Wendy's Co 10-K

Item 8. Financial Statements and Supplementary Data. THE WENDY’S COMPANY AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Glossary of Defined Terms 53 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 55 Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 57 Consolidated Statements of Operations for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 58 Consolidated Statements of Comprehensive Income for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 59 Consolidated Statements of Stockholders’ Equity for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 60 Consolidated Statements of Cash Flows for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 61 Notes to Consolidated Financial Statements 62 (1) Summary of Significant Accounting Policies 62 (2) Cash and Receivables 71 (3) Revenue 72 (4) Properties 74 (5) Leases 75 (6) Goodwill and Other Intangible Assets 79 (7) Investments 80 (8) Accrued Expenses and Other Current Liabilities 81 (9) Long-Term Debt 82 (10) Fair Value Measurements 85 (11) Income Taxes 87 (12) Net Income Per Share 91 (13) Stockholders’ Equity 91 (14) Share-Based Compensation 93 (15) System Optimization Gains, Net 96 (16) Acquisitions 97 (17) Reorganization and Realignment Costs 97 (18) Impairment of Long-Lived Assets 98 (19) Retirement Benefit Plan 99 (20) Supplemental Cash Flow Information 99 (21) Guarantees and Other Commitments and Contingencies 100 (22) Transactions with Related Parties 101 (23) Legal and Environmental Matters 102 (24) Advertising Costs and Funds 102 (25) Geographic Information 103 (26) Segment Information 103 52 Defined Term Footnote Where Defined 2010 Plan (14) Share-Based Compensation 2020 Plan (14) Share-Based Compensation 2021-1 Class A-1 Notes (9) Long-Term Debt 2021-1 Class A-2 Notes (9) Long-Term Debt 401(k) Plan (19) Retirement Benefit Plan Advertising Funds (1) Summary of Significant Accounting Policies AMC (22) Transactions with Related Parties Black-Scholes Model (1) Summary of Significant Accounting Policies Brazil JV (1) Summary of Significant Accounting Policies CAP (11) Income Taxes Class A-2 Notes (9) Long-Term Debt CCA (1) Summary of Significant Accounting Policies CODM (26) Segment Information Company (1) Summary of Significant Accounting Policies Contingent Rent (1) Summary of Significant Accounting Policies EBITDA (26) Segment Information Equity Plans (1) Summary of Significant Accounting Policies FASB (1) Summary of Significant Accounting Policies Franchise Flip (1) Summary of Significant Accounting Policies GAAP (1) Summary of Significant Accounting Policies Indenture (9) Long-Term Debt IRS (11) Income Taxes January 2023 Authorization (13) Stockholders’ Equity Master Issuer (9) Long-Term Debt OBBBA (11) Income Taxes Organizational Redesign Plan (17) Reorganization and Realignment Costs QSCC (22) Transactions with Related Parties Rent Holiday (1) Summary of Significant Accounting Policies Restricted Shares (14) Share-Based Compensation ROU (1) Summary of Significant Accounting Policies RSAs (1) Summary of Significant Accounting Policies RSUs (1) Summary of Significant Accounting Policies Securitization Entities (9) Long-Term Debt Senior Notes (9) Long-Term Debt SOFR (9) Long-Term Debt Straight-Line Rent (1) Summary of Significant Accounting Policies Target (14) Share-Based Compensation The Wendy’s Company (1) Summary of Significant Accounting Policies TimWen (1) Summary of Significant Accounting Policies TSR (1) Summary of Significant Accounting Policies U.S. (1) Summary of Significant Accounting Policies VIE (1) Summary of Significant Accounting Policies Wendy’s (1) Summary of Significant Accounting Policies 53 Defined Term Footnote Where Defined Wendy’s Co-op (22) Transactions with Related Parties Wendy’s Funding (9) Long-Term Debt Wendy’s Merger (7) Investments Wendy’s Restaurants (1) Summary of Significant Accounting Policies Yellow Cab (22) Transactions with Related Parties 54 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of The Wendy’s Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Wendy’s Company and subsidiaries (the “Company”) as of December 28, 2025 and December 29, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 28, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill - Global Real Estate and Development Operations Reporting Unit – Refer to Notes 1 and 6 to the financial statements Critical Audit Matter Description The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company used both an income approach and a market approach to estimate fair value of the global real estate and development operations reporting unit. The income approach requires management to make significant estimates and assumptions including future sales growth, terminal value growth rate, operating profit, and the weighted average cost of capital (discount rate). The market approach requires use of market price data of guideline public companies to estimate the fair value of the reporting unit. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The goodwill balance was $774.1 million as of December 28, 2025, of which $122.5 55 million was allocated to the global real estate and development operations reporting unit. The fair value of the global real estate and development operations reporting unit exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized. We identified the Company’s income approach in the impairment evaluation of goodwill for the global real estate and development operations reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair value of this reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions, particularly related to future sales growth, terminal value growth rate, operating profit, and the selection of the discount rate. How the Critical Audit Matter was Addressed in the Audit Our audit procedures related to the estimates of future sales growth, terminal value growth rate, operating profit, and the discount rate used by management to estimate the fair value of the global real estate and development operations reporting unit included the following, among others: • We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the global real estate and development operations reporting unit, such as controls related to management’s forecasts of future sales growth, terminal value growth rate, operating profit, and selection of the discount rate. • We evaluated management’s ability to accurately forecast future sales growth and operating profit by comparing actual results to management’s historical forecasts. • We performed sensitivity analyses on future sales growth, terminal value growth rate, operating profit, and the discount rate to evaluate the impact of such sensitivity on anticipated cash flows. • We evaluated the reasonableness of management’s future sales growth and operating profit by comparing the forecasts to (1) historical sales growth and operating profit and (2) management’s presentations to the audit committee. We also considered the impact of changes in management’s forecasts from the annual measurement date in the fourth quarter to December 28, 2025. • With the assistance of our fair value specialists, we evaluated the terminal value growth rate and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculation, by: ◦ Utilizing industry and market-specific data to assess the reasonableness of the terminal value growth rate selected by management. ◦ Developing a range of independent estimates for the discount rate and compared those to the discount rate selected by management. /s/ Deloitte & Touche LLP Columbus, Ohio February 23, 2026 We have served as the Company’s auditor since 1994. 56 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands Except Par Value) December 28, 2025 December 29, 2024 ASSETS Current assets: Cash and cash equivalents $ 300,833 $ 450,512 Restricted cash 39,207 34,481 Accounts and notes receivable, net 117,333 99,926 Inventories 7,387 6,529 Prepaid expenses and other current assets 55,412 45,563 Advertising funds restricted assets 97,867 99,129 Total current assets 618,039 736,140 Properties 937,795 907,787 Finance lease assets 312,844 244,954 Operating lease assets 642,589 679,777 Goodwill 774,088 771,468 Other intangible assets 1,170,671 1,192,264 Investments 25,227 29,006 Net investment in sales-type and direct financing leases 284,891 288,048 Other assets 190,417 185,399 Total assets $ 4,956,561 $ 5,034,843 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 29,750 $ 78,163 Current portion of finance lease liabilities 26,673 22,509 Current portion of operating lease liabilities 51,119 50,068 Accounts payable 30,450 28,455 Accrued expenses and other current liabilities 116,655 118,224 Advertising funds restricted liabilities 96,454 100,212 Total current liabilities 351,101 397,631 Long-term debt 2,730,502 2,662,130 Long-term finance lease liabilities 646,715 575,363 Long-term operating lease liabilities 660,257 704,333 Deferred income taxes 287,753 263,420 Deferred franchise fees 87,956 88,387 Other liabilities 74,894 84,227 Total liabilities 4,839,178 4,775,491 Commitments and contingencies Stockholders’ equity: Common stock, $ 0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 190,324 a nd 203,834 shares outstanding, respectively 47,042 47,042 Additional paid-in capital 2,986,150 2,982,102 Retained earnings 435,124 399,700 Common stock held in treasury, at cost; 280,100 and 266,590 shares, respectively ( 3,286,965 ) ( 3,094,739 ) Accumulated other comprehensive loss ( 63,968 ) ( 74,753 ) Total stockholders’ equity 117,383 259,352 Total liabilities and stockholders’ equity $ 4,956,561 $ 5,034,843 See accompanying notes to consolidated financial statements. 57 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Per Share Amounts) Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Revenues: Sales $ 916,325 $ 925,905 $ 930,083 Franchise royalty revenue and fees 602,731 626,002 592,331 Franchise rental income 235,750 236,493 230,168 Advertising funds revenue 422,085 458,092 428,996 2,176,891 2,246,492 2,181,578 Costs and expenses: Cost of sales 791,724 783,211 794,493 Franchise support and other costs 80,975 67,688 57,243 Franchise rental expense 125,773 127,446 125,371 Advertising funds expense 422,552 478,136 428,003 General and administrative 252,679 255,208 249,964 Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) 152,222 143,234 135,789 Amortization of cloud computing arrangements 18,647 14,701 12,778 System optimization gains, net ( 1,030 ) ( 1,219 ) ( 880 ) Reorganization and realignment costs ( 125 ) 8,528 9,200 Impairment of long-lived assets 12,095 9,713 1,401 Other operating income, net ( 22,073 ) ( 11,513 ) ( 13,768 ) 1,833,439 1,875,133 1,799,594 Operating profit 343,452 371,359 381,984 Interest expense, net ( 126,467 ) ( 123,881 ) ( 124,061 ) (Loss) gain on early extinguishment of debt, net ( 642 ) — 2,283 Investment (loss) income, net ( 1,718 ) 11 ( 10,358 ) Other income, net 12,621 24,924 29,570 Income before income taxes 227,246 272,413 279,418 Provision for income taxes ( 62,171 ) ( 78,056 ) ( 74,978 ) Net income $ 165,075 $ 194,357 $ 204,440 Net income per share: Basic $ .85 $ .95 $ .98 Diluted .85 .95 .97 See accompanying notes to consolidated financial statements. 58 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Net income $ 165,075 $ 194,357 $ 204,440 Other comprehensive income (loss): Foreign currency translation adjustment 10,785 ( 16,378 ) 5,801 Other comprehensive income (loss) 10,785 ( 16,378 ) 5,801 Comprehensive income $ 175,860 $ 177,979 $ 210,241 See accompanying notes to consolidated financial statements. 59 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands) Common Stock Additional Paid-In 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 — — 204,440 — — 204,440 Other comprehensive income, net — — — — 5,801 5,801 Cash dividends — — ( 209,253 ) — — ( 209,253 ) Repurchases of common stock — — — ( 191,871 ) — ( 191,871 ) Share-based compensation — 23,747 — — — 23,747 Common stock issued upon exercises of stock options — 4,366 — 9,873 — 14,239 Common stock issued upon vesting of restricted shares — ( 6,193 ) — 2,748 — ( 3,445 ) Other — 230 ( 73 ) 244 — 401 Balance at December 31, 2023 47,042 2,960,035 409,863 ( 3,048,786 ) ( 58,375 ) 309,779 Net income — — 194,357 — — 194,357 Other comprehensive loss, net — — — — ( 16,378 ) ( 16,378 ) Cash dividends — — ( 204,443 ) — — ( 204,443 ) Repurchases of common stock — — — ( 75,624 ) — ( 75,624 ) Share-based compensation — 23,019 — — — 23,019 Common stock issued upon exercises of stock options — 10,127 — 22,430 — 32,557 Common stock issued upon vesting of restricted shares — ( 11,197 ) — 7,014 — ( 4,183 ) Other — 118 ( 77 ) 227 — 268 Balance at December 29, 2024 47,042 2,982,102 399,700 ( 3,094,739 ) ( 74,753 ) 259,352 Net income — — 165,075 — — 165,075 Other comprehensive income, net — — — — 10,785 10,785 Cash dividends — — ( 129,587 ) — — ( 129,587 ) Repurchases of common stock — — — ( 202,131 ) — ( 202,131 ) Share-based compensation — 14,573 — — — 14,573 Common stock issued upon exercises of stock options — ( 633 ) — 2,447 — 1,814 Common stock issued upon vesting of restricted shares — ( 9,912 ) — 7,175 — ( 2,737 ) Other — 20 ( 64 ) 283 — 239 Balance at December 28, 2025 $ 47,042 $ 2,986,150 $ 435,124 $ ( 3,286,965 ) $ ( 63,968 ) $ 117,383 See accompanying notes to consolidated financial statements. 