<PAGE> 1
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 6, 1995
$200,000,000
WENDY'S INTERNATIONAL, INC.
$100,000,000 6.35% NOTES DUE DECEMBER 15, 2005
$100,000,000 7.00% DEBENTURES DUE DECEMBER 15, 2025
----------------------
Interest on the 6.35% Notes due December 15, 2005 and the 7.00% Debentures
due December 15, 2025 is payable semi-annually on June 15 and December 15 of
each year, commencing June 15, 1996. The Notes and the Debentures are not
redeemable prior to maturity. The Notes and the Debentures are unsecured
obligations of the Company and will rank equally with all unsecured and
unsubordinated indebtedness of the Company.
The 6.35% Notes due December 15, 2005 and the 7.00% Debentures due December
15, 2025, respectively, will be represented by one or more Global Notes (as
defined herein) registered in the name of The Depository Trust Company ("DTC")
or its nominee. Beneficial interests in the Global Notes will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Except as described herein, Notes and Debentures in definitive
form will not be issued. The Notes and the Debentures will trade in DTC's
Same-Day Funds Settlement System until maturity, and secondary market trading
activity in the Notes and the Debentures will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds. See "Description of Notes and
Debentures -- Same-Day Settlement and Payment".
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) COMPANY (1)(3)
------------------ ------------ --------------
<S> <C> <C> <C>
Per Note.................................. 99.823% 0.650% 99.173%
Total..................................... $ 99,823,000 $650,000 $ 99,173,000
Per Debenture............................. 99.824% 0.875% 98.949%
Total..................................... $ 99,824,000 $875,000 $ 98,949,000
</TABLE>
- ---------------
(1) Plus accrued interest from December 15, 1995.
(2) The Company has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting estimated expenses of $340,000 payable by the Company.
----------------------
The Notes and the Debentures offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Notes and the Debentures will be ready for delivery in book-entry form
only through the facilities of DTC in New York, New York, on or about December
19, 1995, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
----------------------
The date of this Prospectus Supplement is December 14, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND THE
DEBENTURES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
---------------------
THE COMPANY
The description of the business of Wendy's International, Inc. and its
subsidiaries (collectively, the "Company" or "Wendy's") is qualified in its
entirety by reference to the more detailed information and financial statements
(including the notes thereto) contained elsewhere in this Prospectus Supplement
or the accompanying Prospectus or incorporated by reference herein or therein.
Wendy's is the third largest quick-service restaurant chain in the world
that features hamburgers. As of October 1, 1995, there were 4,587 Wendy's Old
Fashioned Hamburgers restaurants, of which 4,138 were located in the United
States and 449 were located in 33 other countries. Of these 4,587 restaurants,
3,297 were franchised, and the remainder were operated by the Company. Each
Wendy's restaurant offers a relatively standard menu featuring hamburgers and
filet of chicken breast sandwiches, which are prepared to order with the
customer's choice of condiments. Wendy's menu also includes a salad bar, chili,
baked and french fried potatoes, prepared salads, desserts, soft drinks and
other non-alcoholic beverages, and a child's meal which features either a small
hamburger or chicken nuggets, french fries and a small drink. In addition
Wendy's restaurants sell a variety of promotional products on a limited basis. A
breakfast menu is available at certain Wendy's restaurants during the morning
hours.
ACQUISITION OF ALBERTA
On October 31, 1995, the Company entered into a Share Purchase Agreement
with 632687 Alberta Ltd. ("Alberta") and Ronald V. Joyce pursuant to which the
Company agreed to acquire from Mr. Joyce all of the outstanding shares of
Alberta for 16.45 million shares of a Canadian subsidiary of the Company, which
shares are exchangeable for 16.45 million common shares of the Company and which
will represent approximately 13.7% of the Company's total outstanding common
shares upon consummation of the transaction. Alberta is the parent company of
the Tim Hortons restaurant chain. In connection with the transaction, the
Company will assume approximately $125 million of indebtedness of Alberta and
its subsidiaries and has agreed to repay up to Cdn.$125 million of that
indebtedness at or shortly after the consummation of the transaction. The
Company also has agreed to use its best efforts to elect Mr. Joyce to the
Company's Board of Directors. The completion of the transaction is subject to
confirmation that the transaction will be treated as a "pooling of interests"
and to the satisfaction of various other conditions. The transaction is expected
to be completed in late 1995.
Tim Hortons is the second largest restaurant chain in Canada, and the
largest that specializes in coffee and fresh baked goods such as donuts,
muffins, croissants, cookies and fancy desserts. Other products offered include
sandwiches and soup. Systemwide sales were Cdn.$603.2 million in 1994 and
Cdn.$543.4 million for the first nine months of 1995, an increase of 25% over
the comparable period in 1994. As of October 1, 1995, there were more than 1,100
Tim Hortons restaurants in Canada, all but approximately 38 of which were
franchisee-operated. There are several versions of Tim Hortons restaurants,
including stand-alone units with and without drive-throughs, double
drive-throughs, satellite units, kiosks and carts. Alberta and its subsidiaries
own or lease a majority of the restaurant locations and lease or sublease them
to franchisees. Alberta and its subsidiaries also operate six warehouses that
sell and distribute dry goods to all Tim Hortons restaurants. Royalties, rent
and warehouse operations comprise the three principal sources of income.
Management believes that Tim Hortons is an excellent complement to Wendy's
because consumers perceive Tim Hortons as delivering outstanding quality. This
perception is similar to consumers'
S-2
<PAGE> 3
perception of Wendy's quality. In addition, the majority of Tim Hortons' sales
occur at breakfast and afternoon snack time. In contrast, approximately 74% of
Wendy's sales normally occur at lunch and dinner.
As of December 4, 1995, Wendy's and Tim Hortons had co-developed 32
combination restaurants in Canada and one in the U.S. These restaurants contain
separate kitchens for the Wendy's and the Tim Hortons operations, with a shared
dining room.
After the transaction is completed, Tim Hortons will operate as a
subsidiary of Wendy's and will execute its existing strategies. There are
numerous additional opportunities which will be explored in depth before any
decision is made with respect to the future strategic direction of Tim Hortons,
such as expansion into the U.S. or into other countries.
USE OF PROCEEDS
The net proceeds to the Company from the offering of the 6.35% Notes due
December 15, 2005 (the "Notes") and the 7.00% Debentures due December 15, 2025
(the "Debentures"), after payment of estimated offering expenses and the
underwriting discount, will be approximately $197,782,000. The Company intends
to use the net proceeds from the sale of the Notes and the Debentures to repay
up to approximately $125 million of the indebtedness to be assumed in the
contemplated Alberta transaction and for working capital and other corporate
purposes. See "Acquisition of Alberta". Prior to such repayment of indebtedness,
the net proceeds will be invested by the Company in short-term investments.
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the cash and cash equivalents, current
portion of long-term obligations and consolidated capitalization of the Company
as of October 1, 1995, and as adjusted to give effect to the sale by the Company
of the Notes and the Debentures offered hereby and the application of the
estimated net proceeds therefrom, prior to the repayment of any debt, as
described under "Use of Proceeds". The table further sets forth the cash and
cash equivalents, current portion of long-term obligations and consolidated
capitalization of the Company on a pro forma basis as of October 1, 1995,
assuming that both this offering and the application of the estimated net
proceeds therefrom and the Alberta acquisition had occurred on such date.
<TABLE>
<CAPTION>
AS OF OCTOBER 1, 1995
----------------------------------------------
(IN THOUSANDS)
| PRO FORMA
| AS ADJUSTED
| FOR OFFERING
AS ADJUSTED | AND ALBERTA
ACTUAL FOR OFFERING | ACQUISITION(1)
-------- ------------ | --------------
<S> <C> <C> | <C>
Cash and cash equivalents........................ $ 66,259 $ 264,041 | $ 159,041
========= =========== | =============
Current Liabilities: |
Current portion of long-term obligations....... $ 7,938 $ 7,938 | $ 7,938
========= =========== | =============
Long-term obligations: |
Term debt...................................... $ 4,579 $ 4,579 | $ 4,579
7% Convertible Subordinated Debentures, due |
April 1, 2006 (2)........................... 99,925 99,925 | 99,925
6.35% Notes due December 15, 2005.............. -- 100,000 | 100,000
7.00% Debentures due December 15, 2025......... -- 100,000 | 100,000
Capital leases................................. 34,586 34,586 | 34,586
-------- ------------ | --------------
Total long-term obligations............ 139,090 339,090 | 339,090
-------- ------------ | --------------
Shareholders' equity: |
Preferred stock, authorized: |
250,000 shares; issued, none................ -- -- | --
Common stock, $.10 stated value; authorized: |
200,000,000 shares; issued: 103,382,000 |
shares, actual, and 119,832,000 shares, pro |
forma....................................... 10,338 10,338 | 11,983
Capital in excess of stated value.............. 190,638 190,638 | 189,925
Unrealized loss on investments................. -- -- | (2,191)
Retained earnings.............................. 577,333 577,333 | 603,414
Translation adjustments........................ 1,732 1,732 | (1,780)
Pension liability adjustment................... (3,279) (3,279) | (3,279)
-------- ------------ | --------------
776,762 776,762 | 798,072
Treasury stock at cost: 29,000 shares, actual, |
and 129,000 shares, pro forma............... (166) (166) | (1,735)
-------- ------------ | --------------
Total shareholders' equity............. 776,596 776,596 | 796,337
-------- ------------ | --------------
Total capitalization................... $915,686 $1,115,686 | $1,135,427
========= =========== | =============
</TABLE>
- ---------------
(1) The indebtedness of Alberta and its subsidiaries at the time of the
consummation of the Alberta transaction is expected to be $125 million,
which is expected to be repaid from the proceeds of this offering. At
October 1, 1995, the outstanding indebtedness of Alberta and its
subsidiaries was $105 million.
