observable price change for a similar investment of the same issuer.

THE WENDY’S COMPANY AND SUBSIDIARIES

38 unchanged sentences

Under the securitized financing facility, the Master Issuer has issued outstanding Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allow for the drawing of up to $ 300,000 on a revolving basis using various credit instruments, including a letter of credit facility.

No amounts were borrowed under the Class A-1 Notes during the three months ended April 3, 2022.

During the three months ended April 3, 2022, the Company incurred debt issuance costs of $ 10,232 in connection with the issuance of the Series 2022-1 Class A-2 Notes.

No amounts were borrowed under the Class A-1 Notes during the six months ended July 3, 2022.

During the six months ended July 3, 2022, the Company incurred debt issuance costs of $ 10,232 in connection with the issuance of the Series 2022-1 Class A-2 Notes.

The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2022-1 Class A-2 Notes utilizing the effective interest rate method.

60 unchanged sentences

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Company-operated restaurants $ 1,708 $ 488 $ 2,075 $ 934

1 unchanged sentence

Surplus properties 152 142 207 142

$ 1,860 $ 630 $ 2,476 $ 1,265

(10) Income Taxes

The Company’s effective tax rate for the three months ended April 3, 2022 and April 4, 2021 was 26.4 % and 24.1 %, respectively.

The Company’s effective tax rate for the three months ended July 3, 2022 and July 4, 2021 was 26.4 % and 18.6 %, respectively.

The Company’s effective tax rate varied from the U.S.

federal statutory rate of 21 % for the three months ended April 3, 2022 primarily due to state income taxes.

federal statutory rate of 21 % for the three months ended July 3, 2022 primarily due to state income taxes.

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended April 3, 2022.

The Company’s effective tax rate for the six months ended July 3, 2022 and July 4, 2021 was 26.4 % and 20.8 %, respectively.

The Company’s effective tax rate varied from the U.S.

federal statutory rate of 21 % for the six months ended July 3, 2022 primarily due to state income taxes.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 3, 2022.

During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $ 936 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $ 7,206 and $ 11,901 as of April 3, 2022 and January 2, 2022, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of April 3, 2022 and January 2, 2022.

The current portion of refundable income taxes was $ 8,266 and $ 11,901 as of July 3, 2022 and January 2, 2022, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 3, 2022 and January 2, 2022.

(11) Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Net income $ 48,151 $ 65,724 $ 85,553 $ 107,090

2 unchanged sentences

Dilutive effect of stock options and restricted shares

1,569 3,526 2,058 3,459

Weighted average diluted shares outstanding 215,242 225,400 216,704 226,063

2 unchanged sentences

Diluted $ .22 $ .29 $ .39 $ .47

Basic net income per share for the three months ended April 3, 2022 and April 4, 2021 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

Basic net income per share for the three and six months ended July 3, 2022 and July 4, 2021 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding.

Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares.

We excluded potential common shares of 3,295 and 1,870 for the three months ended April 3, 2022 and April 4, 2021, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

We excluded potential common shares of 5,538 and 4,417 for the three and six months ended July 3, 2022, respectively, and 1,825 and 1,847 for the three and six months ended July 4, 2021, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(12) Stockholders’ Equity

During the first quarter of 2022 and 2021, the Company paid dividends per share of $ .125 and $ .09 , respectively.

During each of the first and second quarters of 2022, the Company paid quarterly dividends per share of $ .125 .

During the first and second quarters of 2021, the Company paid dividends per share of $ .09 and $ .10 , respectively.

Repurchases of Common Stock

In February 2022, our Board of Directors authorized a repurchase program of up to $ 100,000 of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”).

In February 2022, our Board of Directors authorized a repurchase program for up to $ 100,000 of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”).

On April 1, 2022, the Company’s Board of Directors approved an increase of $ 150,000 to the February 2022 Authorization, resulting in an aggregate authorization of $ 250,000 that continues to expire on February 28, 2023.

During the three months ended April 3, 2022, no shares were repurchased under the February 2022 Authorization.

Subsequent to April 3, 2022 through May 4, 2022, the Company repurchased 1,156 shares under the February 2022 Authorization with an aggregate purchase price of $ 23,521 , excluding commissions of $ 16 .

In February 2020, our Board of Directors authorized a repurchase program for up to $ 100,000 of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible (the “February 2020 Authorization”).

In July 2020, the Company’s Board of Directors approved an extension of the February 2020 Authorization by one year, through February 28, 2022.

