Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 01, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | WENDY'S CO | |
Entity Central Index Key | 0000030697 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 230,724,058 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 414,168 | $ 431,405 |
Restricted cash | 29,671 | 29,860 |
Accounts and notes receivable, net | 110,567 | 109,805 |
Inventories | 3,550 | 3,687 |
Prepaid expenses and other current assets | 19,762 | 14,452 |
Advertising funds restricted assets | 86,046 | 76,509 |
Total current assets | 663,764 | 665,718 |
Properties | 1,003,231 | 1,023,267 |
Finance lease assets | 195,368 | 189,969 |
Operating lease assets | 919,283 | 0 |
Goodwill | 755,355 | 747,884 |
Other intangible assets | 1,264,238 | 1,294,153 |
Investments | 48,411 | 47,660 |
Net investment in sales-type and direct financing leases | 236,426 | 226,477 |
Other assets | 99,585 | 96,907 |
Total assets | 5,185,661 | 4,292,035 |
Current liabilities: | ||
Current portion of long-term debt | 23,250 | 23,250 |
Current portion of finance lease liabilities | 9,380 | 8,405 |
Current portion of operating lease liabilities | 43,657 | 0 |
Accounts payable | 16,356 | 21,741 |
Accrued expenses and other current liabilities | 141,093 | 150,636 |
Advertising funds restricted liabilities | 89,901 | 80,153 |
Total current liabilities | 323,637 | 284,185 |
Long-term debt | 2,301,563 | 2,305,552 |
Long-term finance lease liabilities | 458,595 | 447,231 |
Long-term operating lease liabilities | 957,739 | 0 |
Deferred income taxes | 268,225 | 269,160 |
Deferred franchise fees | 92,327 | 92,232 |
Other liabilities | 142,881 | 245,226 |
Total liabilities | 4,544,967 | 3,643,586 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 230,944 and 231,233 shares outstanding, respectively | 47,042 | 47,042 |
Additional paid-in capital | 2,880,663 | 2,884,696 |
Retained earnings | 153,991 | 146,277 |
Common stock held in treasury, at cost; 239,480 and 239,191 shares, respectively | (2,385,354) | (2,367,893) |
Accumulated other comprehensive loss | (55,648) | (61,673) |
Total stockholders’ equity | 640,694 | 648,449 |
Total liabilities and stockholders’ equity | $ 5,185,661 | $ 4,292,035 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Balance Sheet Parentheticals - $ / shares shares in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
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 | 230,944 | 231,233 |
Treasury Stock, Shares | 239,480 | 239,191 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Revenues | ||
Franchise rental income | $ 58,452 | $ 50,107 |
Revenues | 408,583 | 380,564 |
Costs and expenses: | ||
Cost of sales | 142,579 | 132,219 |
Franchise support and other costs | 6,018 | 6,173 |
Franchise rental expense | 32,451 | 23,263 |
Advertising funds expense | 80,481 | 78,900 |
General and administrative | 49,313 | 50,356 |
Depreciation and amortization | 33,185 | 32,152 |
System optimization (gains) losses, net | (12) | 570 |
Reorganization and realignment costs | 798 | 2,626 |
Impairment of long-lived assets | 1,486 | 206 |
Other operating income, net | (3,982) | (1,163) |
Costs and expenses | 342,317 | 325,302 |
Operating profit | 66,266 | 55,262 |
Interest expense, net | (29,082) | (30,178) |
Loss on early extinguishment of debt | 0 | (11,475) |
Other income, net | 2,700 | 744 |
Income before income taxes | 39,884 | 14,353 |
(Provision for) benefit from income taxes | (7,990) | 5,806 |
Net income | $ 31,894 | $ 20,159 |
Earnings per share | ||
Earnings Per Share, Basic and Diluted | $ 0.14 | $ 0.08 |
Sales | ||
Revenues | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 167,697 | $ 153,649 |
Franchise royalty revenue and fees | ||
Revenues | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 101,953 | 97,908 |
Advertising funds revenue | ||
Revenues | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 80,481 | $ 78,900 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Net income | $ 31,894 | $ 20,159 |
Other comprehensive income (loss), net: | ||
Foreign currency translation adjustment | 6,025 | (6,044) |
Change in unrecognized pension loss; Unrealized gains arising during the period | 0 | 156 |
Change in unrecognized pension loss; Income tax provision | 0 | (39) |
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax | 0 | 117 |
Other comprehensive income (loss), net | 6,025 | (5,927) |
Comprehensive income | $ 37,919 | $ 14,232 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss |
Stockholders' Equity, beginning of period at Dec. 31, 2017 | $ 573,203 | $ 47,042 | $ 2,885,955 | $ (163,289) | $ (2,150,307) | $ (46,198) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 20,159 | 0 | 0 | 20,159 | 0 | 0 |
Other comprehensive (loss) income, net | (5,927) | 0 | 0 | 0 | 0 | (5,927) |
Cash Dividends | (20,355) | 0 | 0 | (20,355) | 0 | 0 |
Repurchases of common stock | (39,407) | 0 | 0 | 0 | (39,407) | 0 |
Share-based compensation | 4,458 | 0 | 4,458 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 3,578 | 0 | (7,460) | 0 | 11,038 | 0 |
Common stock issued upon vesting of restricted shares | (2,550) | 0 | (4,170) | 0 | 1,620 | 0 |
Other | 48 | 0 | 21 | (5) | 32 | 0 |
Stockholders' Equity, end of period at Apr. 01, 2018 | 462,997 | 47,042 | 2,878,804 | (233,700) | (2,177,024) | (52,125) |
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of change in accounting principle | (70,210) | 0 | 0 | (70,210) | 0 | 0 |
Stockholders' Equity, beginning of period at Dec. 30, 2018 | 648,449 | 47,042 | 2,884,696 | 146,277 | (2,367,893) | (61,673) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 31,894 | 0 | 0 | 31,894 | 0 | 0 |
Other comprehensive (loss) income, net | 6,025 | 0 | 0 | 0 | 0 | 6,025 |
Cash Dividends | (23,069) | 0 | 0 | (23,069) | 0 | 0 |
Repurchases of common stock | (29,370) | 0 | 0 | 0 | (29,370) | 0 |
Share-based compensation | 5,022 | 0 | 5,022 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 8,848 | 0 | (205) | 0 | 9,053 | 0 |
Common stock issued upon vesting of restricted shares | (6,055) | 0 | (8,874) | 0 | 2,819 | 0 |
Other | 55 | 0 | 24 | (6) | 37 | 0 |
Stockholders' Equity, end of period at Mar. 31, 2019 | 640,694 | 47,042 | 2,880,663 | 153,991 | (2,385,354) | (55,648) |
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of change in accounting principle | $ (1,105) | $ 0 | $ 0 | $ (1,105) | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 31,894 | $ 20,159 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 33,185 | 32,152 |
Share-based compensation | 5,022 | 4,458 |
Impairment of long-lived assets | 1,486 | 206 |
Deferred income tax | 842 | (9,799) |
Non-cash rental expense (income), net | 7,818 | (3,239) |
Change in operating lease liabilities | (10,496) | 0 |
Net receipt of deferred vendor incentives | 8,033 | 7,340 |
System optimization (gains) losses, net | (12) | 570 |
Distributions received from joint ventures, net of equity in earnings | 415 | 1,083 |
Long-term debt-related activities, net | 1,823 | 13,215 |
Changes in operating assets and liabilities and other, net | (17,989) | 2,566 |
Net cash provided by operating activities | 62,021 | 68,711 |
Cash flows from investing activities: | ||
Capital expenditures | (11,215) | (10,569) |
Acquisitions | (5,052) | 0 |
Dispositions | 0 | 351 |
Proceeds from sale of investments | 130 | 0 |
Notes receivable, net | 248 | (872) |
Payments for investments | 0 | (12) |
Net cash used in investing activities | (15,889) | (11,102) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 0 | 928,167 |
Repayments of long-term debt | (5,813) | (870,394) |
Repayments of finance lease liabilities | (1,881) | (1,353) |
Deferred financing costs | 0 | (17,340) |
Repurchases of common stock | (30,929) | (39,372) |
Dividends | (23,069) | (20,355) |
Proceeds from stock option exercises | 5,196 | 9,385 |
Payments related to tax withholding for share-based compensation | (6,055) | (8,321) |
