Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | WENDY'S CO | |
Entity Central Index Key | 30,697 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 236,768,234 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 634,751 | $ 171,447 |
Restricted cash | 29,874 | 32,633 |
Accounts and notes receivable, net | 100,148 | 114,390 |
Inventories | 3,335 | 3,156 |
Prepaid expenses and other current assets | 18,147 | 20,125 |
Advertising funds restricted assets | 69,835 | 62,602 |
Total current assets | 856,090 | 404,353 |
Properties | 1,223,982 | 1,263,059 |
Goodwill | 749,192 | 743,334 |
Other intangible assets | 1,303,690 | 1,321,585 |
Investments | 52,575 | 56,002 |
Net investment in direct financing leases | 226,149 | 229,089 |
Other assets | 95,754 | 79,516 |
Total assets | 4,507,432 | 4,096,938 |
Current liabilities: | ||
Current portion of long-term debt | 31,291 | 30,172 |
Accounts payable | 24,061 | 22,764 |
Income taxes payable | 84,623 | 1,115 |
Accrued expenses and other current liabilities | 120,203 | 110,509 |
Advertising funds restricted liabilities | 78,925 | 62,602 |
Total current liabilities | 339,103 | 227,162 |
Long-term debt | 2,759,766 | 2,724,230 |
Deferred income taxes | 275,312 | 299,053 |
Deferred franchise fees | 92,522 | 10,881 |
Other liabilities | 257,411 | 262,409 |
Total liabilities | 3,724,114 | 3,523,735 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 238,318 and 240,512 shares outstanding, respectively | 47,042 | 47,042 |
Additional paid-in capital | 2,883,298 | 2,885,955 |
Retained earnings (accumulated deficit) | 146,983 | (163,289) |
Common stock held in treasury, at cost; 232,106 and 229,912 shares, respectively | (2,242,870) | (2,150,307) |
Accumulated other comprehensive loss | (51,135) | (46,198) |
Total stockholders’ equity | 783,318 | 573,203 |
Total liabilities and stockholders’ equity | $ 4,507,432 | $ 4,096,938 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Balance Sheet Parentheticals - $ / shares shares in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Common Stock, Par Value | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Common Stock, Shares Issued | 470,424 | 470,424 |
Common Stock, Shares, Outstanding | 238,318 | 240,512 |
Treasury Stock, Shares | 232,106 | 229,912 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Revenues: | ||||
Sales | $ 165,323 | $ 158,843 | $ 486,316 | $ 467,914 |
Franchise royalty revenue and fees | 103,212 | 98,882 | 308,679 | 306,120 |
Franchise rental income | 50,474 | 50,275 | 152,110 | 140,127 |
Advertising funds revenue | 81,541 | 0 | 245,011 | 0 |
Revenues | 400,550 | 308,000 | 1,192,116 | 914,161 |
Costs and expenses: | ||||
Cost of sales | 139,348 | 133,631 | 409,721 | 388,755 |
Franchise support and other costs | 5,349 | 3,690 | 18,553 | 11,122 |
Franchise rental expense | 22,260 | 24,076 | 69,829 | 64,841 |
Advertising funds expense | 81,541 | 0 | 245,011 | 0 |
General and administrative | 46,545 | 51,716 | 146,064 | 153,089 |
Depreciation and amortization | 29,070 | 31,216 | 94,649 | 91,690 |
System optimization (gains) losses, net | (486) | 106 | (8) | 39,749 |
Reorganization and realignment costs | 941 | 2,888 | 6,691 | 20,768 |
Impairment of long-lived assets | 347 | 1,041 | 2,156 | 1,804 |
Other operating income, net | (1,713) | (2,021) | (4,643) | (5,828) |
Costs and expenses | 323,202 | 246,343 | 988,023 | 765,990 |
Operating profit | 77,348 | 61,657 | 204,093 | 148,171 |
Interest expense, net | (29,625) | (29,977) | (89,939) | (87,887) |
Loss on early extinguishment of debt | 0 | 0 | (11,475) | 0 |
Investment income (loss), Net | 450,133 | (636) | 450,432 | 2,086 |
Other income, net | 1,061 | 511 | 2,423 | 1,022 |
Income before income taxes | 498,917 | 31,555 | 555,534 | 63,392 |
Provision for income taxes | (107,668) | (17,298) | (114,250) | (28,639) |
Net income | $ 391,249 | $ 14,257 | $ 441,284 | $ 34,753 |
Earnings per share | ||||
Earnings Per Share, Basic | $ 1.65 | $ 0.06 | $ 1.85 | $ 0.14 |
Earnings Per Share, Diluted | $ 1.60 | $ 0.06 | $ 1.79 | $ 0.14 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Net income | $ 391,249 | $ 14,257 | $ 441,284 | $ 34,753 |
Other comprehensive income (loss), net: | ||||
Foreign currency translation adjustment | 5,315 | 8,787 | (5,054) | 16,797 |
Change in unrecognized pension loss; Unrealized gains arising during the period | 0 | 0 | 156 | 156 |
Change in unrecognized pension loss; Income tax provision | 0 | 0 | (39) | (60) |
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax | 0 | 0 | 117 | 96 |
Effect of cash flow hedges; Reclassification of losses into Net income | 0 | 723 | 0 | 2,170 |
Effect of cash flow hedge; Income tax provision | 0 | (279) | 0 | (838) |
Effect of cash flow hedges; Reclassification of losses into Net income, net of tax | 0 | 444 | 0 | 1,332 |
Other comprehensive income (loss), net | 5,315 | 9,231 | (4,937) | 18,225 |
Comprehensive income | $ 396,564 | $ 23,488 | $ 436,347 | $ 52,978 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 441,284 | $ 34,753 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 94,649 | 91,690 |
Share-based compensation | 14,401 | 16,356 |
Impairment of long-lived assets | 2,156 | 1,804 |
Deferred income tax | (1,527) | 945 |
Non-cash rental income, net | (10,868) | (8,348) |
Net receipt of deferred vendor incentives | 2,689 | 4,547 |
System optimization (gains) losses, net | (8) | 39,749 |
Gain on sale of investments, net | (450,000) | (1,807) |
Distributions received from TimWen joint venture | 9,060 | 5,524 |
Equity in earnings in joint ventures, net | (5,810) | (6,113) |
Long-term debt-related activities, net | 16,860 | 9,051 |
Other, net | 4,596 | 2,023 |
Changes in operating assets and liabilities: | ||
Accounts and notes receivable, net | 11,382 | (14,193) |
Inventories | (82) | (44) |
Prepaid expenses and other current assets | 2,754 | (1,281) |
Advertising funds restricted assets and liabilities | 8,879 | (15,823) |
Accounts payable | (559) | (1,557) |
Accrued expenses and other current liabilities | 89,806 | 3,039 |
Net cash provided by operating activities | 229,662 | 160,315 |
Cash flows from investing activities: | ||
Capital expenditures | (39,717) | (53,711) |
Acquisitions | (21,401) | (86,788) |
Dispositions | 2,863 | 80,058 |
Proceeds from sale of investments | 450,000 | 3,282 |
Notes receivable, net | (283) | (4,174) |
Payments for investments | (13) | (375) |
Net cash provided by (used in) investing activities | 391,449 | (61,708) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 934,837 | 22,675 |
Repayments of long-term debt | (893,039) | (42,966) |
Deferred financing costs | (17,340) | (1,069) |
Repurchases of common stock | (140,199) | (90,065) |
Dividends | (60,786) | (51,464) |
Proceeds from stock option exercises | 42,299 | 10,419 |
Payments related to tax withholding for share-based compensation | (10,464) | (4,484) |
Contingent consideration payment | (6,269) | 0 |
Net cash used in financing activities | (150,961) | (156,954) |
Net cash provided by (used in) operations before effect of exchange rate changes on cash | 470,150 | (58,347) |
Effect of exchange rate changes on cash | (2,195) | 6,910 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 467,955 | (51,437) |
Cash, cash equivalents and restricted cash at beginning of period | 212,824 | 275,949 |
Cash, cash equivalents and restricted cash at end of period | 680,779 | 224,512 |
Detail of cash flows from operating activities: | ||
Loss on early extinguishment of debt | 11,475 | 0 |
Accretion of long-term debt | 940 | 927 |
Amortization of deferred financing costs | 4,445 | 5,954 |
Reclassification of unrealized losses on cash flow hedges | 0 | 2,170 |
Long-term debt-related activities, net | 16,860 | 9,051 |
Cash paid for: | ||
Interest | 103,240 | 93,701 |
Income taxes, net of refunds | 5,925 | 22,092 |
Supplemental non-cash investing and financing activities: | ||
Capital expenditures included in accounts payable | 9,588 | 9,621 |
Capitalized lease obligations | 6,569 | 239,721 |
Accrued debt issuance costs | 332 | 0 |
Reconciliation of cash, cash equivalents and restricted cash at end of period: | ||
Total cash, cash equivalents and restricted cash | $ 212,824 | $ 275,949 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of September 30, 2018 , the results of our operations for the three and nine months ended September 30, 2018 and October 1, 2017 and cash flows for the nine months ended September 30, 2018 and October 1, 2017 . The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full 2018 fiscal year. These Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Form 10-K”). The principal subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business geographically. The operation and franchising of Wendy’s ® restaurants in North America (defined as the United States of America (“U.S.”) and Canada) comprises virtually all of our current operations and represents a single reportable segment. The revenues and operating results of Wendy’s restaurants outside of North America are not material. We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. The Company has reclassified certain costs associated with the Company’s franchise operations to “Franchise support and other costs,” which were previously recorded to “Other operating expense (income), net.” The costs reclassified include costs incurred to provide direct support services to our franchisees, as well as certain other direct and incremental costs for the Company’s franchise operations. Also, the Company reclassified certain restaurant operational costs from “General and administrative” to “Cost of sales.” The Company believes this new presentation will aid users in understanding its results of operations. The prior periods reflect the reclassifications of these expenses to conform to the current year presentation. There was no impact to operating profit, income before income taxes or net income as a result of these reclassifications. The following tables illustrate the expense reclassifications made to the condensed consolidated statements of operations for the three and nine months ended October 1, 2017 : Three Months Ended Reclassifications As Previously Reported Franchise support and other costs Restaurant operational costs As Currently Reported Cost of sales $ 132,387 $ — $ 1,244 $ 133,631 Franchise support and other costs — 3,690 — 3,690 General and administrative 52,960 — (1,244 ) 51,716 Other operating expense (income), net 1,669 (3,690 ) — (2,021 ) $ 187,016 $ — $ — $ 187,016 Nine Months Ended Reclassifications As Previously Reported Franchise support and other costs Restaurant operational costs As Currently Reported Cost of sales $ 385,154 $ — $ 3,601 $ 388,755 Franchise support and other costs — 11,122 — 11,122 General and administrative 156,690 — (3,601 ) 153,089 Other operating expense (income), net 5,294 (11,122 ) — (5,828 ) $ 547,138 $ — $ — $ 547,138 |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards New Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for implementation costs of a cloud computing arrangement that is a service contract. The new guidance aligns the accounting for such implementation costs of a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The Company does not expect the amendment, which is effective beginning with our 2019 fiscal year, to have a material impact on our consolidated financial statements. In August 2018, the FASB issued new guidance on disclosure requirements for fair value measurements. The objective of the new guidance, which is effective beginning with our 2020 fiscal year, is to provide additional information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements. New incremental disclosure requirements include the amount of fair value hierarchy level 3 changes in unrealized gains and losses and the range and weighted average used to develop significant unobservable inputs for level 3 fair value measurements. The Company does not expect the amendment to have a material impact on our consolidated financial statements. In August 2018, the FASB issued new guidance on disclosure requirements for employer sponsored defined benefit plans. The amendments remove disclosure requirements that no longer are considered cost beneficial and add disclosure requirements that are identified as relevant. New incremental disclosure requirements include the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates as well as an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The Company does not expect the amendment, which is effective beginning with our 2020 fiscal year, to have a material impact on our consolidated financial statements. In June 2018, the FASB issued new guidance on nonemployee share-based payment arrangements. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company does not expect the amendment, which is effective beginning with our 2019 fiscal year, to have a material impact on our consolidated financial statements. In February 2016, the FASB issued new guidance on leases, which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. The new guidance, which is effective beginning with our 2019 fiscal year, requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months. The guidance allows for either (1) a modified retrospective transition method under which the standard is applied at the beginning of the earliest period presented in the financial statements or (2) an alternative transition method under which the standard is applied at the adoption date and a cumulative-effect adjustment to the opening balance of retained earnings is recognized in the period of adoption. The Company currently plans to adopt the standard using the alternative transition method. We are currently implementing a new lease management system to facilitate the adoption of this guidance. As shown in Note 14 , there are $1,546,470 in future minimum rental payments for operating leases that are not currently on our balance sheet; therefore, we expect this will have a material impact on our consolidated balance sheets and related disclosures. We do not expect the adoption of this guidance to have a material impact on our consolidated statements of operations and statements of cash flows. New Accounting Standards Adopted In May 2017, the FASB issued new guidance on the scope of modification accounting for share-based payment arrangements. The new guidance provides relief to entities that make non-substantive changes to their share-based payment arrangements. The Company adopted this amendment, prospectively, during the first quarter of 2018. The adoption of this guidance did not impact our condensed consolidated financial statements. In January 2017, the FASB issued an amendment that clarifies the definition of a business in determining whether to account for a transaction as an asset acquisition or a business combination. The Company adopted this amendment, prospectively, during the first quarter of 2018. The adoption of this guidance did not impact our condensed consolidated financial statements. In November 2016, the FASB issued an amendment that clarifies guidance for proper classification and presentation of restricted cash in the statement of cash flows. Accordingly, changes in restricted cash that have historically been included within operating, investing and financing activities have been eliminated, and restricted cash, including the restricted cash of the national advertising funds, is combined with cash and cash equivalents when reconciling the beginning and end of period balances for all periods presented. The Company adopted this amendment during the first quarter of 2018. The adoption of the amendment resulted in an increase in net cash used in investing activities of $23,624 during the nine months ended October 1, 2017 . In addition, during the nine months ended October 1, 2017 , net cash provided by operating activities decreased $16,428 , primarily due to changes in restricted cash of the national advertising funds. Because of the inclusion of restricted cash in the beginning and end of period balances, our cash, cash equivalents and restricted cash as presented in the statement of cash flows increased $37,883 and $77,709 as of October 1, 2017 and January 1, 2017 , respectively. This amendment did not impact the Company’s condensed consolidated statements of operations and condensed consolidated balance sheets. In August 2016, the FASB issued an amendment that provides guidance for proper classification of certain cash receipts and payments in the statement of cash flows. Upon adoption in the first quarter of 2018, the Company elected to use the nature of distribution approach for all distributions it receives from its equity method investees. The adoption of this guidance did not impact our condensed consolidated financial statements. In March 2016, the FASB issued an amendment that provides guidance on extinguishing financial liabilities for certain prepaid stored-value products. The Company adopted this amendment during the first quarter of 2018. The adoption of this guidance did not impact our condensed consolidated financial statements. In January 2016, the FASB issued an amendment that revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The Company adopted this amendment during the first quarter of 2018. The adoption of this guidance did not impact our condensed consolidated financial statements. Revenue Recognition In May 2014, the FASB issued amended guidance for revenue recognition. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. The Company adopted the new guidance on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied the new guidance using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative period has not been adjusted and continues to be reported under the previous revenue recognition guidance. The details of the significant changes and quantitative impact of the changes are discussed below. See Note 3 for further information regarding our revenue policies and disaggregation of our sources of revenue. Franchise Fees Under previous revenue recognition guidance, new build technical assistance fees and development fees were recognized as revenue when a franchised restaurant opened, as all material services and conditions related to the franchise fee had been substantially performed upon the restaurant opening. In addition, under previous guidance, technical assistance fees received in connection with sales of Company-operated restaurants to franchisees and facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”), as well as renewal fees, were recognized as revenue when the license agreements were signed and the restaurant opened. Under the new guidance, these franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. As such, these franchise fees are recognized over the contractual term of the franchise agreement. National Advertising Funds The Company maintains two national advertising funds (the “Advertising Funds”) established to collect and administer funds contributed for use in advertising and promotional programs for Company-operated and franchised restaurants in the U.S. and Canada. Previously, the revenue, expenses and cash flows of such Advertising Funds were not included in the Company’s condensed consolidated statements of operations and statements of cash flows because the contributions to these Advertising Funds were designated for specific purposes and the Company acted as an agent, in substance, with regard to these contributions as a result of industry-specific guidance. Under the new guidance, which superseded the previous industry-specific guidance, the revenue, expenses and cash flows of the Advertising Funds are fully consolidated into the Company’s condensed consolidated statements of operations and statements of cash flows. In addition, the Company reclassified the total stockholders’ equity of the Advertising Funds from “ Advertising funds restricted liabilities ” to “Accumulated deficit” upon adoption of the guidance. Upon the full consolidation of the Advertising Funds, the Company also eliminated certain amounts due to and from affiliates from “Advertising funds restricted assets” and “Advertising funds restricted liabilities.” The Company allocates a portion of its advertising funds expense to “ Cost of sales ” based on a percentage of sales of Company-operated restaurants. Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue. Impacts on Financial Statements The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s condensed consolidated financial statements: Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Condensed Consolidated Balance Sheet September 30, 2018 Accrued expenses and other current liabilities $ 120,203 $ (1,664 ) $ — $ 118,539 Advertising funds restricted liabilities 78,925 — (6,645 ) 72,280 Total current liabilities 339,103 (1,664 ) (6,645 ) 330,794 Deferred income taxes 275,312 21,463 — 296,775 Deferred franchise fees 92,522 (81,686 ) — 10,836 Total liabilities 3,724,114 (61,887 ) (6,645 ) 3,655,582 Retained earnings 146,983 62,011 6,645 215,639 Accumulated other comprehensive loss (51,135 ) (124 ) — (51,259 ) Total stockholders’ equity 783,318 61,887 6,645 851,850 Condensed Consolidated Statements of Operations Three Months Ended September 30, 2018 Franchise royalty revenue and fees (a) $ 103,212 $ (497 ) $ — $ 102,715 Advertising funds revenue 81,541 — (81,541 ) — Total revenues 400,550 (497 ) (81,541 ) 318,512 Advertising funds expense 81,541 — (81,541 ) — Total costs and expenses 323,202 — (81,541 ) 241,661 Operating profit 77,348 (497 ) — 76,851 Income before income taxes 498,917 (497 ) — 498,420 Provision for income taxes (107,668 ) 124 — (107,544 ) Net income 391,249 (373 ) — 390,876 Nine Months Ended September 30, 2018 Franchise royalty revenue and fees (a) $ 308,679 $ (2,087 ) $ — $ 306,592 Advertising funds revenue 245,011 — (245,011 ) — Total revenues 1,192,116 (2,087 ) (245,011 ) 945,018 Advertising funds expense 245,011 — (245,011 ) — Total costs and expenses 988,023 — (245,011 ) 743,012 Operating profit 204,093 (2,087 ) — 202,006 Income before income taxes 555,534 (2,087 ) — 553,447 Provision for income taxes (114,250 ) 533 — (113,717 ) Net income 441,284 (1,554 ) — 439,730 _______________ (a) The adjustments for the three and nine months ended September 30, 2018 include the reversal of franchise fees recognized over time under the new revenue recognition guidance of $2,266 and $7,393 , respectively, as well as franchisee fees that would have been recognized under the previous revenue recognition guidance when the license agreements were signed and the restaurant opened of $1,769 and $5,306 , respectively. See Note 3 for further information. Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 2018 Cash flows from operating activities: Net income $ 441,284 $ (1,554 ) $ — $ 439,730 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax (1,527 ) (533 ) — (2,060 ) Other, net 4,596 (219 ) — 4,377 Changes in operating assets and liabilities: Accrued expenses and other current liabilities 89,806 2,306 — 92,112 |
Revenue (Notes)
Revenue (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue [Abstract] | |
Revenue from Contract with Customer | Revenue Nature of Goods and Services Wendy’s franchises and operates Wendy’s ® quick-service restaurants specializing in hamburger sandwiches throughout North America. Wendy’s also has franchised restaurants in 30 foreign countries and U.S. territories other than North America. At September 30, 2018 , Wendy’s operated and franchised 350 and 6,319 restaurants, respectively. The Company generates revenues from sales at Company-operated restaurants and earns fees and rental income from franchised restaurants. The rights and obligations governing franchised restaurants are set forth in the franchise agreement. The franchise agreement provides the franchisee the right to construct, own and operate a Wendy’s restaurant upon a site accepted by Wendy’s and to use the Wendy’s system in connection with the operation of the restaurant at that site. The franchise agreement generally provides for a 20 -year term and a 10 -year renewal subject to certain conditions. The initial term may be extended up to 25 years and the renewal extended up to 20 years for qualifying restaurants under certain new restaurant development programs. The franchise agreement requires that the franchisee pay a royalty based on a percentage of sales of the franchised restaurant, as well as make contributions to the Advertising Funds based on a percentage of sales. The agreement also typically requires that the franchisee pay Wendy’s a technical assistance fee. The technical assistance fee is used to defray some of the costs to Wendy’s for training, start-up and transitional services related to new and existing franchisees acquiring restaurants and in the development and opening of new restaurants. Wendy’s also enters into development agreements with certain franchisees. The development agreement provides the franchisee with the right to develop a specified number of new Wendy’s restaurants using the Image Activation design within a stated, non-exclusive territory for a specified period, subject to the franchisee meeting interim new restaurant development requirements. Wendy’s owns and leases sites from third parties, which it leases and/or subleases to franchisees. Noncancelable lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. The lease term for properties leased or subleased to franchisees is determined based upon the economic detriment to the franchisee and includes consideration of the length of the franchise agreement, historical performance of the restaurant and the existence of bargain renewal options. Royalties and contributions to the Advertising Funds are generally due within the month subsequent to which the revenue was generated through sales of the franchised restaurant. Technical assistance fees, renewal fees and development fees are generally due upon execution of the related franchise agreement. Rental income is due in accordance with the terms of each lease, which is generally at the beginning of each month. Significant Accounting Policy “Sales” includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. “Sales” excludes taxes collected from the Company’s customers. Revenue is recognized when the performance obligation is satisfied, which occurs upon delivery of food to the customer. “Sales” also includes income for gift cards. Gift card payments are recorded as deferred income when received and are recognized as revenue in proportion to actual gift card redemptions. “Franchise royalty revenue and fees” includes royalties, new build technical assistance fees, renewal fees, Franchise Flip technical assistance fees, Franchise Flip advisory fees and development fees. Royalties from franchised restaurants are based on a percentage of sales of the franchised restaurant and are recognized as earned. New build technical assistance fees, renewal fees and Franchise Flip technical assistance fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Franchise Flip advisory fees include valuation services and fees for selecting pre-approved buyers for Franchise Flips. Franchise Flip advisory fees are paid by the seller and are recognized as revenue at closing of the Franchise Flip transaction. “Advertising funds revenue” includes contributions to the Advertising Funds by franchisees. Revenue related to these contributions is based on a percentage of sales of the franchised restaurants and is recognized as earned. “Franchise rental income” includes rental income from properties owned and leased by the Company and leased or subleased to franchisees. Rental income is recognized on a straight-line basis over the respective operating lease terms. Favorable and unfavorable lease amounts related to the leased and/or subleased properties are amortized to rental income on a straight-line basis over the remaining term of the leases. Disaggregation of Revenue The following table disaggregates revenue by primary geographical market and source: Three Months Ended Nine Months Ended September 30, September 30, Primary geographical markets United States $ 375,938 $ 1,121,518 Canada 19,738 56,156 International 4,874 14,442 Total revenue $ 400,550 $ 1,192,116 Sources of revenue Sales at Company-operated restaurants $ 165,323 $ 486,316 Franchise royalty revenue 95,501 283,602 Franchise fees 7,711 25,077 Franchise rental income 50,474 152,110 Advertising funds revenue 81,541 245,011 Total revenue $ 400,550 $ 1,192,116 Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: September 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 39,281 Receivables, which are included in “Advertising funds restricted assets” 42,226 Deferred franchise fees (c) 103,012 _______________ (a) Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s statement of operations. (b) Includes receivables related to “ Sales ” and “ Franchise royalty revenue and fees .” (c) Deferred franchise fees of $10,490 and $92,522 are included in “ Accrued expenses and other current liabilities ” and “ Deferred franchise fees ,” respectively. Significant changes in deferred franchise fees are as follows: Nine Months Ended September 30, Deferred franchise fees at beginning of period $ 102,492 Revenue recognized during the period (7,393 ) New deferrals due to cash received and other 7,913 Deferred franchise fees at end of period $ 103,012 Anticipated Future Recognition of Deferred Franchise Fees The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period: Estimate for fiscal year: 2018 (a) $ 2,445 2019 7,774 2020 6,282 2021 5,749 2022 5,559 Thereafter 75,203 $ 103,012 _______________ (a) Represents franchise fees expected to be recognized for the remainder of the 2018 fiscal year, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
Acquisitions (Notes)
Acquisitions (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions [Text Block] | Acquisitions During the nine months ended September 30, 2018 , the Company acquired 16 restaurants from a franchisee for total net cash consideration of $21,401 . The Company did not incur any material acquisition-related costs associated with the acquisition and such transaction was not significant to our condensed consolidated financial statements. The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from the franchisee: Nine Months Ended September 30, Restaurants acquired from franchisee 16 Total consideration paid, net of cash received $ 21,401 Identifiable assets acquired and liabilities assumed: Properties 4,363 Acquired franchise rights 10,127 Capital lease assets 5,360 Other assets 621 Capital lease obligations (3,135 ) Unfavorable leases (733 ) Other liabilities (1,960 ) Total identifiable net assets 14,643 Goodwill $ 6,758 On May 31, 2017, the Company also entered into the DavCo and NPC Transactions. See Note 5 for further information. |
System Optimization (Gains) Los
System Optimization (Gains) Losses, Net | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
System Optimization (Gains) Losses, Net | System Optimization (Gains) Losses, Net The Company’s system optimization initiative includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating Franchise Flips. The Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system as of January 1, 2017. While the Company has no plans to reduce its ownership below the approximately 5% level, Wendy’s will continue to optimize its system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development and accelerate reimages in the Image Activation format. During the nine months ended September 30, 2018 , the Company completed the sale of three Company-operated restaurants to a franchisee. In addition, the Company facilitated 73 and 270 Franchise Flips during the nine months ended September 30, 2018 and October 1, 2017 , respectively (excluding the DavCo and NPC Transactions discussed below). Gains and losses recognized on dispositions are recorded to “ System optimization (gains) losses, net ” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 6 . All other costs incurred related to facilitating Franchise Flips are recorded to “ Franchise support and other costs .” The following is a summary of the disposition activity recorded as a result of our system optimization initiative: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Gain on sale of restaurants, net (a) $ — $ — $ 89 $ — Post-closing adjustments on sales of restaurants (b) 279 418 54 1,345 Gain (loss) on sales of other assets, net (c) 207 (539 ) (135 ) 2,040 Gain (loss) on DavCo and NPC Transactions (d) — 15 — (43,134 ) System optimization gains (losses), net $ 486 $ (106 ) $ 8 $ (39,749 ) _______________ (a) During the nine months ended September 30, 2018 , the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. Net assets sold totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale. (b) The nine months ended September 30, 2018 includes cash proceeds, net of payments of $6 . The three and nine months ended October 1, 2017 includes cash payments, net of proceeds received, of $333 and $33 , respectively, related to post-closing reconciliations with franchisees. The three and nine months ended September 30, 2018 and the nine months ended October 1, 2017 include the recognition of deferred gains of $503 and $312 , respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees. (c) During the three and nine months ended September 30, 2018 , the Company received cash proceeds, primarily from the sale of surplus properties, of $1,049 and $1,421 , respectively, and received cash proceeds of $2,411 and $9,403 during the three and nine months ended October 1, 2017 , respectively. The nine months ended October 1, 2017 also includes the recognition of a deferred gain of $375 related to the sale of a share in an aircraft. (d) As part of our system optimization initiative, the Company acquired 140 Wendy’s restaurants on May 31, 2017 from DavCo Restaurants, LLC (“DavCo”) for total net cash consideration of $86,788 , which were immediately sold to NPC International, Inc. (“NPC”), an existing franchisee of the Company, for cash proceeds of $70,688 (the “DavCo and NPC Transactions”). The acquisition of Wendy’s restaurants from DavCo was not contingent on executing the sale agreement with NPC; as such, the Company accounted for the transactions as an acquisition and subsequent disposition of a business. As part of the transactions, the Company retained leases for purposes of subleasing such properties to NPC. The total consideration paid to DavCo was allocated to net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. Refer to the Form 10-K for further information regarding the purchase price allocation. The Company finalized the purchase price allocation during 2018 with no differences from the provisional amounts previously reported. The gain on the DavCo and NPC Transactions during the three months ended October 1, 2017 was comprised of a decrease in goodwill of $27 related to adjustments in the fair value of deferred taxes and net unfavorable leases, partially offset by additional selling and other costs of $12 . The loss on the DavCo and NPC Transactions during the nine months ended October 1, 2017 was comprised of the write-off of goodwill of $65,476 and selling and other costs of $1,692 , partially offset by the recognition of net favorable leases of $24,034 . As part of the DavCo acquisition, the Company recognized a supplemental purchase price liability of $6,269 , which was settled during the nine months ended September 30, 2018 . As of September 30, 2018 and December 31, 2017 , the Company had assets held for sale of $2,519 and $2,235 , respectively, primarily consisting of surplus properties. Assets held for sale are included in “ Prepaid expenses and other current assets .” |
