<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- --------------------
Commission File Number 1-8116
WENDY'S INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 31-0785108
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio 43017-0256
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 614-764-3100
----------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
--- ---
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at May 6, 1996
- -------------------------------- --------------------------
<S> <C>
Common shares, $.10 stated value 128,634,000 shares
</TABLE>
Exhibit index on page 12.
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
PART I: Financial Information
Item 1. Financial Statements:
Consolidated Statement of Income for the quarters
ended March 31, 1996 and April 2, 1995 3
Consolidated Balance Sheet as of March 31, 1996,
and December 31, 1995 4 - 5
Consolidated Statement of Cash Flows for the
quarters ended March 31, 1996, and April 2, 1995 6
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
PART II: Other Information
Item 6 10
Signature 11
Index to Exhibits 12
Exhibit 3 (b) - New Regulations, as amended 13 - 32
Exhibit 10 - Amendment to Employment Agreement between The TDL Group
Ltd. (a subsidiary of the Company) and Ronald Vaughan Joyce 33
Exhibit 11 - Computation of Net Income Per Share 34
</TABLE>
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share data)
QUARTER ENDED QUARTER ENDED
MARCH 31 APRIL 2
1996 1995
------------- -------------
<S> <C> <C>
REVENUES
Retail sales...................................... $348,728 $344,884
Franchise revenues................................ 61,155 53,124
-------- --------
409,883 398,008
-------- --------
COSTS AND EXPENSES
Cost of sales..................................... 219,840 210,236
Company restaurant operating
costs........................................... 89,605 86,462
Operating costs................................... 12,474 13,371
General and administrative
expenses........................................ 32,730 33,548
Depreciation and amortization
of property and equipment....................... 21,351 19,265
Other expenses (income)........................... (470) 596
Special charges................................... - 6,879
Interest, net..................................... 2,720 3,176
-------- --------
378,250 373,533
-------- --------
INCOME BEFORE INCOME TAXES............................ 31,633 24,475
INCOME TAXES.......................................... 12,179 8,839
-------- --------
NET INCOME............................................ $ 19,454 $ 15,636
======== ========
PRIMARY EARNINGS PER SHARE............................ $ .16 $ .13
======== ========
FULLY DILUTED EARNINGS PER SHARE...................... $ .16 $ .13
======== ========
DIVIDENDS PER SHARE................................... $ .06 $ .06
======== ========
PRIMARY SHARES........................................ 123,191 120,871
======== ========
FULLY DILUTED SHARES.................................. 131,219 129,128
======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
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<PAGE> 4
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(In thousands)
MARCH 31 DECEMBER 31
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................... $ 98,029 $ 206,127
Short-term investments, at
market........................................ 7,153 7,682
Accounts receivable, net........................ 49,296 49,555
Notes receivable, net........................... 9,377 12,272
Deferred income taxes........................... 18,328 18,389
Inventories and other........................... 30,863 27,254
---------- ----------
213,046 321,279
---------- ----------
PROPERTY AND EQUIPMENT, AT COST..................... 1,565,988 1,527,568
Accumulated depreciation
and amortization............................... (528,546) (520,824)
---------- ----------
1,037,442 1,006,744
---------- ----------
COST IN EXCESS OF NET ASSETS
ACQUIRED, NET................................... 42,340 42,927
DEFERRED INCOME TAXES............................... 19,164 19,233
OTHER ASSETS........................................ 120,165 118,978
---------- ----------
$1,432,157 $1,509,161
========== ==========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
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<PAGE> 5
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(In thousands)
MARCH 31 DECEMBER 31
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts and drafts payable........................... $ 81,587 $ 108,182
Accrued expenses:
Salaries and wages................................. 13,888 23,158
Taxes.............................................. 16,266 20,828
Insurance.......................................... 28,441 29,320
Other.............................................. 25,263 24,207
Income taxes.......................................... 4,239 (2,516)
Due to officer........................................ 29,977 63,221
Current portion of long-term
obligations.......................................... 6,137 29,469
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205,798 295,869
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LONG-TERM OBLIGATIONS
Term debt............................................. 293,265 297,029
Capital leases........................................ 38,635 40,200
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331,900 337,229
