What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-02 · 168 added, 321 removed, 434 unchanged (53% of the section changed)

3 unchanged sentences

(In Thousands Except Par Value)

2023 January 1,

2024 December 31,

ASSETS (Unaudited)

51 unchanged sentences

(In Thousands Except Per Share Amounts)

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Sales $ 225,323 $ 227,949

11 unchanged sentences

Amortization of cloud computing arrangements 3,542 1,582

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

System optimization losses (gains), net 127 ( 5 )

Reorganization and realignment costs 5,673 6,808

5 unchanged sentences

Loss on early extinguishment of debt — ( 1,266 )

Investment (loss) income, net — — ( 10,389 ) 2,107

Investment loss, net — ( 3,562 )

Other income, net 6,836 7,336

2 unchanged sentences

Net income $ 41,993 $ 39,821

Net income per share:

Basic $ .28 $ .24 $ .75 $ .64

Diluted .28 .24 .74 .63

Basic and diluted net income per share $ .20 $ .19

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Net income $ 41,993 $ 39,821

9 unchanged sentences

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

Balance at January 1, 2023 $ 47,042 $ 2,937,885 $ 414,749 $ ( 2,869,780 ) $ ( 64,176 ) $ 465,720

Net income — — 39,821 — — 39,821

Other comprehensive income — — — — 158 158

Cash dividends — — ( 53,103 ) — — ( 53,103 )

Repurchases of common stock — — — ( 38,810 ) — ( 38,810 )

Share-based compensation — 4,609 — — — 4,609

Common stock issued upon exercises of stock options

— 808 — 1,808 — 2,616

Common stock issued upon vesting of restricted shares

— ( 2,222 ) — 678 — ( 1,544 )

Other — 58 ( 22 ) 54 — 90

Balance at April 2, 2023 $ 47,042 $ 2,941,138 $ 401,445 $ ( 2,906,050 ) $ ( 64,018 ) $ 419,557

Net income — — 59,632 — — 59,632

Other comprehensive income — — — — 4,949 4,949

Cash dividends — — ( 52,612 ) — — ( 52,612 )

Repurchases of common stock — — — ( 50,183 ) — ( 50,183 )

Share-based compensation — 5,609 — — — 5,609

Common stock issued upon exercises of stock options

— 1,136 — 3,829 — 4,965

Common stock issued upon vesting of restricted shares

— ( 2,182 ) — 1,283 — ( 899 )

Other — 53 ( 16 ) 60 — 97

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

Balance at December 31, 2023 $ 47,042 $ 2,960,035 $ 409,863 $ ( 3,048,786 ) $ ( 58,375 ) $ 309,779

Net income — — 41,993 — — 41,993

8 unchanged sentences

Other — 29 ( 17 ) 55 — 67

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.

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 March 31, 2024 $ 47,042 $ 2,962,241 $ 400,465 $ ( 3,053,133 ) $ ( 62,961 ) $ 293,654

Balance at January 1, 2023 $ 47,042 $ 2,937,885 $ 414,749 $ ( 2,869,780 ) $ ( 64,176 ) $ 465,720

2 unchanged sentences

Cash dividends — — ( 53,103 ) — — ( 53,103 )

Repurchases of common stock, including accelerated share repurchase — 18,750 — ( 18,750 ) — —

Share-based compensation — 6,348 — — — 6,348

Common stock issued upon exercises of stock options

— 237 — 1,354 — 1,591

Common stock issued upon vesting of restricted shares

— ( 1,989 ) — 459 — ( 1,530 )

Other — 63 ( 8 ) 57 — 112

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 — — — ( 38,810 ) — ( 38,810 )

5 unchanged sentences

Other — 58 ( 22 ) 54 — 90

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

Balance at April 2, 2023 $ 47,042 $ 2,941,138 $ 401,445 $ ( 2,906,050 ) $ ( 64,018 ) $ 419,557

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands)

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

Cash flows from operating activities:

10 unchanged sentences

Change in operating lease liabilities ( 12,112 ) ( 11,718 )