Reorganization and Realignment
Reorganization and Realignment Costs | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Disclosure | Reorganization and Realignment Costs The following is a summary of the initiatives included in “Reorganization and realignment costs:” Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, G&A realignment $ 629 $ 2,656 $ 6,375 $ 19,901 System optimization initiative 312 232 316 867 Reorganization and realignment costs $ 941 $ 2,888 $ 6,691 $ 20,768 General and Administrative ( “ G&A ”) Realignment In May 2017, the Company initiated a plan to further reduce its G&A expenses. The Company expects to incur total costs aggregating approximately $30,000 to $33,000 related to the plan. The Company recognized costs totaling $6,375 during the nine months ended September 30, 2018 , which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $4,500 , comprised of (1) severance and related employee costs of approximately $1,000 , (2) recruitment and relocation costs of approximately $2,000 , (3) third-party and other costs of approximately $500 and (4) share-based compensation of approximately $1,000 . The Company expects to continue to recognize costs associated with the plan into 2019. The following is a summary of the activity recorded as a result of the G&A realignment plan: Three Months Ended Nine Months Ended Total September 30, October 1, September 30, October 1, Severance and related employee costs $ 57 $ 1,210 $ 3,168 $ 14,436 $ 18,124 Recruitment and relocation costs 200 145 708 145 1,197 Third-party and other costs 39 496 971 821 2,062 296 1,851 4,847 15,402 21,383 Share-based compensation (a) 333 805 1,528 4,499 6,655 Total G&A realignment $ 629 $ 2,656 $ 6,375 $ 19,901 $ 28,038 _______________ (a) Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A realignment plan. As of September 30, 2018 , the accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $6,817 and $1,432 , respectively. The tables below present a rollforward of our accruals for the plan. Balance December 31, 2017 Charges Payments Balance September 30, 2018 Severance and related employee costs $ 12,093 $ 3,168 $ (7,103 ) $ 8,158 Recruitment and relocation costs 177 708 (794 ) 91 Third-party and other costs — 971 (971 ) — $ 12,270 $ 4,847 $ (8,868 ) $ 8,249 Balance January 1, 2017 Charges Payments Balance October 1, 2017 Severance and related employee costs $ — $ 14,436 $ (1,350 ) $ 13,086 Recruitment and relocation costs — 145 (36 ) 109 Third-party and other costs — 821 (821 ) — $ — $ 15,402 $ (2,207 ) $ 13,195 System Optimization Initiative The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,225 under the initiative since inception. The Company does not expect to incur additional costs in 2018 in connection with acquisitions or dispositions under our system optimization initiative. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Investments Equity Investments Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons ® brand. (Tim Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “ Other operating income, net .” Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements: Nine Months Ended September 30, October 1, Balance at beginning of period $ 55,363 $ 54,545 Investment 13 375 Equity in earnings for the period 7,566 7,844 Amortization of purchase price adjustments (a) (1,756 ) (1,731 ) 5,810 6,113 Distributions received (b) (9,060 ) (8,128 ) Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other (191 ) 4,304 Balance at end of period $ 51,935 $ 57,209 _______________ (a) Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years. (b) The nine months ended October 1, 2017 included a distribution receivable from TimWen of $2,604 , which was included in “ Accounts and notes receivable, net .” Indirect Investment in Inspire Brands In connection with the sale of Arby’s Restaurant Group, Inc. (“Arby’s) during 2011, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”) obtained an 18.5% equity interest in ARG Holding Corporation (“ARG Parent”) (through which Wendy’s Restaurants indirectly retained an 18.5% interest in Arby’s). The carrying value of our investment was reduced to zero during 2013 in connection with the receipt of a dividend. Our 18.5% equity interest was diluted to 12.3% on February 5, 2018, when a subsidiary of ARG Parent acquired Buffalo Wild Wings, Inc. As a result, our diluted ownership interest included both the Arby’s and Buffalo Wild Wings brands under the newly formed combined company, Inspire Brands, Inc. (“Inspire Brands”). On August 16, 2018, the Company sold its remaining 12.3% ownership interest to Inspire Brands for $450,000 and incurred transaction costs of $79 , which were recorded to “ Investment income (loss), net .” The Company expects to pay income taxes on the transaction of approximately $95,000 during the fourth quarter of 2018. |
Long-Term Debt (Notes)
Long-Term Debt (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: September 30, December 31, Series 2018-1 Class A-2 Notes: 3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025 $ 446,625 $ — 3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 471,438 — Series 2015-1 Class A-2 Notes: 3.371% Series 2015-1 Class A-2-I Notes, repaid with 2018 refinancing — 855,313 4.080% Series 2015-1 Class A-2-II Notes, anticipated repayment date 2022 873,000 879,750 4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025 485,000 488,750 7% debentures, due in 2025 90,454 89,514 Capital lease obligations, due through 2045 458,347 467,964 Unamortized debt issuance costs (33,807 ) (26,889 ) 2,791,057 2,754,402 Less amounts payable within one year (31,291 ) (30,172 ) Total long-term debt $ 2,759,766 $ 2,724,230 On January 17, 2018, Wendy’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, completed a refinancing transaction under which the Master Issuer issued fixed rate senior secured notes in the following 2018-1 series: Class A-2-I with an initial principal amount of $450,000 and Class A-2-II with an initial principal amount of $475,000 (collectively, the “Series 2018-1 Class A-2 Notes”). Interest payments on the Series 2018-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2018-1 Class A-2 Notes is in March 2048. If the Master Issuer has not repaid or redeemed the Series 2018-1 Class A-2 Notes prior to the respective anticipated repayment date, additional interest will accrue on these notes equal to the greater of (1) 5.00% per annum and (2) a per annum interest rate equal to the excess, if any, by which the sum of (a) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (b) 5.00% , plus (c) (i) with respect to the Series 2018-1 Class A-2-I Notes, 1.35% , and (ii) with respect to the Series 2018-1 Class A-2-II Notes, 1.58% , exceeds the original interest rate with respect to such tranche. The net proceeds from the sale of the Series 2018-1 Class A-2 Notes were used to redeem the Master Issuer’s outstanding Series 2015-1 Class A-2-I Notes, to pay prepayment and transaction costs, and for general corporate purposes. As a result, the Company recorded a loss on early extinguishment of debt of $11,475 during the nine months ended September 30, 2018 , which was comprised of the write-off of certain deferred financing costs and a specified make-whole payment. The Series 2018-1 Class A-2 Notes have scheduled principal payments of $9,250 annually from 2018 through 2024, $423,250 in 2025, $4,750 in each 2026 through 2027 and $427,500 in 2028. Concurrently, the Master Issuer entered into a revolving financing facility of Series 2018-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2018-1 Class A-1 Notes” and, together with the Series 2018-1 Class A-2 Notes, the “Series 2018-1 Senior Notes”), which allows for the drawing of up to $150,000 using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2018-1 Class A-1 Notes during the nine months ended September 30, 2018 . The Series 2015-1 Class A-1 Notes were canceled on the closing date and the letters of credit outstanding against the Series 2015-1 Class A-1 Notes were transferred to the Series 2018-1 Class A-1 Notes. The Series 2018-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors (the “Guarantors”), excluding certain real estate assets and subject to certain limitations. The Series 2018-1 Senior Notes are subject to the same series of covenants and restrictions as the Series 2015-1 Senior Notes. During the nine months ended September 30, 2018 , the Company incurred debt issuance costs of $17,672 in connection with the issuance of the Series 2018-1 Senior Notes. The debt issuance costs are being amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2018-1 Senior Notes utilizing the effective interest rate method. Wendy’s U.S. advertising fund has a revolving line of credit of $25,000 . Neither the Company, nor Wendy’s, is the guarantor of the debt. The advertising fund facility was established to fund the advertising fund operations. During the nine months ended September 30, 2018 , the Company borrowed and repaid $9,837 and $11,124 under the line of credit, respectively. During the nine months ended October 1, 2017 , the Company borrowed and repaid $22,675 under the line of credit. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy: • Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets. • Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation. Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments: September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 444,012 $ 444,012 $ 338 $ 338 Level 1 Non-current cost method investments (a) 640 2,409 639 327,710 Level 3 Financial liabilities Series 2018-1 Class A-2-I Notes (b) 446,625 425,678 — — Level 2 Series 2018-1 Class A-2-II Notes (b) 471,438 449,186 — — Level 2 Series 2015-1 Class A-2-I Notes (b) — — 855,313 856,510 Level 2 Series 2015-1 Class A-2-II Notes (b) 873,000 866,714 879,750 897,961 Level 2 Series 2015-1 Class A-2-III Notes (b) 485,000 481,654 488,750 513,188 Level 2 7% debentures, due in 2025 (b) 90,454 104,500 89,514 107,000 Level 2 Guarantees of franchisee loan obligations (c) 22 22 37 37 Level 3 _______________ (a) The fair value of our indirect investment in Arby’s as of December 31, 2017 was based on applying a multiple to Arby’s adjusted earnings before income taxes, depreciation and amortization per its current unaudited financial information. The carrying value of our indirect investment in Arby’s was reduced to zero during 2013 in connection with the receipt of a dividend. On February 5, 2018, a subsidiary of ARG Parent acquired Buffalo Wild Wings, Inc. As a result, our ownership interest included both the Arby’s and Buffalo Wild Wings brands under the newly formed combined company, Inspire Brands. On August 16, 2018, the Company sold its remaining ownership interest to Inspire Brands for $450,000 . See Note 7 for further information. The fair values of our remaining investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments. (b) The fair values were based on quoted market prices in markets that are not considered active markets. (c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage. The carrying amounts of cash, accounts payable and accrued expenses approximated fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximated fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents and guarantees are the only financial assets and liabilities measured and recorded at fair value on a recurring basis. Non-Recurring Fair Value Measurements Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations. Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements and favorable lease assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair value of long-lived assets held and used presented in the tables below represents the remaining carrying value and was estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale, which primarily include surplus properties. The fair values of long-lived assets held for sale presented in the tables below represents the remaining carrying value and were estimated based on current market values. See Note 10 for further information on impairment of our long-lived assets. Fair Value Measurements September 30, Level 1 Level 2 Level 3 Held and used $ 226 $ — $ — $ 226 Held for sale 1,115 — — 1,115 Total $ 1,341 $ — $ — $ 1,341 Fair Value Measurements December 31, Level 1 Level 2 Level 3 Held and used $ 757 $ — $ — $ 757 Held for sale 1,560 — — 1,560 Total $ 2,317 $ — $ — $ 2,317 Total impairment losses for the three and nine months ended September 30, 2018 included remeasuring long-lived assets held and used of $118 and $1,886 , respectively, and remeasuring long-lived assets held for sale of $229 and $270 , respectively. Total impairment losses for the three and nine months ended October 1, 2017 included remeasuring long-lived assets held and used of $928 and $1,146 , respectively, and remeasuring long-lived assets held for sale of $113 and $658 , respectively. |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 9 Months Ended |