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DEFERRED INCOME TAXES..................................... 47,783 47,853
OTHER LONG-TERM LIABILITIES............................... 10,397 9,431
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock,
Authorized: 250,000 shares
Common stock, $.10 stated value
Authorized: 200,000,000 shares
Issued: 104,440,000 and
103,993,000 shares, respectively.................... 10,444 10,399
Capital in excess of stated value..................... 205,433 199,804
Retained earnings..................................... 626,787 614,799
Unrealized loss on investments........................ (1,581) (1,504)
Translation adjustments............................... (3,092) (3,007)
---------- ----------
837,991 820,491
Treasury stock at cost: 129,000 shares................ (1,712) (1,712)
---------- ----------
836,279 818,779
---------- ----------
$1,432,157 $1,509,161
========== ==========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
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<PAGE> 6
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
QUARTER ENDED QUARTER ENDED
MARCH 31 APRIL 2
1996 1995
------------- -------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 20,922 $ 29,704
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from asset dispositions 13,308 4,434
Capital expenditures (61,018) (41,547)
Acquisition of franchises (17,755) (1,708)
Proceeds from sale of marketable securities - 15,292
Other investing activities 487 133
--------- --------
Net cash used in investing activities (64,978) (23,396)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,448 1,542
Principal payments on long-term
obligations (24,780) (1,580)
Dividends paid (7,466) (6,112)
(Payment) loan due officer, net (33,244) 7,863
--------- --------
Net cash provided by (used in) financing
activities (64,042) 1,713
--------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (108,098) 8,021
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD . 206,127 119,639
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 98,029 $127,660
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid $ 1,674 $ 2,875
Interest received 3,612 2,991
Income taxes paid 4,909 1,190
Debt converted to common stock 3,826 -
Acquisition of franchises:
Fair value of assets acquired, net 17,755 3,253
Cash paid 17,755 1,708
Liabilities assumed - 1,850
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. MANAGEMENT'S STATEMENT
In the opinion of management the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring
in nature) necessary to present fairly the financial position of Wendy's
International, Inc. and Subsidiaries (the company) at March 31, 1996, and
December 31, 1995, and the results of operations and cash flows for the
quarters ended March 31, 1996, and April 2, 1995. The Notes to the
Consolidated Financial Statements which are contained in the 1995 Form
10-K should be read in conjunction with these Consolidated Financial
Statements.
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 in March 1995. The company is in the process of evaluating
the impact of this statement on the results of operations and financial
condition of the company.
The company has adopted Financial Accounting Standard Number 123 (SFAS
123) - "Accounting for Stock-Based Compensation". There is no material
impact of this statement on the results of operations and financial
condition of the company.
NOTE 2. ACQUISITIONS AND DISPOSITIONS
In the first quarter of 1996 and 1995, 11 restaurants were franchised for
a net pretax gain of $4.2 million and nine restaurants for a net pretax
gain of $657,000, respectively.
In the first quarter of 1996, the company acquired 40 Roy Rogers
restaurants in the New York and New Jersey areas for conversion to Wendy's
restaurants. The purchase price was $17.8 million. In the first quarter of
1995, the company acquired its partners' share of two restaurants in
London, England. Total consideration in this transaction was $2.1 million
of which $1.3 million is payable after April 1, 1998.
NOTE 3. SUBSEQUENT EVENT
On March 27, 1996, the company announced that on April 15, 1996, it would
redeem all of its outstanding 7% convertible subordinated debentures due
April 1, 2006. Bondholders could redeem their debentures at 103.5% of
principal, plus interest, or convert to shares of Wendy's common stock.
Substantially all of the balance was ultimately converted to shares of
common stock.
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The company recorded net income of $19.5 million for the first quarter ended
March 31, 1996, while $15.6 million was reported for the first quarter ended
April 2, 1995. The 1995 results included an after-tax non-recurring charge of
$3.8 million ($.03 per share) for the profit sharing distribution of Hortons
income (see Special Charges below).
RETAIL SALES
Total retail sales increased 1.1% for the first quarter of 1996 compared to the
first quarter of 1995. This was a result of an increase in average restaurants
open which resulted in increases in sales by the Hortons warehouse and the
Wendy's bakery offset by a 4.0% decrease in Wendy's average domestic net sales.
Sales were adversely impacted by unfavorable weather conditions in the first
quarter of 1996 and industry discounting continued throughout the quarter.
Selling prices increased .4% in the first quarter of 1996.