(2) The 7% Convertible Subordinated Debentures are redeemable, with limited
exceptions, at the option of the Company on or after April 5, 1996. The
conversion price is $12.30 per common share, subject to certain adjustments.
On December 13, 1995, the closing price of the Company's common shares on
the New York Stock Exchange was $21.125.
S-4
<PAGE> 5
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table presents selected historical consolidated financial
information of the Company for each of the past five fiscal years. The selected
historical consolidated financial information for the 1990 through 1994 fiscal
years has been derived from the Company's audited financial statements, which
are incorporated by reference herein. The information for the nine months ended
October 2, 1994 and October 1, 1995 is derived from unaudited consolidated
financial statements, which are incorporated herein by reference. Such unaudited
consolidated financial statements have been prepared on the same basis as the
Company's audited financial statements, and the Company believes that such
unaudited consolidated financial statements contain all adjustments necessary
for a fair presentation of the financial information presented (consisting only
of normal, recurring adjustments, except as explained in note 3 to the Company's
consolidated financial statements set forth in its Form 10-Q for the fiscal
quarter ended October 1, 1995). Interim results are not necessarily indicative
of results for the full year.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
--------------------
OCT. 2, OCT. 1,
1990 1991 1992(1) 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT AS INDICATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Retail sales................................ $ 922.2 $ 962.8 $1,123.9 $1,198.8 $1,256.2 $ 940.6 $ 992.1
Royalties................................... 80.0 85.5 96.4 104.7 113.6 83.7 91.1
Other....................................... 8.7 11.4 18.2 16.6 28.1 22.0 31.5
-------- -------- -------- -------- -------- -------- --------
Total revenues...................... 1,010.9 1,059.7 1,238.5 1,320.1 1,397.9 1,046.3 1,114.7
-------- -------- -------- -------- -------- -------- --------
Cost of sales............................... 545.7 563.2 662.9 705.7 731.7 547.3 582.9
Company restaurant operating costs.......... 261.0 274.3 306.3 319.4 330.5 248.3 258.0
General and administrative expenses......... 76.0 76.1 94.1 102.2 108.2 74.0 84.9
Depreciation and amortization of property
and equipment............................. 55.1 56.1 61.7 65.6 68.1 50.6 53.8
Interest, net............................... 12.4 12.3 12.4 11.7 9.9 8.0 3.2
-------- -------- -------- -------- -------- -------- --------
Total costs and expenses............ 950.2 982.0 1,137.4 1,204.6 1,248.4 928.2 982.8
-------- -------- -------- -------- -------- -------- --------
Income before income taxes (2).............. 60.7 77.7 101.1 115.5 149.5 118.1 131.9
Income taxes (2)............................ 22.1 26.4 36.4 36.2 52.3 42.5 39.9
-------- -------- -------- -------- -------- -------- --------
Net income.................................. $ 39.3 $ 51.3 $ 64.7 $ 79.3 $ 97.2 $ 75.6 $ 92.0
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Current assets.............................. $ 98.1 $ 175.7 $ 162.1 $ 178.7 $ 200.1 $ 194.5 $ 138.3
Property and equipment, net................. 569.6 617.1 675.5 707.3 766.3 740.2 825.5
Total assets................................ 757.9 880.3 919.5 996.5 1,083.0 1,052.7 1,115.8
Current liabilities......................... 109.0 132.5 128.2 143.3 204.1 189.8 146.0
Long-term obligations....................... 168.1 239.6 233.7 200.6 144.9 148.5 139.1
Shareholders' equity........................ 446.8 477.9 528.7 600.8 681.5 665.3 776.6
OTHER OPERATING DATA:
Capital expenditures........................ $ 41.7 $ 69.4 $ 119.6 $ 116.6 $ 141.5 $ 97.9 $ 120.9
Company restaurant operating margin (3)..... 12.5% 13.0% 13.8% 14.5% 15.4% 15.4% 15.2%
Pre-tax profit margin....................... 6.0% 7.3% 8.2% 8.8% 10.7% 11.3% 11.8%
Total debt/total capitalization............. 27% 33% 31% 25% 18% 18% 15%
Return on average assets (4)................ 10.8% 12.3% 13.9% 14.3% 16.3% 15.5% 16.5%
Ratio of earnings to fixed charges.......... 2.85x 3.19x 3.82x 4.26x 5.59x 5.80x 7.24x
RESTAURANT DATA:
Total stores at period end:
Domestic, company......................... 982 1,080 1,117 1,132 1,168 1,151 1,185
Domestic, franchised...................... 2,454 2,408 2,490 2,657 2,826 2,774 2,953
International, company.................... 88 82 91 92 96 95 105
International, franchised................. 203 234 264 287 321 302 344
-------- -------- -------- -------- -------- -------- --------
Total............................... 3,727 3,804 3,962 4,168 4,411 4,322 4,587
-------- -------- -------- -------- -------- -------- --------
Avg. sales per domestic restaurant
(in thousands):
Company................................... $ 832 $ 874 $ 924 $ 978 $ 1,001 $ 753 $ 766
Franchised................................ 803 843 907 960 982 738 740
Total domestic............................ 811 852 912 966 988 742 747
</TABLE>
- ---------------
(1) Fiscal year 1992 includes 53 weeks.
(2) Fiscal year 1990 reflects a $696 thousand ($.01 per share) extraordinary
gain on early extinguishment of debt.
(3) "Company restaurant operating margin" equals retail sales less cost of sales
and Company restaurant operating cost divided by retail sales.
(4) Return on average assets is computed using income before income taxes and
interest charges.
S-5
<PAGE> 6
SELECTED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following table presents selected pro forma consolidated financial
information of the Company for the periods and at the dates indicated. This pro
forma selected consolidated financial information gives effect to the
contemplated acquisition of Alberta (accounted for as a pooling of interests),
as described under "Acquisition of Alberta," as if such transaction had occurred
at the beginning of each period indicated. The unaudited pro forma financial
information presented does not purport to represent what the Company's financial
position or results of operations actually would have been had the
aforementioned transaction been completed as of the date or at the beginning of
the periods indicated or to project the Company's financial position or results
of operations at any future date or for any future period. This information
should be read in conjunction with the Company's audited financial statements
and notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein or incorporated
herein by reference.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JANUARY 1, 1995 OCTOBER 1, 1995
------------------------------------ ------------------------------------
PRO PRO
COMPANY ALBERTA(1) FORMA COMPANY ALBERTA(2) FORMA
-------- ---------- -------- -------- ---------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Retail sales............................ $1,256.2 $ 109.5 $1,365.7 $ 992.1 $ 100.0 $1,092.1
Royalties............................... 113.6 13.5 127.1 91.1 12.1 103.2
Other................................... 28.1 66.3 94.4 31.5 58.6 90.1
-------- ---------- -------- -------- ---------- --------
Total revenues.................. 1,397.9 189.3 1,587.2 1,114.7 170.7 1,285.4
-------- ---------- -------- -------- ---------- --------
Cost of sales........................... 731.7 85.8 817.5 582.9 80.2 663.1
Company restaurant operating costs...... 330.5 2.4 332.9 258.0 1.9 259.9
General and administrative expenses..... 108.2 90.6(3) 198.8 84.9 66.5(3) 151.4
Depreciation and amortization of
property and equipment................ 68.1 6.4 74.5 53.8 5.5 59.3
Interest, net........................... 9.9 3.3 13.2 3.2 4.9 8.1
Environmental reserves.................. -- -- -- -- 11.6(4) 11.6
-------- ---------- -------- -------- ---------- --------
Total costs and expenses........ 1,248.4 188.5 1,436.9 982.8 170.6 1,153.4
-------- ---------- -------- -------- ---------- --------
Income before income taxes.............. 149.5 0.8 150.3 131.9 0.1 132.0
Income taxes............................ 52.3 0.6(3) 52.9 39.9 0.2(3) 40.1
-------- ---------- -------- -------- ---------- --------
Net income.............................. $ 97.2 $ 0.2 $ 97.4 $ 92.0 $ (0.1) $ 91.9
========= ========== ======== ========= ========== ========
Supplemental pro forma adjustment to
compensation expense (3):
Reduction in general and
administrative expenses........... $ 28.9 $ 15.5
Related income taxes................ (12.7) (6.8)
-------- --------
16.2 8.7
-------- --------
Supplemental pro forma net income after
reduction in compensation expense..... $ 113.6 $ 100.6
======== ========
</TABLE>
<TABLE>
<CAPTION>
AT OCTOBER 1, 1995
-----------------------------------------------------
PRO FORMA
COMPANY ALBERTA(5) ADJUSTMENTS PRO FORMA
-------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets.......................... $ 138.3 $ 47.0 $ (5.2)(6) $ 180.1
Property and equipment, net............. 825.5 118.0 9.4(7) 952.9
Total assets............................ 1,115.8 170.3 (5.2) 1,280.9
Current liabilities..................... 146.0 132.6 (3.1)(7) 275.5
Long-term obligations................... 139.1 15.9 -- 155.0
Shareholders' equity.................... 776.6 21.8 (2.1)(8) 796.3
</TABLE>
- ---------------
(1) Converted to U.S. dollars at the rate of 1.37:1.00, based on the average of
daily rates during the fiscal year ended January 1, 1995, as reported in The
Wall Street Journal.