In addition, in May 2021, August 2021 and November 2021, the Board of Directors

During the six months ended July 3, 2022, the Company repurchased 2,759 shares under the February 2022 Authorization with an aggregate purchase price of $ 51,911 , excluding commissions of $ 39 .

As of July 3, 2022, the Company had $ 198,089 of

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

approved increases of $ 50,000 , $ 70,000 and $ 80,000 , respectively, to the February 2020 Authorization, resulting in an aggregate authorization of $ 300,000 that continued to expire on February 28, 2022.

availability remaining under its February 2022 authorization.

Subsequent to July 3, 2022 through August 9, 2022, no shares were repurchased under the February 2022 Authorization.

In July 2020, the Company’s Board of Directors approved an extension of the February 2020 Authorization by one year, through February 28, 2022.

In addition, in May 2021, August 2021 and November 2021, the Board of Directors approved increases of $ 50,000 , $ 70,000 and $ 80,000 , respectively, to the February 2020 Authorization, resulting in an aggregate authorization of $ 300,000 that continued to expire on February 28, 2022.

In November 2021, the Company entered into an accelerated share repurchase agreement (the “2021 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the February 2020 Authorization.

4 unchanged sentences

With the completion of the 2021 ASR Agreement in February 2022 as described above, the Company completed the February 2020 Authorization.

During the three months ended April 4, 2021, the Company repurchased 2,763 shares under the February 2020 Authorization with an aggregate purchase price of $ 56,046 , of which $ 1,196 was accrued at April 4, 2021, and excluding commissions of $ 38 .

During the six months ended July 4, 2021, the Company repurchased 3,956 shares under the February 2020 Authorization with an aggregate purchase price of $ 83,320 , of which $ 440 was accrued at July 4, 2021, and excluding commissions of $ 55 .

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

Three Months Ended

2022 April 4,

Six Months Ended

Balance at beginning of period $ ( 48,200 ) $ ( 49,641 )

Foreign currency translation

( 6,337 ) 5,567

Balance at end of period $ ( 54,537 ) $ ( 44,074 )

2 unchanged sentences

In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees.

At April 3, 2022, Wendy’s and its franchisees operated 7,016 Wendy’s restaurants.

At July 3, 2022, Wendy’s and its franchisees operated 7,040 Wendy’s restaurants.

Of the 411 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 157 restaurants, owned the building and held long-term land leases for 143 restaurants and held leases covering the land and building for 111 restaurants.

6 unchanged sentences

The components of lease cost are as follows:

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Finance lease cost:

8 unchanged sentences

_______________

(a) Includes expenses for executory costs of $ 9,608 and $ 10,063 for the three months ended April 3, 2022 and April 4, 2021, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 28,925 and $ 32,552 for the three months ended April 3, 2022 and April 4, 2021, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,294 and $ 6,681 for the three months ended April 3, 2022 and April 4, 2021, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

(a) Includes expenses for executory costs of $ 9,245 and $ 10,087 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $ 18,853 and $ 20,150 for the six months ended July 3, 2022 and July 4, 2021, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 32,071 and $ 34,063 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $ 60,996 and $ 66,615 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,479 and $ 6,111 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $ 14,773 and $ 12,792 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Company as Lessor

The components of lease income are as follows:

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

Sales-type and direct-financing leases:

6 unchanged sentences

(a) Included in “Interest expense, net.”

(b) Includes sublease income of $ 43,165 and $ 43,250 recognized during the three months ended April 3, 2022 and April 4, 2021, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 9,535 and $ 9,874 for the three months ended April 3, 2022 and April 4, 2021, respectively.

(b) Includes sublease income of $ 43,689 and $ 45,245 recognized during the three months ended July 3, 2022 and July 4, 2021, respectively, and $ 86,854 and $ 88,495 recognized during the six months ended July 3, 2022 and July 4, 2021, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 9,250 and $ 10,195 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $ 18,785 and $ 20,069 for the six months ended July 3, 2022 and July 4, 2021, respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

3 unchanged sentences

The following table includes supplemental non-cash investing and financing activities:

Three Months Ended

2022 April 4,

Six Months Ended

Supplemental non-cash investing and financing activities:

16 unchanged sentences

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada.

During the three months ended April 3, 2022 and April 4, 2021, Wendy’s paid TimWen $ 4,350 and $ 4,026 , respectively, under these lease agreements.

In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 54 during each of the three months ended April 3, 2022 and April 4, 2021, which has been included as a reduction to “General and administrative.”