Average net sales per domestic Wendy's restaurant for the quarter ended March
31, 1996, and April 2, 1995, were as follows:
<TABLE>
<CAPTION>
First Quarter %
1996 1995 Decrease
---- ---- --------
<S> <C> <C> <C>
Company................... $236,850 $246,750 (4.0)
Franchise................. 221,850 236,550 (6.2)
Total Domestic............ 226,100 239,500 (5.6)
</TABLE>
The number of systemwide restaurants open as of March 31, 1996, and April 2,
1995, was as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Company............................................ 1,318 1,267
Franchise.......................................... 3,400 3,187
----- -----
Total Wendy's...................................... 4,718 4,454
===== =====
Total Hortons...................................... 1,238 997
===== =====
</TABLE>
COST OF SALES AND RESTAURANT OPERATING COSTS
The domestic company operating margin decreased in the first quarter 1996 to
11.1% versus 14.1% for 1995. The decrease reflected higher labor costs along
with higher domestic cost of sales related to increased chicken and produce
prices. Wendy's domestic restaurant operating costs were higher, as a percent of
retail sales, in the first quarter 1996 versus 1995 due to lower average
domestic sales. Utility costs and rent also increased as a percent of retail
sales.
FRANCHISE REVENUES
Royalties before reserve provisions increased $.8 million in the first quarter
1996 compared with 1995. This was primarily a result of an increase in franchise
restaurants open offset by a 6.2% decrease in average sales of domestic Wendy's
franchise restaurants. No reserves were provided against royalties in the first
quarter 1996 and $2.4 million was provided for in the first quarter of 1995.
Gains from franchising Wendy's restaurants increased $3.6 million and rental
income from properties leased to franchises increased $3.4 million.
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GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the first quarter of 1996 were 8.0% of
total revenues versus 8.4% in 1995. The reduction in expense reflected
relatively lower provisions for management bonuses in 1996 and non-recurring
charges in 1995 for a Hortons retirement plan expense.
SPECIAL CHARGES
The special charges in 1995 represent the profit sharing contribution made to
the sole shareholder of Hortons. As a result of the acquisition of Hortons by
Wendy's in December 1995 these charges no longer apply in 1996 or future years.
FINANCIAL CONDITION
The company's financial condition remains solid at the end of the first quarter
of 1996. The debt to equity and debt to total capitalization ratios were 40% and
28%, respectively, at March 31, 1996. These compare to a debt to equity ratio
and debt to total capitalization ratio of 41% and 29%, respectively, at December
31, 1995. In addition, the $100 million 7% convertible debentures were
substantially all converted to stock in April 1996, which significantly improved
the debt to equity ratio to approximately 25%. Capital expenditures amounted to
$61 million for 1996 compared to $42 million for 1995 reflecting increased
restaurant development.
OUTLOOK
The company continues to employ its strategies as outlined in the company's 1995
Annual Report. As was expected, competition in the quick-service restaurant
industry has been intense and will remain so in the foreseeable future. Pressure
on retail sales is continuing into 1996. 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 750 new restaurants will be opened or under
construction systemwide (both company and franchise) during 1996. Cash flow from
operations, cash and investments on hand, existing revolving credit agreements
and possible asset sales should adequately provide for projected cash
requirements. If additional cash is needed for future acquisitions of
restaurants from franchisees, or for other corporate purposes, the company
believes it would be able to obtain additional cash through potential revolving
credit agreements, the issuance of securities or by the sale of selected
franchisee receivables.
SAFE HARBOR STATEMENT
Except for historical information, statements in this Form 10-Q are
forward-looking and involve risks and uncertainties including, but not limited
to, continuation of intense competition in the industry, weather, changes in
economic conditions, consumer preference and spending patterns, consumer
perceptions of food safety, inflation, labor and benefit costs, legal claims,
the continued ability of the company and its franchisees to obtain suitable
locations and financing for new restaurant development, governmental initiatives
such as new taxes or wage rates, and other factors set forth in Exhibit 99 to
the company's Form 10-K filed with the Securities and Exchange Commission on
April 1, 1996.
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Index to Exhibits on Page 12.
(b) A report on Form 8-K was filed with the Securities and Exchange Commission
on January 16, 1996, disclosing the completion of the acquisition of
1052106 Ontario Limited, formerly 632687 Alberta Ltd., on December 29,
1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WENDY'S INTERNATIONAL, INC.
---------------------------
(Registrant)
Date: 5/10/96 /s/ John K. Casey
------------------ -----------------------
John K. Casey
Vice Chairman and Chief
Financial Officer
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- ------- ------------ --------
<S> <C> <C>
3 (b) New Regulations, as amended 13 - 32
10 Amendment to Employment Agreement
between The TDL Group Ltd. (a sub-
sidiary of the Company) and Ronald
Vaughan Joyce 33
11 Computation of Net Income Per
Common Share 34
</TABLE>
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<PAGE> 1
(As Amended April 30, 1996)
NEW REGULATIONS
OF
WENDY'S INTERNATIONAL, INC.