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

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

Net receipt (recognition) of deferred vendor incentives 8,584 ( 1,197 )

System optimization losses (gains), net 127 ( 5 )

Distributions received from joint ventures, net of equity in earnings 430 394

10 unchanged sentences

Cash flows from financing activities:

Proceeds from long-term debt — 500,000

Repayments of long-term debt ( 7,313 ) ( 39,122 )

Repayments of finance lease liabilities ( 5,465 ) ( 4,398 )

Deferred financing costs — ( 10,232 )

Repurchases of common stock ( 7,295 ) ( 36,727 )

2 unchanged sentences

Payments related to tax withholding for share-based compensation ( 2,115 ) ( 1,809 )

Net cash (used in) provided by financing activities ( 373,225 ) 324,505

Net cash (used in) provided by operations before effect of exchange rate changes on cash ( 159,231 ) 461,068

Net cash used in financing activities ( 72,630 ) ( 132,278 )

Net cash provided by (used in) operations before effect of exchange rate changes on cash 6,544 ( 91,364 )

Effect of exchange rate changes on cash ( 2,274 ) 129

Net (decrease) increase in cash, cash equivalents and restricted cash ( 158,924 ) 453,892

Net increase (decrease) in cash, cash equivalents and restricted cash 4,270 ( 91,235 )

Cash, cash equivalents and restricted cash at beginning of period 588,816 831,801

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 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”).

In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of March 31, 2024, the results of our operations for the three months ended March 31, 2024 and April 2, 2023 and cash flows for the three months ended March 31, 2024 and April 2, 2023.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full 2024 fiscal year.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”).

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

All three-month periods presented herein contain 13 weeks.

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 October 1, 2023

Three Months Ended March 31, 2024

Sales at Company-operated restaurants $ 219,468 $ 5,855 $ — $ 225,323

4 unchanged sentences

Total revenues $ 442,847 $ 32,815 $ 59,091 $ 534,753

Three Months Ended October 2, 2022

Three Months Ended April 2, 2023

Sales at Company-operated restaurants $ 222,632 $ 5,317 $ — $ 227,949

7 unchanged sentences

(In Thousands Except Per Share Amounts)

Wendy’s International Global Real Estate & Development Total

Nine Months Ended October 1, 2023

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

Franchise royalty revenue 333,958 50,408 — 384,366

Franchise fees 51,812 4,515 3,377 59,704

Franchise rental income — — 173,407 173,407

Advertising funds revenue 296,043 24,049 — 320,092

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

Nine Months Ended October 2, 2022

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

Franchise royalty revenue 315,572 45,743 — 361,315

Franchise fees 46,685 3,695 2,450 52,830

Franchise rental income — — 174,944 174,944

Advertising funds revenue 281,779 19,197 — 300,976

Total revenues $ 1,303,685 $ 77,916 $ 177,394 $ 1,558,995

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

2023 (a) January 1, 2023 (a)

March 31, 2024 (a) December 31, 2023 (a)

Receivables, which are included in “Accounts and notes receivable, net” (b)

6 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 $ 10,526 and $ 89,363 , respectively, as of October 1, 2023, and $ 8,977 and $ 90,231 , respectively, as of January 1, 2023.

(c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 10,933 and $ 89,331 , respectively, as of March 31, 2024, and $ 10,673 and $ 90,132 , respectively, as of December 31, 2023.

Significant changes in deferred franchise fees are as follows:

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

Deferred franchise fees at beginning of period $ 100,805 $ 99,208

3 unchanged sentences

Deferred franchise fees at end of period $ 100,264 $ 97,694

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 2024, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(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”).

As of January 1, 2017, the Company achieved its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5 % of the total system.

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 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 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.

(3) System Optimization Losses (Gains), Net

As of March 31, 2024, Company-operated restaurant ownership was approximately 5 % of the total system.

During the three months ended March 31, 2024, the Company facilitated 11 Franchise Flips.

During the three months ended April 2, 2023, the Company did not facilitate any Franchise Flips.