Contingent consideration payment | 0 | (6,100) |
Net cash used in financing activities | (62,551) | (25,683) |
Net cash (used in) provided by operations before effect of exchange rate changes on cash | (16,419) | 31,926 |
Effect of exchange rate changes on cash | 1,884 | (2,482) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (14,535) | 29,444 |
Cash, cash equivalents and restricted cash at beginning of period | 486,512 | 212,824 |
Cash, cash equivalents and restricted cash at end of period | 471,977 | 242,268 |
Supplemental non-cash investing and financing activities: | ||
Capital expenditures included in accounts payable | 5,125 | 6,466 |
Finance leases | 13,810 | 1,101 |
Reconciliation of cash, cash equivalents and restricted cash at end of period: | ||
Total cash, cash equivalents and restricted cash | $ 486,512 | $ 212,824 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and the results of our operations and cash flows for the three months ended March 31, 2019 and April 1, 2018 . The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full 2019 fiscal year. The 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 30, 2018 (the “Form 10-K”). The principal 100% owned 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-month periods presented herein contain 13 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods. Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue. Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. See Note 2 for further information. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards New Accounting Standards Adopted 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 adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed 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 adopted this amendment during the first quarter of 2019. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. Leases 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 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases. The Company adopted the new guidance during the first quarter of 2019 using the effective date as the date of initial application; therefore, the comparative period has not been adjusted and continues to be reported under the previous lease guidance. The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did not recognize right-of-use (“ROU”) assets or liabilities, which included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient for lessees to account for lease components and nonlease components as a single lease component for all underlying classes of assets. In addition, the Company elected the practical expedient for lessors to account for lease components and nonlease components as a single lease component in instances where the lease component is predominant, the timing and pattern of transfer for the lease component and nonlease component are the same and the lease component, if accounted for separately, would be classified as an operating lease. The Company did not elect the use-of-hindsight practical expedient. The standard had a material impact on our condensed consolidated balance sheets and related disclosures. Upon adoption at the beginning of 2019, we recognized operating lease liabilities of $1,011,000 based on the present value of the remaining minimum rental payments, with corresponding ROU assets of $934,000 . The measurement of the operating lease ROU assets included, among other items, favorable lease amounts of $23,000 and unfavorable lease amounts of $30,000 , which were previously included in “Other intangible assets” and “Other liabilities,” respectively, as well as the excess of rent expense recognized on a straight-line basis over the minimum rents paid of $67,000 , which was previously included in “Other liabilities.” In addition, the standard requires lessors to recognize lessees’ payments to the Company for executory costs on a gross basis as revenue with a corresponding expense, which we expect will result in an increase of approximately $40,000 to our 2019 franchise rental income and expense. The Company also recognized a decrease to retained earnings of $1,105 as a result of impairing newly recognized ROU assets upon transition to the new guidance. The adoption of the guidance did not have a material impact on our condensed consolidated statement of cash flows. In connection with the adoption of the standard, the Company has reclassified finance lease ROU assets to “Finance lease assets,” which were previously recorded to “Properties.” The Company also reclassified the current and long-term finance lease liabilities to “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” which were previously recorded to “Current portion of long-term debt” and “Long-term debt,” respectively. The prior period reflects the reclassifications of these assets and liabilities to conform to the current year presentation. The following table illustrates the reclassifications made to the condensed consolidated balance sheet as of December 30, 2018 : As Previously Reported Reclassifications As Currently Reported Properties $ 1,213,236 $ (189,969 ) $ 1,023,267 Finance lease assets — 189,969 189,969 Current portion of long-term debt 31,655 (8,405 ) 23,250 Current portion of finance lease liabilities — 8,405 8,405 Long-term debt 2,752,783 (447,231 ) 2,305,552 Long-term finance lease liabilities — 447,231 447,231 $ 1,429,490 $ — $ 1,429,490 |
Revenue (Notes)
Revenue (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue [Abstract] | |
Revenue from Contract with Customer | Revenue Disaggregation of Revenue The following tables disaggregate revenue by primary geographical market and source: Three Months Ended March 31, 2019 U.S. Canada Other International Total Sales at Company-operated restaurants $ 167,697 $ — $ — $ 167,697 Franchise royalty revenue 84,378 5,508 4,957 94,843 Franchise fees 6,009 412 689 7,110 Franchise rental income 50,665 7,787 — 58,452 Advertising funds revenue 75,981 4,500 — 80,481 Total revenues $ 384,730 $ 18,207 $ 5,646 $ 408,583 Three Months Ended April 1, 2018 Sales at Company-operated restaurants $ 153,649 $ — $ — $ 153,649 Franchise royalty revenue 80,222 5,363 4,358 89,943 Franchise fees 7,085 646 234 7,965 Franchise rental income 44,265 5,842 — 50,107 Advertising funds revenue 74,414 4,486 — 78,900 Total revenues $ 359,635 $ 16,337 $ 4,592 $ 380,564 Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: March 31, 2019 (a) December 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 44,765 $ 40,300 Receivables, which are included in “Advertising funds restricted assets” 47,056 47,332 Deferred franchise fees (c) 101,469 102,205 _______________ (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 are included in “ Accrued expenses and other current liabilities ” and “ Deferred franchise fees ” and totaled $9,142 and $92,327 as of March 31, 2019 , respectively, and $9,973 and $92,232 as of December 30, 2018 , respectively. Significant changes in deferred franchise fees are as follows: Three Months Ended March 31, April 1, Deferred franchise fees at beginning of period $ 102,205 $ 102,492 Revenue recognized during the period (2,772 ) (2,688 ) New deferrals due to cash received and other 2,036 2,957 Deferred franchise fees at end of period $ 101,469 $ 102,761 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: 2019 (a) $ 6,307 2020 6,482 2021 5,939 2022 5,725 2023 5,500 Thereafter 71,516 $ 101,469 _______________ (a) Represents franchise fees expected to be recognized for the remainder of 2019, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
Acquisitions (Notes)