ADOPTED APRIL 10, 1975
INDEX
<TABLE>
<CAPTION>
Section No. Caption Page No.
- ----------- ------- --------
<S> <C> <C>
ARTICLE 1. MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings........................................ 1
Section 1.02. Calling of Meetings.................................... 1
Section 1.03. Place of Meetings...................................... 1
Section 1.04. Notice of Meetings..................................... 2
Section 1.05. Waiver of Notice....................................... 3
Section 1.06. Quorum................................................. 3
Section 1.07. Votes Required......................................... 4
Section 1.08. Order of Business...................................... 4
Section 1.09. Shareholders Entitled to Vote.......................... 4
Section 1.10. Cumulative Voting...................................... 5
Section 1.11. Proxies................................................ 6
Section 1.12. Inspectors of Election................................. 6
ARTICLE 2. DIRECTORS
Section 2.01. Authority and Qualifications........................... 7
Section 2.02. Number of Directors and Term of
Office................................................. 7
Section 2.03. Election............................................... 7
Section 2.04. Removal................................................ 8
Section 2.05. Vacancies.............................................. 8
Section 2.06. Meetings............................................... 8
Section 2.07. Notice of Meetings..................................... 9
Section 2.08. Waiver of Notice....................................... 10
Section 2.09. Quorum................................................. 10
Section 2.10. Committees of the Directors............................ 11
Section 2.11. Compensation........................................... 12
Section 2.12. By-Laws................................................ 12
ARTICLE 3. OFFICERS
Section 3.01. Officers............................................... 12
Section 3.02. Tenure of Office....................................... 13
Section 3.03. Duties of Officers..................................... 13
ARTICLE 4. SHARES
Section 4.01. Certificates........................................... 13
Section 4.02. Transfers.............................................. 14
</TABLE>
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<TABLE>
<S> <C> <C>
Section 4.03. Transfer Agents and Registrars......................... 15
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates........................................... 15
ARTICLE 5. INDEMNIFICATION
Section 5.01. Indemnification........................................ 16
ARTICLE 6. CERTAIN TRANSACTIONS
Section 6.01. Contracts or Transactions With
Directors and Officers................................. 18
ARTICLE 7. MISCELLANEOUS
Section 7.01. Seal................................................... 19
Section 7.02. Amendments ........................................... 19
Section 7.03. Action by Shareholders or Directors
Without a Meeting...................................... 20
</TABLE>
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<PAGE> 3
NEW REGULATIONS
OF
WENDY'S INTERNATIONAL, INC.
ADOPTED APRIL 10, 1975
ARTICLE 1.
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the
shareholders for the election of directors, for the consideration of reports to
be laid before such meeting and for the transaction of such other business as
may properly come before such meeting, shall be held on the first Monday of
April in each year or on such other date as may be fixed from time to time by
the directors.
Section 1.02. Calling of Meetings. Meetings of the
shareholders may be called only by the Chairman of the Board, the President all
of the directors acting without a meeting, a majority of the directors by action
at a meeting or the holders of at least 25% of all shares outstanding and
entitled to vote there at.
Section 1.03. Place of Meetings. All meetings of shareholders
shall be held at the principal office of the corporation, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at any
place within or without of the State of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice stating
the time, place and purposes of a meeting of the
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shareholders shall be given either by personal delivery or by mail not less than
seven nor more than sixty days before the date of the meeting to each
shareholder of record entitled to notice of the meeting by or at the direction
of the Chairman of the Board, the President or the Secretary. If mailed, such
notice shall be addressed to the shareholder at his address as it appears on the
records of the corporation. Notice of adjournment of a meeting need not be given
if the time and place to which it is adjourned are fixed and announced at such
meeting. In the event of a transfer of shares after the record date for
determining the shareholders who are entitled to receive notice of a meeting of
shareholders, it shall not be necessary to give notice to the transferee.
Nothing herein contained shall prevent the setting of a record date in the
manner provided by law, the Articles or the Regulations for the determination of
shareholders who are entitled to receive notice of or to vote at any meeting of
shareholders or for any purpose required or permitted by law.