60 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Cash flows from operating activities: Net income $ 165,075 $ 194,357 $ 204,440 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) 152,222 143,234 135,789 Amortization of cloud computing arrangements 18,647 14,701 12,778 Share-based compensation 14,573 23,019 23,747 Impairment of long-lived assets 12,095 9,713 1,401 Deferred income tax 23,461 ( 5,529 ) ( 807 ) Non-cash rental expense, net 45,454 41,904 40,655 Change in operating lease liabilities ( 49,230 ) ( 48,911 ) ( 47,212 ) Net receipt (recognition) of deferred vendor incentives 1,534 ( 586 ) 1,034 System optimization gains, net ( 1,030 ) ( 1,219 ) ( 880 ) Gain on sale of investments, net — — ( 31 ) Distributions received from TimWen joint venture 14,779 14,408 12,901 Equity in earnings in joint ventures, net ( 11,215 ) ( 11,607 ) ( 10,819 ) Long-term debt-related activities, net (see Note 20) 8,123 7,479 5,320 Cloud computing arrangements expenditures ( 23,483 ) ( 18,815 ) ( 32,902 ) Other, net 25,093 14,542 22,883 Changes in operating assets and liabilities: Accounts and notes receivable ( 19,174 ) ( 5,158 ) 430 Inventories ( 473 ) 138 439 Prepaid expenses and other current assets ( 1,345 ) ( 1,795 ) ( 672 ) Advertising funds restricted assets and liabilities ( 4,007 ) ( 20,733 ) ( 18,210 ) Accounts payable ( 8,927 ) 1,026 ( 8,826 ) Accrued expenses and other current liabilities ( 17,629 ) 5,139 3,958 Net cash provided by operating activities 344,543 355,307 345,416 Cash flows from investing activities: Capital expenditures ( 101,927 ) ( 94,388 ) ( 85,021 ) Franchise development fund ( 38,410 ) ( 41,246 ) ( 7,951 ) Acquisitions ( 16,854 ) — — Dispositions 4,410 4,946 2,115 Proceeds from sale of investments — — 31 Notes receivable, net 1,949 1,383 4,280 Net cash used in investing activities ( 150,832 ) ( 129,305 ) ( 86,546 ) Cash flows from financing activities: Proceeds from long-term debt 475,500 — — Repayments of long-term debt ( 453,993 ) ( 29,250 ) ( 94,702 ) Repayments of finance lease liabilities ( 24,546 ) ( 20,404 ) ( 21,588 ) Deferred financing costs ( 9,671 ) — — Repurchases of common stock ( 200,766 ) ( 77,375 ) ( 189,554 ) Dividends ( 129,587 ) ( 204,443 ) ( 209,253 ) Proceeds from stock option exercises 1,916 32,859 14,667 Payments related to tax withholding for share-based compensation ( 2,839 ) ( 4,485 ) ( 3,873 ) Net cash used in financing activities ( 343,986 ) ( 303,098 ) ( 504,303 ) Net cash used in operations before effect of exchange rate changes on cash ( 150,275 ) ( 77,096 ) ( 245,433 ) Effect of exchange rate changes on cash 4,339 ( 8,112 ) 2,448 Net decrease in cash, cash equivalents and restricted cash ( 145,936 ) ( 85,208 ) ( 242,985 ) Cash, cash equivalents and restricted cash at beginning of period 503,608 588,816 831,801 Cash, cash equivalents and restricted cash at end of period $ 357,672 $ 503,608 $ 588,816 See accompanying notes to consolidated financial statements. 61 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (1) Summary of Significant Accounting Policies Corporate Structure The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC and its subsidiaries (“Wendy’s”). Wendy’s franchises and operates Wendy’s quick-service restaurants throughout the United States of America (“U.S.”) and in 38 foreign countries and U.S. territories. At December 28, 2025, Wendy’s operated and franchised 434 and 6,963 restaurants, respectively. The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 26 for further information. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all of the Company’s subsidiaries. We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. The principal entities in which we possess a variable interest include the Company’s national advertising funds for the U.S. and Canada (the “Advertising Funds”). All intercompany balances and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Reclassifications Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. Fiscal Year The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31 and are referred to herein as (1) “the year ended December 28, 2025” or “2025,” (2) “the year ended December 29, 2024” or “2024,” and (3) “the year ended December 31, 2023” or “2023,” all of which consisted of 52 weeks. All references to years, quarters and months relate to fiscal periods rather than calendar periods. Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Company’s cash and cash equivalents principally consist of cash in bank and money market mutual fund accounts and are primarily not in Federal Deposit Insurance Corporation insured accounts. We believe that our vulnerability to risk concentrations in our cash equivalents is mitigated by (1) our policies restricting the eligibility, credit quality and concentration limits for our placements in cash equivalents and (2) insurance from the Securities Investor Protection Corporation of up to $ 500 per account, as well as supplemental private insurance coverage maintained by substantially all of our brokerage firms, to the extent our cash equivalents are held in brokerage accounts. 62 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Restricted Cash In accordance with the Company’s securitized financing facility, certain cash accounts have been established with the trustee for the benefit of the trustee and the noteholders and are restricted in their use. Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of principal, interest and commitment fees required for the Company’s senior secured notes. Restricted cash also includes cash collected by the Advertising Funds, usage of which is restricted for advertising activities and is included in “Advertising funds restricted assets.” See Note 2 for further information. Accounts and Notes Receivable, Net Accounts and notes receivable, net, consist primarily of royalties, rents, property taxes and franchise fees due principally from franchisees, refundable income taxes, credit card receivables and insurance receivables. Reserve estimates include consideration of the likelihood of default expected over the estimated life of the receivable. The Company periodically assesses the need for an allowance for doubtful accounts on its receivables based upon several key credit quality indicators such as outstanding past due balances, the financial strength of the obligor, the estimated fair value of any underlying collateral and agreement characteristics. We believe that our vulnerability to risk concentrations in our receivables is mitigated by (1) favorable historical collectability on past due balances, (2) recourse to the underlying collateral regarding sales-type and direct financing lease receivables, and (3) our expectations for fluctuations in general market conditions. Receivables are considered delinquent once they are contractually past due under the terms of the underlying agreements. See Note 2 for further information. Inventories The Company’s inventories are stated at the lower of cost or net realizable value, with cost determined in accordance with the first-in, first-out method and consist primarily of restaurant food items and paper supplies. Cloud Computing Arrangements (“CCA”) The Company capitalizes implementation costs associated with its CCA consistent with costs capitalized for internal-use software. Capitalized CCA implementation costs are included in “Prepaid expenses and other current assets” and “Other assets.” The CCA implementation costs are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised. Amortization expense of CCA implementation costs is recorded to “Amortization of cloud computing arrangements.” The CCA implementation costs are included within operating activities in the Company’s consolidated statements of cash flows. Properties and Depreciation and Amortization Properties are stated at cost, including capitalized internal costs of employees to the extent such employees are dedicated to specific restaurant construction and information technology projects, less accumulated depreciation and amortization. Depreciation and amortization of properties is computed principally on the straight-line basis using the following estimated useful lives of the related major classes of properties: three to 20 years for office and restaurant equipment (including technology), three to 15 years for transportation equipment and seven to 30 years for buildings and improvements. When the Company commits to a plan to cease using certain properties before the end of their estimated useful lives, depreciation expense is accelerated to reflect the use of the assets over their shortened useful lives. Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably assured of exercising. The Company reviews properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If such review indicates an asset group may not be recoverable, an impairment loss is recognized for the excess of the carrying amount over the fair value of an asset group to be held and used or over the fair value less cost to sell of an asset to be disposed. See “Impairment of Long-Lived Assets” below for further information. 63 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The Company classifies assets as held for sale and ceases depreciation of the assets when there is a plan for disposal of the assets and those assets meet the held for sale criteria. Assets held for sale are included in “Prepaid expenses and other current assets” in the consolidated balance sheets. Goodwill Goodwill, representing the excess of the cost of an acquired entity over the fair value of the acquired net assets, is not amortized. Goodwill associated with our Company-operated restaurants is reduced as a result of restaurant dispositions based on the relative fair values and is included in the carrying value of the restaurant in determining the gain or loss on disposal. If a Company-operated restaurant is sold within two years of being acquired from a franchisee, the goodwill associated with the acquisition is written off in its entirety. Goodwill has been assigned to reporting units for purposes of impairment testing. The Company tests goodwill for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Our annual impairment test of goodwill may be completed through a qualitative assessment to determine if the fair value of the reporting unit is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment for any reporting units, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value of a reporting unit exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative test, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The fair value of the reporting unit is determined by management and is based on the results of (1) estimates we made regarding the present value of the anticipated cash flows associated with each reporting unit and/or (2) the indicated value of the reporting units based on a comparison and correlation of the Company and other similar companies. Our critical estimates in this impairment test include future sales growth, operating profit, terminal value growth rates and the weighted average cost of capital (discount rate). We also utilize other key inputs such as income tax rates and capital expenditures to derive fair value. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we use, we may be required to recognize goodwill impairment charges in future years. Impairment of Long-Lived Assets Our long-lived assets include (1) properties and related definite-lived intangible assets (e.g., favorable leases) that are leased and/or subleased to franchisees, (2) Company-operated restaurant assets and related definite-lived intangible assets, which include reacquired rights under franchise agreements, and (3) finance and operating lease assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the carrying amount of the asset group to future undiscounted net cash flows expected to be generated through leases and/or subleases or by our individual Company-operated restaurants. If the carrying amount of the long-lived asset group is not recoverable on an undiscounted cash flow basis, then impairment is recognized to the extent that the carrying amount exceeds its fair value and is included in “Impairment of long-lived assets.” Our critical estimates in this review process include the anticipated future cash flows from leases and/or subleases or individual Company-operated restaurants, which is used in assessing the recoverability of the respective long-lived assets. Our fair value estimates are subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates we used, we may be required to recognize additional impairment charges in future years. Other Intangible Assets Definite-lived intangible assets are amortized on a straight-line basis using the following estimated useful lives of the related classes of intangibles: for favorable leases, the terms of the respective leases, including periods covered by renewal options that the Company as lessor is reasonably certain the tenant will exercise; one to five years for computer software; two to 64 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) 20 years for reacquired rights under franchise agreements; and 20 years for franchise agreements. Trademarks have an indefinite life and are not amortized. The Company reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. Our annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not greater than the carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, we test for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. Our critical estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenues of Company-operated and franchised restaurants and the resulting cash flows. Investments The Company has a 50 % share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons ® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). In addition, the Company has a 20 % share in a joint venture in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.” Cash distributions and dividends received that are determined to be returns of capital are recorded as a reduction of the carrying value of our investments and returns on our investments are recorded to “Investment (loss) income, net.” The difference between the carrying value of our TimWen equity investment and the underlying equity in the historical net assets of the investee is accounted for as if the investee were a consolidated subsidiary. Accordingly, the carrying value difference is amortized over the estimated lives of the assets of the investee to which such difference would have been allocated if the equity investment were a consolidated subsidiary. To the extent the carrying value difference represents goodwill, it is not amortized. Other investments in equity securities in which the Company does not have significant influence, and for which there is not a readily determinable fair value, are recorded at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Realized gains and losses are reported as income or loss in the period in which the securities are sold or otherwise disposed. Share-Based Compensation The Company has granted share-based compensation awards to certain employees under several equity plans (the “Equity Plans”). The Company measures the cost of employee services received in exchange for an equity award, which include grants of employee stock options and restricted shares, based on the fair value of the award at the date of grant. Share-based compensation expense is recognized net of estimated forfeitures, determined based on historical experience. The Company recognizes share-based compensation expense over the requisite service period unless the awards are subject to performance conditions, in which case we recognize compensation expense over the requisite service period to the extent performance conditions are considered probable. Certain of the performance-based awards also include a relative Total Shareholder Return (“TSR”) modifier to determine the number of shares earned at the end of the performance period. The Company determines the grant date fair value of stock options using a Black-Scholes-Merton option pricing model (the “Black-Scholes Model”). The grant date fair value of restricted share awards (“RSAs”), restricted share units (“RSUs”) and performance-based awards are determined using the fair market value of the Company’s common stock on the date of grant, as set forth in the applicable plan document. The grant date fair values of market condition awards, as well as performance condition awards that include a relative TSR modifier, are estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. 