Acquisitions (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions During the three months ended March 31, 2019 , the Company acquired five restaurants from franchisees for total net cash consideration of $5,052 . The Company did not incur any material acquisition-related costs associated with the acquisitions and such transactions were 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 franchisees: Three Months Ended March 31, Restaurants acquired from franchisees 5 Total consideration paid, net of cash received $ 5,052 Identifiable assets acquired and liabilities assumed: Properties 666 Acquired franchise rights 1,354 Finance lease assets 5,350 Finance lease liabilities (4,084 ) Other (2,316 ) Total identifiable net assets 970 Goodwill $ 4,082 During 2018, the Company acquired 16 restaurants from a franchisee for total net cash consideration of $21,401 . The fair values of the identifiable intangible assets related to the acquisition were provisional amounts as of December 30, 2018 , pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months ended March 31, 2019 , which resulted in a decrease in the fair value of acquired franchise rights of $2,989 and an increase in deferred tax assets of $140 . |
System Optimization (Gains) Los
System Optimization (Gains) Losses, Net | 3 Months Ended |
Mar. 31, 2019 | |
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 franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to reduce its ownership below the approximately 5% level, Wendy’s expects to 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, drive new restaurant development and accelerate reimages. 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 March 31, April 1, Post-closing adjustments on sales of restaurants (a) $ (8 ) $ (212 ) Gain (loss) on sales of other assets, net (b) 20 (358 ) System optimization gains (losses), net $ 12 $ (570 ) _______________ (a) The three months ended April 1, 2018 includes cash proceeds, net of payments of $6 . (b) During the three months ended April 1, 2018 , the Company received cash proceeds of $345 primarily from the sale of surplus properties. Assets Held for Sale As of March 31, 2019 and December 30, 2018 , the Company had assets held for sale of $4,470 and $2,435 , 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 | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, April 1, G&A realignment $ 782 $ 2,626 System optimization initiative 16 — Reorganization and realignment costs $ 798 $ 2,626 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 $32,000 to $35,000 related to the plan. The Company recognized costs totaling $782 and $2,626 during the three months ended March 31, 2019 and April 1, 2018 , respectively, which primarily included severance and related employee costs. The Company expects to incur additional costs associated with our G&A realignment plan aggregating approximately $3,500 , comprised of (1) severance and related employee costs of approximately $500 , (2) recruitment and relocation costs of approximately $1,500 , (3) third-party and other costs of approximately $500 and (4) share-based compensation of approximately $1,000 . The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2019. In May 2019, the Company announced changes to its leadership structure that includes the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer. The Company expects to incur incremental reorganization and realignment costs associated with these leadership changes of approximately $2,500 , of which approximately $1,500 will be severance and related employee costs and approximately $1,000 will be share-based compensation. This will increase total reorganization and realignment costs to approximately $34,500 to $37,500 . Also as a result of these changes, the Company’s chief operating decision maker is currently evaluating the Company’s management and operating structure and anticipates this evaluation will result in a change to its existing operating segment structure by the end of 2019. The following is a summary of the activity recorded as a result of the G&A realignment plan: Three Months Ended Total March 31, April 1, Severance and related employee costs $ 472 $ 2,059 $ 19,225 Recruitment and relocation costs 114 148 1,680 Third-party and other costs 16 328 2,126 602 2,535 23,031 Share-based compensation (a) 180 91 6,864 Termination of defined benefit plans — — 1,335 Total G&A realignment $ 782 $ 2,626 $ 31,230 _______________ (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. The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,730 and $765 as of March 31, 2019 , respectively, and $8,781 and $2,731 as of April 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan. Balance December 30, 2018 Charges Payments Balance March 31, 2019 Severance and related employee costs $ 7,241 $ 472 $ (2,218 ) $ 5,495 Recruitment and relocation costs 83 114 (197 ) — Third-party and other costs — 16 (16 ) — $ 7,324 $ 602 $ (2,431 ) $ 5,495 Balance December 31, 2017 Charges Payments Balance April 1, 2018 Severance and related employee costs $ 12,093 $ 2,059 $ (2,844 ) $ 11,308 Recruitment and relocation costs 177 148 (121 ) 204 Third-party and other costs — 328 (328 ) — $ 12,270 $ 2,535 $ (3,293 ) $ 11,512 System Optimization Initiative The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,208 under the initiative since inception and expects to incur additional costs of approximately $500 during the remainder of 2019, which are primarily comprised of professional fees. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
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: Three Months Ended March 31, April 1, Balance at beginning of period $ 47,021 $ 55,363 Investment — 12 Equity in earnings for the period 2,397 2,420 Amortization of purchase price adjustments (a) (566 ) (596 ) 1,831 1,824 Distributions received (2,246 ) (2,907 ) Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other 1,166 (1,262 ) Balance at end of period $ 47,772 $ 53,030 _______________ (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. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
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: March 31, December 30, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 205,393 $ 205,393 $ 222,228 $ 222,228 Level 1 Other investments in equity securities (a) 639 2,179 639 2,181 Level 3 Financial liabilities Series 2018-1 Class A-2-I Notes (b) 444,375 439,656 445,500 424,026 Level 2 Series 2018-1 Class A-2-II Notes (b) 469,063 461,952 470,250 439,353 Level 2 Series 2015-1 Class A-2-II Notes (b) 868,500 876,065 870,750 865,342 Level 2 Series 2015-1 Class A-2-III Notes (b) 482,500 495,711 483,750 482,522 Level 2 7% debentures, due in 2025 (b) 91,086 99,000 90,769 102,750 Level 2 Guarantees of franchisee loan obligations (c) 12 12 17 17 Level 3 _______________ (a) The fair values of our 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 values of long-lived assets held and used presented in the tables below represents the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated 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 9 for further information on impairment of our long-lived assets. Fair Value Measurements March 31, Level 1 Level 2 Level 3 Held and used $ — $ — $ — $ — Held for sale 2,516 — — 2,516 Total $ 2,516 $ — $ — $ 2,516 Fair Value Measurements December 30, Level 1 Level 2 Level 3 Held and used $ 462 $ — $ — $ 462 Held for sale 1,031 — — 1,031 Total $ 1,493 $ — $ — $ 1,493 |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 3 Months Ended |