(B) Following receipt by the President or the Secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called a meeting of the shareholders,
delivered either in person or by registered mail to such officer by any persons
entitled to call a meeting of shareholders, such officer shall cause to be given
to the shareholders entitled thereto notice of a meeting to be held on a date
not less than seven nor more than sixty days after the receipt of such request,
as such officer may fix. If such notice is not given within thirty days after
the receipt of
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such request by the President or the Secretary, then, and only then, the persons
properly calling the meeting may fix the time of meeting and give notice thereof
in accordance with the provisions of the Regulations.
Section 1.05. Waiver of Notice. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholder, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice prior to or at the commencement of
the meeting shall be deemed to be a waiver by such shareholder of notice of such
meeting.
Section 1.06. Quorum. At any meeting of shareholders, the
holders of a majority of the voting shares of the corporation then outstanding
and entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the Chairman of
the Board, the President or the officer of the corporation acting as chairman of
the meeting, may adjourn such meeting from time to time, and if a quorum is
present at such adjourned meeting any business may be transacted as if the
meeting had been held as originally called.
Section 1.07. Votes Required. At all elections of directors
the candidates receiving the greatest number of votes shall be elected. Any
other matter submitted to the shareholders
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for their vote shall be decided by the vote of such proportion of the shares, or
of any class of shares, or of each class, as is required by law, the Articles or
the Regulations.
Section 1.08. Order of Business. The order of business at any
meeting of shareholders shall be determined by the officer of the corporation
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such meeting.
Section 1.09. Shareholders Entitled to Vote. Each shareholder
of record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation standing
in his name on the books of the corporation on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.
Section 1.10. Cumulative Voting. If notice in writing shall be
given by a shareholder to the President, a Vice President or the Secretary of
the corporation, not less than forty-eight hours before the time fixed for
holding a meeting of the shareholders for the purpose of electing directors if
notice
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of such meeting shall have been given at least ten days prior thereto, and
otherwise not less than twenty-four hours before such time, that such
shareholder desires that the voting at such election shall be cumulative, and if
an announcement of the giving of such notice is made upon the convening of the
meeting by the presiding officer or secretary of the meeting or by or on behalf
of the shareholder giving such notice, each shareholder shall have the right to
cumulate such voting power as he possesses and to give one candidate as many
votes as the number of directors to be elected multiplied by the number of his
votes equals, or to distribute such number of votes on the same principal among
two or more candidates, as he shall see fit.
Section 1.11. Proxies. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.
Section 1.12. Inspectors of Election. In advance of any
meeting of shareholders, the directors may appoint inspectors of election to act
at such meeting or adjournment thereof; if inspectors are not so appointed, the
officer of the corporation acting as chairman of any such meeting may make such
appointment.
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<PAGE> 8
In case any person appointed as inspector fails to appear or act, the vacancy
may be filled only by appointment made by the directors in advance of such
meeting or, if not so filled, at the meeting by the officer of the corporation
acting as chairman of such meeting. No other person or persons may appoint or
require the appointment of inspectors of election.
ARTICLE 2.
DIRECTORS
Section 2.01. Authority and Qualifications. Except where the
law, the Articles or the Regulations otherwise provide, all authority of the
corporation shall be vested in and exercised by a Board of Directors. Directors
need not be shareholders of the corporation.
Section 2.02. Number of Directors and Term of Office. The
number of directors of the Company shall be fifteen, divided into three classes
consisting of five directors each. The election of each class of directors shall
be a separate election. At each Annual Meeting one class consisting of five
directors shall be elected, and the persons so elected shall serve as directors
for three years and until their successors are elected.
Section 2.03. Election. At each annual meeting of shareholders
for the election of directors, the successors to the directors whose term shall
expire in that year shall be elected, but if the annual meeting is not held or
if one or more of such directors are not elected thereat, they may be elected at
a special meeting called for that purpose. The election of
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directors shall be by ballot whenever requested by the presiding officer of the
meeting or by the holders of a majority of the voting shares outstanding,
entitled to vote at such meeting and present in person or by proxy, but unless
such request is made, the election shall be by voice vote.
Section 2.04. Removal. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than a majority of the
voting power of the corporation to elect directors in place of those to be
removed. In case of any such removal, a new director may be elected at the same
meeting for the unexpired term of each director removed. Failure to elect a
director to fill the unexpired term of any director removed shall be deemed to
create a vacancy in the Board.
Section 2.05. Vacancies. Any vacancy in the Board may be
filled by the remaining directors, though less than a majority of the whole
authorized number of directors, by the vote of their number, for the unexpired
term.
