<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- -------------------
Commission File Number 1-8116
------
WENDY'S INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 31-0785108
------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio 43017-0256
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 614-764-3100
------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
--- ---
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 4, 1995
-------------------------------- -----------------------------
Common shares, $.10 stated value 102,297,000 shares
Exhibit index on page 15.
-1 of 17-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PAGES
-----
PART I: Financial Information
Item 1. Financial Statements:
Consolidated Statement of Income for the quarters
and year-to-date periods ended
July 2, 1995 and July 3, 1994 3 - 4
Consolidated Balance Sheet as of July 2, 1995
and January 1, 1995 5 - 6
Consolidated Statement of Cash Flows for the
year-to-date periods ended July 2, 1995
and July 3, 1994 7
Notes to the Consolidated Financial Statements 8 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10 - 12
PART II: Other Information
Item 4 13
Item 6 13
Signature 14
Index to Exhibits 15
Exhibit 11 - Computation of Net Income Per Share 16 - 17
-2-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTER ENDED QUARTER ENDED
JULY 2 JULY 3
1995 1994
------ ------
<S> <C> <C>
REVENUES
Retail sales . . . . . . . . . . . . . . . $333,943 $326,425
Royalties. . . . . . . . . . . . . . . . . 31,562 29,830
Other. . . . . . . . . . . . . . . . . . . 14,078 10,949
-------- --------
379,583 367,204
-------- --------
COSTS AND EXPENSES
Cost of sales. . . . . . . . . . . . . . . 195,156 187,408
Company restaurant operating
costs. . . . . . . . . . . . . . . . . . 84,708 84,319
General and administrative
expenses . . . . . . . . . . . . . . . . 28,674 23,346
Depreciation and amortization
of property and equipment. . . . . . . . 17,874 16,842
Interest, net. . . . . . . . . . . . . . . 764 3,183
-------- --------
327,176 315,098
-------- --------
INCOME BEFORE INCOME TAXES . . . . . . . . . 52,407 52,106
INCOME TAXES . . . . . . . . . . . . . . . . 12,311 18,758
-------- --------
NET INCOME . . . . . . . . . . . . . . . . . $ 40,096 $ 33,348
-------- --------
-------- --------
PRIMARY EARNINGS PER SHARE . . . . . . . . . $ .38 $ .32
-------- --------
-------- --------
FULLY DILUTED EARNINGS PER SHARE . . . . . . $ .37 $ .31
-------- --------
-------- --------
DIVIDENDS PER SHARE. . . . . . . . . . . . . $ .06 $ .06
-------- --------
-------- --------
PRIMARY SHARES . . . . . . . . . . . . . . . 105,078 104,499
-------- --------
-------- --------
FULLY DILUTED SHARES . . . . . . . . . . . . 113,266 112,629
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
-3-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
YEAR-TO-DATE YEAR-TO-DATE
ENDED ENDED
JULY 2 JULY 3
1995 1994
------ ------
<S> <C> <C>
REVENUES
Retail sales . . . . . . . . . . . . . . . $649,341 $618,217
Royalties. . . . . . . . . . . . . . . . . 58,497 54,351
Other. . . . . . . . . . . . . . . . . . . 18,100 14,426
-------- --------
725,938 686,994
-------- --------
COSTS AND EXPENSES
Cost of sales. . . . . . . . . . . . . . . 381,568 360,796
Company restaurant operating
costs. . . . . . . . . . . . . . . . . . 170,632 164,755
General and administrative
expenses . . . . . . . . . . . . . . . . 58,567 50,526
Depreciation and amortization
of property and equipment. . . . . . . . 35,481 33,499
Interest, net. . . . . . . . . . . . . . . 2,587 5,802
-------- --------
648,835 615,378
-------- --------
INCOME BEFORE INCOME TAXES . . . . . . . . . 77,103 71,616
INCOME TAXES . . . . . . . . . . . . . . . . 21,201 25,782
-------- --------
NET INCOME . . . . . . . . . . . . . . . . . $ 55,902 $ 45,834
-------- --------
-------- --------
PRIMARY EARNINGS PER SHARE . . . . . . . . . $ .53 $ .44
-------- --------
-------- --------
FULLY DILUTED EARNINGS PER SHARE . . . . . . $ .52 $ .43
-------- --------
-------- --------
DIVIDENDS PER SHARE. . . . . . . . . . . . . $ .12 $ .12
-------- --------
-------- --------
PRIMARY SHARES . . . . . . . . . . . . . . . 104,800 104,520
-------- --------
-------- --------
FULLY DILUTED SHARES . . . . . . . . . . . . 113,021 112,650
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
-4-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(IN THOUSANDS)
JULY 2 JANUARY 1
1995 1995