Mar. 31, 2019 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets During the three months ended March 31, 2019 and April 1, 2018 , the Company recorded impairment charges on long-lived assets as a result of closing Company-operated restaurants and classifying such surplus properties as held for sale. During the three months ended March 31, 2019 , the Company recorded impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants. Additionally, during the three months ended April 1, 2018 , the Company recorded impairment charges as a result of 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. 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 March 31, April 1, Surplus properties $ 1,285 $ 41 Company-operated restaurants 201 — Restaurants leased or subleased to franchisees — 165 $ 1,486 $ 206 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2019 and April 1, 2018 was 20.0% and (40.5)% respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to (1) net excess tax benefits related to share-based payments, which resulted in a benefit of $2,036 in the first quarter of 2019 and a benefit of $6,093 for the first quarter of 2018, (2) the impact of the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) and (3) state income tax provision in 2019, including non-recurring changes to state deferred taxes net of federal benefits. 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 quarter of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax benefit of $3,623 . This net benefit included $5,578 for the tax benefit of foreign tax credits, partially offset by a net expense of $1,955 related to the impact of the corporate rate reduction on our net deferred tax liabilities. There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three months ended March 31, 2019 . During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $7,764 due to the lapse of statutes of limitations and expected settlements with taxing authorities. The current portion of refundable income taxes was $9,560 and $14,475 as of March 31, 2019 and December 30, 2018 , 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 March 31, 2019 and December 30, 2018 . |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2019 | |
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 shares of common stock outstanding. The weighted average number of shares used to calculate basic and diluted net income per share were as follows: Three Months Ended March 31, April 1, Common stock: Weighted average basic shares outstanding 230,584 239,928 Dilutive effect of stock options and restricted shares 5,310 8,491 Weighted average diluted shares outstanding 235,894 248,419 Diluted net income per share for the three months ended March 31, 2019 and April 1, 2018 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 2,158 and 2,711 for the three months ended March 31, 2019 and April 1, 2018 , respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Dividends During the first quarter of 2019 and 2018, the Company paid dividends per share of $.10 and $.085 , respectively. Repurchases of Common Stock In February 2019, our Board of Directors authorized a repurchase program for up to $225,000 of our common stock through March 1, 2020, when and if market conditions warrant and to the extent legally permissible. In connection with the February 2019 authorization, the Company’s previous November 2018 repurchase authorization for up to $220,000 of our common stock was canceled. During the three months ended March 31, 2019 , the Company repurchased 1,744 shares with an aggregate purchase price of $29,345 , of which $268 was accrued at March 31, 2019 , and excluding commissions of $25 , under the November 2018 and February 2019 authorizations. As of March 31, 2019 , the Company had $217,112 of availability remaining under its February 2019 authorization. Subsequent to March 31, 2019 through May 1, 2019 , the Company repurchased 308 shares under the February 2019 authorization with an aggregate purchase price of $5,654 , excluding commissions of $4 . 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 warranted and to the extent legally permissible. During the three months ended April 1, 2018 , the Company repurchased 989 shares with an aggregate purchase price of $16,741 , of which $1,294 was accrued at April 1, 2018 , and excluding commissions of $14 . Additionally, during the three months ended April 1, 2018 , the Company completed its previous February 2017 repurchase authorization for up to $150,000 of our common stock with the repurchase of 1,385 shares with an aggregate purchase price of $22,633 , and excluding commissions of $19 . 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 Pension Total Balance at December 30, 2018 $ (61,673 ) $ — $ (61,673 ) Current-period other comprehensive income 6,025 — 6,025 Balance at March 31, 2019 $ (55,648 ) $ — $ (55,648 ) Balance at December 31, 2017 $ (45,149 ) $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (6,044 ) 117 (5,927 ) Balance at April 1, 2018 $ (51,193 ) $ (932 ) $ (52,125 ) |
Leases (Notes)
Leases (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. Company as Lessor The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
Leases | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. Company as Lessor The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
Leases | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. Company as Lessor The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
Leases | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. Company as Lessor The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
Leases | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. Company as Lessee The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. Company as Lessor The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
Transactions with Related Parti
Transactions with Related Parties | 3 Months Ended |
Mar. 31, 2019 | |
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 three months ended March 31, 2019 and April 1, 2018 , Wendy’s paid TimWen $3,855 and $2,872 , respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $52 and $54 during the three months ended March 31, 2019 and April 1, 2018 , respectively, which has been included as a reduction to “General and administrative.” |
Guarantees and Other Commitment
Guarantees and Other Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees and Other Commitments and Contingencies | Guarantees and Other Commitments and Contingencies Except as described below, 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. 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 $69,753 as of March 31, 2019 . These leases extend through 2056. We have not received any notice of default related to these leases as of March 31, 2019 . In the event of default by a franchise owner, Wendy’s generally retains the right to acquire possession of the related restaurant locations. Letters of Credit As of March 31, 2019 , the Company had outstanding letters of credit with various parties totaling $27,089 . 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. Purchase and Capital Commitments Beverage Agreement The Company has an agreement with a beverage vendor, which provides fountain beverage products and certain marketing support funding to the Company and its franchisees. This agreement requires minimum purchases of certain fountain beverages (“Fountain Beverages”) by the Company and its franchisees at certain agreed upon prices until the total contractual gallon volume usage is reached. This agreement also provides for an annual advance to be paid to the Company based on the vendor’s expectation of the Company’s annual Fountain Beverages usage, which is amortized over actual usage during the year. In January 2019, the Company amended its contract with the beverage vendor, which now expires at the later of reaching a threshold usage requirement or December 31, 2025. Beverage purchases made by the Company under this agreement during the three months ended March 31, 2019 were $2,414 . As of March 31, 2019 , the Company estimates future purchases to be approximately $7,500 for the remainder of 2019, $10,600 in 2020, $11,100 in 2021, $11,900 in 2022 and $12,500 in 2023 based on current pricing and the expected ratio of usage at Company-operated restaurants to usage at franchised restaurants. |
Legal and Environmental Matters
Legal and Environmental Matters | 3 Months Ended |
Mar. 31, 2019 | |