65 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Foreign Currency Translation Financial statements of foreign subsidiaries are prepared in their functional currency and then translated into U.S. dollars. Assets and liabilities are translated at the exchange rate as of the balance sheet date and revenues, costs and expenses are translated at a monthly average exchange rate. Net gains or losses resulting from the translation are recorded to the “Foreign currency translation adjustment” component of “Accumulated other comprehensive loss.” Gains and losses arising from the impact of foreign currency exchange rate fluctuations on transactions in foreign currency are included in “General and administrative.” Income Taxes The Company accounts for income taxes under the asset and liability method. A deferred tax asset or liability is recognized whenever there are (1) future tax effects from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (2) operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the years in which those differences are expected to be recovered or settled. Deferred tax assets are recognized to the extent the Company believes these assets will more likely than not be realized. In evaluating the realizability of deferred tax assets, the Company considers all available positive and negative evidence, including the interaction and the timing of future reversals of existing temporary differences, projected future taxable income, recent operating results and tax-planning strategies. When considered necessary, a valuation allowance is recorded to reduce the carrying amount of the deferred tax assets to their anticipated realizable value. The Company records uncertain tax positions on the basis of a two-step process whereby we first determine if it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is then measured for purposes of financial statement recognition as the largest amount of benefit that is greater than 50% likely of being realized upon being effectively settled. Interest and penalties accrued for uncertain tax positions are charged to “Provision for income taxes.” Restaurant Acquisitions and Dispositions The Company accounts for the acquisition of restaurants from franchisees using the acquisition method of accounting for business combinations. The acquisition method of accounting involves the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process requires the use of estimates and assumptions to derive fair values and to complete the allocation. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed represents goodwill derived from the acquisition. See “Goodwill” above for further information. In connection with the sale of Company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise, development, relationship and lease agreements. The Company typically sells restaurants’ cash, inventory and equipment and retains ownership or the leasehold interest to the real estate to lease and/or sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as such, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants, technical assistance fees and development fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company obtains third-party evidence to estimate the relative selling price of the stated rent under the lease and/or sublease agreements which is primarily based upon comparable market rents. Based on the Company’s review of the third-party evidence, the Company records favorable or unfavorable lease assets/liabilities with a corresponding offset to the gain or loss on the sale of the restaurants. The cash consideration per restaurant for technical assistance fees and development fees is consistent with the amounts stated in the related franchise agreements which are charged for separate standalone arrangements. The Company recognizes the technical assistance and development fees over the contractual term of the franchise agreements. Future royalty income is also recognized in revenue as earned. See “Revenue Recognition” below for further information. 66 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Revenue Recognition “Sales” includes revenue recognized upon delivery of food to the customer at Company-operated restaurants. “Sales” excludes taxes collected from the Company’s customers. Revenue is recognized when the food is purchased by the customer, which is when our performance obligation is satisfied. “Sales” also includes income for gift cards. Gift card payments are recorded as deferred income when received and are recognized as revenue upon redemption. “Franchise royalty revenue and fees” includes royalties, new build technical assistance fees, renewal fees, franchisee-to- franchisee restaurant transfer (“Franchise Flip”) technical assistance fees, Franchise Flip advisory fees, development fees and information technology and other fees. Royalties from franchised restaurants are based on a percentage of sales of the franchised restaurant and are recognized as earned. New build technical assistance fees, renewal fees and Franchise Flip technical assistance fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Franchise Flip advisory fees include valuation services and fees for selecting pre-approved buyers for Franchise Flips. Franchise Flip advisory fees are paid by the seller and are recognized as revenue at closing of the Franchise Flip transaction. Information technology and other fees are recognized as revenue as earned. “Franchise rental income” includes rental income from properties owned and leased by the Company and leased or subleased to franchisees. Rental income is recognized on a straight-line basis over the respective operating lease terms. Favorable and unfavorable lease amounts related to the leased and/or subleased properties are amortized to rental income on a straight-line basis over the remaining term of the leases. “Advertising funds revenue” includes contributions to the Advertising Funds by franchisees. Revenue related to these contributions is based on a percentage of sales of the franchised restaurants and is recognized as earned. Cost of Sales Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs relating to Company-operated restaurants. Cost of sales excludes depreciation and amortization expense. Vendor Incentives The Company receives incentives from certain vendors. These incentives are recognized as earned and are classified as a reduction of “Cost of sales.” Advertising Costs Advertising costs are expensed as incurred and are included in “Cost of sales” and “Advertising funds expense.” Production costs of advertising are expensed when the advertisement is first released. Franchise Support and Other Costs The Company incurs costs to provide direct support services to our franchisees, as well as certain other direct and incremental costs to the Company’s franchise operations. These costs primarily relate to franchise development services, facilitating Franchise Flips and information technology services, which are charged to “Franchise support and other costs,” as incurred. The provision for doubtful accounts related to receivables from franchisees is also included in “Franchise support and other costs.” Self-Insurance The Company is self-insured for most workers’ compensation losses and health care claims and purchases insurance for general liability and automotive liability losses, all subject to a $ 500 per occurrence retention or deductible limit. The Company provides for their estimated cost to settle both known claims and claims incurred but not yet reported. Liabilities associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to us, as 67 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) well as industry-wide loss experience and other actuarial assumptions. We determine our insurance obligations with the assistance of actuarial firms. Since there are many estimates and assumptions involved in recording insurance liabilities and in the case of workers’ compensation a significant period of time elapses before the ultimate resolution of claims, differences between actual future events and prior estimates and assumptions could result in adjustments to these liabilities. Leases Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement and historical performance of the restaurant. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” 68 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below),” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including periods covered by renewal options that the Company is reasonably certain of exercising. Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “Other operating income, net.” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Concentration of Risk Wendy’s had no customers which accounted for 10% or more of consolidated revenues in 2025, 2024 or 2023. As of December 28, 2025, Wendy’s had one main in-line distributor of food, packaging and beverage products, excluding breads, that serviced approximately 63 % of Wendy’s restaurants in the U.S. and four additional in-line distributors that, in the aggregate, serviced approximately 35 % of Wendy’s restaurants in the U.S. We believe that our vulnerability to risk concentrations related to significant vendors and sources of our raw materials is mitigated as we believe that there are other vendors who would be able to service our requirements. However, if a disruption of service from any of our in-line distributors was to occur, we could experience short-term increases in our costs while distribution channels were adjusted. Wendy’s restaurants are principally located throughout the U.S. and to a lesser extent, in 38 foreign countries and U.S. territories, with the largest number in Canada. Wendy’s U.S. restaurants are located in 50 states and the District of Columbia, 69 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) with the largest number in Florida, Texas, Ohio, California, Georgia, North Carolina, Pennsylvania and New York. Because our restaurant operations are generally located throughout the U.S. and to a much lesser extent, Canada and other foreign countries and U.S. territories, we believe the risk of geographic concentration is not significant. We could be adversely affected by changing consumer preferences, including as a result from concerns over nutritional or safety aspects of beef, chicken, eggs, pork, french fries or other products we sell or the effects of food safety events or disease outbreaks. Our exposure to foreign exchange risk is primarily related to fluctuations in the Canadian dollar relative to the U.S. dollar for our Canadian operations. However, our exposure to Canadian dollar foreign currency risk is mitigated by the fact that there are no Company-operated restaurants in Canada and less than 10 % of Wendy’s franchised restaurants are in Canada. The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from franchisees for royalties, franchise fees and rent. In addition, we have notes receivable from certain of our franchisees. The financial condition of these franchisees is largely dependent upon the underlying business trends of the Wendy’s brand and market conditions within the quick-service restaurant industry. This concentration of credit risk is mitigated, in part, by the number of franchisees and the short-term nature of the franchise receivables. New Accounting Standards Adopted Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to enhance its income tax disclosure requirements. The amendment requires annual disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also requires annual disclosure of income taxes paid disaggregated by federal, state and foreign taxes and by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid. The Company adopted this amendment retrospectively during the fourth quarter of 2025. The adoption of this amendment did not have a material impact on our consolidated financial statements. See Note 11 for the expanded income tax disclosures. New Accounting Standards Narrow-Scope Improvements of Interim Reporting Requirements In December 2025, the FASB issued an amendment to improve the navigability of the required interim disclosures and to provide guidance on what disclosures should be provided in interim reporting periods. The amendment is effective commencing with our 2028 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. Accounting for and Disclosure of Software Costs In September 2025, the FASB issued an amendment to modernize the accounting for costs related to internal-use software, improving the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendment is effective commencing with our 2028 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the FASB issued an amendment to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets for revenue arising from contracts with customers. The amendment is effective commencing with our 2026 fiscal year. The Company does not expect the guidance to have a material impact on our consolidated financial statements. Disaggregation of Income Statement Expenses In November 2024, the FASB issued an amendment to expand disclosure requirements related to certain income statement expenses. The amendment requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the consolidated financial statements. The amendment is effective commencing with our 2027 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. 