<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 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- --------------
Commission File Number 1-8116
WENDY'S INTERNATIONAL, INC.
---------------------------
(Exact name of Registrant as specified in its charter)
Ohio 31-0785108
---- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio 43017-0256
- ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 614-764-3100
------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 2, 1997
----- --------------------------
Common shares, $.10 stated value 131,337,000 shares
Exhibit index on page 12.
1 of 15
<PAGE> 2
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Pages
-----
PART I: Financial Information
Item 1. Financial Statements:
Consolidated Statement of Income for the quarters
ended March 30, 1997 and March 31, 1996 3
Consolidated Balance Sheet as of March 30, 1997
and December 29, 1996 4-5
Consolidated Statement of Cash Flows for the
quarters ended March 30, 1997 and March 31, 1996 6
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
PART II: Other Information
Item 6. 10
Signature 11
Index to Exhibits 12
Exhibit 11 - Computation of Net Income Per Common Share 13
Exhibit 99 - Safe Harbor under the Private Securities Litigation 14-15
Reform Act of 1995
2
<PAGE> 3
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 30, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
REVENUES
Retail sales..................................... $386,125 $348,728
Franchise revenues............................... 72,759 61,155
-------- --------
458,884 409,883
-------- --------
COSTS AND EXPENSES
Cost of sales.................................... 241,819 219,840
Company restaurant operating
costs.......................................... 95,151 89,605
Operating costs.................................. 14,030 12,474
General and administrative
expenses....................................... 38,474 32,730
Depreciation and amortization
of property and equipment...................... 23,854 21,351
Other expenses (income).......................... 3,622 (470)
Interest, net.................................... 1,677 2,720
-------- --------
418,627 378,250
-------- --------
INCOME BEFORE INCOME TAXES........................... 40,257 31,633
INCOME TAXES......................................... 15,620 12,179
-------- --------
NET INCOME........................................... $ 24,637 $ 19,454
======== ========
PRIMARY EARNINGS PER COMMON SHARE.................... $.19 $.16
==== ====
FULLY DILUTED EARNINGS PER COMMON SHARE.............. $.19 $.16
==== ====
DIVIDENDS PER COMMON SHARE .......................... $.06 $.06
==== ====
PRIMARY SHARES....................................... 140,055 123,191
======== ========
FULLY DILUTED SHARES................................. 140,090 131,219
======== ========
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
3
<PAGE> 4
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(In thousands)
MARCH 30, 1997 DECEMBER 29, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............. $ 187,323 $ 218,956
Short-term investments................ 4,388 4,795
Accounts receivable, net.............. 56,801 53,250
Notes receivable, net................. 10,411 11,003
Deferred income taxes................. 15,188 15,760
Inventories and other................. 36,342 33,199
---------- ----------
310,453 336,963
---------- ----------
PROPERTY AND EQUIPMENT, AT COST........... 1,793,107 1,749,902
Accumulated depreciation and
amortization........................ (553,482) (541,958)
---------- ----------
1,239,625 1,207,944
---------- ----------
COST IN EXCESS OF NET ASSETS
ACQUIRED, NET......................... 50,808 51,636
DEFERRED INCOME TAXES..................... 12,688 12,938
OTHER ASSETS.............................. 173,933 171,953
---------- ----------
$1,787,507 $1,781,434
========== ==========
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
4
<PAGE> 5
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(In thousands)
MARCH 30, 1997 DECEMBER 29,1996
-------------- ----------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and drafts payable...................... $ 74,894 $ 108,629
Accrued expenses:
Salaries and wages............................ 17,519 24,741
Taxes......................................... 18,458 18,502
Insurance..................................... 29,786 30,337
Other......................................... 26,892 18,874
Current portion of long-term
obligations................................... 6,631 6,681
---------- ----------
174,180 207,764
---------- ----------
LONG-TERM OBLIGATIONS
Term debt........................................ 197,599 197,622
Capital leases................................... 42,442 44,206
---------- ----------
240,041 241,828
---------- ----------
DEFERRED INCOME TAXES................................ 63,792 62,956
OTHER LONG-TERM LIABILITIES.......................... 12,631 12,114
COMMITMENTS AND CONTINGENCIES
COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY WENDY'S FINANCING I, HOLDING
SOLELY WENDY'S CONVERTIBLE DEBENTURES................ 200,000 200,000
SHAREHOLDERS' EQUITY
Preferred stock,
Authorized: 250,000 shares
Common stock, $.10 stated value
Authorized: 200,000,000 shares
Issued: 114,995,000 and
113,148,000 shares, respectively.............. 11,500 11,315
Capital in excess of stated value................ 337,768 312,570
Retained earnings................................ 756,993 740,311
Unrealized loss on investments................... (1,176) (969)
Translation adjustments.......................... (6,510) (4,743)
---------- ----------
1,098,575 1,058,484
Treasury stock at cost: 129,000 shares .......... (1,712) (1,712)
---------- ----------
1,096,863 1,056,772
---------- ----------
$1,787,507 $1,781,434
========== ==========
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
5
<PAGE> 6
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
QUARTER ENDED QUARTER ENDED
MARCH 30, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES....................................... $ 42,761 $ 20,922
--------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from asset dispositions................. 6,993 13,308
Capital expenditures............................. (88,330) (61,018)
Acquisition of franchises........................ (307) (17,755)
Other investing activities....................... (1,289) 487
--------- --------
Net cash from investing activities............. (82,933) (64,978)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock........... 17,944 1,448
Principal payments on long-term
obligations.................................... (1,528) (24,780)
Dividends paid on common shares.................. (7,877) (7,466)
Payment due officer, net......................... - (33,244)
--------- --------
Net cash from financing activities............. 8,539 (64,042)
--------- --------
DECREASE IN CASH AND CASH
EQUIVALENTS...................................... (31,633) (108,098)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD......................................... 218,956 206,127
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........... $ 187,323 $ 98,029
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid.................................... $ 3,740 $ 1,674
Interest received................................ 5,591 3,612
Income taxes paid................................ 2,400 4,909
Debt converted to common stock................... - 3,826
Acquisition of franchises:
Fair value of assets acquired, net............... 307 17,755
Cash paid........................................ 307 17,755
Liabilities assumed.............................. - -
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
6
<PAGE> 7
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 30, 1997 and
December 29, 1996 and the results of operations and cash flows for the
quarters ended March 30, 1997 and March 31, 1996. The Notes to the
Consolidated Financial Statements which are contained in the 1996 Form
10-K should be read in conjunction with these Consolidated Financial
Statements.
NOTE 2. ACQUISITIONS AND DISPOSITIONS
In the first quarter of 1997 and 1996, 36 restaurants were franchised for
a net pretax gain of $6.7 million and 11 restaurants for a net pretax gain
of $4.2 million, respectively.
In the first quarter of 1997 and 1996, the company acquired 31 Rax
restaurants in Ohio and West Virginia and 40 Roy Rogers restaurants in New
York and New Jersey, respectively, for conversion to Wendy's restaurants.
The purchase price was $8.9 million for Rax and $17.8 million for Roy
Rogers.
NOTE 3. BASIC AND DILUTED EARNINGS PER SHARE
Financial Accounting Standard No. 128 (FAS 128) "Earnings per Share",
becomes effective for periods ending after December 15, 1997, which for
Wendy's will be the fourth quarter. FAS 128 requires the calculation of
earnings per share (EPS) under two methods, basic and diluted. Basic EPS
is calculated as income available to common shareholders divided by the
weighted-average common shares outstanding. Diluted EPS is calculated
giving effect to all dilutive potential common shares, such as options and
various convertible securities. Once adopted, FAS 128 requires restatement
of EPS for all periods presented. The following pro forma information
presents the first quarter of 1997 and 1996 EPS calculated in accordance
with FAS 128. In the first quarter there is no difference between the pro
forma EPS and the currently reported EPS shown on the Consolidated
Statement of Income.
<TABLE>
<CAPTION>
(In thousands, except per share data)
Quarter Ended Quarter Ended
March 30, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Income available to common shareholders $24,637 $19,454
Number of shares for computation
of basic EPS 130,848 120,431
Pro forma basic EPS $.19 $.16
==== ====
Income for computation of
diluted EPS $26,189 $20,468
Number of shares for computation of
diluted EPS 140,055 131,217
Pro forma diluted EPS $.19 $.16
==== ====
</TABLE>
7
<PAGE> 8
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income increased 27% to $24.6 million in the first quarter of 1997,
compared to $19.5 million in the first quarter of 1996. Fully diluted earnings
per common share increased 19% to $.19 in 1997 versus $.16 in 1996.
RETAIL SALES
Total retail sales increased 10.7% for the first quarter of 1997 compared to
the first quarter of 1996. This was primarily the result of an increase in
Wendy's domestic average net sales of 9.1%. Sales also increased in Wendy's
international operations and in Hortons' Canadian and domestic operations. In
the prior year, domestic average sales decreased 4.0% as a result of severe
winter weather conditions throughout the first quarter. Selling prices
increased 1.6% in the first quarter of 1997.
Average net sales per domestic Wendy's restaurant for the quarters ended March
30, 1997 and March 31, 1996, were as follows:
<TABLE>
<CAPTION>
First Quarter %
1997 1996 Increase
---- ---- --------
<S> <C> <C> <C>
Company.............. $258,350 $236,850 9.1
Franchise............ 234,500 221,850 5.7
Total Domestic....... 241,000 226,100 6.6
</TABLE>
The number of systemwide restaurants open as of March 30, 1997 and March 31,
1996 was as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Company............................... 1,297 1,318
Franchise............................. 3,695 3,400
----- -----
Total Wendy's......................... 4,992 4,718
===== =====
Total Hortons ....................... 1,421 1,238
===== =====
</TABLE>
COST OF SALES AND RESTAURANT OPERATING COSTS
The domestic company operating margin increased in the first quarter 1997 to
13.0% versus 11.1% for 1996. Wendy's domestic restaurant operating costs were
lower, as a percent of retail sales, in the first quarter 1997 versus 1996
reflecting reduced local and coupon marketing expenditures, higher average
domestic sales and favorable insurance expenses. Domestic Wendy's cost of sales
improved as a percent of sales reflecting the leverage benefit on labor of
significantly higher average sales as well as improved food cost.
8
<PAGE> 9
FRANCHISE REVENUES
Royalties before reserve provisions increased $4.4 million in the first quarter
1997 compared with 1996. This was primarily a result of an increase in
franchise restaurants open and a 5.7% increase in average sales of domestic
Wendy's franchise restaurants. Reserves of $521,000 were provided against
royalties in the first quarter 1997 while no reserves were provided in the
first quarter 1996. Gains from franchising Wendy's restaurants increased $2.5
million and rental income from properties leased to franchisees increased $3.7
million.
OTHER EXPENSES (INCOME)
During the first quarter 1997, charges of $1.5 million were made for an
arbitration decision relating to international operations, $1.2 million for
store closures and $1.2 million in asset write-offs related to restaurant
remodeling and conversion activity.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the first quarter of 1997 were 8.4% of
total revenues versus 8.0% in 1996. The increase in expense reflected lower
provisions for performance based management bonuses in 1996.
FINANCIAL CONDITION
The company's financial condition remains solid at the end of the first quarter
of 1997. The debt to equity and debt to total capitalization ratios were 22%
and 18%, respectively, at March 30, 1997. Cash provided by operating activities
increased from $21 million in 1996 to $43 million in 1997. Capital expenditures
amounted to $88 million for 1997 compared to $61 million for 1996 reflecting
increased restaurant development.
OUTLOOK
The company continues to employ its strategies as outlined in the company's 1996
Annual Report. As was expected, competition in the quick-service restaurant
industry has been intense and will remain so in the foreseeable future. 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 believes that its success depends on providing
quality products and everyday value, not in discounting products. The company
anticipates that approximately 750 new Wendy's and Tim Hortons restaurants will
be opened or under construction systemwide (both company and franchise) during
1997. During the first quarter 1997 there were 128 new restaurants opened with
another 156 under construction. 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 bank borrowing or the issuance of securities.
9
<PAGE> 10
SAFE HARBOR STATEMENT
Certain information contained in this Form 10-Q, particularly information
regarding future economic performance and finances, plans and objectives of
management, is forward looking. In some cases, information regarding certain
important factors that could cause actual results to differ materially from any
such forward-looking statement appear together with such statement. In
addition, the following factors, in addition to other possible factors not
listed, could affect the company's actual results and cause such results to
differ materially from those expressed in forward-looking statements. These
factors include competition within the quick-service restaurant industry, which
remains extremely intense, both domestically and internationally, with many
competitors pursuing heavy price discounting; changes in economic conditions;
consumer perceptions of food safety; harsh weather, particularly in the first
and fourth quarters; changes in consumer tastes; labor and benefit costs; legal
claims; risks inherent to international development; the continued ability of
the company and its franchisees to obtain suitable locations and financing for
new restaurant development; governmental initiatives such as minimum wage
rates, taxes and possible franchise legislation; and other factors set forth in
Exhibit 99 attached hereto.
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Index to Exhibits on Page 12.
(b) No report on Form 8-K was filed during the quarter ended March 30, 1997.
10
<PAGE> 11
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WENDY'S INTERNATIONAL, INC.
(Registrant)
Date: 5/9/97 /s/ Frederick R. Reed
--------- ---------------------------
Frederick R. Reed
Chief Financial Officer, General
Counsel and Secretary
11
<PAGE> 12
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description Page No.
------ ----------- --------
11 Computation of Net Income 13
Per Common Share
99 Safe Harbor Under 14-15
the Private Securities
Litigation Reform Act of 1995
12
<PAGE> 1
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 30, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
Weighted average number
of common shares outstanding........................... 114,398 103,981
Shares issuable pursuant to employee stock option
plans less shares assumed repurchased at the
average market price............................... 1,634 2,760
Shares issuable upon conversion of company-
obligated mandatorily redeemable preferred
securities......................................... 7,573 -
Shares issuable upon conversion of exchangeable
shares............................................. 16,450 16,450
-------- --------
NUMBER OF SHARES FOR COMPUTATION OF
PRIMARY EARNINGS PER COMMON SHARE...................... 140,055 123,191
Add net additional shares issuable pursuant to
employee stock option plans at period-end
market price....................................... 35 2
Add additional shares issuable
assuming conversion of
subordinated debentures............................ - 8,026
-------- --------
NUMBER OF SHARES FOR COMPUTATION OF
FULLY DILUTED EARNINGS PER COMMON SHARE............... 140,090 131,219
======== ========
Net income ............................................... $ 24,637 $ 19,454
Add distribution savings on assumed conversion of
company-obligated mandatorily redeemable
preferred securities, net of tax..................... 1,552 -
-------- --------
Net income for computation of primary earnings
per common share....................................... 26,189 19,454
Add interest savings on assumed conversion
of subordinated debentures, net of tax............... - 1,014
-------- --------
Net income for computation of fully diluted
earnings per common share............................ $ 26,189 $ 20,468
======== ========
Net income per common share:
Assuming primary dilution.............................. $.19 $.16
==== ====
Assuming full dilution................................. $.19 $.16
==== ====
</TABLE>
13
<PAGE> 1
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 99
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information about their companies, so long as those statements are
identified as forward looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the statement. The Company desires to
take advantage of the "safe harbor" provisions of the Act. Certain information,
particularly information regarding future economic performance and finances,
and plans and objectives of management, contained, or incorporated by
reference, in this Form 10-Q is forward looking. In some cases, information
regarding certain important factors that could cause actual results to differ
materially from any such forward-looking statement appear together with such
statement. Also, the following factors, in addition to other possible factors
not listed, could affect the Company's actual results and cause such results to
differ materially from those expressed in forward-looking statements:
Competition. The quick-service restaurant industry is intensely competitive
with respect to price, service, location, personnel, and type and quality of
food. The Company and its franchisees compete with international, regional and
local organizations primarily through the quality, variety and value perception
of food products offered. The number and location of units, quality and speed
of service, attractiveness of facilities and effectiveness of advertising and
marketing programs are also important factors. The Company anticipates that
intense competition will continue to focus on pricing. Certain of the Company's
competitors have substantially larger marketing budgets.
Economic, Market and Other Conditions. The quick-service restaurant industry is
affected by changes in national, regional and local economic conditions,
consumer preferences and spending patterns, demographic trends, consumer
perceptions of food safety, weather, traffic patterns and the type, number and
location of competing restaurants. Factors such as inflation, food costs, labor
and benefit costs, legal claims, and the availability of management and hourly
employees also affect restaurant operations and administrative expenses. The
ability of the Company and its franchisees to finance new restaurant
development, improvements and additions to existing restaurants and the
acquisition of restaurants from, and sale of restaurants to, franchisees, is
affected by economic conditions, including interest rates and other government
policies impacting land and construction costs and the cost and availability of
borrowed funds.
Importance of Locations. The success of Company and franchised restaurants is
dependent in substantial part on location. There can be no assurance that
current locations will continue to be attractive, as demographic patterns
change. It is possible the neighborhood or economic conditions where
restaurants are located could decline in the future, thus resulting in
potentially reduced sales in those locations.
14
<PAGE> 2
Government Regulation. The Company and its franchisees are subject to various
federal, state and local laws affecting their business. The development and
operation of restaurants depend to a significant extent on the selection and
acquisition of suitable sites, which are subject to zoning, land use,
environmental, traffic and other regulations. Restaurant operations are also
subject to licensing and regulation by state and local departments relating to
health, sanitation and safety standards, federal and state labor laws
(including applicable minimum wage requirements, overtime, working and safety
conditions, and citizenship requirements), federal and state laws which
prohibit discrimination and other laws regulating the design and operation of
facilities, such as the Americans With Disabilities Act of 1990. Changes in
these laws and regulations, particularly increases in applicable minimum wages,
may adversely affect financial results. The operation of the Company's
franchisee system is also subject to regulation enacted by a number of states
and rules promulgated by the Federal Trade Commission. The Company cannot
predict the effect on its operations, particularly on its relationship with
franchisees, of the future enactment of additional legislation regulating the
franchise relationship.
Growth Plans. The Company plans to significantly increase the number of
systemwide Wendy's and Tim Hortons restaurants open or under construction.
There can be no assurance that the Company or its franchisees will be able to
achieve growth objectives or that new restaurants opened or acquired will be
profitable. The opening and success of restaurants depends on various factors,
including the identification and availability of suitable and economically
viable locations, sales levels at existing restaurants, the negotiation of
acceptable lease or purchase terms for new locations, permitting and regulatory
compliance, the ability to meet construction schedules, the financial and other
development capabilities of franchisees, the ability of the Company to hire and
train qualified management personnel, and general economic and business
conditions.
International Operations. The Company's business outside of the United States
is subject to a number of additional factors, including international economic
and political conditions, differing cultures and consumer preferences, currency
regulations and fluctuations, diverse government regulations and tax systems,
uncertain or differing interpretations of rights and obligations in connection
with international franchise agreements and the collection of royalties from
international franchisees, the availability and cost of land and construction
costs, and the availability of experienced management and appropriate
franchisees and joint venture partners. Although the Company believes it has
developed the support structure required for international growth, there is no
assurance that such growth will occur or that international operations will be
profitable.
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 187,323
<SECURITIES> 4,388
<RECEIVABLES> 67,212
<ALLOWANCES> 0
<INVENTORY> 36,342
<CURRENT-ASSETS> 310,453
<PP&E> 1,793,107
<DEPRECIATION> 553,482
<TOTAL-ASSETS> 1,787,507
<CURRENT-LIABILITIES> 174,180
<BONDS> 397,599
0
0
<COMMON> 11,500
<OTHER-SE> 1,085,363
<TOTAL-LIABILITY-AND-EQUITY> 1,787,507
<SALES> 386,125
<TOTAL-REVENUES> 458,884
<CGS> 241,819
<TOTAL-COSTS> 351,000
<OTHER-EXPENSES> 65,950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,677
<INCOME-PRETAX> 40,257
<INCOME-TAX> 15,620
<INCOME-CONTINUING> 24,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,637
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