(2) Converted to U.S. dollars at the rate of 1.38:1.00, based on the average of
daily rates during the nine months ended October 1, 1995, as reported in The
Wall Street Journal.
S-6
<PAGE> 7
(3) Reflects a contractual reduction in compensation expense payable to an
officer of Alberta and related income tax impact. The duties and
responsibilities of the officer will remain largely unchanged as a result of
the Alberta transaction, and, accordingly, other costs will not be incurred
to offset this reduction. The Company believes that this supplemental pro
forma adjustment is necessary to provide investors with information with
which to realistically assess the impact of the Alberta acquisition.
(4) Reflects the estimated costs of assessment, cleanup and remediation in
connection with properties acquired in the Alberta transaction, which amount
has been charged by Alberta to its operations in the nine-month period ended
September 30, 1995.
(5) Converted to U.S. dollars at the rate of 1.34:1.00, based on the daily rate
as of September 29, 1995, as reported in The Wall Street Journal.
(6) Includes the effect of the reclassification of 100,000 common shares of the
Company held by Alberta to treasury stock and the consolidation of a joint
venture of the Company and Alberta previously accounted for under the equity
method in the separate financial statements of the Company and Alberta.
(7) Reflects the consolidation of a joint venture of the Company and Alberta
previously accounted for under the equity method in the separate financial
statements of the Company and Alberta.
(8) Includes the effect of the reclassification of 100,000 common shares of the
Company held by Alberta to treasury stock and the effect of the exchange of
16.45 million common shares of the Company for all of the outstanding shares
of Alberta.
S-7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company recorded net income of $36.1 million for the third quarter
ended October 1, 1995, while $29.8 million was reported for the third quarter
ended October 2, 1994. Net income for the year-to-date period was $92.0 million
for 1995 compared with $75.6 million for 1994.
Retail Sales
Domestic retail sales increased 5.3% for the third quarter of 1995 compared
with the third quarter of 1994. This was primarily a result of a 2.9% increase
in average restaurants open, and a 2.2% increase in average domestic net sales.
Year-to-date domestic retail sales increased $41.0 million in 1995 compared with
1994 reflecting an additional 34 average restaurants open and a 1.7% increase in
average domestic company-operated net sales. Average selling prices increased
0.1% during the current year.
The improvement in average domestic net sales 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. However, intense
competition within the quick-service restaurant industry continues to affect
retail sales.
Average net sales per domestic Wendy's restaurant for the quarters and
year-to-date periods ended October 2, 1994, and October 1, 1995, were as
follows:
<TABLE>
<CAPTION>
THIRD QUARTER % YEAR-TO-DATE
--------------------------------- INCREASE ------------------------- %
1994 1995 (DECREASE) 1994 1995 INCREASE
-------------- -------------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Company........ $254,450 $260,000 2.2 $ 752,950 $ 766,000 1.7
Franchise...... 253,200 250,950 (0.9) 737,550 739,600 0.3
Total
Domestic..... 253,600 253,550 -- 742,150 747,250 0.7
</TABLE>
The number of systemwide Wendy's restaurants open as of October 2, 1994 and
October 1, 1995 was as follows:
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Company....................... 1,246 1,290
Franchise..................... 3,076 3,297
------ ------
Total Wendy's................. 4,322 4,587
===== =====
</TABLE>
Cost of Sales and Restaurant Operating Costs
The Company restaurant operating profit margin decreased in the third
quarter 1995 to 15.8% versus 16.2% for 1994. The restaurant operating margin was
15.2% for the year-to-date 1995 and 15.4% for 1994. Cost of sales reflected
increases in restaurant labor due to inflation in the restaurant labor wage rate
throughout 1995. Likewise paper costs increased reflecting higher prices of the
paper products used in the restaurants. Food costs were somewhat favorable with
lower beef and chicken prices throughout the current year offset by higher
lettuce prices in the quarter and additionally by higher tomato prices in the
year-to-date period. Restaurant operating costs, as a percent of retail sales,
reflect lower insurance costs in the third quarter and lower local advertising
in the year-to-date period.
Royalties
Royalties before reserve provisions increased $1.9 million in the third
quarter 1995 compared with 1994. This was primarily a result of an increase of
176 average domestic restaurants open, while
S-8
<PAGE> 9
franchise domestic average net sales declined 0.9%. Royalties before reserve
provisions increased $6.4 million for the year-to-date period of 1995 with
franchise domestic average net sales up 0.3% and 180 more average domestic
restaurants open.
Reserves were reduced by $500,000 in the third quarter of 1995. Royalty
reserves of $1.9 million have been provided for the 1995 year-to-date period.
This compares to royalty reserves of $918,000 for the third quarter and $2.9
million for the year-to-date 1994.
Other Revenues
Other revenues increased $5.8 million over the third quarter of 1994. This
reflected pretax gains related to franchising restaurants of $5.6 million in the
third quarter 1995 versus $3.7 million in 1994 and gains from the sale of
various properties leased to franchisees of $3 million in 1995 and $400,000 in
1994. For the year-to-date periods other revenues increased $9.5 million
reflecting increased gains on franchising restaurants of $5.7 million and
increased gains of $2.1 million on dispositions of leased properties.
General and Administrative Expenses
General and administrative expenses for the third quarter of 1995 were 6.8%
of total revenues versus 6.5% in 1994. The year-to-date 1995 general and
administrative expenses were 7.6% versus 7.1% in 1994. There was a $2.9 million
increase for the quarter comparison and a $10.9 million increase for the
year-to-date comparison which reflects increases in salaries and benefits of
$2.4 million for the quarter and $5.8 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. The year-to-date increase also reflected higher marketing
research expenditures and increased spending to support international
development.
Income Taxes
During the third quarter of 1995, the rates at which deferred state and
local income taxes are being provided were reduced to reflect the current
estimate of the rate and jurisdictions in which the future liabilities are
expected to be settled. Year-to-date income taxes reflect the recognition in the
second quarter of 1995 of 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. 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 third
quarter of 1995. The debt to equity and debt to total capitalization ratios were
18% and 15%, respectively, at October 1, 1995. These compare to a debt to equity
ratio and debt to total capitalization ratio of 21% and 18%, respectively, at
January 1, 1995. Year-to-date capital expenditures amounted to $120.9 million
for 1995 compared to $97.9 million for 1994 representing an increase in new
restaurant development.
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 has continued throughout 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
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<PAGE> 10
restaurants will be opened or under construction systemwide (both Company and
franchise) during 1995. Through October 1, 1995, the Company and its franchisees
opened 223 new restaurants with another 89 under construction.
On October 31, 1995, the Company entered into a Share Purchase Agreement
with 632687 Alberta and Ronald V. Joyce pursuant to which the Company agreed to
acquire from Mr. Joyce all of the outstanding shares of Alberta for 16.45
million shares of a Canadian subsidiary of the Company, which shares are
exchangeable for 16.45 million common shares of the Company and which will
represent approximately 13.7% of the Company's outstanding common shares upon
consummation of the transaction. Alberta is the parent company of the Tim
Hortons restaurant chain. In connection with the transaction, the Company will
assume approximately $125 million of indebtedness of Alberta and its
subsidiaries and has agreed to repay up to Cdn.$125 million of that indebtedness
at or shortly after the consummation of the transaction. The Company also has
agreed to use its best efforts to elect Mr. Joyce to the Company's Board of
Directors. The completion of the transaction is subject to confirmation that the
transaction will be treated as a "pooling of interests" and to the satisfaction
of various other conditions. The transaction is expected to be completed in late
1995.
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 the Notes and the
Debentures offered hereby should adequately provide for ongoing projected cash
requirements and for the retirement of the indebtedness to be retired in
connection with the Alberta transaction. See "Acquisition of Alberta" and "Use
of Proceeds."
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.
Financial Accounting Standard Number 123 ("SFAS 123") -- "Accounting for
Stock-based Compensation" was issued and is effective for fiscal years beginning
after December 29, 1996. The adoption of SFAS 123 will not have an impact on the
results of operations or financial condition of the company.