Loss Contingency [Abstract] | |
Legal and Environmental Matters | Legal and Environmental Matters The Company is 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 believe we have adequate accruals for continuing operations for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or 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 Form 10-K. There were no material developments in those legal proceedings during the three months ended March 31, 2019. |
Leases (Policies)
Leases (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lessee, Leases | Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. |
Lessor, Leases | Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 31, 2019 , Wendy’s and its franchisees operated 6,710 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 513 and leased 1,275 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Determination of Whether a Contract Contains a Lease The Company evaluates the contracts it enters into to determine whether such contracts contain leases. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. ROU Model and Determination of Lease Term The Company uses the ROU model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any favorable or unfavorable terms for leases acquired from franchisees, as well as payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment. For properties used for Company-operated restaurants, the primary economic detriment relates to the existence of unamortized leasehold improvements which might be impaired if we choose not to exercise the available 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. Lease terms for real estate are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other assets” where the Company is a lessor. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Contingent Rent is recognized each period as the liability is incurred or the asset is earned. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense related to the operating lease liability. Variable lease cost for operating leases includes Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Lease costs are recorded in the condensed consolidated statements of operations based on the nature of the underlying lease as follows: (1) rental expense related to leases for Company-operated restaurants is recorded to “Cost of sales,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Franchise rental expense” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative.” Favorable and unfavorable lease amounts for operating leases where the Company is the lessor are recorded as components of “Other intangible assets” and “Other liabilities,” respectively. Favorable and unfavorable lease amounts are amortized on a straight-line basis over the term of the leases. When the expected term of a lease is determined to be shorter than the original amortization period, the favorable or unfavorable lease balance associated with the lease is adjusted to reflect the revised lease term. Rental income and favorable and unfavorable lease amortization for operating leases on properties leased or subleased to franchisees is recorded to “Franchise rental income.” Lessees’ variable payments to the Company for executory costs under operating leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Finance Leases Lease cost for finance leases includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to “Depreciation and amortization,” and interest expense on the finance lease liability, which is calculated using the interest method and recorded to “Interest expense, net.” Sales-Type and Direct Financing Leases For sales-type and direct financing leases where the Company is the lessor, the Company records its investment in properties leased to franchisees on a net basis, which is comprised of the present value of the lease payments not yet received and the present value of the guaranteed and unguaranteed residual assets. The current and long-term portions of our net investment in sales-type and direct financing leases are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. Unearned income is recognized as interest income over the lease term and is included in “Interest expense, net.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which is recorded to “ Other operating income, net .” The gain or loss recognized upon commencement of the lease is directly affected by the Company’s estimate of the amount to be derived from the guaranteed and unguaranteed residual assets at the end of the lease term. The Company’s main component of this estimate is the expected fair value of the underlying assets, primarily the fair value of land. Lessees’ variable payments to the Company for executory costs under sales-type and direct financing leases are recognized on a gross basis as “Franchise rental income” with a corresponding expense recorded to “Franchise rental expense.” Significant Assumptions and Judgments Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, including sales-type and direct financing, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income reported would vary if different estimates and assumptions were used. |
New Accounting Standards (Table
New Accounting Standards (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Prior Period Adjustments Restatement | |
Schedule of Prior Period Adjustments | The following table illustrates the reclassifications made to the condensed consolidated balance sheet as of December 30, 2018 : As Previously Reported Reclassifications As Currently Reported Properties $ 1,213,236 $ (189,969 ) $ 1,023,267 Finance lease assets — 189,969 189,969 Current portion of long-term debt 31,655 (8,405 ) 23,250 Current portion of finance lease liabilities — 8,405 8,405 Long-term debt 2,752,783 (447,231 ) 2,305,552 Long-term finance lease liabilities — 447,231 447,231 $ 1,429,490 $ — $ 1,429,490 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue [Abstract] | |
Disaggregation of Revenue | The following tables disaggregate revenue by primary geographical market and source: Three Months Ended March 31, 2019 U.S. Canada Other International Total Sales at Company-operated restaurants $ 167,697 $ — $ — $ 167,697 Franchise royalty revenue 84,378 5,508 4,957 94,843 Franchise fees 6,009 412 689 7,110 Franchise rental income 50,665 7,787 — 58,452 Advertising funds revenue 75,981 4,500 — 80,481 Total revenues $ 384,730 $ 18,207 $ 5,646 $ 408,583 Three Months Ended April 1, 2018 Sales at Company-operated restaurants $ 153,649 $ — $ — $ 153,649 Franchise royalty revenue 80,222 5,363 4,358 89,943 Franchise fees 7,085 646 234 7,965 Franchise rental income 44,265 5,842 — 50,107 Advertising funds revenue 74,414 4,486 — 78,900 Total revenues $ 359,635 $ 16,337 $ 4,592 $ 380,564 |
Contract balances, assets and liabilities | The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: March 31, 2019 (a) December 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 44,765 $ 40,300 Receivables, which are included in “Advertising funds restricted assets” 47,056 47,332 Deferred franchise fees (c) 101,469 102,205 _______________ (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 are included in “ Accrued expenses and other current liabilities ” and “ Deferred franchise fees ” and totaled $9,142 and $92,327 as of March 31, 2019 , respectively, and $9,973 and $92,232 as of December 30, 2018 , respectively. |
Deferred franchise fee rollforward | Significant changes in deferred franchise fees are as follows: Three Months Ended March 31, April 1, Deferred franchise fees at beginning of period $ 102,205 $ 102,492 Revenue recognized during the period (2,772 ) (2,688 ) New deferrals due to cash received and other 2,036 2,957 Deferred franchise fees at end of period $ 101,469 $ 102,761 |