------ ------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . $ 57,025 $ 119,639
Short-term investments, at market. . . . . - 15,292
Accounts receivable, net . . . . . . . . . 26,665 28,015
Notes receivable, net. . . . . . . . . . . 9,289 7,446
Deferred income taxes. . . . . . . . . . . 11,461 9,959
Inventories and other. . . . . . . . . . . 24,014 19,702
---------- ----------
128,454 200,053
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land . . . . . . . . . . . . . . . . . . . 240,532 222,671
Buildings. . . . . . . . . . . . . . . . . 382,990 359,503
Leasehold improvements . . . . . . . . . . 194,670 189,243
Restaurant equipment . . . . . . . . . . . 349,180 335,474
Other equipment. . . . . . . . . . . . . . 54,366 53,265
Capital leases . . . . . . . . . . . . . . 61,270 63,531
---------- ----------
1,283,008 1,223,687
Accumulated depreciation
and amortization . . . . . . . . . . . . (474,249) (457,368)
---------- ----------
808,759 766,319
---------- ----------
COST IN EXCESS OF NET ASSETS
ACQUIRED, NET. . . . . . . . . . . . . . . 40,960 30,780
DEFERRED INCOME TAXES. . . . . . . . . . . . 22,440 16,142
OTHER ASSETS . . . . . . . . . . . . . . . . 76,741 69,690
---------- ----------
$1,077,354 $1,082,984
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
-5-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(IN THOUSANDS)
JULY 2 JANUARY 1
1995 1995
------ ------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts and drafts payable. . . . . . . . $ 56,118 $ 69,845
Accrued expenses:
Salaries and wages . . . . . . . . . . . 15,994 22,173
Taxes. . . . . . . . . . . . . . . . . . 16,532 15,248
Insurance. . . . . . . . . . . . . . . . 28,783 26,037
Other. . . . . . . . . . . . . . . . . . 11,615 11,409
Income taxes . . . . . . . . . . . . . . . 12,719 1,683
Current portion of long-term
obligations. . . . . . . . . . . . . . . 7,482 57,674
---------- ----------
149,243 204,069
---------- ----------
LONG-TERM OBLIGATIONS
Term debt . . . . . . . . . . . . . . . . . 104,585 104,842
Capital leases. . . . . . . . . . . . . . . 36,364 40,018
---------- ----------
140,949 144,860
---------- ----------
DEFERRED INCOME TAXES. . . . . . . . . . . . 40,596 39,799
OTHER LONG-TERM LIABILITIES. . . . . . . . . 14,939 12,758
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock,
Authorized: 250,000 shares
Common stock, $.10 stated value
Authorized: 200,000,000 shares
Issued: 102,278,000 and
101,787,000 shares, respectively . . . . 10,228 10,179
Capital in excess of stated value. . . . . 176,531 171,004
Retained earnings. . . . . . . . . . . . . 547,379 503,712
Translation adjustments. . . . . . . . . . 867 (19)
Pension liability adjustment . . . . . . . (3,212) (3,212)
---------- ----------
731,793 681,664
Treasury stock at cost: 29,000 shares. . . (166) 166)
---------- ----------
731,627 681,498
---------- ----------
$1,077,354 $1,082,984
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
-6-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
YEAR-TO-DATE ENDED YEAR-TO-DATE ENDED
JULY 2 JULY 3
1995 1994
----- ------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES . . . . . . . . . . . . . . . . . $ 79,548 $ 85,413
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from asset dispositions . . . . . . 21,479 15,250
Capital expenditures . . . . . . . . . . . . (77,050) (63,764)
Acquisition of franchises. . . . . . . . . . (38,353) (11,148)
Proceeds from marketable securities. . . . . 15,292 7,934
Other investing activities . . . . . . . . . (1,876) 457
-------- --------
Net cash used in investing activities (80,508) (51,271)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock . . . 4,221 2,870
Principal payments on long-term
obligations. . . . . . . . . . . . . . . . (53,640) (2,638)
Dividends paid . . . . . . . . . . . . . . . (12,235) (12,135)
-------- --------
Net cash used in financing activities . (61,654) (11,903)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . . (62,614) 22,239
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . . . 119,639 71,698
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . $ 57,025 $ 93,937
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid. . . . . . . . . . . . . . . . $ 9,456 $ 9,524
Interest received. . . . . . . . . . . . . . 5,567 3,366
Income taxes paid. . . . . . . . . . . . . . 15,592 12,958
Debt converted to stock. . . . . . . . . . . 25
Acquisition of franchises:
Fair value of assets acquired, net . . . . . 39,898 15,586
Cash paid. . . . . . . . . . . . . . . . . . 38,353 11,148
Liabilities assumed. . . . . . . . . . . . . 1,850 4,438
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
-7-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. MANAGEMENT'S STATEMENT
In the opinion of management the accompanying unaudited financial statements
contain all adjustments (all of which are normal and recurring in nature
except for the income tax valuation allowance as discussed in note 3)
necessary to present fairly the financial position of Wendy's International,
Inc. and Subsidiaries (the company) at July 2, 1995, and January 1, 1995 and
the results of operations for the quarters and year-to-date periods ended
July 2, 1995 and July 3, 1994 and cash flows for the year-to-date periods
ended July 2, 1995 and July 3, 1994. The Notes to the Consolidated Financial
Statements which are contained in the 1994 Form 10-K should be read in
conjunction with these Consolidated Financial Statements.
NOTE 2. ACQUISITIONS AND DISPOSITIONS
In the first quarter of 1995 and 1994, nine restaurants were franchised for
a net pretax gain of $657,000 and one restaurant for a net pretax gain of
$25,000, respectively. During the second quarters of 1995 and 1994, the
company franchised 26 restaurants for a net pretax gain of $9,900,000 and 23
restaurants for a net pretax gain of $6,700,000, respectively.
In the first quarter of 1995, the company acquired its partners' share of two
restaurants in London, England. Total consideration in this transaction was
$2,122,000 of which $1,255,000 is payable after April 1, 1998. One domestic
restaurant was also acquired for $854,000.
During the second quarter of 1995, the company acquired 34 restaurants in the
Little Rock market for approximately $37,000,000. In the second quarter of
1994,
the company acquired 30 restaurants, 29 of which were in the Kansas City
market, for approximately $11,000,000.
NOTE 3. INCOME TAXES
Income taxes in the second quarter of 1995 reflect the benefit of a reduction
in the valuation allowance related to excess capital allowances and net
operating loss carryovers of a Canadian subsidiary of $6.6 million. During
the quarter a partnership agreement was executed between Wendy's and Tim
Hortons establishing "TIMWEN Partnership" for purposes of accelerating the
development of combination units of Wendy's and Tim Hortons in Canada. The
reduction in the valuation allowance reflects the recognition of all
remaining tax benefits pursuant to the success of the Canadian reorganization
and the profitability of Canadian operations.
-8-
<PAGE>
NOTE 4. SUBSEQUENT EVENT
On August 8, 1995, the company entered into an agreement in principle with
632687 Alberta Limited (Alberta) and Ronald V. Joyce to acquire all of the stock
of Alberta for 16.2 million shares of a Canadian subsidiary of the company
exchangeable for 16.2 million common shares of the company. Alberta is the
parent company of the Tim Hortons restaurant chain.
The completion of the transaction is subject to the approval of the company's
board of directors, negotiation and execution of definitive agreements, the
completion of due diligence reviews with results satisfactory to the company
in its sole good faith judgment, confirmation that the transaction will be
treated as a "pooling of interest", and satisfaction of customary conditions.
The transaction is expected to be completed in late 1995 or early 1996.
-9-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The company recorded net income of $40.1 million for the second quarter ended
July 2, 1995, while $33.3 million was reported for the second quarter ended July
3, 1994. Net income for the year-to-date period was $55.9 million for 1995
compared with $45.8 million for 1994.
RETAIL SALES
Retail sales were adversely affected by intense competition within the
quick-service restaurant industry. Domestic retail sales increased 1.6% for the
second quarter of 1995 compared with the second quarter of 1994. This was
primarily a result of a 2.4% increase in average restaurants open, offset by an
.8% decrease in average domestic net sales. Year-to-date domestic retail sales
increased $25.4 million in 1995 compared with 1994 reflecting an additional 34
average restaurants open and a 1.5% increase in average domestic
company-operated net sales. Selling prices increased .1% during the current
year.
