What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-09 · 194 added, 128 removed, 561 unchanged (36% of the section changed)

57 unchanged sentences

(In Thousands Except Per Share Amounts)

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Sales $ 234,721 $ 228,786 $ 703,358 $ 668,930

11 unchanged sentences

Amortization of cloud computing arrangements 3,844 888 7,692 888

System optimization losses (gains), net 6 ( 152 ) 1 ( 3,686 )

System optimization gains, net ( 120 ) ( 452 ) ( 119 ) ( 4,138 )

Reorganization and realignment costs 611 8 8,100 628

17 unchanged sentences

(In Thousands)

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Net income $ 58,049 $ 50,542 $ 157,502 $ 136,095

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 4,533 ) ( 14,183 ) 574 ( 20,520 )

Other comprehensive income (loss) 4,949 ( 7,455 ) 5,107 ( 6,337 )

Other comprehensive (loss) income ( 4,533 ) ( 14,183 ) 574 ( 20,520 )

Comprehensive income $ 53,516 $ 36,359 $ 158,076 $ 115,575

28 unchanged sentences

Balance at July 2, 2023 $ 47,042 $ 2,945,754 $ 408,449 $ ( 2,951,061 ) $ ( 59,069 ) $ 391,115

Net income — — 58,049 — — 58,049

Other comprehensive loss — — — — ( 4,533 ) ( 4,533 )

Cash dividends — — ( 52,156 ) — — ( 52,156 )

Repurchases of common stock — — — ( 56,714 ) — ( 56,714 )

Share-based compensation — 6,551 — — — 6,551

Common stock issued upon exercises of stock options

— 210 — 894 — 1,104

Common stock issued upon vesting of restricted shares

— ( 1,658 ) — 702 — ( 956 )

Other — 59 ( 18 ) 63 — 104

Balance at October 1, 2023 $ 47,042 $ 2,950,916 $ 414,324 $ ( 3,006,116 ) $ ( 63,602 ) $ 342,564

See accompanying notes to condensed consolidated financial statements.

27 unchanged sentences

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

Net income — — 50,542 — — 50,542

Other comprehensive loss — — — — ( 14,183 ) ( 14,183 )

Cash dividends — — ( 26,607 ) — — ( 26,607 )

Share-based compensation — 5,027 — — — 5,027

Common stock issued upon exercises of stock options

— 450 — 241 — 691

Common stock issued upon vesting of restricted shares

— ( 1,876 ) — 817 — ( 1,059 )

Other — 48 ( 11 ) 68 — 105

Balance at October 2, 2022 $ 47,042 $ 2,930,388 $ 400,111 $ ( 2,871,442 ) $ ( 68,720 ) $ 437,379

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

2023 October 2,

Cash flows from operating activities:

11 unchanged sentences

Net receipt of deferred vendor incentives 4,007 1,884

System optimization losses (gains), net 1 ( 3,686 )

System optimization gains, net ( 119 ) ( 4,138 )

Distributions received from joint ventures, net of equity in earnings 1,349 3,468

30 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 July 2, 2023, the results of our operations for the three and six months ended July 2, 2023 and July 3, 2022 and cash flows for the six months ended July 2, 2023 and July 3, 2022.

The results of operations for the six months ended July 2, 2023 are not necessarily indicative of the results to be expected for the full 2023 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 October 1, 2023, the results of our operations for the three and nine months ended October 1, 2023 and October 2, 2022 and cash flows for the nine months ended October 1, 2023 and October 2, 2022.

The results of operations for the nine months ended October 1, 2023 are not necessarily indicative of the results to be expected for the full 2023 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 1, 2023 (the “Form 10-K”).

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

All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively.