No Company-operated restaurants were sold to or purchased from franchisees during the three months ended March 31, 2024 or April 2, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization losses (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,” which are further described in Note 4.

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

As part of our system optimization initiative, the Company recorded a (loss) gain on sales of surplus and other properties of $( 127 ) and $ 5 during the three months ended March 31, 2024 and April 2, 2023, respectively.

The Company received net cash proceeds from the sales of $ 26 and $ 287 during the three months ended March 31, 2024 and April 2, 2023, respectively.

Assets Held for Sale

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.

As of March 31, 2024 and December 31, 2023, the Company had assets held for sale of $ 2,678 and $ 2,689 , 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 Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Organizational redesign $ 5,622 $ 6,737

1 unchanged sentence

Reorganization and realignment costs $ 5,673 $ 6,808

Organizational Redesign

In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”).

As a result of the Organizational Redesign Plan, the Company held its general and administrative expense in 2023 relatively flat compared with 2022.

Additionally, in January 2024, the Board of Directors announced the appointment of Kirk Tanner as the Company’s new President and Chief Executive Officer, effective February 5, 2024.

Tanner succeeded Todd A.

Penegor, the Company’s previous President and Chief Executive Officer, who departed from the Company in February 2024.

The Company expects to incur total costs of approximately $ 17,000 to $ 19,000 related to the Organizational Redesign Plan, including costs related to the succession of the President and Chief Executive Officer role.

During the three months ended March 31, 2024 and April 2, 2023, the Company recognized costs totaling $ 5,622 and $ 6,737 , respectively, which primarily included severance and related employee costs.

The Company expects to incur additional costs aggregating approximately $ 2,500 to $ 4,500 , comprised of (1) severance and related employee costs of approximately $ 2,000 , (2) recruitment and relocation costs of approximately $ 200 and (3) share-based compensation of approximately $ 1,500 .

The Company expects costs related to the Organizational Redesign Plan to continue into 2026.

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(In Thousands Except Per Share Amounts)

Organizational Redesign

As a result of the Organizational Redesign Plan, the Company expects to hold its general and administrative expense in 2023 and 2024 relatively flat compared with 2022.

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

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 .

The Company expects costs related to the Organizational Redesign Plan to continue into 2026, with approximately three-fourths of the total costs to be recognized during 2023.

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

Three Months Ended Nine Months Ended

2023 October 1,

Three Months Ended

2024 April 2,

2023 Total Incurred Since Inception

Severance and related employee costs $ 5,362 $ 5,539 $ 11,605

1 unchanged sentence

Third-party and other costs 50 345 1,046

5,494 5,962 13,287

Share-based compensation (a) 128 775 1,399

2 unchanged sentences

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

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.

As of March 31, 2024, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 3,816 and $ 2,261 , respectively.

The tables below present a rollforward of our accruals for the Organizational Redesign Plan.

Charges Payments Balance

3 unchanged sentences

$ 1,692 $ 5,494 $ ( 1,109 ) $ 6,077

2023 Charges Payments Balance

Severance and related employee costs $ — $ 5,539 $ ( 741 ) $ 4,798

Recruitment and relocation costs — 78 ( 78 ) —

Third-party and other costs — 345 ( 62 ) 283

$ — $ 5,962 $ ( 881 ) $ 5,081

Other Reorganization and Realignment Plans

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.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three months ended March 31, 2024 and April 2, 2023.

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

The following is a summary of the carrying value of our investments:

2023 January 1,

2024 December 31,

Equity method investments $ 31,512 $ 32,727

1 unchanged sentence

$ 33,230 $ 34,445

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Equity Method Investments

3 unchanged sentences

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

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

Balance at beginning of period $ 32,727 $ 33,921

2 unchanged sentences

Distributions received ( 2,952 ) ( 2,493 )

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

151 ( 3,027 )

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

Balance at end of period $ 31,512 $ 33,537

2 unchanged sentences

Other Investments in Equity Securities

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

Long-term debt consisted of the following:

2023 January 1,

Class A-2 Notes (a):

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

$ 98,750 $ 99,500

4.535 % Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032

395,000 398,000

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

439,875 443,250

2.775 % Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031

635,375 640,250

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

361,000 364,000

4.080 % Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029

406,125 409,500

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

447,688 451,250

7 % debentures, due in 2025 (b)

49,190 86,369

Unamortized debt issuance costs ( 35,527 ) ( 40,673 )

2,797,476 2,851,446

Less amounts payable within one year ( 29,250 ) ( 29,250 )

Total long-term debt $ 2,768,226 $ 2,822,196

_______________

(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.