Section 2.06. Meetings. A meeting of the directors shall be
held immediately following the adjournment of each annual meeting of
shareholders at which directors are elected, and notice of such meeting need not
be given. The directors shall hold such other meetings as may from time to time
be called, and such other meetings of directors may be called only by the
Chairman of the Board, the President, or any two directors. All meetings of
directors may be held at the principal office of the corporation in Columbus,
Ohio, or at such
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other place within or without the State of Ohio, as the directors may from time
to time determine by a resolution. Meetings of the directors may also be held
through any communications equipment if all persons participating can hear each
other.
Section 2.07. Notice of Meetings. Notice of the time and place
of each meeting of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to each of the directors
by at least one of the following methods:
A. By a writing mailed not less than three days before such
meeting and addressed to the residence or usual place of
business of a director, as such address appears on the records
of the corporation; or
B. By telegraph, cable, radio, wireless or a writing sent or
delivered to the residence or usual place of business of a
director, as the same appears on the records of the
corporation, not later than the day before the date on which
such meeting is to be held; or
C. Personally or by telephone not later than the day before
the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the Chairman of the Board, the President or the Secretary of the
corporation or by the directors calling the meeting. Any such notice need not
specify the purpose or purposes of the meeting. Notice of
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adjournment of a meeting of directors need not be given if the time and place to
which it is adjourned are fixed and announced at such meeting.
Section 2.08. Waiver of Notice. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of the
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
Section 2.09. Quorum. A majority of the whole authorized
number of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the Board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
Board, except as otherwise provided by law, the Articles or the Regulations.
Section 2.10. Committees of the Directors. The directors may
create one or more committees of the directors, each to consist of not less than
three directors, and may delegate to such committees any of the authority of the
directors, however conferred, other than that of filling vacancies among the
directors or in any committee of the directors.
Such committees of the directors shall serve at the
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pleasure of the directors, shall act only in the intervals between meetings of
the directors and shall be subject to the control and direction of the
directors. Each of such committees of the directors may act by a majority of its
members at a meeting or by a writing or writings signed by all of its members.
Meetings of the committees of the directors may be held through any
communications equipment if all persons participating can hear each other.
Any act or authorization of an act by any such committee of
the directors, within the authority delegated to it, shall be as effective for
all purposes as the act or authorization of the directors. Notice of the time
and place of each meeting of any committee of the directors shall be given to
each of its members by at least one of the methods specified in Section 2.07
hereof. A meeting of any committee of the directors may be called only by the
Chairman of the Board or the President or by a member of such committee of the
directors.
Section 2.11. Compensation. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as
directors, such amount as the directors may determine.
Section 2.12. By-Laws. The directors may adopt, and amend from
time to time, By-Laws for their own government, which By-Laws shall not be
inconsistent with the law, the Articles or the Regulations.
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ARTICLE 3.
OFFICERS
Section 3.01. Officers. The officers of the corporation to be
elected by the directors shall be a Chairman of the Board; President; one or
more Vice Presidents, as the directors may from time to time determine; a
Secretary; a Treasurer and such other officers and assistant officers as the
directors may from time to time elect. If the directors elect a Chairman of the
Board, he must be a director. Officers need not be shareholders of the
corporation and may be paid such compensation as the directors may from time to
time determine. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles, the Regulations or
the By-Laws to be executed, acknowledged or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the
corporation shall hold office at the pleasure of the directors. Any officer of
the corporation may be removed, either with or without cause, at any time, by
the affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to any contract rights of the
person so removed.
Section 3.03. Duties of Officers. All officers, as between
themselves and the corporation, shall, respectively, have such duties as are
determined by the directors.
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ARTICLE 4.
SHARES
Section 4.01. Certificates. Certificates evidencing ownership
of shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the corporation shall bear a distinguishing
number; the signatures of the Chairman of the Board or the President or a Vice
President and of the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer (except that when any such certificate is countersigned by
an incorporated transfer agent or registrar, such signatures may be facsimile,
engraved, stamped or printed) and such recitals as may be required by law.