70 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (2) Cash and Receivables Year End December 28, 2025 December 29, 2024 Cash and cash equivalents Cash $ 90,226 $ 131,300 Cash equivalents 210,607 319,212 300,833 450,512 Restricted cash Accounts held by trustee for the securitized financing facility 38,800 34,089 Other 407 392 39,207 34,481 Advertising Funds (a) 17,632 18,615 56,839 53,096 Total cash, cash equivalents and restricted cash $ 357,672 $ 503,608 _______________ (a) Included in “Advertising funds restricted assets.” Year End December 28, 2025 December 29, 2024 Gross Allowance for Doubtful Accounts Net Gross Allowance for Doubtful Accounts Net Accounts and Notes Receivable, Net Accounts receivable (a) $ 123,405 $ ( 18,448 ) $ 104,957 $ 91,989 $ ( 5,153 ) $ 86,836 Notes receivable from franchisees (b) (c) 14,820 ( 2,444 ) 12,376 15,239 ( 2,149 ) 13,090 $ 138,225 $ ( 20,892 ) $ 117,333 $ 107,228 $ ( 7,302 ) $ 99,926 ______________ (a) Includes income tax refund receivables of $ 17,055 and $ 3,587 as of December 28, 2025 and December 29, 2024, respectively. (b) Includes the current portion of sales-type and direct financing lease receivables of $ 10,932 and $ 9,377 as of December 28, 2025 and December 29, 2024, respectively. See Note 5 for further information. (c) Includes notes receivable related to the Brazil JV of $ 3,888 and $ 5,837 as of December 28, 2025 and December 29, 2024, respectively. As of December 28, 2025 and December 29, 2024, the Company had reserves of $ 2,444 and $ 2,149 , respectively, on the loans outstanding related to the Brazil JV. See Note 7 for further information. 71 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The following is a rollforward of the allowance for doubtful accounts: Accounts Receivable Notes Receivable Total 2025 Balance at December 29, 2024 $ 5,153 $ 2,149 $ 7,302 Provision for doubtful accounts 14,954 1,088 16,042 Uncollectible accounts written off, net of recoveries ( 1,659 ) ( 793 ) ( 2,452 ) Balance at December 28, 2025 $ 18,448 $ 2,444 $ 20,892 2024 Balance at December 31, 2023 $ 1,538 $ 1,149 $ 2,687 Provision for doubtful accounts 3,716 1,000 4,716 Uncollectible accounts written off, net of recoveries ( 101 ) — ( 101 ) Balance at December 29, 2024 $ 5,153 $ 2,149 $ 7,302 2023 Balance at January 1, 2023 $ 1,707 $ 4,640 $ 6,347 Provision for doubtful accounts 534 ( 414 ) 120 Uncollectible accounts written off, net of recoveries ( 703 ) ( 3,077 ) ( 3,780 ) Balance at December 31, 2023 $ 1,538 $ 1,149 $ 2,687 (3) Revenue Nature of Goods and Services The Company generates revenues from sales at Company-operated restaurants and earns royalties, fees and rental income from franchised restaurants. Revenues are recognized upon delivery of food to the customer at Company-operated restaurants or upon the fulfillment of terms outlined in the franchise agreement for franchised restaurants. The franchise agreement provides the franchisee the right to construct, own and operate a Wendy’s restaurant upon a site accepted by Wendy’s and to use the Wendy’s system in connection with the operation of the restaurant at that site. The franchise agreement generally provides for a 20 -year term and a 10 -year renewal subject to certain conditions. The initial term may be extended up to 25 years at the franchisee’s option. The franchise agreement requires that the franchisee pay a royalty based on a percentage of sales at the franchised restaurant, as well as make contributions to the applicable Advertising Fund based on a percentage of sales. Wendy’s may offer development incentive programs from time to time that provide for a discount or lesser royalty amount or Advertising Fund contribution for a limited period of time. The agreement also typically requires that the franchisee pay Wendy’s a technical assistance fee. The technical assistance fee is used to defray some of the costs to Wendy’s for start-up and transitional services related to new and existing franchisees in the development and opening of new restaurants or acquiring Company-operated restaurants. The franchise agreement also requires that the franchisee pay an annual fee for technology services. The technology fee is a flat fee dependent on each restaurant’s sales. Wendy’s also enters into development agreements with certain franchisees. The development agreement generally provides the franchisee with the right to develop a specified number of new Wendy’s restaurants using Wendy’s current design standards and specifications within a stated, non-exclusive territory for a specified period, subject to the franchisee meeting interim new restaurant development requirements. Wendy’s owns and leases sites from third parties, which it leases and/or subleases to franchisees. Noncancelable lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. The initial lease term for properties leased or subleased to franchisees is generally set to be coterminous with the initial 20 -year term of the related franchise agreement and any renewal term is coterminous with the 10 -year renewal term of the related franchise agreement. 72 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Royalties and contributions to the Advertising Funds are generally due within the month subsequent to which the revenue was generated through sales at the franchised restaurant. Technical assistance fees and renewal fees are generally due upon execution of the related franchise agreement. Annual technology fees are due in quarterly installments. Rental income is due in accordance with the terms of each lease, which is generally at the beginning of each month. Disaggregation of Revenue The following tables disaggregate revenue by segment and source for 2025, 2024 and 2023: Wendy’s U.S. Wendy’s International Global Real Estate & Development Total 2025 Sales at Company-operated restaurants $ 887,512 $ 28,813 $ — $ 916,325 Franchise royalty revenue 429,039 75,508 — 504,547 Franchise fees 84,101 11,027 3,056 98,184 Franchise rental income — — 235,750 235,750 Advertising funds revenue 384,472 37,613 — 422,085 Total revenues $ 1,785,124 $ 152,961 $ 238,806 $ 2,176,891 2024 Sales at Company-operated restaurants $ 898,886 $ 27,019 $ — $ 925,905 Franchise royalty revenue 456,648 71,740 — 528,388 Franchise fees 82,703 9,347 5,564 97,614 Franchise rental income — — 236,493 236,493 Advertising funds revenue 421,508 36,584 — 458,092 Total revenues $ 1,859,745 $ 144,690 $ 242,057 $ 2,246,492 2023 Sales at Company-operated restaurants $ 905,700 $ 24,383 $ — $ 930,083 Franchise royalty revenue 444,653 67,506 — 512,159 Franchise fees 68,749 6,406 5,017 80,172 Franchise rental income — — 230,168 230,168 Advertising funds revenue 396,743 32,253 — 428,996 Total revenues $ 1,815,845 $ 130,548 $ 235,185 $ 2,181,578 Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: Year End December 28, 2025 (a) December 29, 2024 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 59,060 $ 55,601 Receivables, which are included in “Advertising funds restricted assets” 75,083 73,223 Deferred franchise fees (c) 98,496 99,411 _______________ 73 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (a) Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s consolidated statements of operations. (b) Includes receivables related to “Sales” and “Franchise royalty revenue and fees.” (c) Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $ 10,540 and $ 87,956 , respectively, as of December 28, 2025, and $ 11,024 and $ 88,387 , respectively, as of December 29, 2024. Significant changes in deferred franchise fees are as follows: Year Ended 2025 2024 2023 Deferred franchise fees at beginning of period $ 99,411 $ 100,805 $ 99,208 Revenue recognized during the period ( 10,167 ) ( 12,706 ) ( 12,242 ) New deferrals due to cash received and other 9,252 11,312 13,839 Deferred franchise fees at end of period $ 98,496 $ 99,411 $ 100,805 Anticipated Future Recognition of Deferred Franchise Fees The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period: Estimate for fiscal year: 2026 (a) $ 10,540 2027 6,811 2028 6,670 2029 6,563 2030 6,458 Thereafter 61,454 $ 98,496 _______________ (a) Includes development-related franchise fees expected to be recognized over a duration of one year or less. (4) Properties Year End December 28, 2025 December 29, 2024 Land $ 386,231 $ 379,581 Buildings and improvements 541,240 534,054 Leasehold improvements 480,303 453,381 Office, restaurant and transportation equipment 395,510 362,312 1,803,284 1,729,328 Accumulated depreciation and amortization ( 865,489 ) ( 821,541 ) $ 937,795 $ 907,787 Depreciation and amortization expense related to properties was $ 80,061 , $ 75,575 and $ 70,108 during 2025, 2024 and 2023, respectively. 74 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (5) Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of December 28, 2025, the nature of restaurants operated by the Company and its franchisees was as follows: Year End December 28, 2025 Company-operated restaurants: Owned land and building 155 Owned building and held long-term land leases 142 Leased land and building 137 Total Company-operated restaurants 434 Franchisee-operated restaurants: Company-owned properties leased to franchisees 491 Company-leased properties subleased to franchisees 1,146 Other franchisee-operated restaurants 5,326 Total franchisee-operated restaurants 6,963 Total Company-operated and franchisee-operated restaurants 7,397 Company as Lessee The components of lease cost for 2025, 2024 and 2023 are as follows: Year Ended 2025 2024 2023 Finance lease cost: Amortization of finance lease assets $ 18,901 $ 13,877 $ 16,061 Interest on finance lease liabilities 44,650 43,051 42,624 63,551 56,928 58,685 Operating lease cost 81,762 84,382 85,138 Variable lease cost (a) 67,633 66,977 66,859 Short-term lease cost 5,234 5,420 5,864 Total operating lease cost (b) 154,629 156,779 157,861 Total lease cost $ 218,180 $ 213,707 $ 216,546 _______________ (a) Includes expenses for executory costs of $ 42,057 , $ 39,754 , and $ 39,456 for 2025, 2024 and 2023, respectively, for which the Company is reimbursed by sublessees. (b) Includes $ 125,563 , $ 127,228 and $ 125,180 for 2025, 2024 and 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $ 27,731 , $ 27,633 and $ 30,538 for 2025, 2024 and 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants. 75 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The following table includes supplemental cash flow and non-cash information related to leases: Year Ended 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 44,674 $ 43,050 $ 42,624 Operating cash flows from operating leases 84,815 86,664 86,972 Financing cash flows from finance leases 24,546 20,404 21,588 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities (a) 115,252 47,014 20,243 Operating lease liabilities 22,111 41,423 12,659 _______________ (a) 2025 includes finance lease liabilities assumed as part of the Company’s acquisition of 35 franchise-operated restaurants. See Note 16 for further information. The following table includes supplemental information related to leases: Year End December 28, 2025 December 29, 2024 Weighted-average remaining lease term (years): Finance leases 14.7 14.0 Operating leases 11.4 11.9 Weighted average discount rate: Finance leases 7.59 % 8.09 % Operating leases 5.01 % 4.98 % Supplemental balance sheet information: Finance lease assets, gross $ 432,554 $ 349,212 Accumulated amortization ( 119,710 ) ( 104,258 ) Finance lease assets 312,844 244,954 Operating lease assets 642,589 679,777 76 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 28, 2025: Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2026 $ 12,528 $ 59,459 $ 21,491 $ 62,526 2027 12,699 60,642 21,588 64,692 2028 12,774 61,976 21,428 65,142 2029 12,988 63,401 21,453 64,698 2030 13,343 63,343 20,829 63,875 Thereafter 166,718 536,633 142,064 388,321 Total minimum payments $ 231,050 $ 845,454 $ 248,853 $ 709,254 Less interest ( 88,084 ) ( 315,032 ) ( 62,991 ) ( 183,740 ) Present value of minimum lease payments (a) (b) $ 142,966 $ 530,422 $ 185,862 $ 525,514 _______________ (a) The present value of minimum finance lease payments of $ 26,673 and $ 646,715 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (b) The present value of minimum operating lease payments of $ 51,119 and $ 660,257 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. Company as Lessor The components of lease income for 2025, 2024 and 2023 are as follows: Year Ended 2025 2024 2023 Sales-type and direct-financing leases: Selling profit $ 2,910 $ 474 $ 2,466 Interest income (a) 27,512 29,187 31,412 Operating lease income 166,430 168,497 163,927 Variable lease income 69,320 67,996 66,241 Franchise rental income (b) $ 235,750 $ 236,493 $ 230,168 _______________ (a) Included in “Interest expense, net.” (b) Includes sublease income of $ 172,742 , $ 174,478 and $ 170,112 recognized during 2025, 2024 and 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $ 42,050 , $ 39,793 and $ 39,350 for 2025, 2024 and 2023, respectively. 