(the “Wendy’s Merger”).

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

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 .

During the three months ended April 2, 2023, the Company recorded an impairment charge of $ 3,562 for the difference between the estimated fair value and the carrying value of an investment in equity securities.

(6) Fair Value Measurements

14 unchanged sentences

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

2023 January 1,

2024 December 31,

Value Carrying

14 unchanged sentences

_______________

(a) The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which was based on observable price changes.

(a) The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

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

2 unchanged sentences

Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Non-Recurring Fair Value Measurements

2 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.

12 unchanged sentences

(7) Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale.

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 Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Company-operated restaurants $ 1,775 $ 350

Restaurants leased or subleased to franchisees — — — 194

Surplus properties 231 26

1 unchanged sentence

(8) Income Taxes

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 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 for the three months ended March 31, 2024 and April 2, 2023 was 26.9 % and 28.0 %, respectively.

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

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 $ 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.

federal statutory rate of 21 % for the three months ended March 31, 2024 primarily due to state income taxes and the tax effects of our foreign operations.

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 March 31, 2024.

During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $ 220 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $ 6,830 and $ 5,284 as of March 31, 2024 and December 31, 2023, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of March 31, 2024 or December 31, 2023.

(9) Net Income Per Share

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

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Net income $ 41,993 $ 39,821

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Dilutive effect of stock options and restricted shares

1,768 1,796 2,185 1,971

Weighted average diluted shares outstanding 206,971 215,029

Net income per share:

Basic $ .28 $ .24 $ .75 $ .64

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

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.

Basic and diluted net income per share $ .20 $ .19

Basic net income per share for the three months ended March 31, 2024 and April 2, 2023 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 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.

We excluded potential common shares of 6,789 and 4,532 for the three months ended March 31, 2024 and April 2, 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(10) Stockholders’ Equity

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 .

During both the first quarter of 2024 and the first quarter of 2023, the Company paid dividends per share of $ .25 .

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 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 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.

During the three months ended March 31, 2024, the Company repurchased 392 shares under the January 2023 Authorization with an aggregate purchase price of $ 7,187 , of which $ 470 was accrued as of March 31, 2024, and excluding excise tax of $ 24 and commissions of $ 5 .

As of March 31, 2024, the Company had $ 302,813 of availability remaining under the January 2023 Authorization.

Subsequent to March 31, 2024 through April 25, 2024, the Company repurchased 229 shares under the January 2023 Authorization with an aggregate purchase price of $ 4,316 , excluding applicable excise tax and commissions.

During the three months ended April 2, 2023, the Company repurchased 1,794 shares under the January 2023 Authorization with an aggregate purchase price of $ 38,785 , of which $ 2,083 was accrued as of April 2, 2023, and excluding commissions of $ 25 .

THE WENDY’S COMPANY AND SUBSIDIARIES

1 unchanged sentence

(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”).

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, the Board of Directors approved increases totaling $ 200,000 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.

Under the 2021 ASR Agreement, the Company paid the financial institution an initial purchase price of $ 125,000 in cash and received an initial delivery of 4,910 shares of common stock, representing an estimated 85 % of the total shares expected to be delivered under the 2021 ASR Agreement.

In February 2022, the Company completed the 2021 ASR Agreement and received an additional 715 shares of common stock.

The total number of shares of common stock ultimately purchased by the Company under the 2021 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2021 ASR Agreement, less an agreed upon discount.

In total, 5,625 shares were delivered under the 2021 ASR Agreement at an average purchase price of $ 22.22 per share.