BUSINESS
Wendy's is the third largest quick-service restaurant chain in the world
that features hamburgers. As of October 1, 1995, there were 4,587 Wendy's Old
Fashioned Hamburgers restaurants, of which 4,138 were located in the United
States and 449 were located in 33 other countries. Of these 4,587 restaurants,
3,297 were franchised, and the remainder were operated by the Company. Each
Wendy's restaurant offers a relatively standard menu featuring hamburgers and
filet of chicken breast sandwiches, which are prepared to order with the
customer's choice of condiments. Wendy's menu also includes a salad bar, chili,
baked and french fried potatoes, prepared salads, desserts, soft drinks and
other non-alcoholic beverages, and a child's meal which features either a small
hamburger or chicken nuggets, french fries and a small drink. In addition
Wendy's restaurants sell a variety of promotional products on a limited basis. A
breakfast menu is available at certain Wendy's restaurants during the morning
hours.
Over the past seven years, Wendy's has adhered to a business strategy which
includes: (1) focusing on high quality and perceived value and (2) aggressive
but responsible system growth. The Company believes that the consistent
application of its strategies has enabled Wendy's favorably to distinguish
itself among its competitors and to provide strong operating performance. In
fact, according to a major industry publication, Wendy's was named America's
best-loved hamburger chain in 1994, for the sixteenth year. Over the past five
years, Wendy's has responsibly grown its systemwide sales from $3.1 billion in
1990 to $4.2 billion in 1994, a 38% increase, while improving average comparable
net sales per domestic restaurant from $811,000 to $988,000, a 22% increase.
During the same period, the Company restaurant operating margin increased from
12.5% to 15.4%, and pretax profit margin increased from 6.0% to 10.7%. For the
first nine months of 1995, systemwide sales increased to $3.4
S-10
<PAGE> 11
billion from $3.1 billion during the comparable period of 1994, and net sales
per domestic restaurant increased to $747,000 from $742,000. Company restaurant
operating margins in the first nine months of 1995 were 15.2% compared to 15.4%
during the comparable period in 1994, reflecting a difficult competitive
environment and inflation in the restaurant labor wage rate throughout 1995.
Pretax profit margin increased to 11.8% from 11.3% during this period despite
these factors. Wendy's has continued its strategy of pursuing quality and
perceived value and has not aggressively participated in price discounting.
FOCUS ON HIGH QUALITY AND PERCEIVED VALUE
Exceeding Customer Expectations
The strategy for exceeding customer expectations every time the customer
visits a Wendy's restaurant is executed through strong focus on restaurant
operations and facilities. The Company strengthens operations through programs
such as crew and restaurant management training, management assessment and
development, incentive compensation and award programs designed to encourage
managers to achieve excellence in restaurant operations. Wendy's
performance-driven culture is an important element of this strategy. Field and
administrative managers above the level of restaurant manager are bonus-eligible
depending on achievement of results. Wendy's also has a unique, broad-based
employee stock option plan that grants options annually to substantially all
full-time employees. Physical condition of restaurants is addressed through
ongoing remodeling. Wendy's has pioneered the "Scoreboard," a digital readout at
the drive-through menu board that enables customers to see their orders as they
are recorded by the register operator. This innovation has enhanced customer
perception of order accuracy.
Strong Brand Equity
Wendy's employs a two-pronged marketing strategy that focuses on leveraging
on and improving the strength of the brand Wendy's, while simultaneously
building the association of value with the Wendy's brand. The first part of the
strategy is addressed by offering unique, high-quality sandwiches based on
existing hamburger and chicken products. Examples of these products are the
Smoky Bacon Cheeseburger and the Spicy Chicken Sandwich. These unique offerings
appear on the menu three to five times per year for a limited time during which
they are advertised on national television. The second part of the strategy is
addressed through the Super Value Menu, Combo Meals and the Kids' Meal. The
Super Value Menu is generally a collection of nine products priced at $0.99,
although the number, composition and pricing may vary from market to market.
Combos are generally a collection of three products, such as a hamburger, french
fries and a drink, priced at a discount. The Kids' Meal is also a collection of
three products, generally a small hamburger or chicken nuggets, a small order of
french fries and a small drink priced at a discount.
Wendy's Senior Chairman and Founder, Dave Thomas, has been its spokesman in
its advertising continuously for six years. The effectiveness of this
advertising has allowed Wendy's to achieve very high advertising awareness
despite being heavily overspent by two of its competitors.
RESPONSIBLE GROWTH OF THE SYSTEM
Over the last five years, the Company has focused on strengthening the
Company's restaurant system and growing it responsibly. The Company looks to
grow both domestically and internationally. The following table outlines
historical domestic and international growth from 1991 through the first nine
months of 1995:
S-11
<PAGE> 12
DOMESTIC AND INTERNATIONAL GROWTH
<TABLE>
<CAPTION>
OCT. 1,
1991 1992 1993 1994 1995
----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Domestic New Restaurants:
Company...................... 33 71 77 72 52
Franchised................... 66 105 131 176 125
International New Restaurants:
Company...................... 1 3 2 4 9
Franchised................... 47 56 41 46 37
</TABLE>
Domestic Growth
Between 1991 and October 1, 1995, Wendy's has added a total of 908 new
domestic restaurants. The Company believes there is a significant opportunity to
construct new Wendy's restaurants in the U.S., as evidenced by the Company's
relatively low market penetration. In the U.S. there is one Wendy's restaurant
for approximately every 65,000 people. The Company's largest competitor has one
restaurant for approximately every 27,000. The majority of new restaurant
locations are for "stand-alone" units with drive-through windows. These units
cost an average of approximately $1.0 million to develop. In recent years the
Company has been increasingly focusing on developing "special sites." These
typically are locations where a restaurant is operated in conjunction with
another business. Examples are hospitals, university student unions, travel
centers and airports. The Company anticipates that it will also encounter
opportunities to expand by purchasing sites formerly used for competitive
concepts. In addition, restaurant capacity is enhanced where needed by
retrofitting front counters to add registers and by adding a second
drive-through window. Through October 1, 1995, Wendy's has retrofitted
approximately 251 Company-operated restaurants.
An integral part of the Company's strategy is a program whereby restaurants
are regularly purchased from, and sold to, franchisees. This program provides
additional flexibility for managing the system and for handling situations such
as proven multi-unit operators who would like to join and grow within the
Wendy's system if they can acquire a base, and large existing Wendy's
franchisees facing estate planning issues. In addition, the sale of restaurants
generates gains and cash that can be used to offset write-downs, to pay for
remodels or for other purposes. Between 1987 and the third quarter of 1995, 649
restaurants have been sold and 381 have been purchased. These transactions have
generated $77.5 million in gains and a net of $93 million in cash.
International Growth
Between 1991 and October 1, 1995, Wendy's has added a total of 246 new
international restaurants. Wendy's believes it has significant opportunities to
develop restaurants outside of the U.S. An integral part of the Company's
international strategy is to develop with strong local franchisees or partners.
The Company believes there is currently a healthy base of such franchisees and
partners in many countries targeted by Wendy's for development. For example, at
the end of the third quarter of 1995, there were 197 restaurants in Canada, 49
in Japan and 31 in the Philippines. In addition to pursuing development through
existing franchisees and partners, the Company is focusing on countries deemed
to have a larger opportunity for Wendy's because of higher per capita income,
larger populations and lower political risk. Examples include England, Canada,
Japan and Argentina. In Canada, development has been accelerated by forming a
joint venture with Tim Hortons to build combination units that have separate
kitchens for a Wendy's and a Tim Hortons and a shared dining room. As of
December 4, 1995, there were 32 of these combination units open in Canada and
one in the U.S. The Tim Hortons transaction presents a number of opportunities,
including the development of Tim Hortons restaurants in the U.S. or in other
countries, the development of both Wendy's and Tim Hortons through each other's
franchisees and sales of Tim Hortons products in Wendy's restaurants. The
Company intends to explore these opportunities. See "Acquisition of Alberta".
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<PAGE> 13
DESCRIPTION OF NOTES AND DEBENTURES
The following description of the particular terms of the Notes and the
Debentures offered hereby (referred to in the accompanying Prospectus as the
"Offered Debt Securities") supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of Debt Securities
set forth in the Prospectus, to which description reference is hereby made.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Prospectus.
GENERAL
The Notes and the Debentures will be unsecured and unsubordinated
obligations of the Company and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company. The Notes will mature on December
15, 2005, and the Debentures will mature on December 15, 2025. The Notes and the
Debentures will bear interest at the respective rates per annum shown on the
front cover of this Prospectus Supplement, payable semi-annually on June 15 and
December 15 of each year (each an "Interest Payment Date") commencing June 15,
1996, to the Person in whose name the Note or the Debenture, as the case may be
(or any predecessor Note or Debenture, as the case may be) is registered at the
close of business on the preceding June 1 or December 1, as the case may be. The
Notes and the Debentures will not be redeemable by the Company prior to their
stated maturity and will not be entitled to the benefit of a sinking fund.
BOOK-ENTRY SYSTEM
The Notes and the Debentures, respectively, will be issued in the form of
global notes (the "Global Notes"). The Global Notes will be deposited with, or
on behalf of DTC (the "Depository"), and registered in the name of the
Depository or a nominee thereof. Unless and until it is exchanged in whole or in
part for Notes or Debentures, as the case may be, in definitive form, no Global
Note may be transferred except as a whole by the Depository to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such Nominee to a
successor of such Depository or a nominee of such successor.