The improvement in average domestic net sales for the year- to-date period was a
result of the value menu strategy, such as Combo Meals, Kids' Meals, and Super
Value Menu, solid restaurant operations, and effective marketing campaigns.
Average net sales per domestic Wendy's restaurant for the quarters and
year-to-date periods ended July 2, 1995 and July 3, 1994 were as follows:
<TABLE>
<CAPTION>
Second Quarter % Year-to-Date %
1995 1994 (Decrease) 1995 1994 Increase
---- ---- ---------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Company. . . . . . . . . . . . . . . . . $259,150 $261,150 (.8) $505,900 $498,450 1.5
Franchise. . . . . . . . . . . . . . . . 251,950 256,200 (1.7) 488,600 484,200 .9
Total Domestic . . . . . . . . . . . . . 254,050 257,650 (1.4) 493,600 488,405 1.1
</TABLE>
The number of systemwide Wendy's restaurants open as of July 2, 1995 and July 3,
1994 was as follows:
1995 1994
---- ----
Company 1,283 1,250
Franchise 3,220 3,014
----- - ----
Total Wendy's 4,503 4,264
----- -----
----- -----
COST OF SALES AND RESTAURANT OPERATING COSTS
The company restaurant operating profit margin decreased in the second quarter
1995 to 16.2% versus 16.8% for 1994. The restaurant operating margin remained
constant at 15.0% for the year-to-date 1995 and 1994. Margins were negatively
impacted by lower average restaurant sales. Cost of sales reflected increases in
restaurant labor due to inflation in the restaurant labor wage rate. Food costs
were somewhat favorable with increased produce prices offset by decreases in
beef and chicken prices. Restaurant operating costs were reduced, as a percent
of retail sales, in both the second quarter and year-to-date periods due to
lower local advertising.
ROYALTIES
Royalties before reserve provisions increased $1.7 million in the second quarter
1995 compared with 1994. This was primarily a result of an increase of 186
average domestic restaurants open, while franchise domestic average net sales
declined 1.7%. Royalties before reserve provisions increased $4.6 million for
the year-to-date period of 1995 with franchise domestic average net sales up .9%
and 182 more average domestic restaurants open.
-10-
<PAGE>
There were no reserves provided for the second quarter 1995 and $2.4 million was
provided for in the year-to-date period. This compares to reserves of $57,000
for the second quarter 1994 and reserves provided of $1.9 million for the
year-to-date 1994.
OTHER REVENUES
Other revenues increased $3.1 million over the second quarter of 1994. This was
primarily a result of pretax gains related to franchising restaurants of $9.9
million in the second quarter 1995 versus $6.7 million in 1994. For the
year-to-date periods other revenue increased $3.7 million reflecting increased
gains on franchising restaurants of $3.8 million.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the second quarter of 1995 were 7.6% of
total revenues versus 6.4% in 1994. For the year-to-date 1995 general and
administrative expenses were 8.1% versus 7.4% in 1994. The increased percentages
reflect lower than expected average sales for the current year. There was a $5.3
million increase for the quarter comparison and an $8.0 million increase for the
year- to-date comparison which reflects increases in salaries and benefits of
$1.9 million for the quarter and $3.4 million for the year-to-date periods. This
was a result of annual employee merit and performance pay increases and minimal
increases in staffing of overhead personnel throughout 1994 and the year-to-date
1995 to support new domestic and international restaurant development planned
for 1995 and beyond. Increases were also seen in legal and professional fees.
INCOME TAXES
Income taxes in the second quarter of 1995 reflect the benefit of a reduction in
the valuation allowance related to excess capital allowances and net operating
loss carryovers of a Canadian subsidiary of $6.6 million. During the quarter a
partnership agreement was executed between Wendy's and Tim Hortons establishing
"TIMWEN Partnership" for purposes of accelerating the development of combination
units of Wendy's and Tim Hortons in Canada. The reduction in the valuation
allowance reflects the recognition of all remaining tax benefits pursuant to the
success of the Canadian reorganization and the profitability of Canadian
operations.
FINANCIAL CONDITION
The company's financial condition remains solid at the end of the second quarter
of 1995. The debt to equity and debt to total capitalization ratios were 19% and
16%, respectively, at July 2, 1995. These compare to a debt to equity ratio and
debt to total capitalization ratio of 21% and 18%, respectively, at fiscal
year-end 1994. Year-to- date capital expenditures amounted to $77.1 million for
1995 compared to $63.8 million for 1994.