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

Accumulated Other Comprehensive Loss

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

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

Balance at beginning of period $ ( 58,375 ) $ ( 64,176 )

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

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.

Wendy’s also owned 488 and leased 1,186 properties that were either leased or subleased principally to franchisees.

The Company also leases restaurant, office and transportation equipment.

As of March 31, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:

Company-operated restaurants:

Owned land and building 155

Owned building and held long-term land leases 144

Leased land and building 112

Total Company-operated restaurants 411

Franchisee-operated restaurants:

Company-owned properties leased to franchisees 493

Company-leased properties subleased to franchisees 1,176

Other franchisee-operated restaurants 5,168

Total franchisee-operated restaurants 6,837

Total Company-operated and franchisee-operated restaurants 7,248

THE WENDY’S COMPANY AND SUBSIDIARIES

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The components of lease cost are as follows:

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Finance lease cost:

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_______________

(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.

(a) Includes expenses for executory costs of $ 10,221 and $ 9,848 for the three months ended March 31, 2024 and April 2, 2023, respectively, for which the Company is reimbursed by sublessees.

(b) Includes $ 31,718 and $ 30,598 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees.

Also includes $ 7,388 and $ 7,865 for the three months ended March 31, 2024 and April 2, 2023, 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 Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

Sales-type and direct-financing leases:

Selling profit $ 354 $ 711 $ 1,555 $ 2,868

Selling (loss) profit $ ( 16 ) $ 129

Interest income (a) 7,719 7,862

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

(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.

(b) Includes sublease income of $ 42,783 and $ 42,951 recognized during the three months ended March 31, 2024 and April 2, 2023, respectively.

Sublease income includes lessees’ variable payments to the Company for executory costs of $ 10,089 and $ 9,778 for the three months ended March 31, 2024 and April 2, 2023, respectively.

THE WENDY’S COMPANY AND SUBSIDIARIES

3 unchanged sentences

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

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

Supplemental non-cash investing and financing activities:

2 unchanged sentences

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

2023 January 1,

2024 December 31,

Reconciliation of cash, cash equivalents and restricted cash at end of period:

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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 $ 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.”

Wendy’s paid TimWen $ 5,030 and $ 4,673 under these lease agreements during the three months ended March 31, 2024 and April 2, 2023, respectively, which is recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $ 60 during both the three months ended March 31, 2024 and the three months ended April 2, 2023, which is included as a reduction to “General and administrative.”

Transactions with QSCC

Wendy’s has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc.

QSCC manages, for the Wendy’s system in the U.S.

and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume.

QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S.

Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC.

Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations.

In addition, QSCC collects certain rebates, price variance and other recoveries, technology fees, convention fees and other funding from third-party vendors as part of the administration and management of the Wendy’s supply chain in the U.S.

Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend.

Wendy’s recorded its share of patronage dividends of $ 3,096 during the three months ended March 31, 2024, of which $ 2,909 is included in “Other operating income, net” and $ 187 is included as a reduction of “Cost of sales.” There were no patronage dividends recorded during the three months ended April 2, 2023.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Transactions with Yellow Cab

Certain family members and affiliates of Mr.

Nelson Peltz, our Chairman, and Mr.

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 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.”

Certain family members and/or affiliates of Mr.

Nelson Peltz, our Chairman, Mr.

Peter May, our Senior Vice Chairman, and Mr.

Matthew Peltz, our Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee, that as of March 31, 2024 owns and operates 85 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab.

During the three months ended March 31, 2024 and April 2, 2023, the Company recognized $ 3,612 and $ 3,610 , respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities.

In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships.

As of March 31, 2024 and December 31, 2023, $ 1,191 and $ 1,153 , 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

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

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)

During the three months ended March 31, 2024 and April 2, 2023, the Company purchased approximately $ 500 and $ 419 , respectively, of advertising time from a subsidiary of AMC.

The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions.

As of March 31, 2024 and December 31, 2023, approximately $ 50 and $ 584 , respectively, was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.”