77 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 28, 2025: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2026 $ 35,859 $ 1,222 $ 109,097 $ 59,212 2027 36,418 1,359 110,151 59,009 2028 37,420 1,117 111,322 58,993 2029 37,677 1,122 111,529 59,830 2030 38,641 1,363 110,457 60,086 Thereafter 323,981 9,447 683,222 450,453 Total future minimum receipts 509,996 15,630 $ 1,235,778 $ 747,583 Unearned interest income ( 224,428 ) ( 5,375 ) Net investment in sales-type and direct financing leases (a) $ 285,568 $ 10,255 _______________ (a) The present value of minimum sales-type and direct financing rental receipts of $ 10,932 and $ 284,891 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum sales-type and direct financing rental receipts includes a net investment in unguaranteed residual assets of $ 135 . Properties owned by the Company and leased to franchisees and other third parties under operating leases include: Year End December 28, 2025 December 29, 2024 Land $ 271,302 $ 261,131 Buildings and improvements 310,571 303,521 Restaurant equipment 1,429 1,943 583,302 566,595 Accumulated depreciation and amortization ( 220,273 ) ( 207,923 ) $ 363,029 $ 358,672 78 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (6) Goodwill and Other Intangible Assets Goodwill activity for 2025 and 2024 was as follows: Wendy’s U.S. Wendy’s International Global Real Estate & Development Total Balance at December 31, 2023: Goodwill, gross $ 620,603 $ 39,973 $ 122,548 $ 783,124 Accumulated impairment losses (a) — ( 9,397 ) — ( 9,397 ) Goodwill, net 620,603 30,576 122,548 773,727 Changes in goodwill: Currency translation adjustment — ( 2,259 ) — ( 2,259 ) Balance at December 29, 2024: Goodwill, gross 620,603 37,714 122,548 780,865 Accumulated impairment losses (a) — ( 9,397 ) — ( 9,397 ) Goodwill, net 620,603 28,317 122,548 771,468 Changes in goodwill: Restaurant acquisitions 1,249 — — 1,249 Currency translation adjustment — 1,371 — 1,371 Balance at December 28, 2025: Goodwill, gross 621,852 39,085 122,548 783,485 Accumulated impairment losses (a) — ( 9,397 ) — ( 9,397 ) Goodwill, net $ 621,852 $ 29,688 $ 122,548 $ 774,088 _______________ (a) Accumulated impairment losses resulted from the full impairment of goodwill of the Wendy’s international franchise restaurants during the fourth quarter of 2013. The following is a summary of the components of other intangible assets and the related amortization expense: Year End December 28, 2025 December 29, 2024 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Indefinite-lived: Trademarks $ 903,000 $ — $ 903,000 $ 903,000 $ — $ 903,000 Definite-lived: Franchise agreements 348,151 ( 286,182 ) 61,969 347,370 ( 268,976 ) 78,394 Favorable leases 138,730 ( 79,992 ) 58,738 144,734 ( 77,352 ) 67,382 Reacquired rights under franchise agreements 96,042 ( 27,171 ) 68,871 88,696 ( 21,863 ) 66,833 Software 356,325 ( 278,232 ) 78,093 323,738 ( 247,083 ) 76,655 $ 1,842,248 $ ( 671,577 ) $ 1,170,671 $ 1,807,538 $ ( 615,274 ) $ 1,192,264 79 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Aggregate amortization expense: Actual for fiscal year: 2023 $ 59,356 2024 62,255 2025 62,565 Estimate for fiscal year: 2026 $ 57,011 2027 49,764 2028 44,794 2029 34,549 2030 15,160 Thereafter 66,393 $ 267,671 (7) Investments The following is a summary of the carrying value of our investments: Year End December 28, 2025 December 29, 2024 Equity method investments $ 25,227 $ 27,288 Other investments in equity securities — 1,718 $ 25,227 $ 29,006 Equity Method Investments Wendy’s has a 50 % share in the TimWen real estate joint venture and a 20 % share in the Brazil JV, both of which are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.” A wholly-owned subsidiary of Wendy’s entered into the Brazil JV during the second quarter of 2015 for the operation of Wendy’s restaurants in Brazil. Wendy’s, Starboard International Holdings B.V. and Infinity Holding E Participações Ltda. contributed $ 1 , $ 2 and $ 2 , respectively, each receiving proportionate equity interests of 20 %, 40 % and 40 %, respectively. The Brazil JV ceased operations in 2021 and no income or loss was recorded during 2025, 2024 and 2023. A wholly-owned subsidiary of Wendy’s had receivables outstanding related to the Brazil JV totaling $ 3,888 and $ 5,837 as of December 28, 2025 and December 29, 2024, respectively. The total receivables outstanding as of December 28, 2025 were due in 2024. As of December 28, 2025 and December 29, 2024, the Company had reserves of $ 2,444 and $ 2,149 , respectively, on the receivables related to the Brazil JV. The Company is currently pursuing collection of the past due amounts. See Note 2 for further information. The carrying value of our investment in TimWen exceeded our interest in the underlying equity of the joint venture by $ 8,848 and $ 10,575 as of December 28, 2025 and December 29, 2024, respectively, primarily due to purchase price adjustments from the 2008 merger of Triarc Companies, Inc. and Wendy’s International, Inc. (the “Wendy’s Merger”). 80 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Presented below is activity related to our investment in TimWen included in our consolidated balance sheets and consolidated statements of operations as of and for the years ended December 28, 2025, December 29, 2024 and December 31, 2023. Year Ended 2025 2024 2023 Balance at beginning of period $ 27,288 $ 32,727 $ 33,921 Equity in earnings for the period 13,463 14,084 13,493 Amortization of purchase price adjustments (a) ( 2,248 ) ( 2,477 ) ( 2,674 ) 11,215 11,607 10,819 Distributions received ( 14,779 ) ( 14,408 ) ( 12,901 ) Foreign currency translation adjustment included in “Other comprehensive income (loss)” 1,503 ( 2,638 ) 888 Balance at end of period $ 25,227 $ 27,288 $ 32,727 _______________ (a) Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years. Other Investments in Equity Securities During 2021, the Company made an investment in equity securities of $ 10,000 . During the year ended January 1, 2023, the Company recognized a gain of $ 2,107 as a result of an observable price change for a similar investment of the same issuer. During 2025 and 2023, the Company recorded impairment charges of $ 1,718 and $ 10,389 , respectively, for the difference between the estimated fair value and the carrying value of the investment. As a result, the carrying value of the investment was zero as of December 28, 2025. (8) Accrued Expenses and Other Current Liabilities Year End December 28, 2025 December 29, 2024 Accrued compensation and related benefits $ 39,863 $ 45,310 Accrued taxes 28,138 28,497 Other 48,654 44,417 $ 116,655 $ 118,224 81 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (9) Long-Term Debt Long-term debt consisted of the following: Year End December 28, 2025 December 29, 2024 Class A-2 Notes: 5.422 % Series 2025-1 Class A-2-I Notes, anticipated repayment date 2032 $ 450,000 $ — 4.236 % Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029 96,500 97,500 4.535 % Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032 382,134 386,134 2.370 % Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029 414,269 418,769 2.775 % Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031 620,530 627,030 3.783 % Series 2019-1 Class A-2-I Notes, repaid in connection with the December 2025 refinancing — 353,673 4.080 % Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029 394,123 398,623 3.884 % Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 431,599 436,349 7 % debentures, repaid at December 2025 maturity date — 48,913 Unamortized debt issuance costs ( 28,903 ) ( 26,698 ) 2,760,252 2,740,293 Less amounts payable within one year ( 29,750 ) ( 78,163 ) Total long-term debt $ 2,730,502 $ 2,662,130 Aggregate annual maturities of long-term debt as of December 28, 2025 were as follows: Fiscal Year 2026 $ 29,750 2027 29,750 2028 447,099 2029 889,892 2030 15,000 Thereafter 1,377,664 $ 2,789,155 Senior Notes Wendy’s Funding, LLC (“Wendy’s Funding”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. As of December 28, 2025, the Master Issuer has issued the following outstanding series of fixed rate senior secured notes: (i) 2025-1 Class A-2-I with an initial principal amount of $ 450,000 ; (ii) 2022-1 Class A-2-I with an initial principal amount of $ 100,000 ; (iii) 2022-1 Class A-2-II with an initial principal amount of $ 400,000 ; (iv) 2021-1 Class A-2-I with an initial principal amount of $ 450,000 ; (v) 2021-1 Class A-2-II with an initial principal amount of $ 650,000 (collectively, the 2021-1 Class A-2-I Notes and the 2021-1 Class A-2-II Notes are referred to herein as the “2021-1 Class A-2 Notes”); (vi) 2019-1 Class A-2-II with an initial principal amount of $ 450,000 ; and (vii) 2018-1 Class A-2-II with an initial principal amount of $ 475,000 (collectively, the notes described in (i) to (vii) are referred to herein as the “Class A-2 Notes”). During the year ended December 31, 2023, the Company repurchased $ 29,171 in principal of its Class A-2 Notes for $ 24,935 . As a result, the Company recognized a gain on early extinguishment of debt of $ 3,914 for the year ended December 31, 2023. In connection with the issuance of the 2021-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “2021-1 Class A-1 Notes”), which allows for the drawing of up to $ 300,000 on a revolving basis using various credit instruments, including a letter of credit facility. As of 82 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) December 28, 2025, the Company had no outstanding borrowings under the 2021-1 Class A-1 Notes. The Class A-2 Notes and the 2021-1 Class A-1 Notes are collectively referred to as the “Senior Notes.” The Senior Notes are secured by a security interest in substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors (collectively, the “Securitization Entities”), except for certain real estate assets and subject to certain limitations as set forth in the indenture governing the Senior Notes (the “Indenture”) and the related guarantee and collateral agreements. The assets of the Securitization Entities include most of the domestic and certain of the foreign revenue-generating assets of the Company and its subsidiaries, which principally consist of franchise-related agreements, assets related to certain Company-operated restaurants, including certain real estate assets, intellectual property and license agreements for the use of intellectual property. Interest and principal payments on the Class A-2 Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the Class A-2 Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity dates for the Class A-2 Notes range from 2048 through 2055. If the Master Issuer has not repaid or refinanced the Class A-2 Notes prior to their respective anticipated repayment dates, which range from 2028 through 2032, additional interest will accrue pursuant to the Indenture. The 2021-1 Class A-1 Notes accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) Secured Overnight Financing Rate (“SOFR”) for U.S. Dollars or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin and as specified in the purchase agreement for the 2021-1 Class A-1 Notes. There is a commitment fee on the unused portions of the 2021-1 Class A-1 Notes, which ranges from 0.40 % to 0.75 % based on utilization. As of December 28, 2025, $ 28,525 of letters of credit were outstanding against the 2021-1 Class A-1 Notes, which relate primarily to interest reserves required under the Indenture. Covenants and Restrictions The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Senior Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to a failure to maintain stated debt service coverage ratios, the sum of global gross sales for specified restaurants being below certain levels on certain measurement dates, certain manager termination events, an event of default, and the failure to repay or refinance the Class A-2 Notes on the applicable scheduled maturity date. The Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. In addition, the Indenture and the related management agreement contain various covenants that limit the Company and its subsidiaries’ ability to engage in specified types of transactions, subject to certain exceptions, including, for example, to (i) incur or guarantee additional indebtedness, (ii) sell certain assets, (iii) create or incur liens on certain assets to secure indebtedness or (iv) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets. In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the trustee and the noteholders, and are restricted in their use. As of December 28, 2025 and December 29, 2024, Wendy’s Funding had restricted cash of $ 38,800 and $ 34,089 , respectively, which primarily represents cash collections and cash reserves held by the trustee to be used for payments of principal, interest and commitment fees required for the Class A-2 Notes. 83 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Refinancing Transaction In December 2025, the Master Issuer completed a refinancing transaction under which the Master Issuer issued the Series 2025-1 Class A-2-I Notes. A portion of the net proceeds from the sale of the Series 2025-1 Class A-2-I Notes was used to repay in full the Master Issuer’s outstanding Series 2019-1 Class A-2-I Notes and Wendy’s 7 % debentures, including the payment of transaction costs. As a result of the refinancing, the Company recorded a loss on early extinguishment of debt of $ 642 during 2025, which was comprised of the write-off of certain unamortized deferred financing costs. Debt Issuance Costs During 2025, the Company incurred debt issuance costs of $ 9,671 in connection with the December 2025 refinancing transaction. The debt issuance costs are being amortized to “Interest expense, net” through the anticipated repayment dates of the Class A-2 Notes utilizing the effective interest rate method. As of December 28, 2025, the effective interest rates, including the amortization of debt issuance costs, were 4.1 %, 4.3 %, 2.6 %, 2.9 %, 4.7 %, 4.7 % and 5.7 % for the Series 2018-1 Class A-2-II Notes, Series 2019-1 Class A-2-II Notes, Series 2021-1 Class A-2-I Notes, Series 2021-1 Class A-2-II Notes, Series 2022-1 Class A-2-I Notes, Series 2022-1 Class A-2-II Notes and Series 2025-1 Class A-2-I Notes, respectively. Other Long-Term Debt Wendy’s 7 % debentures were unsecured and were reduced to fair value in connection with the Wendy’s Merger based on their outstanding principal of $ 100,000 and an effective interest rate of 8.6 %. The fair value adjustment was accreted and the related charge included in “Interest expense, net” until the debentures matured. These debentures contained covenants that restricted the incurrence of indebtedness secured by liens and certain finance lease transactions. In December 2019, Wendy’s repurchased $ 10,000 in principal of its 7 % debentures for $ 10,550 , including a premium of $ 500 and transaction fees of $ 50 . During 2023, Wendy’s repurchased $ 40,430 in principal of its 7 % debentures for $ 40,517 . As a result, the Company recognized a loss on early extinguishment of debt of $ 1,631 during 2023. During 2025, Wendy’s fully repaid the remaining outstanding principal of $ 49,570 at the December 2025 maturity date. A Canadian subsidiary of Wendy’s has a revolving credit facility of C$ 6,000 , which bears interest at the Bank of Montreal Prime Rate. Borrowings under the facility are guaranteed by Wendy’s. As of December 28, 2025, the Company had no outstanding borrowings under the Canadian revolving credit facility. Wendy’s U.S. advertising fund has a revolving line of credit of $ 15,000 , which was established to support the Company’s advertising fund operations and bears interest at SOFR plus 2.25 %. Borrowings under the line of credit are guaranteed by Wendy’s. During the three months ended March 30, 2025, the Company borrowed and repaid $ 15,000 and $ 8,500 , respectively, under the revolving line of credit. During the three months ended June 29, 2025, the Company borrowed an additional $ 8,500 under the revolving line of credit. During the three months ended December 28, 2025, the Company repaid $ 5,000 under the revolving line of credit, then subsequently borrowed and repaid $ 2,000 and $ 12,000 , respectively, under the revolving line of credit. As a result, as of December 28, 2025, the Company had no outstanding borrowings under the advertising fund revolving line of credit. Interest Expense Interest expense on the Company’s long-term debt was $ 109,523 , $ 110,038 and $ 112,659 during 2025, 2024 and 2023, respectively, which was recorded to “Interest expense, net.” 84 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Pledged Assets The following is a summary of the Company’s assets pledged as collateral for certain debt: Year End December 28, 2025 Cash and cash equivalents $ 16,990 Restricted cash and other assets 38,805 Accounts and notes receivable, net 42,969 Inventories 6,469 Properties 94,120 Other intangible assets 962,676 $ 1,162,029 (10) Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy: • Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets. • Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation. 