The Depository has advised the Company as follows: The Depository is a
limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934. The
Depository was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in such securities through electronic book-entry changes in participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. The Depository's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depository.
Access to the Depository's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. The
rules applicable to the Depository are on file with the Securities and Exchange
Commission.
A further description of the Depository's procedures with respect to Global
Notes is set forth in the Prospectus under "Description of Debt
Securities -- Global Securities".
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes and the Debentures will be made by the
Underwriters in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds, so long as
DTC continues its Same-Day Funds Settlement System available to the Company.
S-13
<PAGE> 14
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes and
the Debentures will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity in the Notes and the Debentures will therefore
be required by DTC to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes or the Debentures.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Goldman, Sachs & Co. ("Goldman
Sachs"), and Goldman Sachs has agreed to purchase, the entire principal amount
of the Notes and the Debentures.
Under the terms and conditions of the Underwriting Agreement, Goldman Sachs
is committed to take and pay for all of the Notes and the Debentures, if any are
taken.
Goldman Sachs proposes to offer the Notes and the Debentures in part
directly to the public at the respective public offering prices set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such prices less a concession of 0.40% and 0.50% of the principal
amount of the Notes and the Debentures, respectively. Goldman Sachs may allow,
and such dealers may reallow, a concession not to exceed 0.25% of the principal
amount of the Notes and the Debentures to certain brokers and dealers. After the
Notes and the Debentures are released for sale to the public, the offering price
and other selling terms may from time to time be varied by Goldman Sachs.
The Notes and the Debentures are a new issue of securities with no
established trading market. The Company has been advised by Goldman Sachs that
Goldman Sachs intends to make a market in the Notes and the Debentures but is
not obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes and the Debentures.
The Company has agreed to indemnify Goldman Sachs against certain
liabilities, including liabilities under the Securities Act of 1933.
VALIDITY OF THE NOTES AND THE DEBENTURES
The validity of the Notes and the Debentures offered hereby will be passed
upon for the Company by Vorys, Sater, Seymour and Pease ("Vorys Sater"),
Columbus, Ohio, and for Goldman Sachs by Sullivan & Cromwell, New York, New
York. Frederick R. Reed, a director of the Company, is a partner in Vorys Sater.
As of November 30, 1995, members of Vorys Sater and attorneys employed thereby,
together with members of their immediate families, beneficially owned an
aggregate of approximately 57,500 shares of Common Stock of the Company.
EXPERTS
The consolidated balance sheets of the Company as of January 1, 1995 and
January 2, 1994 and the consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended January 1, 1995, January
2, 1994 and January 3, 1993 incorporated in this Prospectus Supplement by
reference have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated balance sheet of Alberta as of December 31, 1994 and the
consolidated statements of income and retained earnings and statement of changes
in financial position for the year ended December 31, 1994 incorporated in this
Prospectus Supplement by reference have been incorporated herein in reliance on
the report of Price Waterhouse, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
S-14
<PAGE> 15
[LOGO]
$200,000,000
WENDY'S INTERNATIONAL, INC.
DEBT SECURITIES
------------------
Wendy's International, Inc. may from time to time offer its unsecured debt
securities consisting of debentures, notes and/or other evidences of
indebtedness in one or more series in an aggregate principal amount not to
exceed $200,000,000 (or the equivalent in foreign denominated currency or units
based on or related to currencies). The Debt Securities may be offered as a
separate series in amounts, at prices and on terms to be determined at the time
of sale. The accompanying Prospectus Supplement sets forth, with regard to the
series of Debt Securities in respect of which this Prospectus is being
delivered, the title and the terms of the Debt Securities, including, where
applicable, the specific designation, rank, aggregate principal amount,
authorized denominations (which may be in United States dollars, in any foreign
currency or in units based on or relating to currencies), maturity, rate (which
may be fixed, floating or adjustable), if any, and time or times of payment of
any interest, any terms for optional or mandatory redemption or payment of
additional amounts or any sinking fund provisions, any index, formula or other
method used to determine the amount of principal, premium, if any, or interest,
the initial public offering price, the proceeds to the Company and any other
specific terms in connection with the offering and sale of such series of Debt
Securities.
The Company may sell Debt Securities to or through underwriters and may
also sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co., or may be a group of underwriters
represented by firms including Goldman, Sachs & Co. Goldman, Sachs & Co. may
also act as an agent. See "Plan of Distribution". The accompanying Prospectus
Supplement sets forth the names of any underwriters or agents involved in the
sale of the Debt Securities in respect of which this Prospectus is being
delivered, the principal amounts, if any, to be purchased by underwriters and
the commissions or discounts, if any, to be received by such underwriters or
agents.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
GOLDMAN, SACHS & CO.
------------------
The date of this Prospectus is January 6, 1995.
<PAGE> 16
AVAILABLE INFORMATION
Wendy's International, Inc. ("Wendy's" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at Citicorp Center, 500 West Madison, 14th
Floor, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
The Company has filed a registration statement on Form S-3 (together with
all amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is made to the
Registration Statement and the exhibits filed as part thereof. Statements
contained herein are qualified in their entirety by reference to the
Registration Statement and such exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended January
2, 1994; the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended April 3, 1994, July 3, 1994 and October 2, 1994, respectively; and all
other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act (File No. 1-8116) subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
are incorporated herein by reference. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of all
of the documents which are incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to Wendy's
International, Inc., P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio
43017, Attention: John F. Brownley, Senior Vice President and Treasurer,
telephone number (614) 764-3251.
THE COMPANY
Wendy's is primarily engaged in the business of operating, developing and
franchising a system of distinctive quick-service restaurants under the name
Wendy's Old Fashioned Hamburgers. The Company is one of the largest food service
organizations in the world. Each Wendy's restaurant offers a relatively standard
menu featuring hamburgers and filet of chicken breast sandwiches, which are
prepared to order with the customer's choice of condiments. Wendy's menu
includes a salad bar, chili, baked and french fried potatoes, prepared salads,
desserts, soft drinks and other non-alcoholic beverages, and a child's meal
which features either a small hamburger or chicken nuggets, french fries and a
small drink. In addition the Wendy's restaurants sell a variety of promotional
products on a limited basis. A breakfast menu is available at certain Wendy's
restaurants during the morning hours. At October 2, 1994, there were 4,322
Wendy's restaurants in operation in 50 states and 33 other countries and
territories of which 1,246 were operated by the Company and 3,076 were operated
by franchisees.
2
<PAGE> 17
The Company was incorporated in 1969 under the laws of the State of Ohio.
The principal offices of the Company are located at 4288 West Dublin-Granville
Road, Dublin, Ohio 43017, and its telephone number is (614) 764-3100.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Offered
Debt Securities (as defined below) will be used as set forth in a Prospectus
Supplement relating to such Offered Debt Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
- ---------------------------------------------------------------------------- -------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 29, JANUARY 3, JANUARY 2, OCTOBER 3, OCTOBER 2,
1989 1990 1991 1993 1994 1993 1994
- ------------ ------------ ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
2.13x 2.85x 3.19x 3.82x 4.26x 4.60x 5.80x
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings includes income before income taxes
and fixed charges excluding capitalized interest. Fixed charges includes
interest expense, capitalized interest and one-third of rent expense,
representative of the interest factor.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities are to be issued under an Indenture to be dated as of
December 14, 1995 (the "Indenture") between the Company and The Huntington
National Bank, as trustee (the "Trustee"). A copy of the form of such Indenture
has been filed as an exhibit to the Registration Statement. The following
summaries of certain provisions of the Debt Securities and the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular Sections, Articles or defined
terms of the Indenture are referred to, it is intended that such Sections,
Articles or defined terms shall be incorporated herein by reference. Article and
Section references used herein are references to the Indenture. Capitalized
terms not otherwise defined herein shall have the respective meanings given to
them in the Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated debt of the
Company.