(14) Guarantees and Other Commitments and Contingencies

1 unchanged sentence

Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Franchisee Image Activation Incentive Programs

To promote new restaurant development, Wendy’s has provided franchisees with certain incentive programs for qualifying new restaurants.

In February 2023, Wendy’s announced a new restaurant development incentive program in the U.S.

and Canada that provides for waivers of royalty, national advertising and technical assistance fees for up to the first three years of operation for qualifying new restaurants (referred to as the “Pacesetter” program).

Wendy’s previously offered and will continue to offer a restaurant development incentive program that provides for reductions in royalty and national advertising fees for up to the first two years of operation for qualifying new restaurants (referred to as the “Groundbreaker” program).

and Canadian franchisees may elect either the Pacesetter program or the Groundbreaker program when committing to new multi-unit development agreements or adding incremental commitments to existing development agreements.

Wendy’s also provides franchisees with the option of an early 20 -year or 25 -year renewal of their franchise agreement upon completion of reimaging utilizing certain approved Image Activation reimage designs.

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 $ 92,673 as of October 1, 2023.

These leases extend through 2045.

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

We have had no judgments against us as guarantor of these leases as of March 31, 2024.

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.

The liability recorded for our probable exposure associated with these lease guarantees was not material as of March 31, 2024.

Letters of Credit

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

As of March 31, 2024, the Company had outstanding letters of credit with various parties totaling $ 28,842 .

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

We do not expect any material loss to result from these letters of credit.

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(15) Legal and Environmental Matters

5 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)

(16) Segment Information

Revenues by segment are as follows:

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

$ 442,847 $ 440,988

3 unchanged sentences

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

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

(a) $ 125,824 $ 125,230

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Unallocated franchise support and other costs ( 26 ) —

Advertising funds surplus (deficit) 1,088 ( 1,441 ) 3,509 ( 4,059 )

Advertising funds deficit 207 1,106

Unallocated general and administrative (c) ( 33,390 ) ( 32,161 )

1 unchanged sentence

Amortization of cloud computing arrangements ( 3,542 ) ( 1,582 )

System optimization gains, net 120 452 119 4,138

System optimization (losses) gains, net ( 127 ) 5

Reorganization and realignment costs ( 5,673 ) ( 6,808 )

3 unchanged sentences

Loss on early extinguishment of debt — ( 1,266 )

Investment (loss) income, net — — ( 10,389 ) 2,107

Investment loss, net — ( 3,562 )

Other income, net 6,836 7,336

1 unchanged sentence

_______________

(a) Wendy’s U.S.

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

1 unchanged sentence

(In Thousands Except Per Share Amounts)

(18) New Accounting Standards

(a) Wendy’s U.S.

includes advertising funds expense of $ 2,325 for the three months ended March 31, 2024 related to the Company’s funding of incremental advertising.

(b) Wendy’s International includes advertising funds expense of $ 162 and $ 548 for the three months ended March 31, 2024 and April 2, 2023, respectively, related to the Company’s funding of incremental advertising in Canada.

In addition, Wendy’s International includes other international-related advertising deficit of $ 150 and $ 845 for the three months ended March 31, 2024 and April 2, 2023, respectively.

(17) New Accounting Standards

New Accounting Standard Adopted

Common-Control Lease Arrangements

1 unchanged sentence

The amendment requires a lessee in a common-control lease arrangement to amortize leasehold improvements that it owns over the useful life of the improvements to the common-control group, regardless of the lease term, if the lessee continues to control the use of the underlying asset through a lease.

The standard is effective beginning with our 2024 fiscal year.

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

New Accounting Standards Adopted

Reference Rate Reform

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 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.

In connection with these contract amendments, the Company adopted the reference rate reform guidance during the second quarter of 2023.

The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

Business Combinations

In October 2021, the FASB issued an amendment to improve the accounting for revenue contracts with customers acquired in a business combination.

The amendment requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with current revenue recognition guidance as if the acquirer had originated the contracts.

The Company adopted this amendment during the first quarter of 2024.

The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

The adoption of this amendment did not have a material impact on our condensed consolidated financial statements.

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