85 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments: Year End December 28, 2025 December 29, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 210,607 $ 210,607 $ 319,212 $ 319,212 Level 1 Other investments in equity securities (a) — — 1,718 1,718 Level 2 Financial liabilities (b) Series 2025-1 Class A-2-I Notes 450,000 447,075 — — Level 2 Series 2022-1 Class A-2-I Notes 96,500 95,284 97,500 93,744 Level 2 Series 2022-1 Class A-2-II Notes 382,134 371,625 386,134 371,855 Level 2 Series 2021-1 Class A-2-I Notes 414,269 385,726 418,769 376,256 Level 2 Series 2021-1 Class A-2-II Notes 620,530 553,699 627,030 551,981 Level 2 Series 2019-1 Class A-2-I Notes — — 353,673 345,093 Level 2 Series 2019-1 Class A-2-II Notes 394,123 383,403 398,623 387,039 Level 2 Series 2018-1 Class A-2-II Notes 431,599 421,630 436,349 418,027 Level 2 7 % debentures, due in 2025 — — 48,913 50,034 Level 2 _______________ (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. The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis. 86 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Non-Recurring Fair Value Measurements Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our consolidated statements of operations. Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and ROU assets) to fair value as a result of (1) the deterioration in operating performance or anticipated closures of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. 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. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 18 for further information on impairment of our long-lived assets. Fair Value Measurements 2025 Total Losses December 28, 2025 Level 1 Level 2 Level 3 Held and used $ 1,367 $ — $ — $ 1,367 $ 11,548 Held for sale 2,457 — — 2,457 547 Total $ 3,824 $ — $ — $ 3,824 $ 12,095 Fair Value Measurements 2024 Total Losses December 29, 2024 Level 1 Level 2 Level 3 Held and used $ 2,391 $ — $ — $ 2,391 $ 9,073 Held for sale 1,558 — — 1,558 640 Total $ 3,949 $ — $ — $ 3,949 $ 9,713 (11) Income Taxes Income before income taxes is set forth below: Year Ended 2025 2024 2023 Domestic $ 210,514 $ 254,309 $ 264,423 Foreign (a) 16,732 18,104 14,995 $ 227,246 $ 272,413 $ 279,418 _______________ (a) Excludes foreign income of domestic subsidiaries. 87 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The (provision for) benefit from income taxes is set forth below: Year Ended 2025 2024 2023 Current: U.S. federal $ ( 16,541 ) $ ( 55,875 ) $ ( 50,435 ) U.S. state ( 7,263 ) ( 12,888 ) ( 13,730 ) Foreign ( 14,906 ) ( 14,822 ) ( 11,620 ) Current tax provision ( 38,710 ) ( 83,585 ) ( 75,785 ) Deferred: U.S. federal ( 19,543 ) 10,786 2,163 U.S. state ( 4,489 ) ( 5,409 ) 564 Foreign 571 152 ( 1,920 ) Deferred tax (provision) benefit ( 23,461 ) 5,529 807 Income tax provision $ ( 62,171 ) $ ( 78,056 ) $ ( 74,978 ) Deferred tax assets (liabilities) are set forth below: Year End December 28, 2025 December 29, 2024 Deferred tax assets: Operating and finance lease liabilities $ 341,414 $ 333,033 Net operating loss and credit carryforwards 52,753 51,667 Deferred revenue 22,953 23,085 Other 46,509 51,626 Valuation allowances ( 44,737 ) ( 38,536 ) Total deferred tax assets 418,892 420,875 Deferred tax liabilities: Operating and finance lease assets ( 307,378 ) ( 300,498 ) Intangible assets ( 291,333 ) ( 282,186 ) Fixed assets ( 66,902 ) ( 61,160 ) Other ( 41,032 ) ( 40,451 ) Total deferred tax liabilities ( 706,645 ) ( 684,295 ) $ ( 287,753 ) $ ( 263,420 ) 88 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The amounts and expiration dates of tax credit and net operating loss carryforwards are as follows: Amount Expiration Tax credit carryforwards: U.S. federal foreign tax credits $ 25,704 2027-2034 Foreign tax credits of non-U.S. subsidiaries 856 Indefinite Total $ 26,560 Net operating loss carryforwards (pre-tax): State and local net operating loss carryforwards $ 687,277 2026-2035 State and local net operating loss carryforwards 212,125 Indefinite Foreign net operating loss carryforwards 1,692 Indefinite Total $ 901,094 The Company’s valuation allowances of $ 44,737 and $ 38,536 as of December 28, 2025 and December 29, 2024, respectively, relate primarily to foreign tax credit and foreign and state net operating loss carryforwards. The relative presence of Company-operated restaurants in various states impacts expected future state taxable income available to utilize state net operating loss carryforwards. The current portion of refundable income taxes was $ 17,055 and $ 3,587 as of December 28, 2025 and December 29, 2024, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of December 28, 2025 and December 29, 2024. The reconciliation of income tax computed at the U.S. federal statutory rate of 21 % to reported income tax is set forth below: Year Ended 2025 2024 2023 U.S. federal statutory tax rate (21%) $ 47,722 21.0 % $ 57,207 21.0 % $ 58,678 21.0 % State and local income taxes, net of federal income tax effect 9,284 4.1 % 14,455 5.3 % 10,401 3.7 % Foreign tax effects 1,137 0.5 % 2,106 0.8 % 2,687 1.0 % Effects of cross-border tax laws ( 335 ) ( 0.1 ) % ( 1,669 ) ( 0.6 ) % ( 2,403 ) ( 0.9 ) % Tax credits ( 931 ) ( 0.4 ) % ( 899 ) ( 0.3 ) % ( 1,050 ) ( 0.4 ) % Changes in valuation allowance: Foreign tax credits 4,320 1.9 % 4,274 1.5 % 2,761 1.0 % Other 359 0.2 % — 0.0 % 1,739 0.6 % Nontaxable or nondeductible items 987 0.4 % 2,626 1.0 % 1,581 0.6 % Other adjustments ( 372 ) ( 0.2 ) % ( 44 ) 0.0 % 584 0.2 % $ 62,171 27.4 % $ 78,056 28.7 % $ 74,978 26.8 % In 2025, state and local income taxes in Michigan, Florida, Georgia and California comprised the majority (greater than 50%) of the tax effect in the state and local income taxes, net of federal income tax effect category. In 2024, state and local income taxes in Louisiana, Florida and Illinois comprised the majority of the tax effect in the state and local income taxes, net of federal income tax category. In 2023, state and local income taxes in Florida, Illinois and Massachusetts comprised the majority of the tax effect in the state and local income taxes, net of federal income tax effect category. 89 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The income taxes paid (net of refunds) by jurisdiction are set forth below: Year Ended 2025 2024 2023 U.S. federal $ 29,859 $ 52,774 $ 53,057 U.S. state 10,558 12,476 15,716 Foreign 8,697 8,350 6,417 Total $ 49,114 $ 73,600 $ 75,190 Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions: Year Ended 2025 2024 2023 U.S. state: Florida $ 3,210 $ 3,777 $ 4,300 Illinois $ 2,497 * * Foreign: Canada $ 8,562 $ 8,192 $ 6,300 _______________ * The amount of income taxes paid during the year does not meet the 5% disaggregation threshold. The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”). As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our tax returns for fiscal years through 2023 have been settled. The Company or one of its subsidiaries also files tax returns in various state, local and foreign jurisdictions. The statute of limitations in these jurisdictions vary but generally income tax returns from its 2020 fiscal year and forward remain subject to examination. We believe that adequate provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations. Unrecognized Tax Benefits As of December 28, 2025, the Company had unrecognized tax benefits of $ 19,048 , which, if resolved favorably, would reduce income tax expense by $ 15,048 . A reconciliation of the beginning and ending amount of unrecognized tax benefits follows: Year Ended 2025 2024 2023 Beginning balance $ 14,805 $ 16,719 $ 17,404 Additions: Tax positions of current year 119 375 836 Tax positions of prior years (a) 5,832 — — Reductions: Tax positions of prior years (b) ( 583 ) ( 2,069 ) ( 690 ) Settlements — — ( 249 ) Lapse of statute of limitations ( 1,125 ) ( 220 ) ( 582 ) Ending balance $ 19,048 $ 14,805 $ 16,719 _______________ (a) Increase in uncertain tax benefits related to tax positions of prior years during 2025 was primarily driven by adjustments to state income tax positions. 90 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (b) Reduction in uncertain tax benefits related to tax positions of prior years during 2024 was primarily driven by a non-recurring state rate law change. During 2025, 2024 and 2023, the Company recognized (income) expense for interest of $( 214 ), $ 376 and $ 134 , respectively. The Company has $ 1,141 and $ 1,355 accrued for interest related to uncertain tax positions as of December 28, 2025 and December 29, 2024, respectively. One Big Beautiful Bill Act On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key provisions include the permanent extension of several business tax incentives originally established under the 2017 Tax Cuts and Jobs Act, as well as changes to provisions related to bonus depreciation, and research and development. The OBBBA resulted in an impact to the Company’s current and deferred tax assets and liabilities as of December 28, 2025, as well as a favorable impact on the amount of cash taxes paid during 2025. (12) Net Income Per Share The calculation of basic and diluted net income per share was as follows: Year Ended 2025 2024 2023 Net income $ 165,075 $ 194,357 $ 204,440 Common stock: Weighted average basic shares outstanding 193,406 204,351 209,486 Dilutive effect of stock options and restricted shares 626 1,263 2,048 Weighted average diluted shares outstanding 194,032 205,614 211,534 Net income per share: Basic $ .85 $ .95 $ .98 Diluted $ .85 $ .95 $ .97 Basic net income per share for 2025, 2024 and 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 9,789 , 7,845 and 5,377 for 2025, 2024 and 2023, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects. (13) Stockholders’ Equity Dividends During 2025, 2024 and 2023, the Company paid dividends per share of $ .67 , $ 1.00 and $ 1.00 , respectively. 91 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Treasury Stock There were 470,424 shares of common stock issued at the beginning and end of 2025, 2024 and 2023. Treasury stock activity for 2025, 2024 and 2023 was as follows: Year Ended 2025 2024 2023 Number of shares at beginning of year 266,590 265,027 257,323 Repurchases of common stock 14,361 4,305 9,107 Common shares issued: Stock options, net ( 208 ) ( 1,986 ) ( 989 ) Restricted stock, net ( 501 ) ( 652 ) ( 322 ) Director fees ( 24 ) ( 20 ) ( 22 ) Other ( 118 ) ( 84 ) ( 70 ) Number of shares at end of year 280,100 266,590 265,027 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 2025, the Company repurchased 14,361 shares under the January 2023 Authorization with an aggregate purchase price of $ 200,000 , excluding excise tax of $ 1,930 and commissions of $ 201 . During 2025, the Company paid $ 565 in excise tax on shares repurchased during 2024. As of December 28, 2025, the Company had $ 35,000 of availability remaining under the January 2023 Authorization. During 2024, the Company repurchased 4,305 shares under the January 2023 Authorization with an aggregate purchase price of $ 75,000 , excluding excise tax of $ 564 and commissions of $ 60 . During 2024, the Company paid $ 1,742 in excise tax on shares repurchased during 2023. During 2023, the Company repurchased 9,107 shares under the January 2023 Authorization with an aggregate purchase price of $ 190,000 , of which $ 573 was accrued as of December 31, 2023, and excluding excise tax of $ 1,744 and commissions of $ 127 . Preferred Stock There were 100,000 shares authorized and no shares issued of preferred stock throughout 2025, 2024 and 2023. Accumulated Other Comprehensive Loss The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation: Year Ended 2025 2024 2023 Balance at beginning of period $ ( 74,753 ) $ ( 58,375 ) $ ( 64,176 ) Foreign currency translation 10,785 ( 16,378 ) 5,801 Balance at end of period $ ( 63,968 ) $ ( 74,753 ) $ ( 58,375 ) 92 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (14) Share-Based Compensation The Company has the ability to grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance compensation awards to current or prospective employees, directors, officers, consultants or advisors. During 2020, the Company’s Board of Directors and its stockholders approved the adoption of the 2020 Omnibus Award Plan (the “2020 Plan”) for the issuance of equity instruments as described above. The Company’s previous 2010 Omnibus Award Plan (as amended, the “2010 Plan”) expired in accordance with its terms in 2020. All equity grants in 2025, 2024, and 2023 were issued from the 2020 Plan. The 2020 Plan is currently the only equity plan from which future equity awards may be granted, but outstanding awards granted under the 2010 Plan will continue to be governed by the terms of the 2010 Plan. As of December 28, 2025, there were approximately 8,071 shares of