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued thereunder from time to time in one or more series. Reference is made
to the Prospectus Supplement relating to the particular Debt Securities offered
thereby (the "Offered Debt Securities") which shall set forth the following
terms, as applicable, of the Offered Debt Securities: (1) the title of the
Offered Debt Securities; (2) any limit on the aggregate principal amount of the
Offered Debt Securities; (3) the price (expressed as a percentage of the
3
<PAGE> 18
aggregate principal amount thereof) at which the Offered Debt Securities will be
issued; (4) the Person to whom any interest on the Offered Debt Securities will
be payable, if other than the Person in whose name such Offered Debt Securities
(or one or more Predecessor Securities) are registered on any Regular Record
Date; (5) the date or dates on which the principal of the Offered Debt
Securities will be payable; (6) the rate or rates per annum (which may be fixed,
floating or adjustable) at which the Offered Debt Securities will bear interest,
if any, or the formula pursuant to which such rate or rates shall be determined,
the date or dates from which such interest will accrue and the dates on which
such interest, if any, will be payable and the Regular Record Dates for such
interest payment dates; (7) the place or places where principal of (and premium,
if any) and interest, if any, on Offered Debt Securities will be payable; (8) if
applicable, the price at which, the periods within which and the terms and
conditions upon which the Offered Debt Securities may be redeemed at the option
of the Company, pursuant to a sinking fund or otherwise; (9) if applicable, any
obligation of the Company to redeem or purchase Offered Debt Securities pursuant
to any sinking fund or analogous provisions or at the option of a Holder
thereof, and the period or periods within which, the price or prices at which
and the terms and conditions upon which the Offered Debt Securities will be
redeemed or purchased, in whole or in part; (10) if other than denominations of
$1,000 and any integral multiple thereof, the denominations in which the Offered
Debt Securities will be issuable; (11) the currency or currencies, including
composite currencies or currency units, in which payment of the principal of (or
premium, if any) or interest, if any, on any of the Offered Debt Securities will
be payable if other than the currency of the United States of America; (12) if
the amount of payments of principal of (or premium, if any) or interest, if any,
on the Offered Debt Securities may be determined with reference to one or more
indices, the manner in which such amounts will be determined; (13) if the
principal of (or premium, if any) or interest, if any, on any of the Offered
Debt Securities of the series is to be payable, at the election of the Company
or a Holder thereof, in one or more currencies, including composite currencies,
or currency units other than that or those in which the Securities are stated to
be payable, the currency, currencies, including composite currencies, or
currency units in which payment of the principal of (or premium, if any) or
interest, if any, on Securities of such series as to which such election is made
will be payable, and the periods within which and the terms and conditions upon
which such election is to be made; (14) the portion of the principal amount of
the Offered Debt Securities, if other than the entire principal amount thereof,
payable upon acceleration of maturity thereof; (15) whether all or any part of
the Offered Debt Securities will be issued in the form of a permanent Global
Security or Securities, as described under "Permanent Global Securities", and,
if so, the depositary for, and other terms relating to, such permanent Global
Security or Securities; (16) any event or events of default applicable with
respect to the Offered Debt Securities in addition to those provided in the
Indenture; (17) any other covenant or warranty included for the benefit of the
Offered Debt Securities in addition to (and not inconsistent with) those
included in the Indenture for the benefit of Debt Securities of all series, or
any other covenant or warranty included for the benefit of the Offered Debt
Securities in lieu of any covenant or warranty included in the Indenture for the
benefit of Offered Debt Securities, or any combination of such covenants,
warranties or provisions; (18) any restriction or condition on the
transferability of the Offered Debt Securities; (19) if applicable, that such
Offered Debt Securities, in whole or any specified part, are defeasible pursuant
to the provisions of the Indenture described under "Defeasance and Covenant
Defeasance"; (20) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Offered Debt Securities; and (21)
any other specific terms or provisions of the Offered Debt Securities not
inconsistent with the Indenture. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities are to be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000. (Section
302). No service charge will be made for any transfer or exchange of such
Offered Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
(Section 305)
Debt Securities may be issued under the Indenture as Original Issue
Discount Debt Securities to be offered and sold at a substantial discount below
their stated principal amount. Special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus
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Supplement relating thereto. "Original Issue Discount Debt Security" means any
security which provides for an amount less than the principal amount thereof to
be due and payable upon the declaration of acceleration of the maturity thereof
upon the occurrence and continuance of an Event of Default. (Section 101)
If the Debt Securities are denominated in whole or in part in any currency
other than United States dollars, if the principal of (and premium, if any) or
interest, if any, on the Debt Securities are to be payable, at the election of
the Company or a Holder thereof, in a currency or currencies other than that in
which such Debt Securities are to be payable, or if any index is used to
determined the amount of payments of principal of, premium, if any, or interest
on any series of the Debt Securities, special Federal income tax, accounting and
other considerations applicable thereto will be described in the Prospectus
Supplement relating thereto.
The Indenture does not contain any provisions that would provide protection
to Holders of the Debt Securities against a sudden and dramatic decline in
credit quality of the Company resulting from any takeover, recapitalization or
similar restructuring or from other highly leveraged transactions.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest payment. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that, at
the option of the Company, payment of any interest may be made by check mailed
to the address of the Person entitled thereto as such address appears in the
Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee in Columbus, Ohio will be
designated as the Company's sole Paying Agent for payments with respect to Debt
Securities of each series.
Any other Paying Agents initially designated by the Company for the Debt
Securities of a particular series will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each place of payment for the Debt Securities of a
particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Debt Security thereafter may look only to the Company for payment thereof.
(Section 1003)
COVENANTS
Limitation on Liens
The Indenture provides that the Company may not, and may not permit any
Domestic Subsidiary to, create or suffer to exist any Lien to secure any
Indebtedness of the Company or any Subsidiary upon any Principal Property, or
upon any shares of capital stock or evidences of Indebtedness issued by any
Domestic Subsidiary and owned by the Company or any Domestic Subsidiary (whether
such Principal Property, shares or evidences of indebtedness were owned as of
the date of the Indenture or thereafter acquired), without making, or causing
such Domestic Subsidiary to make, effective provision to secure all of the Debt
Securities issued under the Indenture and then Outstanding by such Lien, equally
and ratably with any and all other Indebtedness thereby secured, so long as such
Indebtedness is so secured,
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unless, after giving effect thereto, the sum of (A) the principal amount of
Indebtedness secured by all Liens incurred after the date of the Indenture and
otherwise prohibited by the Indenture and (B) the Attributable Value of all Sale
and Leaseback Transactions entered into after the date of the Indenture and
otherwise prohibited by the Indenture does not exceed 10% of Consolidated
Capitalization. The foregoing restrictions shall not apply to Indebtedness
secured by Liens existing on the date of the Indenture or to: (i) Liens on any
property existing at the time of the acquisition thereof; (ii) Liens on property
of a corporation existing at the time such corporation is merged into or
consolidated with the Company or a Domestic Subsidiary or at the time of a sale,
lease or other disposition of the properties of such corporation (or a division
thereof) as an entirety or substantially as an entirety to the Company or a
Domestic Subsidiary, provided that such Lien as a result of such merger,
consolidation, sale, lease or other disposition is not extended to property
owned by the Company or such Domestic Subsidiary immediately prior thereto;
(iii) Liens on property of a corporation existing at the time such corporation
becomes a Domestic Subsidiary; (iv) Liens securing Indebtedness of a Domestic
Subsidiary to the Company or to another Domestic Subsidiary; (v) Liens to secure
all or part of the cost of acquisition, construction, development or improvement
of the underlying property, or to secure Indebtedness incurred to provide funds
for any such purpose, provided that the commitment of the creditor to extend the
credit secured by any such Lien shall have been obtained not later than 24
months after the later of (a) the completion of the acquisition, construction,
development or improvement of such property or (b) the placing in operation of
such property or of such property as so constructed, developed or improved; (vi)
Liens on any property created, assumed or otherwise brought into existence in
contemplation of the sale or other disposition of the underlying property,
whether directly or indirectly, by way of share disposition or otherwise,
provided that the Company must have disposed of such property within 180 days
after the creation of such Liens and that any Indebtedness secured by such Liens
shall be without recourse to the Company or any Subsidiary; (vii) Liens in favor
of the United States of America or any State thereof, or any department, agency
or instrumentality or political subdivision thereof, to secure partial,
progress, advance or other payments; (viii) Liens to secure Indebtedness of
joint ventures in which the Company or a Domestic Subsidiary has an interest, to
the extent such Liens are on property or assets of, or equity interests in, such
joint ventures; (ix) Liens to secure Indebtedness in connection with financing
by the Company or a Domestic Subsidiary of the acquisition, development or
construction of one or more restaurants by or for one or more franchisees of the
Company or of a Domestic Subsidiary; and (x) any extension, renewal, replacement
or refunding of any Lien existing on the date of the Indenture or referred to in
clauses (i) to (iii), (v) and (ix), provided that the principal amount of
Indebtedness secured thereby and not otherwise authorized by clauses (i) to
(iii), (v) or (ix) shall not exceed the principal amount of Indebtedness, plus
any premium or fee payable in connection with any such extension, renewal,
replacement or refunding, so secured at the time of such extension, renewal,
replacement or refunding. (Section 1008)
Limitation on Sale and Leaseback Transactions
The Indenture provides that the Company may not, and may not permit any
Domestic Subsidiary to, enter into any Sale and Leaseback Transaction with
respect to any Principal Property, unless, either (i) the Company or such
Domestic Subsidiary would otherwise be entitled to issue, assume or guarantee
Indebtedness secured by a Lien on such Principal Property without equally and
ratably securing the outstanding Debt Securities under the Indenture; (ii) the
Company or such Domestic Subsidiary applies, within 180 days after the effective
date of such Sale and Leaseback Transaction, an amount equal to the Net
Available Proceeds therefrom to (A) the acquisition of one or more Principal
Properties or (B) to the retirement of the Debt Securities or the repayment of
other Indebtedness of the Company or a Domestic Subsidiary (other than such
Indebtedness owned by the Company or a Domestic Subsidiary) which, in the case
of such Indebtedness of the Company, is not subordinate and junior in right of
payment to the prior payment of the Debt Securities; or (iii) after giving
effect thereto, the sum of (A) the principal amount of Indebtedness secured by
all Liens incurred after the date of the Indenture and otherwise prohibited by
the Indenture and (B) the Attributable Value of all Sale and Leaseback
Transactions entered into after the date of the Indenture and otherwise
prohibited by the Indenture does not exceed
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<PAGE> 21
10% of Consolidated Capitalization. The foregoing restrictions will not apply to
(w) a Sale and Leaseback Transaction providing for a lease for a term, including