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: 2019 (a) $ 6,307 2020 6,482 2021 5,939 2022 5,725 2023 5,500 Thereafter 71,516 $ 101,469 _______________ (a) Represents franchise fees expected to be recognized for the remainder of 2019, which includes development-related franchise fees expected to be recognized over a duration of one year or less. |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 franchisees: Three Months Ended March 31, Restaurants acquired from franchisees 5 Total consideration paid, net of cash received $ 5,052 Identifiable assets acquired and liabilities assumed: Properties 666 Acquired franchise rights 1,354 Finance lease assets 5,350 Finance lease liabilities (4,084 ) Other (2,316 ) Total identifiable net assets 970 Goodwill $ 4,082 |
System Optimization (Gains) L_2
System Optimization (Gains) Losses, Net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, April 1, Post-closing adjustments on sales of restaurants (a) $ (8 ) $ (212 ) Gain (loss) on sales of other assets, net (b) 20 (358 ) System optimization gains (losses), net $ 12 $ (570 ) _______________ (a) The three months ended April 1, 2018 includes cash proceeds, net of payments of $6 . (b) During the three months ended April 1, 2018 , the Company received cash proceeds of $345 primarily from the sale of surplus properties. |
Reorganization and Realignmen_2
Reorganization and Realignment Costs (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, April 1, G&A realignment $ 782 $ 2,626 System optimization initiative 16 — Reorganization and realignment costs $ 798 $ 2,626 |
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 Total March 31, April 1, Severance and related employee costs $ 472 $ 2,059 $ 19,225 Recruitment and relocation costs 114 148 1,680 Third-party and other costs 16 328 2,126 602 2,535 23,031 Share-based compensation (a) 180 91 6,864 Termination of defined benefit plans — — 1,335 Total G&A realignment $ 782 $ 2,626 $ 31,230 _______________ (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 | The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,730 and $765 as of March 31, 2019 , respectively, and $8,781 and $2,731 as of April 1, 2018, respectively. The tables below present a rollforward of our accruals for the plan. Balance December 30, 2018 Charges Payments Balance March 31, 2019 Severance and related employee costs $ 7,241 $ 472 $ (2,218 ) $ 5,495 Recruitment and relocation costs 83 114 (197 ) — Third-party and other costs — 16 (16 ) — $ 7,324 $ 602 $ (2,431 ) $ 5,495 Balance December 31, 2017 Charges Payments Balance April 1, 2018 Severance and related employee costs $ 12,093 $ 2,059 $ (2,844 ) $ 11,308 Recruitment and relocation costs 177 148 (121 ) 204 Third-party and other costs — 328 (328 ) — $ 12,270 $ 2,535 $ (3,293 ) $ 11,512 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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: Three Months Ended March 31, April 1, Balance at beginning of period $ 47,021 $ 55,363 Investment — 12 Equity in earnings for the period 2,397 2,420 Amortization of purchase price adjustments (a) (566 ) (596 ) 1,831 1,824 Distributions received (2,246 ) (2,907 ) Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other 1,166 (1,262 ) Balance at end of period $ 47,772 $ 53,030 _______________ (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. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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: March 31, December 30, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 205,393 $ 205,393 $ 222,228 $ 222,228 Level 1 Other investments in equity securities (a) 639 2,179 639 2,181 Level 3 Financial liabilities Series 2018-1 Class A-2-I Notes (b) 444,375 439,656 445,500 424,026 Level 2 Series 2018-1 Class A-2-II Notes (b) 469,063 461,952 470,250 439,353 Level 2 Series 2015-1 Class A-2-II Notes (b) 868,500 876,065 870,750 865,342 Level 2 Series 2015-1 Class A-2-III Notes (b) 482,500 495,711 483,750 482,522 Level 2 7% debentures, due in 2025 (b) 91,086 99,000 90,769 102,750 Level 2 Guarantees of franchisee loan obligations (c) 12 12 17 17 Level 3 _______________ (a) The fair values of our 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 March 31, Level 1 Level 2 Level 3 Held and used $ — $ — $ — $ — Held for sale 2,516 — — 2,516 Total $ 2,516 $ — $ — $ 2,516 Fair Value Measurements December 30, Level 1 Level 2 Level 3 Held and used $ 462 $ — $ — $ 462 Held for sale 1,031 — — 1,031 Total $ 1,493 $ — $ — $ 1,493 |
Impairment of Long-Lived Asse_2
Impairment of Long-Lived Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, April 1, Surplus properties $ 1,285 $ 41 Company-operated restaurants 201 — Restaurants leased or subleased to franchisees — 165 $ 1,486 $ 206 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, April 1, Common stock: Weighted average basic shares outstanding 230,584 239,928 Dilutive effect of stock options and restricted shares 5,310 8,491 Weighted average diluted shares outstanding 235,894 248,419 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
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 Pension Total Balance at December 30, 2018 $ (61,673 ) $ — $ (61,673 ) Current-period other comprehensive income 6,025 — 6,025 Balance at March 31, 2019 $ (55,648 ) $ — $ (55,648 ) Balance at December 31, 2017 $ (45,149 ) $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (6,044 ) 117 (5,927 ) Balance at April 1, 2018 $ (51,193 ) $ (932 ) $ (52,125 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of lease cost are as follows: Three Months Ended March 31, Finance lease cost: Amortization of finance lease assets $ 3,117 Interest on finance lease liabilities 6,753 9,870 Operating lease cost 24,643 Variable lease cost (a) 14,104 Short-term lease cost 1,126 Total operating lease cost (b) 39,873 Total lease cost $ 49,743 _______________ (a) Includes expenses for executory costs of $9,524 , for which the Company is reimbursed by sublessees. (b) Includes $32,451 recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,593 recorded to “Cost of sales” for leases for Company-operated restaurants. |
Schedule of Supplemental Cash Flow and Non-cash Information Related to Leases | The following table includes supplemental cash flow and non-cash information related to leases: Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 9,708 Operating cash flows from operating leases 23,312 Financing cash flows from finance leases 1,881 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 13,810 Operating lease liabilities 3,255 |
Schedule of Supplemental Information Related to Leases | The following table includes supplemental information related to leases: March 31, 2019 Weighted-average remaining lease term (years): Finance leases 17.8 Operating leases 15.9 Weighted average discount rate: Finance leases 10.19 % Operating leases 5.10 % |
Finance Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. |
Lessee, Operating Lease, Liability, Maturity | The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of March 31, 2019 : Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 (a) $ 1,917 $ 34,251 $ 15,168 $ 54,760 2020 2,577 44,313 20,022 73,121 2021 2,687 45,706 19,764 73,067 2022 2,738 46,724 19,398 73,330 2023 2,690 48,389 19,376 73,407 Thereafter 34,441 688,400 200,962 853,051 Total minimum payments $ 47,050 $ 907,783 $ 294,690 $ 1,200,736 Less interest (22,400 ) (464,458 ) (93,278 ) (400,752 ) Present value of minimum lease payments (b) (c) $ 24,650 $ 443,325 $ 201,412 $ 799,984 _______________ (a) Represents future minimum rental payments for non-cancelable leases for the remainder of 2019. (b) The present value of minimum finance lease payments of $9,380 and $458,595 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c) The present value of minimum operating lease payments of $43,657 and $957,739 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 30, 2018: Finance Leases Operating Leases Fiscal Year Company- Operated Franchise and Other Company- Operated Franchise and Other 2019 $ 1,962 $ 45,125 $ 20,174 $ 75,703 2020 1,978 43,969 20,052 73,320 2021 2,082 45,522 19,820 73,167 2022 2,114 46,573 19,530 73,300 2023 2,084 48,109 19,430 73,377 Thereafter 23,558 676,139 203,073 854,964 Total minimum payments $ 33,778 $ 905,437 $ 302,079 $ 1,223,831 Less interest (16,874 ) (466,705 ) Present value of minimum lease payments (a) $ 16,904 $ 438,732 _______________ (a) The present value of minimum finance lease payments of $8,405 and $447,231 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. |