Certificates evidencing shares of the corporation shall be of such tenor and
design as the directors may from time to time adopt, and may bear, in addition
to the required recitals, such further recitals as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing a
share or shares of the corporation is presented to the corporation or its proper
agents with a request to register transfer, the transfer shall be registered as
requested if:
1. An appropriate person signs on each certificate so
presented or signs on a separate document an
assignment or transfer of shares evidenced by each
such certificate or signs a power to assign or
transfer such shares or when the signature of an
appropriate person is written without more on the
back of each such certificate; and
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2. Reasonable assurance is given that the endorsement of
each appropriate person is genuine and effective, the
corporation or its agents reserving the right to
refuse to register a transfer of shares unless the
signature of each appropriate person is guaranteed by
a commercial bank or trust company having an office
or a correspondent in the City of New York or by a
firm having membership in the New York Stock
Exchange; and
3. All applicable laws relating to the collection of
transfer or other taxes have been complied with; and
4. The corporation or its agents are not otherwise
required or permitted to refuse to register such
transfer.
Section 4.03. Transfer Agents and Registrars. The directors
may appoint one or more agents to transfer or to register shares of the
corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates. Except as otherwise provided by law, where the owner of a
certificate evidencing shares of the corporation claims that such certificate
has been lost, destroyed or wrongfully taken, the directors must cause the
corporation to issue a new certificate in place of the original certificate if
the owner:
1. So requests before the corporation has notice that
such original certificate has been acquired by a
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bona fide purchaser; and
2. Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or
sureties satisfactory to the corporation, in such
sum as the directors may, in their discretion,
deem reasonably sufficient as indemnity against
any loss or liability that the corporation may
incur by reason of the issuance of each such new
certificate; and
3. Satisfies any other reasonable requirements which
may be imposed by the directors, in their
discretion.
ARTICLE 5.
INDEMNIFICATION
Section 5.01. Indemnification. The corporation shall indemnify
each director and officer, each former director and officer and each person who
may have served at its request as an officer and each person who may have served
at its request as a director, trustee or officer of any other corporation,
partnership, joint venture, trust or other enterprise, to the greatest extent
permitted by Ohio law, with respect to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, to which such person was or is a party by reason of the fact that
he is or was a director or officer of the corporation or is or was serving at
its request as aforesaid. indemnification hereunder
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<PAGE> 17
shall include all expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement if actually and reasonably incurred by him in
connection with such action, suit or proceeding. Such expenses shall be paid in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation. In addition, the corporation may indemnify or agree to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was an employee or agent of the corporation or is or was serving as an employee
or agent of another enterprise at the request of the corporation; subject,
however, to the limitations imposed by Ohio law. The indemnification provided by
this Section shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under the Articles or any agreement,
vote of shareholders or disinterested directors or otherwise (including, without
limitation, any insurance), both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, trustee, officer, employee or agent and
shall inure to the benefit of the heirs, executors, administrators and
successors of such a person.
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ARTICLE 6.
CERTAIN TRANSACTIONS
Section 6.01. Contracts or Transactions With Directors and
Officers. No contract or transaction shall be void or voidable with respect to
the corporation for the reason that it is between the corporation and one or
more of its directors or officers, or between the corporation and any other
person in which one or more of its directors or officers are directors, trustees
or officers, or have a financial or personal interest, or for the reason that
one or more interested directors or officers participate in or vote at the
meeting of the directors or a committee thereof which authorizes such contract
or transaction, if (a) the material facts as to his or their relationship or
interest and as to the contract or transaction are disclosed or are known to the
directors or the committee and the directors or committee, in good faith
reasonably justified by such facts, authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or (b) the material
facts as to his or their relationship or interest and as to the contract or
transaction are disclosed or known to the shareholders entitled to vote thereon
and the contract or transaction is specifically approved at a meeting of the
shareholders held for such purpose by the affirmative vote of the holders of
shares entitling them to exercise a majority of the voting power of the
corporation held by persons not interested in the contract or transaction; or
(c) the contract or
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transaction is fair as to the corporation at the time it is authorized or
approved by the directors, a committee thereof or the shareholders.
Common or interested directors may be counted in determining the presence of
a quorum at any meeting of the directors or of a committee thereof which
authorizes the contract or transactions.
ARTICLE 7.
MISCELLANEOUS
Section 7.01. Seal. If the corporation adopts a seal, it shall
be circular, about two inches in diameter, with the name of the corporation
engraved around the margin and the word "SEAL" engraved across the center.
Section 7.02. Amendments. The Regulations may be amended, or
new regulations may be adopted, at a meeting of shareholders held for such
purpose, by the affirmative vote of the holders of shares entitling them to
exercise not less than a majority of the voting power of the corporation on such
proposal, or without a meeting by the written consent of the holders of shares
entitling them to exercise not less than two-thirds of the voting power-of the
corporation.