any renewal thereof, of not more than three years, by the end of which term it
is intended that the use of such Principal Property by the lessee will be
discontinued; (x) a Sale and Leaseback Transaction between the Company and a
Domestic Subsidiary or between Domestic Subsidiaries; (y) a Sale and Leaseback
Transaction between the Company or a Domestic Subsidiary and a joint venture in
which the Company or a Domestic Subsidiary has an interest; or (z) a Sale and
Leaseback Transaction between the Company or a Domestic Subsidiary and any other
Person primarily for the purpose of financing the acquisition, development or
construction of one or more restaurants by one or more franchisees of the
Company or of a Domestic Subsidiary. (Section 1009)
RESTRICTIONS ON MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other Person or sell, lease or otherwise transfer its property and
assets as, or substantially as, an entirety to any Person, and the Company may
not permit any Person to merge into or consolidate with the Company unless (i)
either (A) the Company will be the resulting or surviving entity or (B) any
successor or purchaser is a corporation, partnership, limited liability company
or trust organized under the laws of the United States of America, any State or
the District of Columbia, and any such successor or purchaser expressly assumes
the Company's obligations on the Debt Securities under a supplemental Indenture;
(ii) immediately after giving effect to the transaction no Event of Default, and
no event which after notice or lapse of time or both would become an Event of
Default, shall have occurred and be continuing; (iii) if, as a result of any
such transaction, property or assets of the Company or any Domestic Subsidiary
would become subject to a Lien which would not be permitted by the limitation on
Liens contained in the Indenture, the Company or, if applicable, the successor
to the Company, as the case may be, shall take such steps as shall be necessary
effectively to secure the Debt Securities issued under the Indenture equally and
ratably with Indebtedness secured by such Lien; and (iv) certain other
conditions are met. (Section 801). Upon any consolidation or merger into any
other Person or any conveyance, transfer or lease of the Company's assets
substantially as an entirety to any Person, the successor Person shall succeed
to, and be substituted for, the Company under the Indenture, and the Company,
except in the case of a lease, shall be relieved of all obligations and
covenants under the Indenture and the Debt Securities to the extent it was the
predecessor Person. (Section 802)
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Debt Securities, the following events are defined in the
Indenture as "Events of Default" with respect to Debt Securities of any series:
(a) failure to pay principal (including any sinking fund payment) of (or
premium, if any, on) any Debt Security of that series when due; (b) failure to
pay any interest on any Debt Security of that series when due, continued for 30
days; (c) failure to perform any other covenant or agreement of the Company
under the Indenture (other than a covenant the performance of which is dealt
with specifically elsewhere in the Indenture or which has been included in the
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 90 days after written notice as provided in the
Indenture; (d) failure to pay when due (after applicable grace periods as
provided in the Indenture) the principal of, or acceleration of, any
indebtedness for money borrowed by the Company having an aggregate principal
amount outstanding equal to at least $25 million, if such indebtedness is not
discharged, or such acceleration is not annulled, within 10 days after written
notice as provided in the Indenture; (e) certain events of bankruptcy,
Insolvency or reorganization; and (f) any other Event of Default provided with
respect to Debt Securities of that series. (Section 501)
Except as defined in the Prospectus Supplement relating thereto and except
as specified in clauses (d) and (e) of the preceding paragraph, no Event of
Default with respect to Debt Securities of a particular series shall necessarily
constitute an Event of Default with respect to Debt Securities of any other
series. (Section 501) The Holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of any series shall have the right, subject to
such provisions for indemnification of the
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Trustee, to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under the Indenture or exercising any trust
or power conferred on the Trustee with respect to Debt Securities of that
series. (Section 512)
If an Event of Default (other than an Event of Default specified in clause
(e) of the second preceding paragraph) with respect to Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the Trustee
or the Holders of at least 25% in principal amount of the Outstanding Debt
Securities of that series may, by a notice in writing to the Company (and to the
Trustee if given by the Holders), declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Debt Securities of that series to be due and payable immediately; PROVIDED,
HOWEVER, that under certain circumstances the Holders of a majority in aggregate
principal amount of Outstanding Debt Securities of that series may rescind or
annul such declaration and its consequences. (Section 502). If an Event of
Default specified in clause (e) of the next preceding paragraph occurs, the
outstanding Debt Securities automatically will become immediately payable
without any declaration or other act on the part of the Trustee or any Holder.
(Section 502). For information as to waiver of defaults, see "Modification and
Waiver" herein.
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to the principal amount of such Original Issue
Discount Securities due on acceleration upon the occurrence of an Event of
Default and the continuation thereof.
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written notice of
a continuing Event of Default with respect to Debt Securities of that series and
unless also the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of the same series shall have made written request,
and offered reasonable indemnity to the Trustee, to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of the same
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. (Section 507). However, such
limitations do not apply to a suit instituted by a Holder of any Debt Security
for enforcement of payment of the principal of (or premium, if any) or interest,
if any, on such Debt Security on or after the respective due dates expressed in
such Debt Security. (Section 508)
Subject to the provisions of the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any of the
Holders of Debt Securities unless they shall have offered to the Trustee
security or indemnity in form and substance reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request. (Section 603)
The Company will be required to furnish to the Trustee annually a statement
by certain officers of the Company as to whether the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
the Indenture. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee, with the consent of the Holders of not less than a majority of
principal amount of each series of the Outstanding Debt Securities of each
series affected by the modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
such Outstanding Debt Security affected thereby: (a) change the Stated Maturity
of the principal of (or premium, if any) or any installment of principal or
interest, if any, on any such Debt Security; (b) reduce the principal amount of
(or premium, if any) or the interest rate, if any, on any such Debt Security or
the principal amount due upon acceleration of an Original Issue Discount
Security; (c) adversely affect any right of repayment at the option of the
Holder of any such Debt Security; (d) reduce the amount of, or
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<PAGE> 23
postpone the date fixed for, the payment of any sinking fund or analogous
obligation; (e) change the place or currency of payment of principal of (or
premium, if any) or the interest, if any, on any such Debt Security; (f) impair
the right to institute suit for the enforcement of any such payment on or with
respect to any such Debt Security on or after the Stated Maturity (or, in the
case of redemption, on or after the Redemption Date); (g) reduce the percentage
of the principal amount of Outstanding Debt Securities of any series, the
consent of the Holders of which is necessary to modify or amend the Indenture;
or (h) modify the foregoing requirements or reduce the percentage of Outstanding
Debt Securities necessary to waive compliance with certain provisions of the
Indenture or for waiver of certain defaults. (Section 902)
The holders of at least a majority of the aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of that
series, waive compliance by the Company with certain restrictive provisions of
the Indenture and waive any past default under the Indenture, except a default
in the payment of principal, premium or interest or in the performance of
certain covenants. (Sections 1010 and 513)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities of any series have
given or taken any direction, notice, consent, waiver or other action under the
Indenture as of any date, (i) the principal amount of an Original Issue Discount
Debt Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date; (ii) if, as of such date, the
principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be an
amount determined in the manner prescribed for such Debt Security; and (iii) the
principal amount of a Security denominated in one or more foreign currencies or
currency units that will be deemed to be Outstanding will be the United States
dollar equivalent, determined as of such date in the manner prescribed for such
Debt Security, of the principal amount of such Debt Security (or, in the case of
a Debt Security described in clause (i) or (ii) above, of the amount described
in such clause). Certain Debt Securities, including those for which payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased pursuant to Section 1302, will not be deemed
to be Outstanding. (Section 101). For purposes of the Indenture, the Debt
Securities of any series "Outstanding" thereunder are deemed to exclude those
held by Persons that control, are controlled by or are under common control with
the Company; PROVIDED that any Person who does not own, directly or indirectly,
more than 5% of the outstanding voting securities of the Company will not be
deemed to control the Company. (Section 101)
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series on the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such
shorter period as may be specified by the Company (or the Trustee, if it set the
record date), and may be shortened or lengthened (but not beyond 180 days) from
time to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides, if such provision is made applicable to the Debt
Securities of any series pursuant to Section 301 of the Indenture (which will be
indicated in the Prospectus Supplement applicable thereto), that the Company may
elect either (A) to defease and be discharged from any and all obligations with
respect to such Debt Securities then outstanding (except for the obligations to
exchange or register the transfer of such Debt Securities, to replace temporary
or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office
or agency in respect of the Debt Securities, and to
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hold monies for payments in trust)("defeasance"), or (B) to be released from its
obligations with respect to such Debt Securities concerning the restrictions
described under "Restriction on Merger and Sale of Assets" (Section 801) and any
other covenants applicable to such Debt Securities which are subject to covenant
defeasance ("covenant defeasance"), and the occurrence of an event described and
notice thereof in clauses (c) and (d) under "Events of Default and Notice
Thereof" (with respect to covenants determined, pursuant to Section 301 of the
Indenture, to be subject to covenant defeasance) shall no longer be an Event of
Default, in each case, upon the irrevocable deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money, and/or U.S. Government
Obligations (as defined in the Indenture) which through the payment of principal
and interest in accordance with their terms will provide money in an amount
sufficient without reinvestment to pay the principal of (and premium, if any)
and interest, if any, on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor. Such a trust
may only be established if, among other things, (i) the Company has delivered to
the Trustee an opinion of counsel (as specified in the Indenture) to the effect
that the Holders of such Debt Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred, (ii) no Event of Default or event which
with the giving of notice or lapse of time, or both, would become an Event of
Default under the Indenture shall have occurred and be continuing on the date of
such deposit and (iii) certain other customary conditions precedent are
satisfied. In the case of defeasance under clause (A) above, the opinion of
counsel referred to in clause (i) above must refer to and be based on a ruling
of the Internal Revenue Service issued to the Company or published as a revenue
ruling or on a change in applicable Federal income tax law, in each case after
the date of the Indenture. (Article Thirteen)
The Company may exercise the defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of the covenant defeasance option.