Sep. 30, 2018 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets During the three and nine months ended September 30, 2018 and October 1, 2017 , the Company recorded impairment charges on long-lived assets as a result of (1) closing Company-operated restaurants and classifying such surplus properties as held for sale and (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications. Additionally, during the nine months ended September 30, 2018 and the three and nine months ended October 1, 2017, the Company recorded impairment charges on long-lived assets as a result of the deterioration in operating performance of certain Company-operated restaurants and charges for capital improvements in previously impaired restaurants that did not subsequently recover. The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets.” Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Surplus properties $ 229 $ 113 $ 270 $ 658 Restaurants leased or subleased to franchisees 118 95 283 95 Company-operated restaurants — 833 1,603 1,051 $ 347 $ 1,041 $ 2,156 $ 1,804 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended September 30, 2018 and October 1, 2017 was 21.6% and 54.8% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% and 35% in the third quarter of 2018 and 2017, respectively, primarily due to (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $5,251 in the third quarter of 2018, (2) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), (3) the system optimization initiative provision of $5,019 in 2017, reflecting goodwill adjustments, changes to valuation allowances on state net operating loss carryforwards and state deferred taxes, and (4) state income tax provision in 2017, including non-recurring changes to state deferred taxes net of federal benefits. The Company’s effective tax rate for the nine months ended September 30, 2018 and October 1, 2017 was 20.6% and 45.2% , respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% and 35% for the first nine months of 2018 and 2017, respectively, primarily due to (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $12,142 in the first nine months of 2018, (2) state income taxes, (3) the impact of the Tax Act and (4) the system optimization initiative in 2017, reflecting goodwill adjustments, changes to valuation allowances on state net operating loss carryforwards and state deferred taxes. On December 22, 2017, the U.S. government enacted the Tax Act. In our continued analysis of the impact of the Tax Act in the first nine months of 2018 under Staff Accounting Bulletin 118, we have adjusted our provisional amounts for a discrete net tax expense of $2,076 . This includes a net expense of $2,426 related to the impact of the corporate rate reduction on our net deferred tax liabilities and a net expense of $991 related to limitations on the deductibility of certain executive compensation, partially offset by $1,341 for the tax benefit of foreign tax credits. The Company considers the impact of the Tax Act related to these items to be final. The impact of the Tax Act on the Company’s state income taxes is not yet final; however, we do not expect any material change to the provisional amounts made for state taxes. Unrecognized tax benefits for the Company increased by $3,554 and $2,547 during the three and nine months ended September 30, 2018, respectively. The increase was primarily related to the sale of our ownership interest in Inspire Brands (see Note 7 for further information). During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $11,241 due to the lapse of statutes of limitations and expected settlements with taxing authorities. The current portion of refundable income taxes was $5,851 and $26,262 as of September 30, 2018 and December 31, 2017 , respectively, and is included in “Accounts and notes receivable, net” in the condensed consolidated balance sheets. There were no long-term refundable income taxes as of September 30, 2018 and December 31, 2017 . |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share was computed by dividing net income amounts by the weighted average number of common shares outstanding. The weighted average number of shares used to calculate basic and diluted net income per share were as follows: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Common stock: Weighted average basic shares outstanding 237,696 243,354 238,872 245,073 Dilutive effect of stock options and restricted shares 7,070 8,383 7,574 8,103 Weighted average diluted shares outstanding 244,766 251,737 246,446 253,176 Diluted net income per share for the three and nine months ended September 30, 2018 and October 1, 2017 was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 1,121 and 1,287 for the three and nine months ended September 30, 2018 , respectively, and 1,617 and 618 for the three and nine months ended October 1, 2017 , respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Stockholders’ Equity The following is a summary of the changes in stockholders’ equity: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Balance at beginning of period $ 430,539 $ 487,049 $ 573,203 $ 527,736 Comprehensive income 396,564 23,488 436,347 52,978 Cash dividends ($.085 and $.07 per share for the three months and $.255 and $.21 per share for the nine months ended September 30, 2018 and October 1, 2017, respectively) (20,141 ) (17,017 ) (60,786 ) (51,464 ) Repurchases of common stock (56,421 ) (38,463 ) (141,615 ) (90,964 ) Share-based compensation 4,810 4,984 14,401 16,356 Exercises of stock options 29,075 4,033 35,889 10,194 Vesting of restricted shares (1,168 ) (1,528 ) (4,089 ) (4,260 ) Cumulative effect of change in accounting principle (a) — — (70,210 ) 1,880 Other 60 49 178 139 Balance at end of period $ 783,318 $ 462,595 $ 783,318 $ 462,595 _______________ (a) During the nine months ended September 30, 2018, the Company recognized a net increase to “Accumulated deficit” of $70,210 as a result of adoption of amended guidance for revenue recognition. The net increase resulted from an increase to deferred franchise fees of $85,561 and a decrease to “ Deferred income taxes ” of $21,996 as a result of now deferring franchise fees over the contractual term of the franchise agreements. Additionally, an increase to “ Advertising funds restricted liabilities ” of $6,645 was recognized as a result of a reclassification of the total stockholders’ deficit of the Advertising Funds as of December 31, 2017. See Note 2 for further information. During the nine months ended October 1, 2017, the Company recognized a tax benefit as a reduction to the Company’s deferred tax liability with an equal offsetting increase to “Accumulated deficit.” The adjustment was recognized as a result of adoption of an amendment to the accounting for employee share-based payment transactions. Repurchases of Common Stock In February 2018, our Board of Directors authorized a repurchase program for up to $175,000 of our common stock through March 3, 2019, when and if market conditions warrant and to the extent legally permissible. In August 2018, our Board of Directors authorized an additional share repurchase program for up to $100,000 of our common stock through December 27, 2019 with a portion of the proceeds obtained through the sale of our ownership interest in Inspire Brands, when and if market conditions warrant and to the extent legally permissible . During the nine months ended September 30, 2018 , the Company repurchased 6,896 shares with an aggregate purchase price of $118,866 , of which $2,675 was accrued at September 30, 2018 , and excluding commissions of $97 . As of September 30, 2018 , the Company had $56,134 of availability remaining under its February 2018 authorization and $100,000 remaining under its August 2018 authorization. Subsequent to September 30, 2018 through October 31, 2018 , the Company repurchased 1,596 shares under the February 2018 authorization with an aggregate purchase price of $27,288 , excluding commissions of $22 . In addition, subsequent to September 30, 2018 , the Board of Directors approved an increase of $120,000 to the August 2018 authorization, which now totals $220,000 and expires on December 27, 2019. In February 2017, our Board of Directors authorized a repurchase program for up to $150,000 of our common stock through March 4, 2018, when and if market conditions warranted and to the extent legally permissible. During the nine months ended September 30, 2018 , the Company completed the $150,000 program with the repurchase of 1,385 shares with an aggregate purchase price of $22,633 , excluding commissions of $19 . During the nine months ended October 1, 2017 , the Company repurchased 6,131 shares with an aggregate purchase price of $90,876 , of which $899 was accrued at October 1, 2017 , and excluding commissions of $88 . Accumulated Other Comprehensive Loss The following table provides a rollforward of the components of accumulated other comprehensive loss, net of tax as applicable: Foreign Currency Translation Cash Flow Hedges (a) Pension Total Balance at December 31, 2017 $ (45,149 ) $ — $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (5,054 ) — 117 (4,937 ) Balance at September 30, 2018 $ (50,203 ) $ — $ (932 ) $ (51,135 ) Balance at January 1, 2017 $ (60,299 ) $ (1,797 ) $ (1,145 ) $ (63,241 ) Current-period other comprehensive income 16,797 1,332 96 18,225 Balance at October 1, 2017 $ (43,502 ) $ (465 ) $ (1,049 ) $ (45,016 ) _______________ (a) Current-period other comprehensive income included the reclassification of unrealized losses on cash flow hedges from “Accumulated other comprehensive loss” to our condensed consolidated statements of operations of $444 and $1,332 for the three and nine months ended October 1, 2017, respectively. The reclassification of unrealized losses on cash flow hedges consisted of $723 and $2,170 for the three and nine months ended October 1, 2017, respectively, recorded to “Interest expense, net,” net of the related income tax benefit of $279 and $838 for the three and nine months ended October 1, 2017, respectively, recorded to “Provision for income taxes.” |
Leases (Notes)
Leases (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Leases of Lessee Disclosure | Leases At September 30, 2018 , Wendy’s and its franchisees operated 6,669 Wendy’s restaurants. Of the 350 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 145 restaurants, owned the building and held long-term land leases for 141 restaurants and held leases covering land and building for 64 restaurants. Wendy’s also owned 519 and leased 1,281 properties that were either leased or subleased principally to franchisees. Rental expense for operating leases consists of the following components: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Rental expense: Minimum rentals $ 22,814 $ 23,997 $ 72,738 $ 66,701 Contingent rentals 5,061 5,395 14,522 14,405 Total rental expense (a) (b) $ 27,875 $ 29,392 $ 87,260 $ 81,106 _______________ (a) Amounts include rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.” (b) Amounts exclude sublease income of $34,097 and $103,353 recognized during the three and nine months ended September 30, 2018 , respectively, and $35,022 and $92,434 recognized during the three and nine months ended October 1, 2017 , respectively. Rental income for operating leases and subleases consists of the following components: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Rental income: Minimum rentals $ 45,291 $ 44,682 $ 137,549 $ 124,847 Contingent rentals 5,183 5,593 14,561 15,280 Total rental income $ 50,474 $ 50,275 $ 152,110 $ 140,127 The following table illustrates the Company’s future minimum rental payments and rental receipts for non-cancelable leases and subleases, including rental receipts for direct financing leases as of September 30, 2018 . Rental receipts below are presented separately for owned properties and for leased properties based on the classification of the underlying lease. Rental Payments Rental Receipts Fiscal Year Capital Leases Operating Leases Capital Leases Operating Leases Owned Properties 2018 (a) $ 12,967 $ 25,217 $ 16,007 $ 18,911 $ 13,488 2019 45,323 95,216 64,376 76,044 54,736 2020 46,252 94,079 65,467 75,810 55,348 2021 47,849 93,580 67,267 75,771 56,943 2022 48,937 93,304 68,451 76,222 58,514 Thereafter 751,317 1,145,074 1,034,322 935,083 948,620 Total minimum payments $ 952,645 $ 1,546,470 $ 1,315,890 $ 1,257,841 $ 1,187,649 Less interest (494,298 ) Present value of minimum capital lease payments (b) $ 458,347 _______________ (a) Represents future minimum rental payments and rental receipts for non-cancelable leases and subleases for the remainder of the 2018 fiscal year. (b) The present value of minimum capital lease payments of $8,041 and $450,306 are included in “Current portion of long-term debt” and “Long-term debt,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: September 30, December 31, 2017 Land $ 272,730 $ 272,411 Buildings and improvements 313,706 313,108 Restaurant equipment 2,443 2,444 588,879 587,963 Accumulated depreciation and amortization (139,802 ) (128,003 ) $ 449,077 $ 459,960 Our net investment in direct financing leases is as follows: September 30, December 31, 2017 Future minimum rental receipts $ 633,039 $ 662,889 Unearned interest income (406,230 ) (433,175 ) Net investment in direct financing leases 226,809 229,714 Net current investment in direct financing leases (a) (660 ) (625 ) Net non-current investment in direct financing leases $ 226,149 $ 229,089 _______________ (a) Included in “Accounts and notes receivable, net.” During the three and nine months ended September 30, 2018 , the Company recognized $6,844 and $20,861 in interest income related to our direct financing leases, respectively, and $6,467 and $16,312 recognized during the three and nine months ended October 1, 2017 , respectively, which is included in “ Interest expense, net ,” |
Transactions with Related Parti
Transactions with Related Parties | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K. TimWen Lease and Management Fee Payments A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen for the operation of Wendy’s/Tim Hortons combo units in Canada. During the nine months ended September 30, 2018 and October 1, 2017 , Wendy’s paid TimWen $9,967 and $9,362 , respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $161 and $158 during the nine months ended September 30, 2018 and October 1, 2017 , respectively, which has been included as a reduction to “General and administrative.” |
Guarantees and Other Commitment
Guarantees and Other Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees and Other Commitments and Contingencies | Guarantees and Other Commitments and Contingencies The Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations. Franchisee Image Activation Incentive Programs In order to promote Image Activation new restaurant development, Wendy’s has an incentive program for franchisees that provides for reductions in royalty and national advertising payments for up to the first two years of operation for qualifying new restaurants opened by December 31, 2020, with the value of the incentives declining in the later years of the program. In August 2018, Wendy’s announced a new restaurant development incentive program that provides for reductions in royalty and national advertising payments for up to the first two years of operation for qualifying new restaurants for franchisees that sign up for the program and commit to incremental development under a new development agreement by July 1, 2019. Wendy’s also had incentive programs for 2017 available to franchisees that commenced Image Activation restaurant remodels by December 15, 2017. The remodel incentive programs provide for reductions in royalty payments for one year after the completion of construction. Lease Guarantees Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $51,309 as of September 30, 2018 . These leases extend through 2056. We have not received any notice of default related to these leases as of September 30, 2018 . In the event of default by a franchise owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations. Wendy’s is contingently liable for certain other leases which have been assigned to unrelated third parties who have indemnified Wendy’s against future liabilities amounting to $365 as of September 30, 2018 . These leases expire on various dates through 2021. Letters of Credit As of September 30, 2018 , the Company had outstanding letters of credit with various parties totaling $27,102 . The outstanding letters of credit include amounts outstanding against the Series 2018-1 Class A-1 Notes. We do not expect any material loss to result from these letters of credit. |
Legal and Environmental Matters
Legal and Environmental Matters | 9 Months Ended |
Sep. 30, 2018 | |
Loss Contingency [Abstract] | |
Legal and Environmental Matters | Legal and Environmental Matters We are involved in litigation and claims incidental to our current and prior businesses. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We cannot estimate the aggregate possible range of loss due to most proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period. We previously described certain legal proceedings in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2018. The Company was previously named as a defendant in putative class action lawsuits alleging, among other things, that the Company failed to safeguard customer credit card information and failed to provide notice that credit card information had been compromised. Jonathan Torres and other consumers filed an action in the U.S. District Court for the Middle District of Florida (the “Torres Case”). The operative complaint seeks to certify a nationwide class of consumers, or in the alternative, statewide classes of consumers for Florida, New York, New Jersey, Texas and Tennessee, as well as statewide classes of consumers under those states’ consumer protection and unfair trade practices laws. Certain financial institutions have also filed class action lawsuits in the U.S. District Court for the Western District of Pennsylvania, which seek to certify a nationwide class of financial institutions that issued payment cards that were allegedly impacted. Those cases were consolidated into a single case (the “FI Case”). In the Torres Case and FI Case, the plaintiffs seek monetary damages, injunctive and equitable relief, attorneys’ fees and other costs. On August 23, 2018, the court preliminarily approved class settlement in the Torres case. A final approval hearing of the Torres settlement is scheduled for February 25, 2019. On August 27, 2018, the Company filed a motion for judgment on the pleadings in the FI Case, seeking dismissal of the plaintiffs’ negligence and negligence per se claims under Ohio law. That motion is pending before the court. Discovery as between the parties in the FI Case is stayed while settlement discussions are occurring. |