common stock available for future grants under the 2020 Plan. During the periods presented in the consolidated financial statements, the Company settled all exercises of stock options and vesting of restricted shares, including performance shares, with treasury shares. Stock Options The Company grants stock options that have maximum contractual terms of 10 years and primarily vest ratably over three years . The exercise price of options granted is equal to the market price of the Company’s common stock on the date of grant. The fair value of stock options on the date of grant is calculated using the Black-Scholes Model. The aggregate intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The following table summarizes stock option activity during 2025: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding at December 29, 2024 9,133 $ 19.42 Granted 5,208 10.11 Exercised ( 357 ) 9.95 Forfeited and/or expired ( 1,955 ) 20.00 Outstanding at December 28, 2025 12,029 $ 15.57 6.48 $ — Vested or expected to vest at December 28, 2025 11,828 $ 15.65 6.43 $ — Exercisable at December 28, 2025 5,937 $ 20.04 3.51 $ — The total intrinsic value of options exercised during 2025, 2024 and 2023 was $ 908 , $ 5,796 and $ 7,230 , respectively. The weighted average grant date fair value of stock options granted during 2025, 2024 and 2023 was $ 1.33 , $ 3.43 and $ 5.35 , respectively. The weighted average grant date fair value of stock options was determined using the following assumptions: 2025 2024 2023 Risk-free interest rate 3.85 % 3.62 % 4.31 % Expected option life in years 5.25 5.25 5.01 Expected volatility 23.26 % 36.25 % 36.79 % Expected dividend yield 5.54 % 5.99 % 4.64 % The risk-free interest rate represents the U.S. Treasury zero-coupon bond yield correlating to the expected life of the stock options granted. The expected option life represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends for similar grants. The expected volatility is based on the historical market price volatility of the Company over a period equivalent to the expected option life. The expected dividend yield represents the Company’s annualized average yield for regular quarterly dividends declared prior to the respective stock option grant dates. 93 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The Black-Scholes Model has limitations on its effectiveness including that it was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable and that the model requires the use of highly subjective assumptions, such as expected stock price volatility. Employee stock option awards have characteristics significantly different from those of traded options and changes in the subjective input assumptions can materially affect the fair value estimates. Restricted Shares The Company grants RSUs, which primarily vest ratably over three years or cliff vest after three years . The Company also grants RSAs to non-employee directors, which primarily cliff vest after one year. For the purposes of our disclosures, the term “Restricted Shares” applies to RSUs and RSAs collectively unless otherwise noted. The fair value of Restricted Shares granted is determined using the fair market value of the Company’s common stock on the date of grant, as set forth in the applicable plan document. The following table summarizes activity of Restricted Shares during 2025: Number of Restricted Shares Weighted Average Grant Date Fair Value Non-vested at December 29, 2024 1,714 $ 18.81 Granted 1,828 10.64 Vested ( 751 ) 19.33 Forfeited ( 439 ) 17.99 Non-vested at December 28, 2025 2,352 $ 12.44 The total fair value of Restricted Shares that vested in 2025, 2024 and 2023 was $ 8,636 , $ 12,685 and $ 8,224 , respectively. Performance Shares The Company grants performance-based awards to certain officers and key employees. The vesting of these awards is contingent upon meeting one or more defined operational or financial goals (a performance condition) or relative common stock share prices (a market condition). The quantity of shares awarded ranges from 0 % to 200 % of “Target,” as defined in the award agreement as the midpoint number of shares, based on the level of achievement of the performance and market conditions. Certain of the performance-based awards also include a relative TSR modifier to determine the number of shares earned at the end of the performance period. The grant date fair values of performance condition awards are determined using the fair market value of the Company’s common stock on the date of grant, as set forth in the applicable plan document. Share-based compensation expense recorded for performance condition awards is reevaluated at each reporting period based on the probability of the achievement of the goal. The grant date fair values of market condition awards, as well as performance condition awards that include a relative TSR modifier, are estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that the market conditions will be achieved and is applied to the trading price of our common stock on the date of grant. 94 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The input variables are noted in the table below: 2025 2024 2023 Risk-free interest rate 4.25 % 4.38 % 4.31 % Expected life in years 3.00 3.00 3.00 Expected volatility 26.39 % 29.60 % 34.95 % Expected dividend yield (a) 0.00 % 0.00 % 0.00 % _______________ (a) The Monte Carlo method assumes a reinvestment of dividends. Share-based compensation expense is recorded ratably for market condition awards during the requisite service period and is not reversed, except for forfeitures, at the vesting date regardless of whether the market condition is met. The following table summarizes activity of performance shares at Target during 2025: Shares Weighted Average Grant Date Fair Value Non-vested at December 29, 2024 1,236 $ 21.87 Granted 771 15.45 Dividend equivalent units issued (a) 75 — Vested ( 68 ) 21.97 Forfeited ( 1,049 ) 19.97 Non-vested at December 28, 2025 965 $ 18.55 _______________ (a) Dividend equivalent units are issued in lieu of cash dividends for non-vested performance shares. There is no weighted average fair value associated with dividend equivalent units. The total fair value of performance-based awards that vested in 2025, 2024 and 2023 was $ 1,028 , $ 4,683 and $ 4,243 , respectively. Share-Based Compensation Total share-based compensation and the related income tax benefit recognized in the Company’s consolidated statements of operations were as follows: Year Ended 2025 2024 2023 Stock options $ 3,914 $ 4,829 $ 7,687 Restricted shares 10,223 13,857 9,503 Performance shares 436 4,333 6,557 Share-based compensation 14,573 23,019 23,747 Less: Income tax benefit ( 3,717 ) ( 3,300 ) ( 3,207 ) Share-based compensation, net of income tax benefit $ 10,856 $ 19,719 $ 20,540 As of December 28, 2025, there was $ 23,365 of total unrecognized share-based compensation, which will be recognized over a weighted average amortization period of 1.46 years. 95 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (15) System Optimization Gains, Net The Company optimizes the Wendy’s system by facilitating Franchise Flips, evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees and, at times, closing certain underperforming restaurants, to further strengthen the franchisee base, support franchisee economics and drive new restaurant development. During 2025, 2024 and 2023, the Company facilitated one , 50 and 99 Franchise Flips, respectively. During 2025 and 2024, the Company completed the sale of five and three Company-operated restaurants to franchisees, respectively. No Company-operated restaurants were sold to franchisees during 2023. See Note 16 for further information regarding the Company’s acquisition of 35 franchise-operated restaurants during 2025. Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our 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: Year Ended 2025 2024 2023 Number of restaurants sold to franchisees 5 3 — Proceeds from sales of restaurants $ 180 $ 1,808 $ — Net assets sold (a) ( 169 ) ( 1,081 ) — Other ( 150 ) ( 1 ) — ( 139 ) 726 — Post-closing adjustments on sales of restaurants (b) ( 16 ) 694 858 (Loss) gain on sales of restaurants, net ( 155 ) 1,420 858 Gain (loss) on sales of other assets, net (c) 1,185 ( 201 ) 22 System optimization gains, net $ 1,030 $ 1,219 $ 880 _______________ (a) Net assets sold during 2025 consisted primarily of equipment. Net assets sold during 2024 consisted primarily of land and equipment. (b) 2024 and 2023 include the recognition of deferred gains of $ 800 and $ 858 , respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees. (c) During 2025, 2024 and 2023, the Company received cash proceeds of $ 4,230 , $ 3,138 and $ 2,115 , respectively, primarily from the sale of surplus and other properties. Assets Held for Sale As of December 28, 2025 and December 29, 2024, the Company had assets held for sale of $ 3,696 and $ 2,833 , respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.” 96 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (16) Acquisitions During 2025, the Company acquired 35 restaurants from a franchisee. The Company did not incur any material acquisition-related costs associated with the acquisition and the transaction was not significant to our consolidated financial statements. The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from a franchisee: Year Ended December 28, 2025 (a) Restaurants acquired from franchisee 35 Total consideration paid, net of cash received $ 16,854 Identifiable assets acquired and liabilities assumed: Properties 8,026 Acquired franchise rights 7,583 Finance lease assets 43,109 Operating lease assets 7,826 Finance lease liabilities ( 43,717 ) Operating lease liabilities ( 7,370 ) Other 148 Total identifiable net assets 15,605 Goodwill $ 1,249 _______________ (a) The fair value of assets acquired and liabilities assumed related to restaurants acquired in the third quarter of 2025 were provisional amounts as of September 28, 2025, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the fourth quarter of 2025, which resulted in an increase in properties of $ 1,787 and a decrease in acquired franchise rights of $ 569 . (17) Reorganization and Realignment Costs The following is a summary of the initiatives included in “ Reorganization and realignment costs :” Year Ended 2025 2024 2023 Organizational Redesign Plan $ ( 753 ) $ 8,367 $ 9,064 Other reorganization and realignment plans 628 161 136 Reorganization and realignment costs $ ( 125 ) $ 8,528 $ 9,200 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”). Additionally, in January 2024, the Board of Directors announced the appointment of a new President and Chief Executive Officer and the departure of the Company’s previous President and Chief Executive Officer. The Company expects to incur total costs of approximately $ 17,000 related to the Organizational Redesign Plan, including costs related to the 2024 succession of the President and Chief Executive Officer role. During 2025, the Company recognized costs totaling $( 753 ), which primarily included a reversal of a severance accrual. During 2024 and 2023, the Company recognized costs totaling $ 8,367 and $ 9,064 , respectively, which primarily included severance and related employee costs and share-based compensation. The Company expects costs related to the Organizational Redesign Plan to continue into 2026. 97 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) The following is a summary of the costs recorded as a result of the Organizational Redesign Plan: Year Ended 2025 2024 2023 Total Incurred Since Inception Severance and related employee costs $ ( 1,170 ) $ 7,253 $ 6,243 $ 12,326 Recruitment and relocation costs 13 169 554 736 Third-party and other costs — 120 996 1,116 ( 1,157 ) 7,542 7,793 14,178 Share-based compensation (a) 404 825 1,271 2,500 Total organizational redesign $ ( 753 ) $ 8,367 $ 9,064 $ 16,678 _______________ (a) Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan. As of December 28, 2025, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities.” As of December 29, 2024, the accruals for the Organizational Redesign Plan were included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $ 3,872 and $ 385 , respectively. The tables below present a rollforward of our accruals for the Organizational Redesign Plan. Balance December 29, 2024 Charges Payments Balance December 28, 2025 Severance and related employee costs $ 4,257 $ ( 1,170 ) $ ( 2,709 ) $ 378 Recruitment and relocation costs — 13 ( 13 ) — Third-party and other costs — — — — $ 4,257 $ ( 1,157 ) $ ( 2,722 ) $ 378 Balance December 31, 2023 Charges Payments Balance December 29, 2024 Severance and related employee costs $ 1,692 $ 7,253 $ ( 4,688 ) $ 4,257 Recruitment and relocation costs — 169 ( 169 ) — Third-party and other costs — 120 ( 120 ) — $ 1,692 $ 7,542 $ ( 4,977 ) $ 4,257 Other Reorganization and Realignment Plans For 2025, 2024 and 2023, costs incurred under the Company’s other reorganization and realignment plans were not material. The Company does not expect to incur any material additional costs under these plans. (18) Impairment of Long-Lived Assets The Company records impairment charges as a result of (1) the deterioration in operating performance or anticipated closures 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) classifying surplus properties as held for sale. 98 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) 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:” Year Ended 2025 2024 2023 Company-operated restaurants $ 8,631 $ 9,073 $ 1,316 Restaurants leased or subleased to franchisees 2,352 — — Surplus properties 1,112 640 85 $ 12,095 $ 9,713 $ 1,401 (19) Retirement Benefit Plan The Company has a 401(k) defined contribution plan (the “401(k) Plan”) for employees who meet certain minimum requirements and elect to participate. The 401(k) Plan permits employees to contribute up to 75 % of their compensation, subject to certain limitations, and provides for matching employee contributions up to 4 % of compensation and for discretionary profit sharing contributions. In connection with the matching contributions, the Company recognized compensation expense of $ 6,718 , $ 6,228 and $ 5,947 in 2025, 2024 and 2023, respectively. (20) Supplemental Cash Flow Information The following table includes supplemental cash flow information for 2025, 2024 and 2023: Year Ended December 28, 2025 December 29, 2024 December 31, 2023 Long-term debt-related activities, net: Loss (gain) on early extinguishment of debt $ 642 $ — $ ( 2,283 ) Accretion of long-term debt 657 675 755 Amortization of deferred financing costs 6,824 6,804 6,848 $ 8,123 $ 7,479 $ 5,320 Cash paid for: Interest $ 145,819 $ 145,253 $ 146,878 Income taxes, net of refunds 49,114 73,600 75,190 Non-cash investing and financing activities: Capital expenditures included in accounts payable $ 7,099 $ 5,198 $ 9,088 Finance leases 115,252 47,014 20,243 The following table includes a reconciliation of cash, cash equivalents and restricted cash for 2025, 2024 and 2023: December 28, 2025 December 29, 2024 December 31, 2023 Cash and cash equivalents $ 300,833 $ 450,512 $ 516,037 Restricted cash 39,207 34,481 35,848 Restricted cash, included in Advertising funds restricted assets 17,632 18,615 36,931 Total cash, cash equivalents and restricted cash $ 357,672 $ 503,608 $ 588,816 Franchise Development Fund The Company maintains a strategic build to suit development fund to drive additional new restaurant growth. Capital expenditures related to the fund are included in “Franchise development fund” in the consolidated statements of cash flows. 