Section 7.03. Action by Shareholders or Directors Without a
Meeting. Any action which may be authorized or taken at a meeting of the
shareholders or of the directors or of a committee of the directors, as the case
may be, may be authorized or taken without a meeting with the affirmative vote
or approval
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of, and in a writing or writings signed by, all the shareholders who would be
entitled to notice of a meeting of the shareholders held for such purpose or all
the directors or all the members of such committee of the directors,
respectively, which writings shall be filed with or entered upon the records of
the corporation.
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<PAGE> 1
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made as of the 30th day of
April, 1996, by and between The TDL Group Ltd., a corporation organized under
the laws of Ontario (the "Company"), Ronald Vaughan Joyce (the "Executive") and
Wendy's International, Inc. ("Wendy's").
WHEREAS, the parties had previously entered into an Employment Agreement
dated December 29, 1995 (the "Employment Agreement") pursuant to the Share
Purchase Agreement dated as of October 31, 1995, as amended; and
WHEREAS, the parties now wish to set forth their agreement with regard
to an amendment to the Employment Agreement.
NOW, THEREFORE, for and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that
Section 4(a) of the Employment Agreement is hereby amended to read as follows:
As compensation for his services hereunder, the Company shall pay the
Executive, in accordance with the Company's normal payroll practices, direct
salary compensation at an annual rate of C$600,000 through the period ended
December 31, 2000.
Except as otherwise set forth herein, the Employment Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Employment Agreement as of the date and year first set forth above.
THE TDL GROUP LTD.
By: /s/ Gordon F. Teter
-------------------
Title: Chairman
----------------
SIGNED, SEALED AND DELIVERED
in the presence of:
/s/ Donald B. Schroeder /s/ Ronald Vaughan Joyce
- ------------------------------------------ -----------------------------
RONALD VAUGHAN JOYCE
WENDY'S INTERNATIONAL, INC.
By: /s/ Gordon F. Teter
--------------------------------------
Title: President, Chief Executive Officer
& Chief Operating Officer
----------------------------------
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WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
(In thousands, except per share data)
QUARTER ENDED QUARTER ENDED
MARCH 31 APRIL 2
1996 1995
------ -----
<S> <C> <C>
Weighted average number
of common shares outstanding 103,981 101,735
Shares issuable pursuant to employee stock option
plans less shares assumed repurchased at the
average market price 2,760 2,686
Shares issuable upon conversion of exchangeable
shares 16,450 16,450
--------- ---------
Number of shares for computation of
primary earnings per share 123,191 120,871
Add net additional shares issuable pursuant to
employee stock option plans at period-end
market price 2 127
Add additional shares issuable
assuming conversion of
subordinated debentures 8,026 8,130
--------- ---------
Number of shares for computation of
fully diluted earnings per share 131,219 129,128
======== ========
Net income for computation of primary
earnings per share $ 19,454 $ 15,636
Add savings on assumed dilutive conversion
of subordinated debentures net of tax 1,014 1,139
---------- ----------
Net income for computation of fully diluted
earnings per share $ 20,468 $ 16,775
======== ========
Net income per share:
Assuming primary dilution $.16 $.13
==== ====
Assuming full dilution $.16 $.13
==== ====
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-02-1996
<PERIOD-END> MAR-31-1996
<CASH> 98,029
<SECURITIES> 7,153
<RECEIVABLES> 58,673
<ALLOWANCES> 0
<INVENTORY> 30,863
<CURRENT-ASSETS> 213,046
<PP&E> 1,565,988
<DEPRECIATION> 528,546
<TOTAL-ASSETS> 1,432,157
<CURRENT-LIABILITIES> 205,798
<BONDS> 293,265
0
0
<COMMON> 10,444
<OTHER-SE> 825,835
<TOTAL-LIABILITY-AND-EQUITY> 1,432,157
<SALES> 348,728
<TOTAL-REVENUES> 409,883
<CGS> 219,840
<TOTAL-COSTS> 321,449
<OTHER-EXPENSES> 54,081
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,720
<INCOME-PRETAX> 31,633
<INCOME-TAX> 12,179
<INCOME-CONTINUING> 19,454
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,454
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> APR-02-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 344,884
<TOTAL-REVENUES> 398,008
<CGS> 210,236
<TOTAL-COSTS> 310,665
<OTHER-EXPENSES> 59,692
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,176
<INCOME-PRETAX> 24,475
<INCOME-TAX> 8,839
<INCOME-CONTINUING> 15,636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,636
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