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

3 unchanged sentences

Wendy’s International Global Real Estate & Development Total

Three Months Ended July 2, 2023

Three Months Ended October 1, 2023

Sales at Company-operated restaurants $ 227,674 $ 7,047 $ — $ 234,721

4 unchanged sentences

Total revenues $ 457,240 $ 35,167 $ 58,148 $ 550,555

Three Months Ended July 3, 2022

Three Months Ended October 2, 2022

Sales at Company-operated restaurants $ 225,245 $ 3,541 $ — $ 228,786

8 unchanged sentences

Wendy’s International Global Real Estate & Development Total

Six Months Ended July 2, 2023

Nine Months Ended October 1, 2023

Sales at Company-operated restaurants $ 685,168 $ 18,190 $ — $ 703,358

4 unchanged sentences

Total revenues $ 1,366,981 $ 97,162 $ 176,784 $ 1,640,927

Six Months Ended July 3, 2022

Nine Months Ended October 2, 2022

Sales at Company-operated restaurants $ 659,649 $ 9,281 $ — $ 668,930

15 unchanged sentences

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

(c) The current portion of deferred franchise fees is included in “Accrued expenses and other current liabilities” and the long-term portion of deferred franchise fees is included in “Deferred franchise fees” and totaled $ 10,510 and $ 89,729 , respectively, as of July 2, 2023, and $ 8,977 and $ 90,231 , respectively, as of January 1, 2023.

(c) The current portion of deferred franchise fees is included in “Accrued expenses and other current liabilities” and the long-term portion of deferred franchise fees is included in “Deferred franchise fees” and totaled $ 10,526 and $ 89,363 , respectively, as of October 1, 2023, and $ 8,977 and $ 90,231 , respectively, as of January 1, 2023.

Significant changes in deferred franchise fees are as follows:

Six Months Ended

Nine Months Ended

2023 October 2,

Deferred franchise fees at beginning of period $ 99,208 $ 97,186

13 unchanged sentences

(a) Represents franchise fees expected to be recognized for the remainder of 2023, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(3) System Optimization Losses (Gains), Net

(3) System Optimization Gains, Net

The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”).

1 unchanged sentence

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 and drive new restaurant development.

During the six months ended July 2, 2023 and July 3, 2022, the Company facilitated 88 and 46 Franchise Flips, respectively.

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

During the nine months ended October 1, 2023 and October 2, 2022, the Company facilitated 88 and 54 Franchise Flips, respectively.

Additionally, during the nine months ended October 2, 2022, the Company completed the sale of 1 Company-operated restaurant to a franchisee.

No Company-operated restaurants were sold to franchisees during the nine months ended October 1, 2023.

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

Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

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

Three Months Ended Six Months Ended

Post-closing adjustments on sales of restaurants (a) $ — $ 75 $ — $ 3,522

(Loss) gain on sales of other assets, net (b) ( 6 ) 77 ( 1 ) 164

System optimization (losses) gains, net $ ( 6 ) $ 152 $ ( 1 ) $ 3,686

_______________

(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 six months ended July 2, 2023, the Company received net cash proceeds of $ 280 primarily from the sale of surplus and other properties.

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.

The Company also 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

1 unchanged sentence

(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 Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Number of restaurants sold to franchisees — 1 — 1

Proceeds from sales of restaurants (a) $ — $ 79 $ — $ 79

Net assets sold (b) — ( 141 ) — ( 141 )

Net unfavorable leases — ( 360 ) — ( 360 )

Other — 6 — 6

— ( 416 ) — ( 416 )

Post-closing adjustments on sales of restaurants (c) 537 — 537 3,522

Gain (loss) on sales of restaurants, net 537 ( 416 ) 537 3,106

(Loss) gain on sales of other assets, net (d) ( 417 ) 868 ( 418 ) 1,032

System optimization gains, net $ 120 $ 452 $ 119 $ 4,138

_______________

(a) In addition to the proceeds noted herein, the Company received cash proceeds of $ 126 and $ 284 during the three and nine months ended October 2, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

(b) Net assets sold consisted primarily of equipment.

(c) 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.

(d) During the nine months ended October 1, 2023, the Company received net cash proceeds of $ 280 primarily from the sale of surplus and other properties.

During the three and nine months ended October 2, 2022, the Company received net cash proceeds of $ 2,510 and $ 3,368 , respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of July 2, 2023 and January 1, 2023, the Company had assets held for sale of $ 1,379 and $ 1,661 , respectively, primarily consisting of surplus properties.

As of October 1, 2023 and January 1, 2023, the Company had assets held for sale of $ 1,320 and $ 1,661 , 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 Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Organizational redesign $ 579 $ — $ 7,986 $ —

1 unchanged sentence

Reorganization and realignment costs $ 611 $ 8 $ 8,100 $ 628

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Organizational Redesign

2 unchanged sentences

The Company expects to incur total costs of approximately $ 11,000 to $ 13,000 related to the Organizational Redesign Plan.