99 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (21) Guarantees and Other Commitments and Contingencies Guarantees and Contingent Liabilities Franchisee Development Incentive Programs To promote new restaurant development, Wendy’s has provided franchisees with certain incentive programs for qualifying new and existing restaurants. In the U.S. and Canada, Wendy’s offers incentives to new and existing franchisees who enter into development agreements to build new restaurants on a mutually agreed schedule. These incentives typically include reduced royalty and national advertising fees and may include full or partial waivers of the upfront technical assistance fee for each restaurant opened. Similarly, in markets outside of the U.S. and Canada, Wendy’s provides incentives for qualifying restaurants under new franchise or license agreements, generally in the form of reduced royalty fees and full or partial waivers of the technical assistance fee. Existing franchisees in these markets may also receive comparable incentives when they amend their franchise agreement or enter into a new development agreement to commit to building new restaurants on an agreed schedule. 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 $ 98,506 as of December 28, 2025. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of December 28, 2025. 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 December 28, 2025. Insurance Wendy’s is self-insured for most workers’ compensation losses and purchases insurance for general liability and automotive liability losses, all subject to a $ 500 per occurrence retention or deductible limit. Wendy’s determines its liability for claims incurred but not reported for the insurance liabilities on an actuarial basis. As of December 28, 2025, the Company had $ 18,924 recorded for these insurance liabilities. Wendy’s is self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations and determines its liability for health care claims incurred but not reported based on historical claims runoff data. As of December 28, 2025, the Company had $ 3,212 recorded for these health care insurance liabilities. Letters of Credit As of December 28, 2025, the Company had outstanding letters of credit with various parties totaling $ 28,738 . Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes. See Note 9 for further information. We do not expect any material loss to result from these letters of credit. Purchase and Capital Commitments The Company has material purchase requirements under a beverage agreement and information technology agreements with certain vendors. In August 2024, the Company amended its contract with the beverage vendor, which now expires upon reaching a threshold usage requirement or, if certain undertakings are not fulfilled, at the later of reaching a threshold usage requirement or December 31, 2034. Our total purchase requirements under the beverage and information technology agreements are estimated to be approximately $ 143,000 over the remaining life of the contracts. 100 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) (22) Transactions with Related Parties The following is a summary of transactions between the Company and its related parties: Year Ended 2025 2024 2023 Transactions with QSCC: Wendy’s Co-op (a) $ 118 $ 3,493 $ 363 Rental receipts (b) 289 277 231 TimWen lease and management fee payments, net (c) $ 21,033 $ 21,172 $ 20,653 Transactions with Yellow Cab (d) $ 15,197 $ 15,417 $ 14,757 Transactions with AMC (e) $ 800 $ 2,010 $ 2,366 _______________ Transactions with QSCC (a) Wendy’s has a purchasing co-op relationship structure (the “Wendy’s Co-op”) with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”). 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. and Canada. 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. and Canada. 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 $ 118 and $ 363 in 2025 and 2023, respectively, which are included as a reduction of “Cost of sales.” Wendy’s recorded its share of patronage dividends of $ 3,493 in 2024, of which $ 2,909 is included in “Other operating income, net” and $ 584 is included as a reduction of “Cost of sales.” (b) Pursuant to a lease agreement, Wendy’s leased 18,774 square feet of office space to QSCC for an annual base rent of $ 250 , subject to annual increases. The lease expires on January 31, 2027. The Company received lease payments from QSCC of $ 289 , $ 277 and $ 231 during 2025, 2024 and 2023, respectively, which has been recorded to “Franchise rental income.” TimWen Lease and Management Fee Payments (c) 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 $ 21,265 , $ 21,409 and $ 20,894 under these lease agreements during 2025, 2024 and 2023, 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 $ 232 , $ 237 and $ 241 during 2025, 2024 and 2023, respectively, which has been included as a reduction to “General and administrative.” 101 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Transactions with Yellow Cab (d) Certain family members and/or affiliates of Mr. Nelson Peltz, our former Chairman and Chairman Emeritus, Mr. Peter May, our Senior Vice Chairman, and Mr. Matthew Peltz, our former Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee that, as of December 28, 2025 owned and operated 88 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. In addition, Mr. Bradley Peltz, a director of the Company, is a Managing Director of, and holds a minority ownership interest in, Yellow Cab. During 2025, 2024 and 2023, the Company recognized $ 15,197 , $ 15,417 and $ 14,757 , 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 December 28, 2025 and December 29, 2024, $ 1,045 and $ 1,132 , 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 (e) Ms. Kristin Dolan, a director of the Company, serves as the Chief Executive Officer of AMC Networks Inc. (“AMC”). During 2025, 2024 and 2023, the Company purchased approximately $ 800 , $ 2,010 and $ 2,366 , 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 December 29, 2024, approximately $ 17 was due to AMC for advertising time, which is included in “Advertising funds restricted liabilities.” There were no amounts due to AMC as of December 28, 2025. (23) Legal and Environmental Matters The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur, and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. 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. (24) Advertising Costs and Funds We maintain the Advertising Funds established to collect and administer funds contributed for use in advertising and promotional programs. Contributions to the Advertising Funds are required from both Company-operated and franchised restaurants and are based on a percentage of restaurant sales. In addition to the contributions to the Advertising Funds, Company-operated and franchised restaurants make additional contributions to other local and regional advertising programs. 102 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Restricted assets and liabilities of the Advertising Funds at December 28, 2025 and December 29, 2024 are as follows: Year End December 28, 2025 December 29, 2024 Cash and cash equivalents $ 17,632 $ 18,615 Accounts receivable, net 75,083 73,223 Other assets 5,152 7,291 Advertising funds restricted assets $ 97,867 $ 99,129 Accounts payable $ 78,929 $ 83,035 Accrued expenses and other current liabilities 17,525 17,177 Advertising funds restricted liabilities $ 96,454 $ 100,212 Advertising expenses included in “Cost of sales” totaled $ 40,334 , $ 39,051 and $ 38,837 in 2025, 2024 and 2023, respectively. (25) Geographic Information The table below presents revenues and properties information by geographic area: U.S. International Total 2025 Revenues $ 1,977,842 $ 199,049 $ 2,176,891 Properties 856,372 81,423 937,795 2024 Revenues $ 2,056,329 $ 190,163 $ 2,246,492 Properties 840,416 67,371 907,787 2023 Revenues $ 2,007,727 $ 173,851 $ 2,181,578 Properties 830,492 60,588 891,080 (26) Segment Information The Company is comprised of the following reportable and operating segments : (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating Franchise Flips and providing other development-related services to franchisees. The Company measures profit using segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), which excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to the Company’s core operating performance. The Company’s Interim Chief Executive Officer and Chief Financial Officer is the chief operating decision maker (the “CODM”) and uses segment adjusted EBITDA predominantly in periodic reviews of performance and during the annual budget and forecasting process. The CODM considers segment adjusted EBITDA when making decisions about allocating resources to the segments. When the CODM reviews 103 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) balance sheet information, it is at a consolidated level. The accounting policies of the Company’s segments are the same as those described in Note 1. See Note 3 for a reconciliation of segment revenue to total revenue. Wendy’s U.S. revenue, significant segment expenses and segment adjusted EBITDA are as follows: Year Ended 2025 2024 2023 Wendy’s U.S. revenue $ 1,785,124 $ 1,859,745 $ 1,815,845 Wendy’s U.S. expense Cost of sales 761,417 755,265 767,150 Franchise support and other costs 65,524 54,047 47,554 Advertising fund expense (a) 384,472 441,508 396,743 General and administrative 84,464 79,664 75,734 Other segment items (b) 151 3,307 312 Wendy’s U.S. adjusted EBITDA $ 489,096 $ 525,954 $ 528,352 _______________ (a) Includes advertising fund expense of $ 20,000 for 2024 related to the Company’s funding of incremental advertising. There was no funding of incremental advertising during 2025 and 2023. (b) Other segment items for 2025 primarily include professional fees. Other segment items for 2024 and 2023 primarily include lease buyout activity. Wendy’s International revenue, significant segment expenses and segment adjusted EBITDA are as follows: Year Ended 2025 2024 2023 Wendy’s International revenue $ 152,961 $ 144,690 $ 130,548 Wendy’s International expense Cost of sales 30,307 27,946 27,343 Advertising funds expense (a) 40,896 39,330 35,604 General and administrative 29,680 26,048 26,226 Other segment items (b) 8,944 8,098 5,671 Wendy’s International adjusted EBITDA $ 43,134 $ 43,268 $ 35,704 _______________ (a) Includes advertising fund expense of $ 713 , $ 1,919 and $ 2,401 for 2025, 2024 and 2023, respectively, related to the Company’s funding of incremental advertising. In addition, includes other international-related advertising deficit of $ 2,570 , $ 827 and $ 950 for 2025, 2024 and 2023, respectively. (b) Other segment items primarily include franchise support and other costs. 104 Table of Contents THE WENDY’S COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands Except Per Share Amounts) Global Real Estate & Development revenue, significant segment expenses and segment adjusted EBITDA are as follows: Year Ended 2025 2024 2023 Global Real Estate & Development revenue $ 238,806 $ 242,057 $ 235,185 Global Real Estate & Development expense Franchise rental expense 125,773 127,446 125,371 General and administrative 16,181 15,301 15,660 Other segment items (a) ( 13,498 ) ( 9,277 ) ( 9,330 ) Global Real Estate & Development adjusted EBITDA $ 110,350 $ 108,587 $ 103,484 _______________ (a) Other segment items primarily include equity in earnings from our TimWen joint venture, franchise support and other costs and gains on sales-type leases for 2025, 2024 and 2023. Other segment items for 2025 also include lease buyout activity. Equity in earnings from our TimWen joint venture was $ 11,215 , $ 11,607 and $ 10,819 for 2025, 2024 and 2023, respectively. The following table reconciles profit by segment to the Company’s consolidated income before income taxes: Year Ended 2025 2024 2023 Wendy’s U.S. $ 489,096 $ 525,954 $ 528,352 Wendy’s International 43,134 43,268 35,704 Global Real Estate & Development 110,350 108,587 103,484 Total segment adjusted EBITDA 642,580 677,809 667,540 Unallocated franchise support and other costs ( 2,239 ) ( 1,316 ) ( 831 ) Advertising funds surplus 2,816 2,702 4,344 Unallocated general and administrative (a) ( 122,354 ) ( 134,195 ) ( 132,344 ) Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below) ( 152,222 ) ( 143,234 ) ( 135,789 ) Amortization of cloud computing arrangements ( 18,647 ) ( 14,701 ) ( 12,778 ) System optimization gains, net 1,030 1,219 880 Reorganization and realignment costs 125 ( 8,528 ) ( 9,200 ) Impairment of long-lived assets ( 12,095 ) ( 9,713 ) ( 1,401 ) Unallocated other operating income, net 4,458 1,316 1,563 Interest expense, net ( 126,467 ) ( 123,881 ) ( 124,061 ) (Loss) gain on early extinguishment of debt ( 642 ) — 2,283 Investment (loss) income, net ( 1,718 ) 11 ( 10,358 ) Other income, net 12,621 24,924 29,570 Income before income taxes $ 227,246 $ 272,413 $ 279,418 _______________ (a) Includes corporate overhead costs, such as employee compensation and related benefits. 105 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable.