EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of The Wendy’s Company (the “Company”). Unless the context indicates otherwise, any reference in this report to the “Company,” “we,” “us,” and “our” refers to The Wendy’s Company. The unaudited pro forma condensed consolidated financial statements have been prepared to illustrate the effect of the sale by the Company of certain assets used in the operation of 22 Wendy’s® restaurants in the Kansas City metropolitan area to NPC Quality Burgers, Inc., an indirect wholly-owned subsidiary of NPC Restaurant Holdings, LLC (“NPC”) for $9.3 million (subject to customary purchase price adjustments) plus initial franchise fees (the “NPC Disposition”). The unaudited pro forma condensed consolidated financial statements exclude the effect of proceeds from the future sale to NPC of the two additional Wendy’s restaurants currently under development since the sale has not yet been completed.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2013 reflects the pro forma effect as if the NPC Disposition had been consummated on that date. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2013 and the year ended December 30, 2012 include The Wendy’s Company’s historical statements of operations, adjusted to reflect the pro forma effect as if the NPC Disposition had been consummated on January 2, 2012 (the first day of our 2012 fiscal year). The historical consolidated financial statements referred to above for The Wendy’s Company were included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and Annual Report on Form 10-K for the year ended December 30, 2012. The accompanying unaudited pro forma condensed consolidated financial information and the historical consolidated financial information presented therein should be read in conjunction with the historical consolidated financial statements and notes thereto for The Wendy’s Company.
The unaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect transactions and events that (a) are directly attributable to the sale, (b) are factually supportable and (c) with respect to the statement of operations, have a continuing impact on consolidated results. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the sale, including potential general and administrative cost savings. The unaudited pro forma condensed consolidated financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred if the NPC Disposition had occurred on January 2, 2012 nor is it necessarily indicative of our future operating results. The pro forma adjustments are subject to change and are based upon currently available information.
THE WENDY’S COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2013
(In Thousands)
|
| | | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments | | | Pro Forma |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | $ | 428,684 |
| | $ | (31 | ) | (a) | | $ | 438,320 |
|
| | | | 9,667 |
| (b) | | |
| Accounts and notes receivable | 61,761 |
| | — |
| | | 61,761 |
|
| Inventories | 12,424 |
| | (178 | ) | (a) | | 12,246 |
|
| Prepaid expenses and other current assets | 38,020 |
| | 68 |
| (c) | | 38,088 |
|
| Deferred income tax benefit | 84,659 |
| | — |
| | | 84,659 |
|
| Advertising funds restricted assets | 70,118 |
| | — |
| | | 70,118 |
|
| Total current assets | 695,666 |
| | 9,526 |
| | | 705,192 |
|
| Properties | 1,233,283 |
| | (2,995 | ) | (a) | | 1,228,605 |
|
| | | | (1,615 | ) | (d) | | |
| | | | (68 | ) | (c) | | |
| Goodwill | 875,179 |
| | (2,353 | ) | (a) | | 872,826 |
|
| Other intangible assets | 1,293,862 |
| | (268 | ) | (d) | | 1,293,594 |
|
| Investments | 110,901 |
| | — |
| | | 110,901 |
|
| Deferred costs and other assets | 48,087 |
| | — |
| | | 48,087 |
|
| Total assets | $ | 4,256,978 |
| | $ | 2,227 |
| | | $ | 4,259,205 |
|
| | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
| Current liabilities: | | | | | | |
| Current portion of long-term debt | $ | 13,803 |
| | $ | — |
| | | $ | 13,803 |
|
| Accounts payable | 55,406 |
| | — |
| | | 55,406 |
|
| Accrued expenses and other current liabilities | 132,298 |
| | — |
| | | 132,298 |
|
| Advertising funds restricted liabilities | 70,118 |
| | — |
| | | 70,118 |
|
| Total current liabilities | 271,625 |
| | — |
| | | 271,625 |
|
| Long-term debt | 1,441,742 |
| | — |
| | | 1,441,742 |
|
| Deferred income taxes | 435,632 |
| | 1,949 |
| (e) | | 437,581 |
|
| Other liabilities | 136,500 |
| | (402 | ) | (a) | | 136,098 |
|
| Commitments and contingencies | | | | | | |
| Stockholders’ equity | 1,971,479 |
| | 680 |
| (f) | | 1,972,159 |
|
| Total liabilities and stockholders’ equity | $ | 4,256,978 |
| | $ | 2,227 |
| | | $ | 4,259,205 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Quarter Ended March 31, 2013
(In Thousands Except Per Share Amounts)
|
| | | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments | | | Pro Forma |
| Revenues: | | | | | | |
| Sales | $ | 530,673 |
| | $ | (7,261 | ) | (a) | | $ | 523,530 |
|
| | | | 118 |
| (g) | | |
| Franchise revenues | 73,009 |
| | 768 |
| (h) | | 73,777 |
|
| | 603,682 |
| | (6,375 | ) | | | 597,307 |
|
| Costs and expenses: | | | | | | |
| Cost of sales | 460,828 |
| | (6,466 | ) | (a) | | 454,451 |
|
| | | | 118 |
| (g) | | |
| | | | (29 | ) | (i) | | |
| General and administrative | 65,310 |
| | (207 | ) | (a) | | 65,103 |
|
| Depreciation and amortization | 51,797 |
| | (187 | ) | (a) | | 51,579 |
|
| | | | (31 | ) | (j) | | |
| Facilities relocation costs and other transactions | 3,038 |
| | — |
| | | 3,038 |
|
| Other operating expense, net | 245 |
| | 29 |
| (i) | | 274 |
|
| | 581,218 |
| | (6,773 | ) | | | 574,445 |
|
| Operating profit | 22,464 |
| | 398 |
| | | 22,862 |
|
| Interest expense | (20,964 | ) | | — |
| | | (20,964 | ) |
| Other expense, net and investment income, net | (2,271 | ) | | — |
| | | (2,271 | ) |
| Loss before income taxes | (771 | ) | | 398 |
| | | (373 | ) |
| Benefit from income taxes | 2,904 |
| | (159 | ) | (k) | | 2,745 |
|
| Net income | $ | 2,133 |
| | $ | 239 |
| | | $ | 2,372 |
|
| | | | | | | |
| Basic net income per share | $ | 0.01 |
| | | | | $ | 0.01 |
|
| Diluted net income per share | $ | 0.01 |
| | | | | $ | 0.01 |
|
| | | | | | | |
| Weighted average number of basic shares outstanding | 392,498 |
| | | | | 392,498 |
|
| Weighted average number of diluted shares outstanding | 395,694 |
| | | | | 395,694 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 30, 2012
(In Thousands Except Per Share Amounts)
|
| | | | | | | | | | | | |
| | Historical | | Pro Forma Adjustments | | | Pro Forma |
| Revenues: | | | | | | |
| Sales | $ | 2,198,323 |
| | $ | (32,009 | ) | (a) | | $ | 2,166,904 |
|
| | | | 590 |
| (g) | | |
| Franchise revenues | 306,919 |
| | 3,190 |
| (h) | | 310,109 |
|
| | 2,505,242 |
| | (28,229 | ) | | | 2,477,013 |
|
| Costs and expenses: | | | | | | |
| Cost of sales | 1,881,248 |
| | (27,709 | ) | (a) | | 1,854,003 |
|
| | | | 590 |
| (g) | | |
| | | | (126 | ) | (i) | | |
| General and administrative | 287,808 |
| | (752 | ) | (a) | | 287,056 |
|
| Depreciation and amortization | 146,976 |
| | (831 | ) | (a) | | 146,024 |
|
| | | | (121 | ) | (j) | | |
| Impairment of long-lived assets | 21,097 |
| | — |
| | | 21,097 |
|
| Facilities relocation costs and other transactions | 41,031 |
| | — |
| | | 41,031 |
|
| Other operating expense, net | 4,335 |
| | 126 |
| (i) | | 4,461 |
|
| | 2,382,495 |
| | (28,823 | ) | | | 2,353,672 |
|
| Operating profit | 122,747 |
| | 594 |
| | | 123,341 |
|
| Interest expense | (98,604 | ) | | — |
| | | (98,604 | ) |
| Loss on early extinguishment of debt | (75,076 | ) | | — |
| | | (75,076 | ) |
| Other expense, net and investment income, net | 37,808 |
| | — |
| | | 37,808 |
|
| Loss before income taxes and noncontrolling interests | (13,125 | ) | | 594 |
| | | (12,531 | ) |
| Benefit from income taxes | 21,083 |
| | (238 | ) | (k) | | 20,845 |
|
| Income from continuing operations | 7,958 |
| | 356 |
| | | 8,314 |
|
| Income attributable to noncontrolling interests | (2,384 | ) | | — |
| | | (2,384 | ) |
| Income from continuing operations attributable to The Wendy’s Company | $ | 5,574 |
| | $ | 356 |
| | | $ | 5,930 |
|
| | | | | | | |
| Basic income from continuing operations per share attributable to The Wendy’s Company | $ | 0.02 |
| | | | | $ | 0.02 |
|
| Diluted income from continuing operations per share attributable to The Wendy’s Company | $ | 0.02 |
| | | | | $ | 0.02 |
|
| | | | | | | |
| Weighted average number of basic shares outstanding | 390,275 |
| | | | | 390,275 |
|
| Weighted average number of diluted shares outstanding | 392,140 |
| | | | | 392,140 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(In Thousands)
Description of Transaction and Basis of Presentation
The unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of The Wendy’s Company (“The Wendy’s Company” or the “Company”), which were included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and Annual Report on Form 10-K for the year ended December 30, 2012. Unless the context indicates otherwise, any reference in this report to the “Company,” “we,” “us,” and “our” refers to The Wendy’s Company together with its direct and indirect subsidiaries. The unaudited pro forma condensed consolidated statements of operations reflect the sale by the Company of certain assets related to the operations of 22 Wendy’s restaurants as if the sale had been consummated on January 2, 2012 (the first day of our 2012 fiscal year). The unaudited pro forma condensed consolidated balance sheet as of March 31, 2013 reflects such sale as if it had been consummated on that date.
Pro Forma Adjustments
On July 22, 2013, Wendy’s completed the sale by the Company of certain assets used in the operation of 22 Wendy’s restaurants in the Kansas City metropolitan area to NPC pursuant to the terms of an Asset Purchase Agreement dated as of June 12, 2013 for $9,310 (subject to customary purchase price adjustments) plus initial franchise fees.
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited pro forma condensed consolidated statements of operations:
| |
| (a) | The elimination of assets and liabilities included in the NPC Disposition, estimated goodwill allocated to the restaurants being sold and historical revenues and expenses. |
| |
| (b) | Reflects anticipated cash proceeds of the $9,310 sale price and $550 of initial franchise fees, as reduced by $(193) of net liabilities assumed. |
| |
| (c) | Reclassification of costs incurred for the construction of the two Wendy’s restaurants which will be sold to NPC from properties to assets held for sale which is included in prepaid expenses and other current assets. |
| |
| (d) | Reflects the adjustment to fair value for land, buildings and leasehold improvements included in properties and favorable lease assets included in other intangible assets, as a result of the lease and/or sublease of such properties to NPC. |
| |
| (e) | Income taxes related to the estimated pre-tax gain on sale, revenue recognized for the initial franchise fees and the adjustment to fair value of assets discussed above. Income taxes are based on the estimated statutory tax rate adjusted for the impact of non-deductible goodwill. |
| |
| (f) | The after-tax effect on stockholders’ equity due to the NPC Disposition including: (1) $1,480 estimated gain on sale, (2) $330 revenue recognized for the initial franchise fees and (3) $(1,130) adjustment to fair value of assets. |
| |
| (g) | Reclassification of previously eliminated intercompany sales between the Company’s bakery and company-owned restaurants as a result of the NPC Disposition. |
| |
| (h) | Pro forma franchise royalty revenues and rental income as a result of the NPC Disposition. |
| |
| (i) | Reclassification of continuing favorable and unfavorable lease amortization from cost of sales to other operating expense, net as a result of the related properties being subleased to NPC in connection with the NPC Disposition. |
| |
| (j) | Reflects the pro forma effect on continuing depreciation and amortization resulting from the adjustment to fair value of the assets discussed above. |
| |
| (k) | The income tax effect resulting from the pro forma effect of the NPC Disposition based on the estimated statutory tax rate. |