Revenue (Policies)
Revenue (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue [Abstract] | |
Revenue Recognition, Policy | Significant Accounting Policy “Sales” includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. “Sales” excludes taxes collected from the Company’s customers. Revenue is recognized when the performance obligation is satisfied, which occurs upon delivery of food to the customer. “Sales” also includes income for gift cards. Gift card payments are recorded as deferred income when received and are recognized as revenue in proportion to actual gift card redemptions. “Franchise royalty revenue and fees” includes royalties, new build technical assistance fees, renewal fees, Franchise Flip technical assistance fees, Franchise Flip advisory fees and development fees. Royalties from franchised restaurants are based on a percentage of sales of the franchised restaurant and are recognized as earned. New build technical assistance fees, renewal fees and Franchise Flip technical assistance fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements, once the restaurant has opened. Development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement, once the restaurant has opened. These franchise fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Franchise Flip advisory fees include valuation services and fees for selecting pre-approved buyers for Franchise Flips. Franchise Flip advisory fees are paid by the seller and are recognized as revenue at closing of the Franchise Flip transaction. “Advertising funds revenue” includes contributions to the Advertising Funds by franchisees. Revenue related to these contributions is based on a percentage of sales of the franchised restaurants and is recognized as earned. “Franchise rental income” includes rental income from properties owned and leased by the Company and leased or subleased to franchisees. Rental income is recognized on a straight-line basis over the respective operating lease terms. Favorable and unfavorable lease amounts related to the leased and/or subleased properties are amortized to rental income on a straight-line basis over the remaining term of the leases. |
Basis of Presentation Basis of
Basis of Presentation Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Prior Period Adjustments Restatement | |
Schedule of Prior Period Adjustments | The following tables illustrate the expense reclassifications made to the condensed consolidated statements of operations for the three and nine months ended October 1, 2017 : Three Months Ended Reclassifications As Previously Reported Franchise support and other costs Restaurant operational costs As Currently Reported Cost of sales $ 132,387 $ — $ 1,244 $ 133,631 Franchise support and other costs — 3,690 — 3,690 General and administrative 52,960 — (1,244 ) 51,716 Other operating expense (income), net 1,669 (3,690 ) — (2,021 ) $ 187,016 $ — $ — $ 187,016 Nine Months Ended Reclassifications As Previously Reported Franchise support and other costs Restaurant operational costs As Currently Reported Cost of sales $ 385,154 $ — $ 3,601 $ 388,755 Franchise support and other costs — 11,122 — 11,122 General and administrative 156,690 — (3,601 ) 153,089 Other operating expense (income), net 5,294 (11,122 ) — (5,828 ) $ 547,138 $ — $ — $ 547,138 |
New Accounting Standards Revenu
New Accounting Standards Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Adoption for Topic 606 Revenue Recognition [Abstract] | |
Schedule of New Accounting Pronouncements | The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s condensed consolidated financial statements: Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Condensed Consolidated Balance Sheet September 30, 2018 Accrued expenses and other current liabilities $ 120,203 $ (1,664 ) $ — $ 118,539 Advertising funds restricted liabilities 78,925 — (6,645 ) 72,280 Total current liabilities 339,103 (1,664 ) (6,645 ) 330,794 Deferred income taxes 275,312 21,463 — 296,775 Deferred franchise fees 92,522 (81,686 ) — 10,836 Total liabilities 3,724,114 (61,887 ) (6,645 ) 3,655,582 Retained earnings 146,983 62,011 6,645 215,639 Accumulated other comprehensive loss (51,135 ) (124 ) — (51,259 ) Total stockholders’ equity 783,318 61,887 6,645 851,850 Condensed Consolidated Statements of Operations Three Months Ended September 30, 2018 Franchise royalty revenue and fees (a) $ 103,212 $ (497 ) $ — $ 102,715 Advertising funds revenue 81,541 — (81,541 ) — Total revenues 400,550 (497 ) (81,541 ) 318,512 Advertising funds expense 81,541 — (81,541 ) — Total costs and expenses 323,202 — (81,541 ) 241,661 Operating profit 77,348 (497 ) — 76,851 Income before income taxes 498,917 (497 ) — 498,420 Provision for income taxes (107,668 ) 124 — (107,544 ) Net income 391,249 (373 ) — 390,876 Nine Months Ended September 30, 2018 Franchise royalty revenue and fees (a) $ 308,679 $ (2,087 ) $ — $ 306,592 Advertising funds revenue 245,011 — (245,011 ) — Total revenues 1,192,116 (2,087 ) (245,011 ) 945,018 Advertising funds expense 245,011 — (245,011 ) — Total costs and expenses 988,023 — (245,011 ) 743,012 Operating profit 204,093 (2,087 ) — 202,006 Income before income taxes 555,534 (2,087 ) — 553,447 Provision for income taxes (114,250 ) 533 — (113,717 ) Net income 441,284 (1,554 ) — 439,730 _______________ (a) The adjustments for the three and nine months ended September 30, 2018 include the reversal of franchise fees recognized over time under the new revenue recognition guidance of $2,266 and $7,393 , respectively, as well as franchisee fees that would have been recognized under the previous revenue recognition guidance when the license agreements were signed and the restaurant opened of $1,769 and $5,306 , respectively. See Note 3 for further information. Adjustments As Reported Franchise Fees Advertising Funds Balances Without Adoption Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 2018 Cash flows from operating activities: Net income $ 441,284 $ (1,554 ) $ — $ 439,730 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax (1,527 ) (533 ) — (2,060 ) Other, net 4,596 (219 ) — 4,377 Changes in operating assets and liabilities: Accrued expenses and other current liabilities 89,806 2,306 — 92,112 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue [Abstract] | |
Disaggregation of Revenue | The following table disaggregates revenue by primary geographical market and source: Three Months Ended Nine Months Ended September 30, September 30, Primary geographical markets United States $ 375,938 $ 1,121,518 Canada 19,738 56,156 International 4,874 14,442 Total revenue $ 400,550 $ 1,192,116 Sources of revenue Sales at Company-operated restaurants $ 165,323 $ 486,316 Franchise royalty revenue 95,501 283,602 Franchise fees 7,711 25,077 Franchise rental income 50,474 152,110 Advertising funds revenue 81,541 245,011 Total revenue $ 400,550 $ 1,192,116 |
Contract balances, assets and liabilities | The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: September 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 39,281 Receivables, which are included in “Advertising funds restricted assets” 42,226 Deferred franchise fees (c) 103,012 _______________ (a) Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s statement of operations. (b) Includes receivables related to “ Sales ” and “ Franchise royalty revenue and fees .” (c) Deferred franchise fees of $10,490 and $92,522 are included in “ Accrued expenses and other current liabilities ” and “ Deferred franchise fees ,” respectively. |
Deferred franchise fee rollforward | Significant changes in deferred franchise fees are as follows: Nine Months Ended September 30, Deferred franchise fees at beginning of period $ 102,492 Revenue recognized during the period (7,393 ) New deferrals due to cash received and other 7,913 Deferred franchise fees at end of period $ 103,012 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period: Estimate for fiscal year: 2018 (a) $ 2,445 2019 7,774 2020 6,282 2021 5,749 2022 5,559 Thereafter 75,203 $ 103,012 _______________ (a) Represents franchise fees expected to be recognized for the remainder of the 2018 fiscal year, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for restaurants acquired from the franchisee: Nine Months Ended September 30, Restaurants acquired from franchisee 16 Total consideration paid, net of cash received $ 21,401 Identifiable assets acquired and liabilities assumed: Properties 4,363 Acquired franchise rights 10,127 Capital lease assets 5,360 Other assets 621 Capital lease obligations (3,135 ) Unfavorable leases (733 ) Other liabilities (1,960 ) Total identifiable net assets 14,643 Goodwill $ 6,758 |
System Optimization (Gains) L_2
System Optimization (Gains) Losses, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
System optimization gains (losses), net | |
Summary of Disposition Activity | The following is a summary of the disposition activity recorded as a result of our system optimization initiative: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Gain on sale of restaurants, net (a) $ — $ — $ 89 $ — Post-closing adjustments on sales of restaurants (b) 279 418 54 1,345 Gain (loss) on sales of other assets, net (c) 207 (539 ) (135 ) 2,040 Gain (loss) on DavCo and NPC Transactions (d) — 15 — (43,134 ) System optimization gains (losses), net $ 486 $ (106 ) $ 8 $ (39,749 ) _______________ (a) During the nine months ended September 30, 2018 , the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. Net assets sold totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale. (b) The nine months ended September 30, 2018 includes cash proceeds, net of payments of $6 . The three and nine months ended October 1, 2017 includes cash payments, net of proceeds received, of $333 and $33 , respectively, related to post-closing reconciliations with franchisees. The three and nine months ended September 30, 2018 and the nine months ended October 1, 2017 include the recognition of deferred gains of $503 and $312 , respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees. (c) During the three and nine months ended September 30, 2018 , the Company received cash proceeds, primarily from the sale of surplus properties, of $1,049 and $1,421 , respectively, and received cash proceeds of $2,411 and $9,403 during the three and nine months ended October 1, 2017 , respectively. The nine months ended October 1, 2017 also includes the recognition of a deferred gain of $375 related to the sale of a share in an aircraft. (d) As part of our system optimization initiative, the Company acquired 140 Wendy’s restaurants on May 31, 2017 from DavCo Restaurants, LLC (“DavCo”) for total net cash consideration of $86,788 , which were immediately sold to NPC International, Inc. (“NPC”), an existing franchisee of the Company, for cash proceeds of $70,688 (the “DavCo and NPC Transactions”). The acquisition of Wendy’s restaurants from DavCo was not contingent on executing the sale agreement with NPC; as such, the Company accounted for the transactions as an acquisition and subsequent disposition of a business. As part of the transactions, the Company retained leases for purposes of subleasing such properties to NPC. The total consideration paid to DavCo was allocated to net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. Refer to the Form 10-K for further information regarding the purchase price allocation. The Company finalized the purchase price allocation during 2018 with no differences from the provisional amounts previously reported. The gain on the DavCo and NPC Transactions during the three months ended October 1, 2017 was comprised of a decrease in goodwill of $27 related to adjustments in the fair value of deferred taxes and net unfavorable leases, partially offset by additional selling and other costs of $12 . The loss on the DavCo and NPC Transactions during the nine months ended October 1, 2017 was comprised of the write-off of goodwill of $65,476 and selling and other costs of $1,692 , partially offset by the recognition of net favorable leases of $24,034 . As part of the DavCo acquisition, the Company recognized a supplemental purchase price liability of $6,269 , which was settled during the nine months ended September 30, 2018 . |
Reorganization and Realignmen_2
Reorganization and Realignment Costs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring Cost and Reserve | |
Restructuring and Related Costs | The following is a summary of the initiatives included in “Reorganization and realignment costs:” Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, G&A realignment $ 629 $ 2,656 $ 6,375 $ 19,901 System optimization initiative 312 232 316 867 Reorganization and realignment costs $ 941 $ 2,888 $ 6,691 $ 20,768 |
G&A Realignment – May 2017 Plan | |
Restructuring Cost and Reserve | |
Restructuring and Related Costs | The following is a summary of the activity recorded as a result of the G&A realignment plan: Three Months Ended Nine Months Ended Total September 30, October 1, September 30, October 1, Severance and related employee costs $ 57 $ 1,210 $ 3,168 $ 14,436 $ 18,124 Recruitment and relocation costs 200 145 708 145 1,197 Third-party and other costs 39 496 971 821 2,062 296 1,851 4,847 15,402 21,383 Share-based compensation (a) 333 805 1,528 4,499 6,655 Total G&A realignment $ 629 $ 2,656 $ 6,375 $ 19,901 $ 28,038 _______________ (a) Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A realignment plan. |
Schedule of Restructuring Reserve by Type of Cost | As of September 30, 2018 , the accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $6,817 and $1,432 , respectively. The tables below present a rollforward of our accruals for the plan. Balance December 31, 2017 Charges Payments Balance September 30, 2018 Severance and related employee costs $ 12,093 $ 3,168 $ (7,103 ) $ 8,158 Recruitment and relocation costs 177 708 (794 ) 91 Third-party and other costs — 971 (971 ) — $ 12,270 $ 4,847 $ (8,868 ) $ 8,249 Balance January 1, 2017 Charges Payments Balance October 1, 2017 Severance and related employee costs $ — $ 14,436 $ (1,350 ) $ 13,086 Recruitment and relocation costs — 145 (36 ) 109 Third-party and other costs — 821 (821 ) — $ — $ 15,402 $ (2,207 ) $ 13,195 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investments | Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements: Nine Months Ended September 30, October 1, Balance at beginning of period $ 55,363 $ 54,545 Investment 13 375 Equity in earnings for the period 7,566 7,844 Amortization of purchase price adjustments (a) (1,756 ) (1,731 ) 5,810 6,113 Distributions received (b) (9,060 ) (8,128 ) Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other (191 ) 4,304 Balance at end of period $ 51,935 $ 57,209 _______________ (a) Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years. (b) The nine months ended October 1, 2017 included a distribution receivable from TimWen of $2,604 , which was included in “ Accounts and notes receivable, net .” |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Instrument | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: September 30, December 31, Series 2018-1 Class A-2 Notes: 3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025 $ 446,625 $ — 3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 471,438 — Series 2015-1 Class A-2 Notes: 3.371% Series 2015-1 Class A-2-I Notes, repaid with 2018 refinancing — 855,313 4.080% Series 2015-1 Class A-2-II Notes, anticipated repayment date 2022 873,000 879,750 4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025 485,000 488,750 7% debentures, due in 2025 90,454 89,514 Capital lease obligations, due through 2045 458,347 467,964 Unamortized debt issuance costs (33,807 ) (26,889 ) 2,791,057 2,754,402 Less amounts payable within one year (31,291 ) (30,172 ) Total long-term debt $ 2,759,766 $ 2,724,230 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments: September 30, December 31, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 444,012 $ 444,012 $ 338 $ 338 Level 1 Non-current cost method investments (a) 640 2,409 639 327,710 Level 3 Financial liabilities Series 2018-1 Class A-2-I Notes (b) 446,625 425,678 — — Level 2 Series 2018-1 Class A-2-II Notes (b) 471,438 449,186 — — Level 2 Series 2015-1 Class A-2-I Notes (b) — — 855,313 856,510 Level 2 Series 2015-1 Class A-2-II Notes (b) 873,000 866,714 879,750 897,961 Level 2 Series 2015-1 Class A-2-III Notes (b) 485,000 481,654 488,750 513,188 Level 2 7% debentures, due in 2025 (b) 90,454 104,500 89,514 107,000 Level 2 Guarantees of franchisee loan obligations (c) 22 22 37 37 Level 3 _______________ (a) The fair value of our indirect investment in Arby’s as of December 31, 2017 was based on applying a multiple to Arby’s adjusted earnings before income taxes, depreciation and amortization per its current unaudited financial information. The carrying value of our indirect investment in Arby’s was reduced to zero during 2013 in connection with the receipt of a dividend. On February 5, 2018, a subsidiary of ARG Parent acquired Buffalo Wild Wings, Inc. As a result, our ownership interest included both the Arby’s and Buffalo Wild Wings brands under the newly formed combined company, Inspire Brands. On August 16, 2018, the Company sold its remaining ownership interest to Inspire Brands for $450,000 . See Note 7 for further information. The fair values of our remaining investments are not significant and are based on our review of information provided by the investment managers or investees which was based on (1) valuations performed by the investment managers or investees, (2) quoted market or broker/dealer prices for similar investments and (3) quoted market or broker/dealer prices adjusted by the investment managers for legal or contractual restrictions, risk of nonperformance or lack of marketability, depending upon the underlying investments. (b) The fair values were based on quoted market prices in markets that are not considered active markets. (c) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees entering into debt arrangements for equipment financing. We have accrued a liability for the fair value of these guarantees, the calculation of which was based upon a weighted average risk percentage. |
Fair value of assets and liabilities (other than cash and cash equivalents) measure at fair value on a nonrecurring basis | Fair Value Measurements September 30, Level 1 Level 2 Level 3 Held and used $ 226 $ — $ — $ 226 Held for sale 1,115 — — 1,115 Total $ 1,341 $ — $ — $ 1,341 Fair Value Measurements December 31, Level 1 Level 2 Level 3 Held and used $ 757 $ — $ — $ 757 Held for sale 1,560 — — 1,560 Total $ 2,317 $ — $ — $ 2,317 |
Impairment of Long-Lived Asse_2
Impairment of Long-Lived Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets by Type | The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets.” Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Surplus properties $ 229 $ 113 $ 270 $ 658 Restaurants leased or subleased to franchisees 118 95 283 95 Company-operated restaurants — 833 1,603 1,051 $ 347 $ 1,041 $ 2,156 $ 1,804 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Weighted average number of shares used to calculate basic and diluted net income per share | The weighted average number of shares used to calculate basic and diluted net income per share were as follows: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Common stock: Weighted average basic shares outstanding 237,696 243,354 238,872 245,073 Dilutive effect of stock options and restricted shares 7,070 8,383 7,574 8,103 Weighted average diluted shares outstanding 244,766 251,737 246,446 253,176 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of Stockholders' Equity | The following is a summary of the changes in stockholders’ equity: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Balance at beginning of period $ 430,539 $ 487,049 $ 573,203 $ 527,736 Comprehensive income 396,564 23,488 436,347 52,978 Cash dividends ($.085 and $.07 per share for the three months and $.255 and $.21 per share for the nine months ended September 30, 2018 and October 1, 2017, respectively) (20,141 ) (17,017 ) (60,786 ) (51,464 ) Repurchases of common stock (56,421 ) (38,463 ) (141,615 ) (90,964 ) Share-based compensation 4,810 4,984 14,401 16,356 Exercises of stock options 29,075 4,033 35,889 10,194 Vesting of restricted shares (1,168 ) (1,528 ) (4,089 ) (4,260 ) Cumulative effect of change in accounting principle (a) — — (70,210 ) 1,880 Other 60 49 178 139 Balance at end of period $ 783,318 $ 462,595 $ 783,318 $ 462,595 _______________ (a) During the nine months ended September 30, 2018, the Company recognized a net increase to “Accumulated deficit” of $70,210 as a result of adoption of amended guidance for revenue recognition. The net increase resulted from an increase to deferred franchise fees of $85,561 and a decrease to “ Deferred income taxes ” of $21,996 as a result of now deferring franchise fees over the contractual term of the franchise agreements. Additionally, an increase to “ Advertising funds restricted liabilities ” of $6,645 was recognized as a result of a reclassification of the total stockholders’ deficit of the Advertising Funds as of December 31, 2017. See Note 2 for further information. During the nine months ended October 1, 2017, the Company recognized a tax benefit as a reduction to the Company’s deferred tax liability with an equal offsetting increase to “Accumulated deficit.” The adjustment was recognized as a result of adoption of an amendment to the accounting for employee share-based payment transactions. |
Schedule of Accumulated Other Comprehensive Loss | The following table provides a rollforward of the components of accumulated other comprehensive loss, net of tax as applicable: Foreign Currency Translation Cash Flow Hedges (a) Pension Total Balance at December 31, 2017 $ (45,149 ) $ — $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (5,054 ) — 117 (4,937 ) Balance at September 30, 2018 $ (50,203 ) $ — $ (932 ) $ (51,135 ) Balance at January 1, 2017 $ (60,299 ) $ (1,797 ) $ (1,145 ) $ (63,241 ) Current-period other comprehensive income 16,797 1,332 96 18,225 Balance at October 1, 2017 $ (43,502 ) $ (465 ) $ (1,049 ) $ (45,016 ) _______________ (a) Current-period other comprehensive income included the reclassification of unrealized losses on cash flow hedges from “Accumulated other comprehensive loss” to our condensed consolidated statements of operations of $444 and $1,332 for the three and nine months ended October 1, 2017, respectively. The reclassification of unrealized losses on cash flow hedges consisted of $723 and $2,170 for the three and nine months ended October 1, 2017, respectively, recorded to “Interest expense, net,” net of the related income tax benefit of $279 and $838 for the three and nine months ended October 1, 2017, respectively, recorded to “Provision for income taxes.” |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of Rent Expense | Rental expense for operating leases consists of the following components: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Rental expense: Minimum rentals $ 22,814 $ 23,997 $ 72,738 $ 66,701 Contingent rentals 5,061 5,395 14,522 14,405 Total rental expense (a) (b) $ 27,875 $ 29,392 $ 87,260 $ 81,106 _______________ (a) Amounts include rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.” (b) Amounts exclude sublease income of $34,097 and $103,353 recognized during the three and nine months ended September 30, 2018 , respectively, and $35,022 and $92,434 recognized during the three and nine months ended October 1, 2017 , respectively. |
Schedule of Rent Income | Rental income for operating leases and subleases consists of the following components: Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, Rental income: Minimum rentals $ 45,291 $ 44,682 $ 137,549 $ 124,847 Contingent rentals 5,183 5,593 14,561 15,280 Total rental income $ 50,474 $ 50,275 $ 152,110 $ 140,127 |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table illustrates the Company’s future minimum rental payments and rental receipts for non-cancelable leases and subleases, including rental receipts for direct financing leases as of September 30, 2018 . Rental receipts below are presented separately for owned properties and for leased properties based on the classification of the underlying lease. Rental Payments Rental Receipts Fiscal Year Capital Leases Operating Leases Capital Leases Operating Leases Owned Properties 2018 (a) $ 12,967 $ 25,217 $ 16,007 $ 18,911 $ 13,488 2019 45,323 95,216 64,376 76,044 54,736 2020 46,252 94,079 65,467 75,810 55,348 2021 47,849 93,580 67,267 75,771 56,943 2022 48,937 93,304 68,451 76,222 58,514 Thereafter 751,317 1,145,074 1,034,322 935,083 948,620 Total minimum payments $ 952,645 $ 1,546,470 $ 1,315,890 $ 1,257,841 $ 1,187,649 Less interest (494,298 ) Present value of minimum capital lease payments (b) $ 458,347 _______________ (a) Represents future minimum rental payments and rental receipts for non-cancelable leases and subleases for the remainder of the 2018 fiscal year. (b) The present value of minimum capital lease payments of $8,041 and $450,306 are included in “Current portion of long-term debt” and “Long-term debt,” respectively. |
Schedule of Property Subject to or Available for Operating Lease | Properties owned by the Company and leased to franchisees and other third parties under operating leases include: September 30, December 31, 2017 Land $ 272,730 $ 272,411 Buildings and improvements 313,706 313,108 Restaurant equipment 2,443 2,444 588,879 587,963 Accumulated depreciation and amortization (139,802 ) (128,003 ) $ 449,077 $ 459,960 |
Schedule of Capital Leased Assets | Our net investment in direct financing leases is as follows: September 30, December 31, 2017 Future minimum rental receipts $ 633,039 $ 662,889 Unearned interest income (406,230 ) (433,175 ) Net investment in direct financing leases 226,809 229,714 Net current investment in direct financing leases (a) (660 ) (625 ) Net non-current investment in direct financing leases $ 226,149 $ 229,089 _______________ (a) Included in “Accounts and notes receivable, net.” |
Basis of Presentation Basis o_2
Basis of Presentation Basis of Presentation Schedule of Prior Period Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Prior Period Adjustments Restatement | ||||
Cost of sales | $ 139,348 | $ 133,631 | $ 409,721 | $ 388,755 |
Franchise support and other costs | 5,349 | 3,690 | 18,553 | 11,122 |
General and administrative | 46,545 | 51,716 | 146,064 | 153,089 |
Other operating income, net | $ (1,713) | (2,021) | $ (4,643) | (5,828) |
Total of income statement line items affected by prior period reclassifications | 187,016 | 547,138 | ||
Prior period reclassifications to Franchise support and other costs | 0 | 0 | ||
Prior period reclassifications for Restaurant operational costs | 0 | 0 | ||
Previously Reported | ||||
Prior Period Adjustments Restatement | ||||
Cost of sales | 132,387 | 385,154 | ||
Franchise support and other costs | 0 | 0 | ||
General and administrative | 52,960 | 156,690 | ||
Other operating income, net | 1,669 | 5,294 | ||
Total of income statement line items affected by prior period reclassifications | 187,016 | 547,138 | ||
Cost of sales | ||||
Prior Period Adjustments Restatement | ||||
Prior period reclassifications to Franchise support and other costs | 0 | 0 | ||
Prior period reclassifications for Restaurant operational costs | 1,244 | 3,601 | ||
Franchise support and other costs | ||||
Prior Period Adjustments Restatement | ||||
Prior period reclassifications to Franchise support and other costs | 3,690 | 11,122 | ||
Prior period reclassifications for Restaurant operational costs | 0 | 0 | ||
General and administrative | ||||
Prior Period Adjustments Restatement | ||||
Prior period reclassifications to Franchise support and other costs | 0 | 0 | ||
Prior period reclassifications for Restaurant operational costs | (1,244) | (3,601) | ||
Other operating expense (income), net | ||||
Prior Period Adjustments Restatement | ||||
Prior period reclassifications to Franchise support and other costs | (3,690) | (11,122) | ||
Prior period reclassifications for Restaurant operational costs | $ 0 | $ 0 |
New Accounting Standards New Ac
New Accounting Standards New Accounting Standards (Details) $ in Thousands | Sep. 30, 2018USD ($) |
New Accounting Standards [Abstract] | |
Operating Leases, Future Minimum Payments Due | $ 1,546,470 |
New Accounting Standards New _2
New Accounting Standards New Accounting Standards Adopted (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | Jan. 01, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
Change in net cash used in investing activities | $ (391,449) | $ 61,708 | ||
Change in net cash provided by operating activities | 229,662 | 160,315 | ||
Change in cash, cash equivalents and restricted cash | $ 680,779 | 224,512 | $ 212,824 | $ 275,949 |
Restricted cash guidance | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Change in net cash used in investing activities | 23,624 | |||
Change in net cash provided by operating activities | (16,428) | |||
Change in cash, cash equivalents and restricted cash | $ 37,883 | $ 77,709 |
New Accounting Standards Adopti
New Accounting Standards Adoption for Topic 606 Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Jul. 01, 2018 | Dec. 31, 2017 | Jul. 02, 2017 | Jan. 01, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||||||
Accrued expenses and other current liabilities | $ 120,203 | $ 120,203 | $ 110,509 | |||||
Advertising funds restricted liabilities | 78,925 | 78,925 | 62,602 | |||||
Total current liabilities | 339,103 | 339,103 | 227,162 | |||||
Deferred income taxes | 275,312 | 275,312 | 299,053 | |||||
Deferred franchise fees | 92,522 | 92,522 | 10,881 | |||||
Total liabilities | 3,724,114 | 3,724,114 | 3,523,735 | |||||
Retained earnings (accumulated deficit) | 146,983 | 146,983 | (163,289) | |||||
Accumulated other comprehensive loss | (51,135) | $ (45,016) | (51,135) | $ (45,016) | (46,198) | $ (63,241) | ||
Total stockholders' equity | 783,318 | 462,595 | 783,318 | 462,595 | $ 430,539 | $ 573,203 | $ 487,049 | $ 527,736 |
Franchise royalty revenue and fees | 103,212 | 98,882 | 308,679 | 306,120 | ||||
Advertising funds revenue | 81,541 | 0 | 245,011 | 0 | ||||
Total revenues | 400,550 | 308,000 | 1,192,116 | 914,161 | ||||
Advertising funds expense | 81,541 | 0 | 245,011 | 0 | ||||
Total costs and expenses | 323,202 | 246,343 | 988,023 | 765,990 | ||||
Operating profit | 77,348 | 61,657 | 204,093 | 148,171 | ||||
Income before income taxes | 498,917 | 31,555 | 555,534 | 63,392 | ||||
Provision for income taxes | (107,668) | (17,298) | (114,250) | (28,639) | ||||
Net income | 391,249 | $ 14,257 | 441,284 | 34,753 | ||||
Revenue recognized during the period related to deferred franchise fees | 2,266 | 7,393 | ||||||
Deferred income tax | (1,527) | 945 | ||||||
Other, net | 4,596 | 2,023 | ||||||
Accrued expenses and other current liabilities | 89,806 | $ 3,039 | ||||||
Revenue recognition guidance | ||||||||
New Accounting Pronouncements or Change in Accounting Principle | ||||||||
Advertising funds restricted liabilities | 6,645 | 6,645 | ||||||
Deferred income taxes | (21,996) | (21,996) | ||||||
Deferred franchise fees | 85,561 | 85,561 | ||||||
Adjustments for franchise fees | Revenue recognition guidance | ||||||||
New Accounting Pronouncements or Change in Accounting Principle | ||||||||
Accrued expenses and other current liabilities | (1,664) | (1,664) | ||||||
Advertising funds restricted liabilities | 0 | 0 | ||||||
Total current liabilities | (1,664) | (1,664) | ||||||
Deferred income taxes | 21,463 | 21,463 | ||||||
Deferred franchise fees | (81,686) | (81,686) | ||||||
Total liabilities | (61,887) | (61,887) | ||||||
Retained earnings (accumulated deficit) | 62,011 | 62,011 | ||||||
Accumulated other comprehensive loss | (124) | (124) | ||||||
Total stockholders' equity | 61,887 | 61,887 | ||||||
Franchise royalty revenue and fees | (497) | (2,087) | ||||||
Advertising funds revenue | 0 | 0 | ||||||
Total revenues | (497) | (2,087) | ||||||
Advertising funds expense | 0 | 0 | ||||||
Total costs and expenses | 0 | 0 | ||||||
Operating profit | (497) | (2,087) | ||||||
Income before income taxes | (497) | (2,087) | ||||||
Provision for income taxes | 124 | 533 | ||||||
Net income | (373) | (1,554) | ||||||
Deferred income tax | (533) | |||||||
Other, net | (219) | |||||||
Accrued expenses and other current liabilities | 2,306 | |||||||
Adjustments for advertising funds | Revenue recognition guidance | ||||||||
New Accounting Pronouncements or Change in Accounting Principle | ||||||||
Accrued expenses and other current liabilities | 0 | 0 | ||||||
Advertising funds restricted liabilities | (6,645) | (6,645) | ||||||
Total current liabilities | (6,645) | (6,645) | ||||||
Deferred income taxes | 0 | 0 | ||||||
Deferred franchise fees | 0 | 0 | ||||||
Total liabilities | (6,645) | (6,645) | ||||||
Retained earnings (accumulated deficit) | 6,645 | 6,645 | ||||||
Accumulated other comprehensive loss | 0 | 0 | ||||||
Total stockholders' equity | 6,645 | 6,645 | ||||||
Franchise royalty revenue and fees | 0 | 0 | ||||||
Advertising funds revenue | (81,541) | (245,011) | ||||||
Total revenues | (81,541) | (245,011) | ||||||
Advertising funds expense | (81,541) | (245,011) | ||||||
Total costs and expenses | (81,541) | (245,011) | ||||||
Operating profit | 0 | 0 | ||||||
Income before income taxes | 0 | 0 | ||||||
Provision for income taxes | 0 | 0 | ||||||
Net income | 0 | 0 | ||||||
Deferred income tax | 0 | |||||||
Other, net | 0 | |||||||
Accrued expenses and other current liabilities | 0 | |||||||
Balances without adoption | Revenue recognition guidance | ||||||||
New Accounting Pronouncements or Change in Accounting Principle | ||||||||
Accrued expenses and other current liabilities | 118,539 | 118,539 | ||||||
Advertising funds restricted liabilities | 72,280 | 72,280 | ||||||
Total current liabilities | 330,794 | 330,794 | ||||||
Deferred income taxes | 296,775 | 296,775 | ||||||
Deferred franchise fees | 10,836 | 10,836 | ||||||
Total liabilities | 3,655,582 | 3,655,582 | ||||||
Retained earnings (accumulated deficit) | 215,639 | 215,639 | ||||||
Accumulated other comprehensive loss | (51,259) | (51,259) | ||||||
Total stockholders' equity | 851,850 | 851,850 | ||||||
Franchise royalty revenue and fees | 102,715 | 306,592 | ||||||
Advertising funds revenue | 0 | 0 | ||||||
Total revenues | 318,512 | 945,018 | ||||||
Advertising funds expense | 0 | 0 | ||||||
Total costs and expenses | 241,661 | 743,012 | ||||||
Operating profit | 76,851 | 202,006 | ||||||
Income before income taxes | 498,420 | 553,447 | ||||||
Provision for income taxes | (107,544) | (113,717) | ||||||
Net income | 390,876 | 439,730 | ||||||
Revenue recognized during the period related to deferred franchise fees | $ 1,769 | 5,306 | ||||||
Deferred income tax | (2,060) | |||||||
Other, net | 4,377 | |||||||
Accrued expenses and other current liabilities | $ 92,112 |
Revenue Disaggregation of Reven
Revenue Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($)countriesnumber_of_restaurants | Oct. 01, 2017USD ($) | Sep. 30, 2018USD ($)countriesnumber_of_restaurants | Oct. 01, 2017USD ($) | |
Disaggregation of Revenue | ||||
Number of Restaurants | number_of_restaurants | 6,669 | 6,669 | ||
Franchise agreement term | 20 years | |||
Franchise agreement renewal term | 10 years | |||
Franchise agreement extension term | 25 years | |||
Franchise agreement renewal term extension | 20 years | |||
Revenues | $ 400,550 | $ 308,000 | $ 1,192,116 | $ 914,161 |
Sales at Company-operated restaurants | 165,323 | 158,843 | 486,316 | 467,914 |
Franchise royalty revenue | 95,501 | 283,602 | ||
Franchise fees | 7,711 | 25,077 | ||
Franchise rental income | 50,474 | 50,275 | 152,110 | 140,127 |
Advertising funds revenue | 81,541 | $ 0 | 245,011 | $ 0 |
United States | ||||
Disaggregation of Revenue | ||||
Revenues | 375,938 | 1,121,518 | ||
Canada | ||||
Disaggregation of Revenue | ||||
Revenues | 19,738 | 56,156 | ||
Other International | ||||
Disaggregation of Revenue | ||||
Revenues | $ 4,874 | $ 14,442 | ||
Entity Operated Units | ||||
Disaggregation of Revenue | ||||
Number of Restaurants | number_of_restaurants | 350 | 350 | ||
Franchised Units | ||||
Disaggregation of Revenue | ||||
Number of Restaurants | number_of_restaurants | 6,319 | 6,319 | ||
Franchised Units | Other International | ||||
Disaggregation of Revenue | ||||
Number of Countries in which Entity Operates | countries | 30 | 30 | ||
Minimum | Lessee Disclosure | ||||
Disaggregation of Revenue | ||||
Lessee, Operating Lease, Term of Contract | 15 years | |||
Maximum | Lessee Disclosure | ||||
Disaggregation of Revenue | ||||
Lessee, Operating Lease, Term of Contract | 20 years |
Revenue Contract Balances (Deta
Revenue Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Contract balances | |||
Receivables, which are included in Accounts and notes receivable, net | $ 39,281 | $ 39,281 | |
Receivables, which are included in Advertising funds restricted assets | 42,226 | 42,226 | |
Deferred franchise fees at beginning of period | 102,492 | ||
Revenue recognized during the period | (2,266) | (7,393) | |
New deferrals due to cash received and other | 7,913 | ||
Deferred franchise fees at end of period | 103,012 | 103,012 | |
Deferred franchisee fees, current | 10,490 | 10,490 | |
Deferred franchise fees, noncurrent | $ 92,522 | $ 92,522 | $ 10,881 |
Revenue Revenue, Remaining Perf
Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Revenue [Abstract] | |
Anticipated recognition of revenue for the remainder of 2018 | $ 2,445 |
Anticipated recognition of revenue in 2019 | 7,774 |
Anticipated recognition of revenue in 2020 | 6,282 |
Anticipated recognition of revenue in 2021 | 5,749 |
Anticipated recognition of revenue in 2022 | 5,559 |
Anticipated recognition of revenue thereafter | 75,203 |
Revenue, Remaining Performance Obligation | $ 103,012 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018USD ($)number_of_restaurants | Dec. 31, 2017USD ($) | |
Business Acquisition | ||
Goodwill | $ 749,192 | $ 743,334 |
Acquisitions | ||
Business Acquisition | ||
Restaurants acquired from franchisee | number_of_restaurants | 16 | |
Total consideration paid, net of cash received | $ 21,401 | |
Properties | 4,363 | |
Acquired franchise rights | 10,127 | |
Capital lease asset | 5,360 | |
Other assets | 621 | |
Capital lease obligations | (3,135) | |
Unfavorable leases | (733) | |
Other liabilities | (1,960) | |
Total identifiable net assets | 14,643 | |
Goodwill | $ 6,758 |
System Optimization (Gains) L_3
System Optimization (Gains) Losses, Net Summary of Disposition Activity (Details) $ in Thousands | May 31, 2017USD ($)number_of_restaurants | Sep. 30, 2018USD ($) | Oct. 01, 2017USD ($) | Sep. 30, 2018USD ($)number_of_restaurants | Oct. 01, 2017USD ($)number_of_restaurants |
System optimization gains (losses), net | |||||
Company-operated restaurant ownership percentage | 5.00% | 5.00% | |||
System optimization gains (losses), net | $ 486 | $ (106) | $ 8 | $ (39,749) | |
Proceeds from sales | $ 2,863 | 80,058 | |||
Sale of Company-operated restaurants to franchisees | |||||
System optimization gains (losses), net | |||||
Number of restaurants sold to franchisees | number_of_restaurants | 3 | ||||
System optimization gains (losses), net | 0 | 0 | $ 89 | 0 | |
Post closing adjustments on sales of restaurants | 279 | 418 | 54 | 1,345 | |
Proceeds from sales | 1,436 | ||||
Net Assets Sold | (1,139) | ||||
Goodwill | (208) | ||||
Cash proceeds from post closing adjustments, net of payments | 6 | ||||
Cash payments for post closing adjustments, net of proceeds | 333 | 33 | |||
Recognition of deferred gain on sale of property | 503 | $ 503 | $ 312 | ||
Sale of franchise-operated restaurant to franchisee | |||||
System optimization gains (losses), net | |||||
Number of restaurants sold to franchisees | number_of_restaurants | 73 | 270 | |||
Sale of Other Assets | |||||
System optimization gains (losses), net | |||||
System optimization gains (losses), net | 207 | (539) | $ (135) | $ 2,040 | |
Proceeds from sales | 1,049 | 2,411 | 1,421 | 9,403 | |
Recognition of deferred gain on sale of property | 375 | ||||
NPC Disposition | |||||
System optimization gains (losses), net | |||||
Number of restaurants sold to franchisees | number_of_restaurants | 140 | ||||
System optimization gains (losses), net | $ 0 | 15 | 0 | (43,134) | |
Proceeds from sales | $ 70,688 | ||||
Goodwill | (65,476) | ||||
Selling and other costs | (12) | (1,692) | |||
Net favorable leases | $ 24,034 | ||||
DavCo Acquisition | |||||
System optimization gains (losses), net | |||||
Goodwill | $ (27) | ||||
Restaurants acquired from franchisees | number_of_restaurants | 140 | ||||
Total consideration paid, net of cash received | $ 86,788 | ||||
Supplemental purchase price | $ 6,269 |
System Optimization (Gains) L_4
System Optimization (Gains) Losses, Net Assets Held for Sale (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Assets held for sale | $ 2,519 | $ 2,235 |
Reorganization and Realignmen_3
Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | $ 941 | $ 2,888 | $ 6,691 | $ 20,768 |
G&A Realignment – May 2017 Plan | ||||
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | 629 | 2,656 | 6,375 | 19,901 |
System Optimization | ||||
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | $ 312 | $ 232 | $ 316 | $ 867 |
Reorganization and Realignmen_4
Reorganization and Realignment Costs G&A Realignment - May 2017 Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Restructuring Cost and Reserve | ||||
Restructuring Charges | $ 941 | $ 2,888 | $ 6,691 | $ 20,768 |
G&A Realignment – May 2017 Plan | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 4,500 | 4,500 | ||
Restructuring and Related Cost, Incurred Cost | 296 | 1,851 | 4,847 | 15,402 |
Restructuring and Related Cost, Cost Incurred to Date | 21,383 | 21,383 | ||
Restructuring Charges | 629 | 2,656 | 6,375 | 19,901 |
Restructuring Charges, Cost Incurred to Date | 28,038 | 28,038 | ||
G&A Realignment – May 2017 Plan | Severance and related employee costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 1,000 | 1,000 | ||
Restructuring and Related Cost, Incurred Cost | 57 | 1,210 | 3,168 | 14,436 |
Restructuring and Related Cost, Cost Incurred to Date | 18,124 | 18,124 | ||
G&A Realignment – May 2017 Plan | Recruitment and relocation costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 2,000 | 2,000 | ||
Restructuring and Related Cost, Incurred Cost | 200 | 145 | 708 | 145 |
Restructuring and Related Cost, Cost Incurred to Date | 1,197 | 1,197 | ||
G&A Realignment – May 2017 Plan | Third-party and other costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 500 | 500 | ||
Restructuring and Related Cost, Incurred Cost | 39 | 496 | 971 | 821 |
Restructuring and Related Cost, Cost Incurred to Date | 2,062 | 2,062 | ||
G&A Realignment – May 2017 Plan | Share based compensation | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 1,000 | 1,000 | ||
Restructuring and Related Cost, Incurred Cost | 333 | $ 805 | 1,528 | $ 4,499 |
Restructuring and Related Cost, Cost Incurred to Date | 6,655 | 6,655 | ||
G&A Realignment – May 2017 Plan | Minimum | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost | 30,000 | 30,000 | ||
G&A Realignment – May 2017 Plan | Maximum | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost | $ 33,000 | $ 33,000 |
Reorganization and Realignmen_5
Reorganization and Realignment Costs G&A Realignment - May 2017 Plan Accrual Rollforward (Details) - G&A Realignment – May 2017 Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Restructuring Cost and Reserve | ||||
Beginning balance | $ 12,270 | $ 0 | ||
Charges | $ 296 | $ 1,851 | 4,847 | 15,402 |
Payments for Restructuring | (8,868) | (2,207) | ||
Ending balance | 8,249 | 13,195 | 8,249 | 13,195 |
Severance and related employee costs | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 12,093 | 0 | ||
Charges | 57 | 1,210 | 3,168 | 14,436 |
Payments for Restructuring | (7,103) | (1,350) | ||
Ending balance | 8,158 | 13,086 | 8,158 | 13,086 |
Recruitment and relocation costs | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 177 | 0 | ||
Charges | 200 | 145 | 708 | 145 |
Payments for Restructuring | (794) | (36) | ||
Ending balance | 91 | 109 | 91 | 109 |
Third-party and other costs | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 0 | 0 | ||
Charges | 39 | 496 | 971 | 821 |
Payments for Restructuring | (971) | (821) | ||
Ending balance | 0 | $ 0 | 0 | $ 0 |
Accrued expenses and other current liabilities | ||||
Restructuring Cost and Reserve | ||||
Ending balance | 6,817 | 6,817 | ||
Other Liabilities | ||||
Restructuring Cost and Reserve | ||||
Ending balance | $ 1,432 | $ 1,432 |
Reorganization and Realignmen_6
Reorganization and Realignment Costs System Optimization Costs (Details) $ in Thousands | Sep. 30, 2018USD ($) |
System Optimization | |
Restructuring Cost and Reserve | |
Restructuring and Related Cost, Cost Incurred to Date | $ 72,225 |
Investments Equity Investment S
Investments Equity Investment Summary (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($)years | Oct. 01, 2017USD ($)years | Sep. 30, 2018USD ($)years | Oct. 01, 2017USD ($)years | |
Schedule of Equity Method Investments | ||||
Investment | $ 13 | $ 375 | ||
Equity in earnings for the period, net of amortization of purchase price adjustments | 5,810 | 6,113 | ||
Distributions received | (9,060) | (5,524) | ||
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other | $ 5,315 | $ 8,787 | $ (5,054) | $ 16,797 |
TimWen | ||||
Schedule of Equity Method Investments | ||||
Equity Method Investment, Ownership Percentage | 50.00% | 50.00% | ||
Equity Method Investment, Purchase Price Adjustment, Amortization Period | years | 21 | 21 | 21 | 21 |
Distribution Receivable | $ 2,604 | $ 2,604 | ||
Brazil JV | ||||
Schedule of Equity Method Investments | ||||
Equity Method Investment, Ownership Percentage | 20.00% | 20.00% | ||
TimWen and Brazil JV | ||||
Schedule of Equity Method Investments | ||||
Balance at beginning of period | $ 55,363 | 54,545 | ||
Investment | 13 | 375 | ||
Equity in earnings for the period | 7,566 | 7,844 | ||
Amortization of Purchase Price Adjustment | (1,756) | (1,731) | ||
Equity in earnings for the period, net of amortization of purchase price adjustments | 5,810 | 6,113 | ||
Distributions received | (9,060) | (8,128) | ||
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other | (191) | 4,304 | ||
Balance at end of period | $ 51,935 | $ 57,209 | $ 51,935 | $ 57,209 |
Investments Indirect Investment
Investments Indirect Investment in Inspire Brands (Details) - USD ($) $ in Thousands | Aug. 16, 2018 | Sep. 30, 2018 | Feb. 05, 2018 | Dec. 31, 2017 | Dec. 29, 2013 | Jan. 01, 2012 |
Accrued Income Taxes, Current | $ 84,623 | $ 1,115 | ||||
Arby's Restaurant Group, Inc | ||||||
Proceeds from Divestiture of Business, Percentage of Buyer Stock Received | 18.50% | |||||
Inspire Brands, Inc | ||||||
Inspire Brands carrying value | $ 0 | |||||
Percentage of Arby's Stock after Dilutive Effect of Merger | 12.30% | |||||
Proceeds from sale of Inspire Brands investment | $ 450,000 | |||||
Sale of Cost Method Investments, Transaction Costs | $ 79 | |||||
Accrued Income Taxes, Current | $ 95,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Jan. 17, 2018 | Dec. 31, 2017 | |
Debt Instrument | ||||||
Debt and Capital Lease Obligations | $ 2,791,057 | $ 2,791,057 | $ 2,754,402 | |||
Less amounts payable within one year | (31,291) | (31,291) | (30,172) | |||
Long-term debt | 2,759,766 | 2,759,766 | 2,724,230 | |||
Loss on early extinguishment of debt | 0 | $ 0 | 11,475 | $ 0 | ||
Wendy's U.S. Advertising Fund | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 25,000 | 25,000 | ||||
Proceeds from Lines of Credit | 9,837 | 22,675 | ||||
Repayments of Lines of Credit | 11,124 | $ 22,675 | ||||
Capital lease obligations, due through 2045 | ||||||
Debt Instrument | ||||||
Debt and Capital Lease Obligations | $ 458,347 | $ 458,347 | 467,964 | |||
Series 2018-1 Class A-2-I Notes | ||||||
Debt Instrument | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.573% | 3.573% | ||||
Debt and Capital Lease Obligations | $ 446,625 | $ 446,625 | $ 450,000 | 0 | ||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 1.35% | |||||
Series 2018-1 Class A-2-II Notes | ||||||
Debt Instrument | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.884% | 3.884% | ||||
Debt and Capital Lease Obligations | $ 471,438 | $ 471,438 | $ 475,000 | 0 | ||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 1.58% | |||||
Series 2015-1 Class A-2-I Notes | ||||||
Debt Instrument | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.371% | 3.371% | ||||
Debt and Capital Lease Obligations | $ 0 | $ 0 | 855,313 | |||
Series 2015-1 Class A-2-II Notes | ||||||
Debt Instrument | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.08% | 4.08% | ||||
Debt and Capital Lease Obligations | $ 873,000 | $ 873,000 | 879,750 | |||
Series 2015-1 Class A-2-III Notes | ||||||
Debt Instrument | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.497% | 4.497% | ||||
Debt and Capital Lease Obligations | $ 485,000 | $ 485,000 | 488,750 | |||
7% Debentures | ||||||
Debt Instrument | ||||||
Debt and Capital Lease Obligations | 90,454 | 90,454 | 89,514 | |||
Other Debt Obligations | ||||||
Debt Instrument | ||||||
Unamortized debt issuance costs | (33,807) | (33,807) | $ (26,889) | |||
Series 2018-1 Class A-2 Notes | ||||||
Debt Instrument | ||||||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 5.00% | |||||
Long-term Debt, Maturities, Repayments of Principal Annually for the Next Seven Years | $ 9,250 | |||||
Long-term Debt, Maturities, Repayments of Principal in 2025 | 423,250 | |||||
Long-term Debt, Maturities, Repayments of Principal in 2026 and 2027 | 4,750 | |||||
Long-term Debt, Maturities, Repayments of Principal in 2028 | 427,500 | |||||
Series 2018-1 Class A-1 Notes | Letter of Credit | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000 | |||||
Line of credit, amount borrowed | 0 | 0 | ||||
Series 2018-1 Senior Notes | ||||||
Debt Instrument | ||||||
Incurred Debt Issuance Costs | $ 17,672 | $ 17,672 |
Fair Value Measurements Financi
Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands | Aug. 16, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 29, 2013 |
Inspire Brands, Inc | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Inspire Brands carrying value | $ 0 | |||
Proceeds from sale of Inspire Brands investment | $ 450,000 | |||
Reported Value Measurement | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Cash equivalents | $ 444,012 | $ 338 | ||