Sales-type Lease, Lease Income | The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. |
Direct Financing Lease, Lease Income | The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. |
Operating Lease, Lease Income | The components of lease income are as follows: Three Months Ended March 31, Sales-type and direct-financing leases: Selling profit $ 1,934 Interest income 4,733 Operating lease income $ 45,205 Variable lease income 13,247 Franchise rental income (a) $ 58,452 _______________ (a) Includes sublease income of $43,021 recognized during the three months ended March 31, 2019, of which $9,432 represents lessees’ variable payments to the Company for executory costs. |
Sales-type and Direct Financing Leases, Lease Receivable, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. |
Lessor, Operating Lease, Payments to be Received, Maturity | The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2019: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 20,182 $ 1,543 $ 84,371 $ 39,451 2020 27,484 2,130 113,275 52,990 2021 28,522 2,162 114,167 54,561 2022 29,159 2,243 115,363 56,034 2023 30,193 2,287 116,342 56,239 Thereafter 466,197 28,031 1,367,503 859,548 Total future minimum receipts 601,737 38,396 $ 1,911,021 $ 1,118,823 Unearned interest income (380,607 ) (20,831 ) Net investment in sales-type and direct financing leases (b) $ 221,130 $ 17,565 _______________ (a) Represents future minimum rental receipts for non-cancelable leases for the remainder of 2019. (b) The present value of minimum direct financing rental receipts of $2,269 and $236,426 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $233 . The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 30, 2018: Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 $ 26,239 $ 1,937 $ 113,180 $ 52,527 2020 26,859 2,006 113,578 53,066 2021 27,904 2,043 114,447 54,615 2022 28,563 2,119 115,552 56,092 2023 29,512 2,159 116,463 56,284 Thereafter 448,851 26,404 1,372,646 858,755 Total future minimum receipts 587,928 36,668 $ 1,945,866 $ 1,131,339 Unearned interest income (377,046 ) (20,338 ) Net investment in sales-type and direct financing leases (a) $ 210,882 $ 16,330 _______________ (a) The present value of minimum direct financing rental receipts of $735 and $226,477 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. |
Schedule of Property Subject To Operating Lease | Properties owned by the Company and leased to franchisees and other third parties under operating leases include: March 31, 2019 Land $ 281,571 Buildings and improvements 310,912 Restaurant equipment 2,120 594,603 Accumulated depreciation and amortization (145,812 ) $ 448,791 |
New Accounting Standards New Ac
New Accounting Standards New Accounting Standards Adopted (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle | |||
Operating lease assets | $ 919,283 | $ 0 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Operating lease liabilities | 1,011,000 | ||
Operating lease assets | 934,000 | ||
Favorable leases | 23,000 | ||
Unfavorable leases | 30,000 | ||
Straight-line rent In excess of minimum rents paid | 67,000 | ||
Cumulative effect on retained earnings, net of tax | $ (1,105) | ||
Scenario, Forecast | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Effect on future earnings, amount | $ 40,000 |
New Accounting Standards Schedu
New Accounting Standards Schedule of Prior Period Adjustments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Prior Period Adjustments Restatement | ||
Properties | $ 1,003,231 | $ 1,023,267 |
Finance lease assets | 195,368 | 189,969 |
Current portion of long-term debt | 23,250 | 23,250 |
Current portion of finance lease liabilities | 9,380 | 8,405 |
Long-term debt | 2,301,563 | 2,305,552 |
Long-term finance lease liabilities | $ 458,595 | 447,231 |
Total of balance sheet line items affected by prior period reclassifications | 1,429,490 | |
Previously Reported | ||
Prior Period Adjustments Restatement | ||
Properties | 1,213,236 | |
Finance lease assets | 0 | |
Current portion of long-term debt | 31,655 | |
Current portion of finance lease liabilities | 0 | |
Long-term debt | 2,752,783 | |
Long-term finance lease liabilities | 0 | |
Total of balance sheet line items affected by prior period reclassifications | 1,429,490 | |
Restatement Adjustment | ||
Prior Period Adjustments Restatement | ||
Properties | (189,969) | |
Finance lease assets | 189,969 | |
Current portion of long-term debt | (8,405) | |
Current portion of finance lease liabilities | 8,405 | |
Long-term debt | (447,231) | |
Long-term finance lease liabilities | 447,231 | |
Total of balance sheet line items affected by prior period reclassifications | $ 0 |
Revenue Disaggregation of Reven
Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Disaggregation of Revenue | ||
Franchise rental income | $ 58,452 | $ 50,107 |
Total revenues | 408,583 | 380,564 |
United States | ||
Disaggregation of Revenue | ||
Franchise rental income | 50,665 | 44,265 |
Total revenues | 384,730 | 359,635 |
Canada | ||
Disaggregation of Revenue | ||
Franchise rental income | 7,787 | 5,842 |
Total revenues | 18,207 | 16,337 |
Other International | ||
Disaggregation of Revenue | ||
Franchise rental income | 0 | 0 |
Total revenues | 5,646 | 4,592 |
Sales at Company-operated restaurants | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 167,697 | 153,649 |
Sales at Company-operated restaurants | United States | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 167,697 | 153,649 |
Sales at Company-operated restaurants | Canada | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Sales at Company-operated restaurants | Other International | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 |
Franchise royalty revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 94,843 | 89,943 |
Franchise royalty revenue | United States | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 84,378 | 80,222 |
Franchise royalty revenue | Canada | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,508 | 5,363 |
Franchise royalty revenue | Other International | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 4,957 | 4,358 |
Franchise fees | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 7,110 | 7,965 |
Franchise fees | United States | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 6,009 | 7,085 |
Franchise fees | Canada | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 412 | 646 |
Franchise fees | Other International | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 689 | 234 |
Advertising funds revenue | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 80,481 | 78,900 |
Advertising funds revenue | United States | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 75,981 | 74,414 |
Advertising funds revenue | Canada | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 4,500 | 4,486 |
Advertising funds revenue | Other International | ||
Disaggregation of Revenue | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 0 | $ 0 |
Revenue Contract Balances (Deta
Revenue Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | Dec. 30, 2018 | |
Contract balances | |||
Receivables, which are included in Accounts and notes receivable, net | $ 44,765 | $ 40,300 | |
Receivables, which are included in Advertising funds restricted assets | 47,056 | 47,332 | |
Deferred franchise fees at beginning of period | 102,205 | $ 102,492 | |