During the six months ended July 2, 2023, the Company recognized costs totaling $ 7,407 , which primarily included severance and related employee costs and share-based compensation.

During the nine months ended October 1, 2023, the Company recognized costs totaling $ 7,986 , which primarily included severance and related employee costs and share-based compensation.

The Company expects to incur additional costs aggregating approximately $ 3,000 to $ 5,000 , comprised of (1) severance and related employee costs of approximately $ 1,500 , (2) recruitment and relocation costs of approximately $ 500 , (3) third-party and other costs of approximately $ 500 and (4) share-based compensation of approximately $ 1,500 .

1 unchanged sentence

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 1,

Severance and related employee costs $ 114 $ 5,674

5 unchanged sentences

(a) Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

As of July 2, 2023, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 3,038 and $ 117 , respectively.

As of October 1, 2023, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities”.

The table below presents a rollforward of our accruals for the Organizational Redesign Plan.

5 unchanged sentences

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the six months ended July 2, 2023 and July 3, 2022.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the nine months ended October 1, 2023 and October 2, 2022.

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

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(5) Investments

8 unchanged sentences

Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

Six Months Ended

Nine Months Ended

2023 October 2,

Balance at beginning of period $ 33,921 $ 39,870

2 unchanged sentences

Distributions received ( 9,310 ) ( 10,396 )

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

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

151 ( 3,027 )

Balance at end of period $ 32,723 $ 33,375

2 unchanged sentences

Other Investments in Equity Securities

During 2021, the Company made an investment in equity securities of $ 10,000 and, during the six months ended July 3, 2022, recognized a gain of $ 2,107 as a result of an observable price change for a similar investment of the same issuer.

During the three and six months ended July 2, 2023, the Company recorded impairment charges of $ 6,827 and $ 10,389 , respectively, for the difference between the estimated fair value and the carrying value of the investment.

During 2021, the Company made an investment in equity securities of $ 10,000 and, during the nine months ended October 2, 2022, recognized a gain of $ 2,107 as a result of an observable price change for a similar investment of the same issuer.

During the nine months ended October 1, 2023, the Company recorded impairment charges of $ 10,389 for the difference between the estimated fair value and the carrying value of the investment.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(6) Long-Term Debt

1 unchanged sentence

2023 January 1,

Series 2022-1 Class A-2 Notes:

Class A-2 Notes (a):

4.236 % Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029

2 unchanged sentences

395,000 398,000

Series 2021-1 Class A-2 Notes:

2.370 % Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029

2 unchanged sentences

635,375 640,250

Series 2019-1 Class A-2 Notes:

3.783 % Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026

2 unchanged sentences

406,125 409,500

Series 2018-1 Class A-2 Notes:

3.884 % Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028

447,688 451,250

7 % debentures, due in 2025 (a)

7 % debentures, due in 2025 (b)

49,190 86,369

4 unchanged sentences

_______________

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(a) Wendy’s 7 % debentures are unsecured and were reduced to fair value in connection with the 2008 merger of Triarc Companies, Inc.

(a) Subsequent to October 1, 2023 through October 26, 2023, the Company repurchased $ 29,171 in principal of its Class A-2 senior secured notes for $ 24,935 .

(b) Wendy’s 7 % debentures are unsecured and were reduced to fair value in connection with the 2008 merger of Triarc Companies, Inc.

and Wendy’s International, Inc.

1 unchanged sentence

The fair value adjustment is being accreted and the related charge included in “Interest expense, net” until the debentures mature.

During the six months ended July 2, 2023, Wendy’s repurchased $ 31,571 in principal of its 7 % debentures at par value.

As a result, the Company recognized a loss on early extinguishment of debt of $ 1,266 during the six months ended July 2, 2023.

During the nine months ended October 1, 2023, Wendy’s repurchased $ 39,266 in principal of its 7 % debentures for $ 39,343 .

As a result, the Company recognized a loss on early extinguishment of debt of $ 1,585 during the nine months ended October 1, 2023.