During the six months ended July 3, 2022 and July 4, 2021, Wendy’s paid TimWen $ 9,601 and $ 8,817 , respectively, under these lease agreements.

In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 111 and $ 110 during the six months ended July 3, 2022 and July 4, 2021, respectively, which has been included as a reduction to “General and administrative.”

Transactions with Yellow Cab

2 unchanged sentences

Peter May, our Senior Vice Chairman, as well as Mr.

Matthew Peltz, our Vice Chairman, hold indirect, minority ownership interests in operating companies managed by Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of April 3, 2022 owned and operated 82 Wendy’s restaurants.

During the three months ended April 3, 2022 and April 4, 2021, the Company recognized $ 3,067 and $ 1,659 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

As of April 3, 2022 and January 2, 2022, $ 984 and $ 974 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

Matthew Peltz, our Vice Chairman, hold indirect, minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”) and operating companies managed by Yellow Cab, a Wendy’s franchisee, that as of July 3, 2022 owned and operated 82 Wendy’s restaurants.

During the six months ended July 3, 2022 and July 4, 2021, the Company recognized $ 6,476 and $ 4,353 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

As of July 3, 2022 and January 2, 2022, $ 1,046 and $ 974 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

THE WENDY’S COMPANY AND SUBSIDIARIES

5 unchanged sentences

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $ 89,294 as of April 3, 2022.

These leases extend through 2045.

We have had no judgments against us as guarantor of these leases as of April 3, 2022.

We have had no judgments against us as guarantor of these leases as of July 3, 2022.

In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of April 3, 2022.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 3, 2022.

Letters of Credit

As of April 3, 2022, the Company had outstanding letters of credit with various parties totaling $ 22,121 .

As of July 3, 2022, the Company had outstanding letters of credit with various parties totaling $ 28,633 .

Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes.

9 unchanged sentences

We previously described certain legal proceedings in the Form 10-K.

As of April 3, 2022, there were no material developments in those legal proceedings.

As of July 3, 2022, there were no material developments in those legal proceedings.

(18) Segment Information

Revenues by segment were as follows:

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

$ 450,440 $ 409,843 $ 857,751 $ 791,797

6 unchanged sentences

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

Three Months Ended

2022 April 4,

Three Months Ended Six Months Ended

(a) $ 126,999 $ 126,650 $ 231,823 $ 238,737

Wendy’s International (a) 5,453 7,684

Wendy’s International (b) 9,350 6,528 14,803 14,212

Global Real Estate & Development 27,283 26,569 54,890 52,822

2 unchanged sentences

Advertising funds deficit ( 1,375 ) ( 1,602 ) ( 2,618 ) ( 2,866 )

Unallocated general and administrative (b) ( 31,005 ) ( 25,107 )

Unallocated general and administrative (c) ( 30,989 ) ( 28,864 ) ( 61,994 ) ( 53,971 )

Depreciation and amortization ( 33,428 ) ( 30,761 ) ( 66,659 ) ( 62,303 )

4 unchanged sentences

Interest expense, net ( 32,125 ) ( 28,204 ) ( 58,490 ) ( 56,990 )

Investment income, net 2,111 3

Loss on early extinguishment of debt — ( 17,917 ) — ( 17,917 )

Investment (loss) income, net ( 4 ) 3 2,107 6

Other income, net 1,238 158 1,445 284

2 unchanged sentences

(a) Wendy’s U.S.

includes advertising fund expense of $ 2,556 and $ 3,534 for the three months ended April 3, 2022 and April 4, 2021, respectively, and Wendy’s International includes advertising fund expense of $ 838 for the three months ended April 3, 2022, all of which related to the Company’s funding of incremental advertising.

In addition, Wendy’s International includes other international-related advertising expense of $ 642 for the three months ended April 3, 2022.

(b) Includes corporate overhead costs, such as employee compensation and related benefits.

includes advertising fund expense of $ 2,766 and $ 5,322 for the three and six months ended July 3, 2022, respectively, and $ 3,990 and $ 7,524 for the three and six months ended July 4, 2021, respectively, related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising fund expense of $ 1,084 and $ 1,922 for the three and six months ended July 3, 2022, respectively, related to the Company’s funding of incremental advertising.

In addition, Wendy’s International includes other international-related advertising expense of $ 880 and $ 1,522 for the three and six months ended July 3, 2022, respectively.

(19) New Accounting Standards

6 unchanged sentences

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 1. Financial Statements