If the Company exercises the defeasance option, payment of such Debt Securities
may not be accelerated because of an Event of Default. If the Company exercises
the covenant defeasance option, payment of such Debt Securities may not be
accelerated by reference to the covenants noted under clause (B) above. In the
event the Company omits to comply with the remaining obligations with respect to
such Debt Securities under the Indenture after exercising its covenant
defeasance option and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee may be insufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default, because the required deposit
in the defeasance trust is based upon scheduled cash flows, rather than market
values, which will vary depending on prevailing interest rates and other
factors. However, the Company will remain liable in respect of such payments.
(Article Thirteen)
The Prospectus Supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Debt
Securities of a particular series.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture with respect to any particular
series of Debt Securities for the full definition of all such terms, as well as
any other terms used herein for which no definition is provided. (Section 101)
"Attributable Value" in respect of any Sale and Leaseback Transaction
means, as of the time of determination, the lesser of (i) the sale price of the
Principal Property so leased multiplied by a fraction the numerator of which is
the remaining portion of the base term of the lease included in such Sale and
Leaseback Transaction and the denominator of which is the base term of such
lease, and (ii) the total obligation (discounted to present value at the highest
rate of interest specified by the terms of any series of Debt Securities then
Outstanding compounded semi-annually) of the lessee for rental payments (other
than amounts required to be paid on account of property taxes as well as
maintenance, repairs,
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<PAGE> 25
insurance, water rates and other items which do not constitute payments for
property rights) during the remaining portion of the base term of the lease
included in such Sale and Leaseback Transaction.
"Consolidated Capitalization" of the Company means consolidated total
assets less consolidated current liabilities, all as shown on a consolidated
balance sheet of the Company and all Subsidiaries (whether or not consolidated
for accounting purposes).
"Domestic Subsidiary" means any Subsidiary which owns a Principal Property.
"Indebtedness" of any Person means (without duplication), with respect to
any Person, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person and (iv) every obligation of the type referred to in
clauses (i) through (iii) of another Person the payment of which such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor,
guarantor or otherwise (but only, in the case of clause (iv), to the extent such
Person has guaranteed or is responsible or liable for such obligations).
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance, or other security arrangement of any kind or nature whatsoever on
or with respect to such property or assets (including any conditional sale or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Net Available Proceeds" from any Sale Transaction by any Person means cash
or readily marketable cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiree of
Indebtedness or obligations relating to the properties or assets that are the
subject of such Sale Transaction or received in any other noncash form)
therefrom by such Person, net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
as a consequence of such Sale Transaction; (ii) all payments made by such Person
or its Subsidiaries on any Indebtedness which is secured in whole or in part by
any such properties and assets in accordance with the terms of any Lien upon or
with respect to any such properties and assets or which must, by the terms of
such Lien, or in order to obtain a necessary consent to such Sale Transaction or
by applicable law, be repaid out of the proceeds from such Sale Transaction; and
(iii) all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or joint ventures as a result of such Sale
Transaction; provided, however, that for purposes of clause (ii) of "Limitations
on Sale and Leaseback Transactions", the amount of Net Available Proceeds to be
applied to any acquisition of Principal Properties or retirement of Debt
Securities or other Indebtedness shall be reduced by an amount equal to the sum
of (A) an amount equal to the redemption price with respect to such Debt
Securities delivered within 180 days after the effective date of such Sale and
Leaseback Transaction to the Trustee for retirement and cancellation and (B) the
principal amount, plus any premium or fee paid in connection with a redemption
in accordance with the terms, of such other Indebtedness voluntarily retired by
the Company within such 180-day period, excluding in each case retirements
pursuant to mandatory sinking fund or prepayment provisions and payments at
maturity.
"Principal Property" means all restaurant or related equipment and all real
property, in each case which is owned by the Company or a Subsidiary and which
constitutes all or part of any restaurant located within one of the 50 states of
the United States or the District of Columbia.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any Principal Property that, more than 12
months after (i) the completion of the acquisition, construction, development or
improvement of such Principal Property or (ii) the placing in operation of such
Principal Property or of such Principal Property as so constructed, developed or
improved, has been or is being sold, conveyed, transferred or otherwise disposed
of by such Person to such lender or investor or to any Person to whom
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funds have been or are to be advanced by such lender on the security of such
Principal Property. The term of such arrangement, as of any date (the
"measurement date"), shall end on the date of the last payment of rent or any
other amount due under such arrangement on or prior to the first date after the
measurement date on which such arrangement may be terminated by the lessee, at
its sole option, without payment of a penalty. "Sale Transaction" means any such
sale, conveyance, transfer or other disposition.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding voting stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
PERMANENT GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
permanent Global Securities that will be deposited with a Depositary or its
nominee. In such a case, one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of Outstanding Debt Securities of the series to be represented
by such Global Security or Securities. The Prospectus Supplement relating to
such series of Debt Securities will describe the circumstances, if any, under
which beneficial owners of interests in any such permanent Global Security may
exchange such interests for Debt Securities of such series and of like tenor and
principal amount in any authorized form and denomination. Unless and until it is
exchanged in whole or in part for Debt Securities in definitive registered form,
a permanent Global Security may not be registered for transfer or exchange
except in the circumstances described in the applicable Prospectus Supplement.
(Sections 204 and 305)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a permanent Global
Security and a description of the Depositary will be contained in the applicable
Prospectus Supplement.
THE TRUSTEE
The Trustee may be deemed to have a conflicting interest and may be
required to resign as Trustee if at the time of a default under the Indenture it
is a creditor of the Company.
The Trustee under the Indenture is also Trustee of the 7% Convertible
Subordinated Debentures Due 2006 (the "Convertible Debentures") issued pursuant
to an Indenture dated as of April 1, 1991, between the Company and The
Huntington National Bank, as trustee. Pursuant to the Trust Indenture Act,
should a default occur with respect to either the Debt Securities or the
Convertible Debentures, the Trustee would be required to resign as Trustee with
respect to the Debt Securities or the Convertible Debentures under the Indenture
within 90 days of such default unless such default were cured, duly waived or
otherwise eliminated.
GOVERNING LAW
The Indenture and the Debt Securities are governed by and shall be
construed in accordance with the laws of the State of New York. (Section 112)
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co., or a group of underwriters
represented by firms including Goldman, Sachs & Co. Goldman, Sachs & Co. may
also act as agents.
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The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of Debt Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Company by
Vorys, Sater, Seymour and Pease, Columbus, Ohio and for any underwriters or
agents by Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated balance sheets of the Company as of January 2, 1994 and
January 3, 1993 and the consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended January 2, 1994, January
3, 1993 and December 29, 1991 incorporated in this Prospectus by reference have
been incorporated herein in reliance on the report of Coopers & Lybrand,
independent accountants, given on the authority of that Firm as experts in
accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THE PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Company........................... S-2
Acquisition of Alberta................ S-2
Use of Proceeds....................... S-3
Capitalization........................ S-4
Selected Consolidated Financial
Information......................... S-5
Selected Pro Forma Consolidated
Financial Information............... S-6
Management's Discussion and Analysis
of Financial Conditions and Results
of Operations....................... S-8
Business.............................. S-10
Description of Notes and Debentures... S-13
Underwriting.......................... S-14
Validity of the Notes and the
Debentures.......................... S-14
Experts............................... S-14
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 2
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of Debt Securities........ 3
Plan of Distribution.................. 12
Validity of the Debt Securities....... 13
Experts............................... 13
</TABLE>
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$200,000,000
WENDY'S
INTERNATIONAL, INC.
$100,000,000
6.35% NOTES DUE
DECEMBER 15, 2005
$100,000,000
7.00% DEBENTURES DUE
DECEMBER 15, 2025
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LOGO
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GOLDMAN, SACHS & CO.
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