Subsequent to October 1, 2023 through October 26, 2023, the Company repurchased $ 1,164 in principal of its 7 % debentures for $ 1,174 .

(7) Fair Value Measurements

9 unchanged sentences

The inputs into the determination of fair value require significant management judgment or estimation.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Financial Instruments

19 unchanged sentences

(b) The fair values were based on quoted market prices in markets that are not considered active markets.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items.

5 unchanged sentences

The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Total impairment losses may also include the impact of remeasuring long-lived assets held for sale.

14 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 Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Company-operated restaurants $ — $ 159 $ 428 $ 2,234

2 unchanged sentences

$ 59 $ 206 $ 513 $ 2,682

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(9) Income Taxes

The Company’s effective tax rate for the three months ended July 2, 2023 and July 3, 2022 was 24.4 % and 26.4 %, respectively.

The Company’s effective tax rate for the three months ended October 1, 2023 and October 2, 2022 was 25.5 % and 26.9 %, respectively.

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

federal statutory rate of 21 % for the three months ended July 2, 2023 primarily due to state income taxes, including discrete changes to state deferred income taxes.

The Company’s effective tax rate for the six months ended July 2, 2023 and July 3, 2022 was 25.9 % and 26.4 %, respectively.

federal statutory rate of 21 % for the three months ended October 1, 2023 primarily due to state income taxes, including discrete changes to state deferred income taxes.

The Company’s effective tax rate for the nine months ended October 1, 2023 and October 2, 2022 was 25.8 % and 26.6 %, respectively.

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

federal statutory rate of 21 % for the six months ended July 2, 2023 primarily due to state income taxes, including discrete changes to state deferred income taxes, and a one-time adjustment to our foreign deferred income taxes related to prior periods.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 2, 2023.

federal statutory rate of 21 % for the nine months ended October 1, 2023 primarily due to state income taxes, including discrete changes to state deferred income taxes, and a one-time adjustment to our foreign deferred income taxes related to prior periods.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and nine months ended October 1, 2023.

During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $ 582 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $ 14,562 and $ 3,236 as of July 2, 2023 and January 1, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 2, 2023 and January 1, 2023.

The current portion of refundable income taxes was $ 8,062 and $ 3,236 as of October 1, 2023 and January 1, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of October 1, 2023 and January 1, 2023.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(10) Net Income Per Share

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Net income $ 58,049 $ 50,542 $ 157,502 $ 136,095

7 unchanged sentences

Diluted $ .28 $ .24 $ .74 $ .63

Basic net income per share for the three and six months ended July 2, 2023 and July 3, 2022 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 nine months ended October 1, 2023 and October 2, 2022 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 4,420 and 4,476 for the three and six months ended July 2, 2023, respectively, and 5,538 and 4,417 for the three and six months ended July 3, 2022, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

We excluded potential common shares of 5,204 and 4,719 for the three and nine months ended October 1, 2023, respectively, and 4,298 and 4,377 for the three and nine months ended October 2, 2022, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(11) Stockholders’ Equity

During each of the first and second quarters of 2023, the Company paid dividends per share of $ .25 .

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

During each of the first, second and third quarters of 2023, the Company paid dividends per share of $ .25 .

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

Repurchases of Common Stock

In January 2023, our Board of Directors authorized a repurchase program for up to $ 500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”).

During the six months ended July 2, 2023, the Company repurchased 4,023 shares under the January 2023 Authorization with an aggregate purchase price of $ 88,254 , of which $ 1,380 was accrued as of July 2, 2023, and excluding excise tax of $ 683 and commissions of $ 56 .

As of July 2, 2023, the Company had $ 411,746 of availability remaining under the January 2023 Authorization.

Subsequent to July 2, 2023 through August 2, 2023, the Company repurchased 706 shares under the January 2023 Authorization with an aggregate purchase price of $ 15,163 , excluding applicable excise tax and commissions of $ 10 .

During the nine months ended October 1, 2023, the Company repurchased 6,730 shares under the January 2023 Authorization with an aggregate purchase price of $ 144,320 , of which $ 2,001 was accrued as of October 1, 2023, and excluding excise tax of $ 1,293 and commissions of $ 94 .

As of October 1, 2023, the Company had $ 355,680 of availability remaining under the January 2023 Authorization.