Non-current cost method investments | 640 | 639 | ||
Guarantees of franchisee loan obligations | 22 | 37 | ||
Reported Value Measurement | Series 2018-1 Class A-2-I Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 446,625 | 0 | ||
Reported Value Measurement | Series 2018-1 Class A-2-II Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 471,438 | 0 | ||
Reported Value Measurement | Series 2015-1 Class A-2-I Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 0 | 855,313 | ||
Reported Value Measurement | Series 2015-1 Class A-2-II Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 873,000 | 879,750 | ||
Reported Value Measurement | Series 2015-1 Class A-2-III Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 485,000 | 488,750 | ||
Reported Value Measurement | 7% Debentures | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 90,454 | 89,514 | ||
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Cash equivalents | 444,012 | 338 | ||
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Non-current cost method investments | 2,409 | 327,710 | ||
Guarantees of franchisee loan obligations | 22 | 37 | ||
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 425,678 | 0 | ||
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 449,186 | 0 | ||
Estimate of Fair Value Measurement | Series 2015-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 0 | 856,510 | ||
Estimate of Fair Value Measurement | Series 2015-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 866,714 | 897,961 | ||
Estimate of Fair Value Measurement | Series 2015-1 Class A-2-III Notes | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | 481,654 | 513,188 | ||
Estimate of Fair Value Measurement | 7% Debentures | Fair Value, Inputs, Level 2 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Debt instrument | $ 104,500 | $ 107,000 |
Fair Value Measurements Non-Rec
Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | |||||
Impairment of Long-Lived Assets Held-for-use | $ 118 | $ 928 | $ 1,886 | $ 1,146 | |
Impairment of Long-Lived Assets to be Disposed of | 229 | $ 113 | 270 | $ 658 | |
Fair Value, Measurements, Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | |||||
Assets Held and Used, Long Lived, Fair Value Disclosure | 226 | 226 | $ 757 | ||
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 1,115 | 1,115 | 1,560 | ||
Total | 1,341 | 1,341 | 2,317 | ||
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | |||||
Assets Held and Used, Long Lived, Fair Value Disclosure | 0 | 0 | 0 | ||
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 0 | 0 | 0 | ||
Total | 0 | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | |||||
Assets Held and Used, Long Lived, Fair Value Disclosure | 0 | 0 | 0 | ||
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 0 | 0 | 0 | ||
Total | 0 | 0 | 0 | ||
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | |||||
Assets Held and Used, Long Lived, Fair Value Disclosure | 226 | 226 | 757 | ||
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 1,115 | 1,115 | 1,560 | ||
Total | $ 1,341 | $ 1,341 | $ 2,317 |
Impairment of Long-Lived Asse_3
Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | $ 347 | $ 1,041 | $ 2,156 | $ 1,804 |
Restaurants leased or subleased to franchisees | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | 118 | 95 | 283 | 95 |
Company-operated restaurants | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | 0 | 833 | 1,603 | 1,051 |
Surplus Properties | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | $ 229 | $ 113 | $ 270 | $ 658 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | |
Effective Income Tax Rate | 21.60% | 54.80% | 20.60% | 45.20% | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | 21.00% | 35.00% | |
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | $ 5,251 | $ 12,142 | |||
(Provision for) benefit from income taxes | (107,668) | $ (17,298) | (114,250) | $ (28,639) | |
Unrecognized Tax Benefits, Increase Resulting from Divestiture | 3,554 | 2,547 | |||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 11,241 | 11,241 | |||
Income Taxes Receivable | 5,851 | 5,851 | $ 26,262 | ||
Income Taxes Receivable, Noncurrent | $ 0 | 0 | $ 0 | ||
Tax Act | |||||
(Provision for) benefit from income taxes | (2,076) | ||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | 2,426 | ||||
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount | 991 | ||||
Release of valuation allowances on foreign tax credits | $ 1,341 | ||||
System Optimization | |||||
(Provision for) benefit from income taxes | $ (5,019) |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Common Stock: | ||||
Weighted average basic shares outstanding | 237,696 | 243,354 | 238,872 | 245,073 |
Dilutive effect of stock options and restricted shares | 7,070 | 8,383 | 7,574 | 8,103 |
Weighted average diluted shares outstanding | 244,766 | 251,737 | 246,446 | 253,176 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,121 | 1,617 | 1,287 | 618 |
Stockholders' Equity Rollforwar
Stockholders' Equity Rollforward (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | |
Increase (Decrease) in Stockholders' Equity | |||||
Balance at beginning of period | $ 430,539 | $ 487,049 | $ 573,203 | $ 527,736 | |
Comprehensive income | 396,564 | 23,488 | 436,347 | 52,978 | |
Cash dividends ($.085 and $.07 per share for the three months and $.255 and $.21 per share for the nine months ended September 30, 2018 and October 1, 2017, respectively) | (20,141) | (17,017) | (60,786) | (51,464) | |
Repurchases of common stock | (56,421) | (38,463) | (141,615) | (90,964) | |
Share-based compensation | 4,810 | 4,984 | 14,401 | 16,356 | |
Exercises of stock options | 29,075 | 4,033 | 35,889 | 10,194 | |
Vesting of restricted shares | (1,168) | (1,528) | (4,089) | (4,260) | |
Cumulative effect of new accounting principle in period of adoption | 0 | 0 | (70,210) | 1,880 | |
Other | 60 | 49 | 178 | 139 | |
Balance at end of period | $ 783,318 | $ 462,595 | $ 783,318 | $ 462,595 | |
Dividends per share | $ 0.085 | $ 0.07 | $ 0.255 | $ 0.21 | |
Deferred franchise fees | $ (92,522) | $ (92,522) | $ (10,881) | ||
Deferred income taxes | (275,312) | (275,312) | (299,053) | ||
Advertising funds restricted liabilities | (78,925) | (78,925) | $ (62,602) | ||
Revenue recognition guidance | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Deferred franchise fees | (85,561) | (85,561) | |||
Deferred income taxes | 21,996 | 21,996 | |||
Advertising funds restricted liabilities | $ (6,645) | $ (6,645) |
Stockholders' Equity Repurchase
Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | |||||
Oct. 31, 2018 | Sep. 30, 2018 | Oct. 01, 2017 | Nov. 01, 2018 | Aug. 15, 2018 | Feb. 15, 2018 | Feb. 22, 2017 | |
Subsequent Event | |||||||
Equity, Class of Treasury Stock | |||||||
Treasury Stock, Shares, Acquired | 1,596 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 27,288 | ||||||
Stock Repurchase Program, Cost Incurred | $ 22 | ||||||
February 2018 Share Repurchase Program | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 175,000 | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 56,134 | ||||||
August 2018 Share Repurchase Program | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 100,000 | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 100,000 | ||||||
Share Repurchase Programs | |||||||
Equity, Class of Treasury Stock | |||||||
Treasury Stock, Shares, Acquired | 6,896 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 118,866 | ||||||
Stock Repurchase Program, Repurchase Accrual | 2,675 | ||||||
Stock Repurchase Program, Cost Incurred | $ 97 | ||||||
November 2018 Share Repurchase Program | Subsequent Event | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 120,000 | ||||||
August and November 2018 Share Repurchase Program | Subsequent Event | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 220,000 | ||||||
February 2017 Share Repurchase Program | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 150,000 | ||||||
Treasury Stock, Shares, Acquired | 1,385 | 6,131 | |||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 22,633 | $ 90,876 | |||||
Stock Repurchase Program, Repurchase Accrual | 899 | ||||||
Stock Repurchase Program, Cost Incurred | $ 19 | $ 88 |
Stockholders' Equity Accumulate
Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance, beginning of year | $ (46,198) | $ (63,241) | ||
Current-period other comprehensive (loss) income | $ 5,315 | $ 9,231 | (4,937) | 18,225 |
Balance, end of the period | (51,135) | (45,016) | (51,135) | (45,016) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Net of Tax | 444 | 1,332 | ||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | 723 | 2,170 | ||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | (279) | (838) | ||
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance, beginning of year | (45,149) | (60,299) | ||
Current-period other comprehensive (loss) income | (5,054) | 16,797 | ||
Balance, end of the period | (50,203) | (43,502) | (50,203) | (43,502) |
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance, beginning of year | 0 | (1,797) | ||
Current-period other comprehensive (loss) income | 0 | 1,332 | ||
Balance, end of the period | 0 | (465) | 0 | (465) |
Pension | ||||
Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance, beginning of year | (1,049) | (1,145) | ||
Current-period other comprehensive (loss) income | 117 | 96 | ||
Balance, end of the period | $ (932) | $ (1,049) | $ (932) | $ (1,049) |
Leases Lease Disclosure (Detail
Leases Lease Disclosure (Details) | Sep. 30, 2018Propertynumber_of_restaurants |
Property Subject to or Available for Operating Lease | |
Number of Restaurants | number_of_restaurants | 6,669 |
Entity Operated Units | |
Property Subject to or Available for Operating Lease | |
Number of Restaurants | number_of_restaurants | 350 |
Lessee Disclosure | Land and Building | |
Property Subject to or Available for Operating Lease | |
Property Subject to or Available for Operating Lease, Number of Units | 145 |
Lessee Disclosure | Land and Building | Property Subject to Operating Lease | |
Property Subject to or Available for Operating Lease | |
Property Subject to or Available for Operating Lease, Number of Units | 64 |
Lessee Disclosure | Land | Property Subject to Operating Lease | |
Property Subject to or Available for Operating Lease | |
Property Subject to or Available for Operating Lease, Number of Units | 141 |
Lessor Disclosure | Property Subject to Operating Lease | |
Property Subject to or Available for Operating Lease | |
Property Subject to or Available for Operating Lease, Number of Units | 1,281 |
Lessor Disclosure | Assets Leased to Others | Property Subject to Operating Lease | |
Property Subject to or Available for Operating Lease | |
Property Subject to or Available for Operating Lease, Number of Units | 519 |
Leases Operating Lease Rent Exp
Leases Operating Lease Rent Expense and Rent Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | |
Operating Leased Assets | ||||
Rental expense, Minimum rentals | $ 22,814 | $ 23,997 | $ 72,738 | $ 66,701 |
Rental expense, Contingent rentals | 5,061 | 5,395 | 14,522 | 14,405 |
Total rental expense | 27,875 | 29,392 | 87,260 | 81,106 |
Sublease income | 34,097 | 35,022 | 103,353 | 92,434 |
Rental income, Minimum rentals | 45,291 | 44,682 | 137,549 | 124,847 |
Rental income, Contingent rentals | 5,183 | 5,593 | 14,561 | 15,280 |
Total rental income | $ 50,474 | $ 50,275 | $ 152,110 | $ 140,127 |
Leases Future Minimum Rent (Det
Leases Future Minimum Rent (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating Leased Assets | |
Rental payments, Capital leases, 2018 | $ 12,967 |
Rental payments, Capital leases, 2019 | 45,323 |
Rental payments, Capital leases, 2020 | 46,252 |
Rental payments, Capital leases, 2021 | 47,849 |
Rental payments, Capital leases, 2022 | 48,937 |
Rental payments, Capital leases, Thereafter | 751,317 |
Rental payments, Capital leases, Total minimum payments | 952,645 |
Less interest | (494,298) |
Present value of minimum capital lease payments | 458,347 |
Rental payments, Operating leases, 2018 | 25,217 |
Rental payments, Operating leases, 2019 | 95,216 |
Rental payments, Operating leases, 2020 | 94,079 |
Rental payments, Operating leases, 2021 | 93,580 |
Rental payments, Operating leases, 2022 | 93,304 |
Rental payments, Operating leases, Thereafter | 1,145,074 |
Rental payments, Operating leases, Total minimum payments | 1,546,470 |
Rental receipts, Capital leases, 2018 | 16,007 |
Rental receipts, Capital leases, 2019 | 64,376 |
Rental receipts, Capital leases, 2020 | 65,467 |
Rental receipts, Capital leases, 2021 | 67,267 |
Rental receipts, Capital leases, 2022 | 68,451 |
Rental receipts, Capital leases, Thereafter | 1,034,322 |
Rental receipts, Capital leases, Total minimum payments | 1,315,890 |
Rental receipts, Operating leases, 2018 | 18,911 |
Rental receipts, Operating leases, 2019 | 76,044 |
Rental receipts, Operating leases, 2020 | 75,810 |
Rental receipts, Operating leases, 2021 | 75,771 |
Rental receipts, Operating leases, 2022 | 76,222 |
Rental receipts, Operating leases, Thereafter | 935,083 |
Rental receipts, Operating leases, Total minimum payments | 1,257,841 |
Rental receipts, Owned properties, 2018 | 13,488 |
Rental receipts, Owned properties, 2019 | 54,736 |
Rental receipts, Owned properties, 2020 | 55,348 |
Rental receipts, Owned properties, 2021 | 56,943 |
Rental receipts, Owned properties, 2022 | 58,514 |
Rental receipts, Owned properties, Thereafter | 948,620 |
Rental receipts, Owned properties, Total minimum payments | 1,187,649 |
Current portion of long-term debt | |
Operating Leased Assets | |
Capital Lease Obligations, Current | 8,041 |
Long-term Debt | |
Operating Leased Assets | |
Capital Lease Obligations, Noncurrent | $ 450,306 |
Leases Properties Leased to Thi
Leases Properties Leased to Third Parties (Details) - Property Subject to Operating Lease - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property Subject to or Available for Operating Lease | ||
Property Leased to Others | $ 588,879 | $ 587,963 |
Property Leased to Others, Accumulated Depreciation | (139,802) | (128,003) |
Property Leased to Others, Net | 449,077 | 459,960 |
Land | ||
Property Subject to or Available for Operating Lease | ||
Property Leased to Others | 272,730 | 272,411 |
Buildings and improvements | ||
Property Subject to or Available for Operating Lease | ||
Property Leased to Others | 313,706 | 313,108 |
Restaurant equipment | ||
Property Subject to or Available for Operating Lease | ||
Property Leased to Others | $ 2,443 | $ 2,444 |
Leases Net Investment in Direct
Leases Net Investment in Direct Financing Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Dec. 31, 2017 | |
Capital Leased Assets | |||||
Future minimum rental receipts | $ 633,039 | $ 633,039 | $ 662,889 | ||
Unearned interest income | (406,230) | (406,230) | (433,175) | ||
Net investment in direct financing leases | 226,809 | 226,809 | 229,714 | ||
Net current investment in direct financing leases | (660) | (660) | (625) | ||
Net non-current investment in direct financing leases | 226,149 | 226,149 | $ 229,089 | ||
Interest income, Direct financing leases | $ 6,844 | $ 6,467 | $ 20,861 | $ 16,312 |
Transactions with Related Par_2
Transactions with Related Parties (Details) - TimWen - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Related Party Transaction | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 9,967 | $ 9,362 |
General and administrative | ||
Related Party Transaction | ||
Related Party Transaction, Other Revenues from Transactions with Related Party | $ 161 | $ 158 |
Guarantees and Other Commitme_2
Guarantees and Other Commitments and Contingencies Franchisee Image Activation Incentive Programs (Details) - Maximum | 9 Months Ended |
Sep. 30, 2018 | |
New Build Incentive Program | |
Guarantor Obligations | |
Years of reduction in royalty payment attributable to new builds | 2 years |
2018 New Build Incentive Program | |
Guarantor Obligations | |
Years of reduction in royalty payment attributable to new builds | 2 years |
Remodel Incentive Program | |
Guarantor Obligations | |
Years of reduction in royalty payment attributable to remodel incentive program | 1 year |
Guarantees and Other Commitme_3
Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Property Lease Guarantee | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 51,309 |
Indirect Guarantee of Indebtedness | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 365 |
Guarantees and Other Commitme_4
Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Guarantor Obligations | |
Letters of Credit Outstanding | $ 27,102 |
Uncategorized Items - wen-20180
Label | Element | Value |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 8,579,000 |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | 16,154,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 165,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 0 |