OUTLOOK
The company continues to employ its strategies as outlined in the company's 1994
Annual Report. As was expected, competition in the quick-service restaurant
industry has been intense and will remain so in the foreseeable future. Pressure
on retail sales is continuing in 1995. Emphasis continues to be on solid
restaurant operations, new products, effective marketing, new restaurant
development, and the overall financial health of the entire system. The company
anticipates that as many as 400 new restaurants will be opened or under
construction systemwide (both company and franchise) during 1995. Through July
2, 1995, the company and its franchisees opened 129 new restaurants with another
100 under construction. Cash flow from operations, cash and investments on hand,
possible asset sales, cash available through existing revolving credit
agreements, and cash proceeds from the issuance of all or a portion of the $200
million debt securities covered by a shelf registration statement that was filed
in December 1994 should adequately provide for projected cash requirements.
-11-
<PAGE>
Financial Accounting Standard Number 121 (SFAS 121) - "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was
issued and is effective for fiscal years beginning after December 15, 1995. The
adoption of SFAS 121 will not have a significant impact on the results of
operations or financial condition of the company.
SUBSEQUENT EVENT
On August 8, 1995, the company entered into an agreement in principle with
632687 Alberta Limited (Alberta) and Ronald V. Joyce to acquire all of the stock
of Alberta for 16.2 million shares of a Canadian subsidiary of the company
exchangeable for 16.2 million common shares of the company. Alberta is the
parent company of the Tim Hortons restaurant chain.
The completion of the transaction is subject to the approval of the company's
board of directors, negotiation and execution of definitive agreements, the
completion of due diligence reviews with results satisfactory to the company
in its sole good faith judgment, confirmation that the transaction will be
treated as a "pooling of interest", and satisfaction of customary conditions.
The transaction is expected to be completed in late 1995 or early 1996.
The Tim Hortons chain includes approximately 1,000 restaurants systemwide,
almost all of which are franchised. 1994 systemwide sales were approximately
$600 million Canadian. Since the beginning of 1994, Tim Hortons' revenue,
earnings and the number of systemwide restaurants have grown at annual rates
exceeding 25%. Exclusive of any non-recurring transaction costs, and assuming
that the historical performance of both companies continues, the transaction
is expected to be accretive to the company's earnings.
If the transaction is completed, the company will assume an estimated $125
million (U.S.) of Alberta's debt as part of the transaction. In such event, the
company believes that cash flow from combined operations, cash and investments
on hand, possible asset sales, cash available through existing credit
agreements, and cash proceeds from the issuance of all or a portion of the $200
million debt securities covered by a shelf registration statement that was filed
in December of 1994 should adequately provide for ongoing projected cash
requirements and for the retirement of the assumed indebtedness.
-12-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of the company's shareholders was held on May 1, 1995.
(b) The following table sets forth the name of each director elected at the
meeting and the number of votes for or withheld from each director.
<TABLE>
<CAPTION>
Director For Withheld
-------- --- --------
<S> <C> <C>
R. David Thomas 87,576,590 328,153
John K. Casey 87,556,265 348,478
Ernest S. Hayeck 87,500,723 404,022
Janet Hill 87,546,135 358,608
</TABLE>
The following directors did not stand for reelection at the meeting (the year in
which each directors term expires is indicated in parenthesis): Thekla R.
Shackelford (1996), Ronald E. Musick (1996), W. Clay Hamner (1996), Gordon F.
Teter (1996), Frederick R. Reed (1996), Fielden B. Nutter, Sr. (1997), James W.
Near (1997), James V. Pickett (1997) and Thomas F. Keller (1997).
(c) The following table sets forth a brief description of each other matter
voted on at the Annual Meeting and the number of votes cast for, against or
abstaining from each matter.
Approve Coopers & Lybrand L.L.P. For Against Abstain
--- ------- -------
as independent public accountants 87,374,162 218,202 312,367
of the company
There were no broker nonvotes (as described by the Securities and Exchange
Commission) in connection with any of the matters set forth in this Item 4.
Item 6. Exhibits and Reports on Form 8-K.
(a) Index to Exhibits on Page 15.
(b) No report on Form 8-K was filed during the quarter ended July 2, 1995.
-13-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WENDY'S INTERNATIONAL, INC.
---------------------------
(Registrant)
Date: 08/15/95 /s/John K. Casey
------------- -------------------------
John K. Casey
Vice Chairman and Chief
Financial Officer
-14-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description Page No.