Subsequent to October 1, 2023 through October 26, 2023, the Company repurchased 1,232 shares under the January 2023 Authorization with an aggregate purchase price of $ 23,596 , excluding applicable excise tax and commissions.

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 warranted and to the extent legally permissible (the “February 2022 Authorization”).

In April 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 was set to expire on February 28, 2023.

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 .

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

In connection with the January 2023 Authorization, the remaining portion of the February 2022 Authorization was canceled.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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”).

9 unchanged sentences

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

Six Months Ended

Nine Months Ended

2023 October 2,

Balance at beginning of period $ ( 64,176 ) $ ( 48,200 )

2 unchanged sentences

Balance at end of period $ ( 63,602 ) $ ( 68,720 )

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Nature of Leases

1 unchanged sentence

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

At July 2, 2023, Wendy’s and its franchisees operated 7,115 Wendy’s restaurants.

At October 1, 2023, Wendy’s and its franchisees operated 7,166 Wendy’s restaurants.

Of the 415 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 159 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 112 restaurants.

1 unchanged sentence

The Company also leases restaurant, office and transportation equipment.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Company as Lessee

The components of lease cost are as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Finance lease cost:

8 unchanged sentences

_______________

(a) Includes expenses for executory costs of $ 10,172 and $ 9,245 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $ 20,020 and $ 18,853 for the six months ended July 2, 2023 and July 3, 2022, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 32,329 and $ 32,071 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $ 62,927 and $ 60,996 for the six months ended July 2, 2023 and July 3, 2022, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,546 and $ 7,479 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $ 15,411 and $ 14,773 for the six months ended July 2, 2023 and July 3, 2022, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(a) Includes expenses for executory costs of $ 9,777 and $ 8,943 for the three months ended October 1, 2023 and October 2, 2022, respectively, and $ 29,797 and $ 27,796 for the nine months ended October 1, 2023 and October 2, 2022, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 31,824 and $ 31,559 for the three months ended October 1, 2023 and October 2, 2022, respectively, and $ 94,751 and $ 92,555 for the nine months ended October 1, 2023 and October 2, 2022, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,570 and $ 7,357 for the three months ended October 1, 2023 and October 2, 2022, respectively, and $ 22,981 and $ 22,130 for the nine months ended October 1, 2023 and October 2, 2022, 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 Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Sales-type and direct-financing leases:

6 unchanged sentences

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

(b) Includes sublease income of $ 42,961 and $ 43,689 recognized during the three months ended July 2, 2023 and July 3, 2022, respectively, and $ 85,912 and $ 86,854 recognized during the six months ended July 2, 2023 and July 3, 2022, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 10,115 and $ 9,250 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $ 19,893 and $ 18,785 for the six months ended July 2, 2023 and July 3, 2022, respectively.

(b) Includes sublease income of $ 42,545 and $ 43,540 recognized during the three months ended October 1, 2023 and October 2, 2022, respectively, and $ 128,457 and $ 130,394 recognized during the nine months ended October 1, 2023 and October 2, 2022, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 9,811 and $ 8,947 for the three months ended October 1, 2023 and October 2, 2022, respectively, and $ 29,704 and $ 27,732 for the nine months ended October 1, 2023 and October 2, 2022, respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(13) Supplemental Cash Flow Information

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

Six Months Ended

Nine Months Ended

2023 October 2,

Supplemental non-cash investing and financing activities:

8 unchanged sentences

Total cash, cash equivalents and restricted cash $ 672,877 $ 831,801

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(14) Transactions with Related Parties

2 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.

Wendy’s paid TimWen $ 10,140 and $ 9,601 under these lease agreements during the six months ended July 2, 2023 and July 3, 2022, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 121 and $ 111 during the six months ended July 2, 2023 and July 3, 2022, respectively, which has been included as a reduction to “General and administrative.”

Wendy’s paid TimWen $ 15,713 and $ 15,148 under these lease agreements during the nine months ended October 1, 2023 and October 2, 2022, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 181 and $ 166 during the nine months ended October 1, 2023 and October 2, 2022, 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 Yellow Cab Holdings, LLC (“Yellow Cab”) and operating companies managed by Yellow Cab, a Wendy’s franchisee, that as of July 2, 2023 owned and operated 83 Wendy’s restaurants.

During the six months ended July 2, 2023 and July 3, 2022, the Company recognized $ 7,411 and $ 6,476 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

As of July 2, 2023 and January 1, 2023, $ 1,130 and $ 1,125 , 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 October 1, 2023 owned and operated 83 Wendy’s restaurants.

During the nine months ended October 1, 2023 and October 2, 2022, the Company recognized $ 11,143 and $ 9,942 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

As of October 1, 2023 and January 1, 2023, $ 1,116 and $ 1,125 , respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

Transactions with AMC

1 unchanged sentence

Kristin Dolan, a director of the Company, was appointed as the Chief Executive Officer of AMC Networks Inc.

During the six months ended July 2, 2023, the Company purchased approximately $ 1,200 of advertising time from a subsidiary of AMC.

As of July 2, 2023, approximately $ 850 was due to AMC for advertising time, which is included in “Advertising funds restricted liabilities.”

During the nine months ended October 1, 2023, the Company purchased approximately $ 1,800 of advertising time from a subsidiary of AMC.

As of October 1, 2023, approximately $ 16 was due to AMC for advertising time, which is included in “Advertising funds restricted liabilities.”

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(15) Guarantees and Other Commitments and Contingencies

9 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 $ 95,523 as of July 2, 2023.

These leases extend through 2045.

We have had no judgments against us as guarantor of these leases as of July 2, 2023.

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

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

franchise owner.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 2, 2023.

We have had no judgments against us as guarantor of these leases as of October 1, 2023.

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 October 1, 2023.

Letters of Credit

As of July 2, 2023, the Company had outstanding letters of credit with various parties totaling $ 28,847 .

As of October 1, 2023, the Company had outstanding letters of credit with various parties totaling $ 28,843 .

Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1.

7 unchanged sentences

Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(17) Segment Information

Revenues by segment are as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

$ 457,240 $ 445,934 $ 1,366,981 $ 1,303,685

2 unchanged sentences

Total revenues $ 550,555 $ 532,569 $ 1,640,927 $ 1,558,995

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

(a) $ 134,887 $ 123,696 $ 403,064 $ 355,519

7 unchanged sentences

Amortization of cloud computing arrangements ( 3,844 ) ( 888 ) ( 7,692 ) ( 888 )

System optimization (losses) gains, net ( 6 ) 152 ( 1 ) 3,686

System optimization gains, net 120 452 119 4,138

Reorganization and realignment costs ( 611 ) ( 8 ) ( 8,100 ) ( 628 )

8 unchanged sentences

(a) Wendy’s U.S.

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

(b) Wendy’s International includes advertising funds expense of $ 658 and $ 1,206 for the three and six months ended July 2, 2023, respectively, and $ 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 deficit of $ 479 and $ 1,324 for the three and six months ended July 2, 2023, respectively, and $ 880 and $ 1,522 for the three and six months ended July 3, 2022, respectively.

includes advertising funds expense of $ 2,779 and $ 8,101 for the three and nine months ended October 2, 2022, respectively, related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising funds expense of $ 596 and $ 1,802 for the three and nine months ended October 1, 2023, respectively, and $ 1,002 and $ 2,924 for the three and nine months ended October 2, 2022, respectively, related to the Company’s funding of incremental advertising in Canada.

In addition, Wendy’s International includes other international-related advertising surplus (deficit) of $ 535 and $( 789 ) for the three and nine months ended October 1, 2023, respectively, and $ 538 and $( 984 ) for the three and nine months ended October 2, 2022, respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(18) New Accounting Standards

5 unchanged sentences

The Company does not expect the guidance to have a material impact on our condensed consolidated financial statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

New Accounting Standards Adopted

1 unchanged sentence

In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions to current reference rate reform guidance to ease the financial reporting burdens related to the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

During the three months ended July 2, 2023, certain of the Company’s subsidiaries executed amendments to the 2021-1 Variable Funding Senior Secured Notes, Class A-1 and the U.S.

During the nine months ended October 1, 2023, certain of the Company’s subsidiaries executed amendments to the 2021-1 Variable Funding Senior Secured Notes, Class A-1 and the U.S.

advertising fund revolving line of credit to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”), plus any applicable margin.

7 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