------ ----------- --------
11 Computation of Net 16 - 17
Income Per Common
Share.
-15-
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTER ENDED QUARTER ENDED
JULY 2 JULY 3
1995 1994
-------- --------
<S> <C> <C>
Weighted average number
of common shares outstanding. . . . . . . . . . . 102,106 101,157
Add net shares issuable pursuant
to employee stock option plans
less shares assumed repurchased
at the average market price. . . . . . . . . . 2,972 3,342
-------- --------
Number of shares for computation of
primary earnings per share. . . . . . . . . . . . 105,078 104,499
Add net additional shares issuable
pursuant to employee stock option plans at
period-end market price. . . . . . . . . . . . 60
Add additional shares issuable
assuming conversion of
subordinated debentures . . . . . . . . . . . . 8,128 8,130
-------- --------
Number of shares for computation of
fully diluted earnings per share . . . . . . . . 113,266 112,629
-------- --------
-------- --------
Net income for computation of primary
earnings per share . . . . . . . . . . . . . . . $ 40,096 $ 33,348
Add savings on assumed dilutive conversion
of subordinated debentures net of tax . . . . . 1,291 1,136
-------- --------
Net income for computation of fully diluted
earnings per share . . . . . . . . . . . . . . . $ 41,387 $ 34,484
-------- --------
-------- --------
Net income per share:
Assuming primary dilution . . . . . . . . . . . . $.38 $.32
---- ----
---- ----
Assuming full dilution. . . . . . . . . . . . . . $.37 $.31
---- ----
---- ----
</TABLE>
<PAGE>
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
YEAR-TO-DATE YEAR-TO-DATE
ENDED ENDED
JULY 2 JULY 3
1995 1994
-------- --------
<S> <C> <C>
Weighted average number
of common shares outstanding. . . . . . . . . . . 101,971 101,049
Add net shares issuable pursuant
to employee stock option plans
less shares assumed repurchased
at the average market price. . . . . . . . . . 2,829 3,471
-------- --------
Number of shares for computation of
primary earnings per share. . . . . . . . . . . . 104,800 104,520
Add net additional shares issuable
pursuant to employee stock option plans at
period-end market price. . . . . . . . . . . . 93
Add additional shares issuable
assuming conversion of
subordinated debentures. . . . . . . . . . . . 8,128 8,130
-------- --------
Number of shares for computation of
fully diluted earnings per share . . . . . . . . 113,021 112,650
-------- --------
-------- --------
Net income for computation of primary
earnings per share . . . . . . . . . . . . . . . $ 55,902 $ 45,834
Add savings on assumed dilutive conversion
of subordinated debentures net of tax. . . . . 2,581 2,272
-------- --------
Net income for computation of fully diluted
earnings per share . . . . . . . . . . . . . . . $ 58,483 $ 48,106
-------- --------
-------- --------
Net income per share:
Assuming primary dilution . . . . . . . . . . . . $.53 $.44
---- ----
---- ----
Assuming full dilution. . . . . . . . . . . . . . $.52 $.43
---- ----
---- ----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> JUL-02-1995
<CASH> 57,025
<SECURITIES> 0
<RECEIVABLES> 35,954<F1>
<ALLOWANCES> 0
<INVENTORY> 24,014
<CURRENT-ASSETS> 128,454
<PP&E> 1,283,008
<DEPRECIATION> (474,249)
<TOTAL-ASSETS> 1,077,354
<CURRENT-LIABILITIES> 149,243
<BONDS> 104,585
<COMMON> 10,228
0
0
<OTHER-SE> 721,399
<TOTAL-LIABILITY-AND-EQUITY> 1,077,354
<SALES> 649,341
<TOTAL-REVENUES> 725,938
<CGS> 381,568
<TOTAL-COSTS> 552,200<F2>
<OTHER-EXPENSES> 94,048
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,587<F3>
<INCOME-PRETAX> 77,103
<INCOME-TAX> 21,201
<INCOME-CONTINUING> 55,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,902
<EPS-PRIMARY> .53
<EPS-DILUTED> .52
<FN>
<F1>REPRESENTS ACCOUNTS AND NOTES RECEIVABLE NET
<F2>COST OF SALES AND COMPANY RESTAURANT OPERATING COSTS
<F3>REPRESENTS INTEREST EXPENSE NET OF INTEREST INCOME
</FN>
</TABLE>