Revenue recognized during the period | (2,772) | (2,688) | |
New deferrals due to cash received and other | 2,036 | 2,957 | |
Deferred franchise fees at end of period | 101,469 | $ 102,761 | |
Deferred franchisee fees, current | 9,142 | 9,973 | |
Deferred franchise fees, noncurrent | $ 92,327 | $ 92,232 |
Revenue Revenue, Remaining Perf
Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Revenue [Abstract] | |
Anticipated recognition of revenue for the remainder of 2019 | $ 6,307 |
Anticipated recognition of revenue in 2020 | 6,482 |
Anticipated recognition of revenue in 2021 | 5,939 |
Anticipated recognition of revenue in 2022 | 5,725 |
Anticipated recognition of revenue in 2023 | 5,500 |
Anticipated recognition of revenue thereafter | 71,516 |
Revenue, Remaining Performance Obligation, Amount | $ 101,469 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($)number_of_restaurants | Dec. 30, 2018USD ($)number_of_restaurants | |
Business Acquisition | ||
Goodwill | $ 755,355 | $ 747,884 |
Acquisitions | ||
Business Acquisition | ||
Restaurants acquired from franchisees | number_of_restaurants | 5 | 16 |
Total consideration paid, net of cash received | $ 5,052 | $ 21,401 |
Properties | 666 | |
Acquired franchise rights | 1,354 | |
Finance lease assets | 5,350 | |
Finance lease liabilities | (4,084) | |
Other | (2,316) | |
Total identifiable net assets | 970 | |
Goodwill | 4,082 | |
Business Acquisitions, Purchase Price Allocation, Intangible Assets Other Than Goodwill | (2,989) | |
Business Acquisitions, Purchase Price Allocation, Deferred Tax Assets | $ 140 |
System Optimization (Gains) L_3
System Optimization (Gains) Losses, Net Summary of Disposition Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | Jan. 01, 2017 | |
System optimization gains (losses), net | |||
Company-operated restaurant ownership percentage | 5.00% | ||
System optimization gains (losses), net | $ 12 | $ (570) | |
Proceeds from sales | 0 | 351 | |
Sale of Company-operated restaurants to franchisees | |||
System optimization gains (losses), net | |||
Post closing adjustments on sales of restaurants | (8) | (212) | |
Cash proceeds from post closing adjustments, net of payments | 6 | ||
Sale of Other Assets | |||
System optimization gains (losses), net | |||
System optimization gains (losses), net | $ 20 | (358) | |
Proceeds from sales | $ 345 |
System Optimization (Gains) L_4
System Optimization (Gains) Losses, Net Assets Held for Sale (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Property, Plant and Equipment [Abstract] | ||
Assets held for sale | $ 4,470 | $ 2,435 |
Reorganization and Realignmen_3
Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | $ 798 | $ 2,626 |
G&A Realignment – May 2017 Plan | ||
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | 782 | 2,626 |
Restructuring and Related Cost, Expected Cost Remaining | 3,500 | |
System Optimization | ||
Restructuring Cost and Reserve | ||
Reorganization and realignment costs | 16 | $ 0 |
Restructuring and Related Cost, Expected Cost Remaining | $ 500 |
Reorganization and Realignmen_4
Reorganization and Realignment Costs G&A Realignment - May 2017 Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | May 01, 2019 | |
Restructuring Cost and Reserve | |||
Reorganization and realignment costs | $ 798 | $ 2,626 | |
G&A Realignment – May 2017 Plan | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 3,500 | ||
Restructuring and Related Cost, Incurred Cost | 602 | 2,535 | |
Restructuring and Related Cost, Cost Incurred to Date | 23,031 | ||
Reorganization and realignment costs | 782 | 2,626 | |
Restructuring Charges, Cost Incurred to Date | 31,230 | ||
G&A Realignment – May 2017 Plan | Severance and related employee costs | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 500 | ||
Restructuring and Related Cost, Incurred Cost | 472 | 2,059 | |
Restructuring and Related Cost, Cost Incurred to Date | 19,225 | ||
G&A Realignment – May 2017 Plan | Recruitment and relocation costs | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 1,500 | ||
Restructuring and Related Cost, Incurred Cost | 114 | 148 | |
Restructuring and Related Cost, Cost Incurred to Date | 1,680 | ||
G&A Realignment – May 2017 Plan | Third-party and other costs | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 500 | ||
Restructuring and Related Cost, Incurred Cost | 16 | 328 | |
Restructuring and Related Cost, Cost Incurred to Date | 2,126 | ||
G&A Realignment – May 2017 Plan | Share based compensation | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 1,000 | ||
Restructuring and Related Cost, Incurred Cost | 180 | 91 | |
Restructuring and Related Cost, Cost Incurred to Date | 6,864 | ||
G&A Realignment – May 2017 Plan | Termination of defined benefit plans | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Incurred Cost | 0 | $ 0 | |
Restructuring and Related Cost, Cost Incurred to Date | 1,335 | ||
G&A Realignment – May 2017 Plan | Minimum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | 32,000 | ||
G&A Realignment – May 2017 Plan | Maximum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | $ 35,000 | ||
Subsequent Event | G&A Realignment – May 2017 Plan | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | $ 2,500 | ||
Subsequent Event | G&A Realignment – May 2017 Plan | Severance and related employee costs | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 1,500 | ||
Subsequent Event | G&A Realignment – May 2017 Plan | Share based compensation | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost Remaining | 1,000 | ||
Subsequent Event | G&A Realignment – May 2017 Plan | Minimum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | 34,500 | ||
Subsequent Event | G&A Realignment – May 2017 Plan | Maximum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | $ 37,500 |
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 | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Restructuring Cost and Reserve | ||
Beginning balance | $ 7,324 | $ 12,270 |
Charges | 602 | 2,535 |
Payments for Restructuring | (2,431) | (3,293) |
Ending balance | 5,495 | 11,512 |
Severance and related employee costs | ||
Restructuring Cost and Reserve | ||
Beginning balance | 7,241 | 12,093 |
Charges | 472 | 2,059 |
Payments for Restructuring | (2,218) | (2,844) |
Ending balance | 5,495 | 11,308 |
Recruitment and relocation | ||
Restructuring Cost and Reserve | ||
Beginning balance | 83 | 177 |
Charges | 114 | 148 |
Payments for Restructuring | (197) | (121) |
Ending balance | 0 | 204 |
Other Restructuring | ||
Restructuring Cost and Reserve | ||
Beginning balance | 0 | 0 |
Charges | 16 | 328 |
Payments for Restructuring | (16) | (328) |
Ending balance | 0 | 0 |
Accrued expenses and other current liabilities | ||
Restructuring Cost and Reserve | ||
Ending balance | 4,730 | 8,781 |
Other Liabilities | ||
Restructuring Cost and Reserve | ||
Ending balance | $ 765 | $ 2,731 |
Reorganization and Realignmen_6
Reorganization and Realignment Costs System Optimization Costs (Details) - System Optimization $ in Thousands | Mar. 31, 2019USD ($) |
Restructuring Cost and Reserve | |
Restructuring and Related Cost, Cost Incurred to Date | $ 72,208 |
Restructuring and Related Cost, Expected Cost Remaining | $ 500 |
Investments Equity Investment S
Investments Equity Investment Summary (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)years | Apr. 01, 2018USD ($)years | |
Schedule of Equity Method Investments | ||
Investment | $ 0 | $ 12 |
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other | $ 6,025 | $ (6,044) |
TimWen | ||
Schedule of Equity Method Investments | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
Equity Method Investment, Purchase Price Adjustment, Amortization Period | years | 21 | 21 |
Brazil JV | ||
Schedule of Equity Method Investments | ||
Equity Method Investment, Ownership Percentage | 20.00% | |
TimWen and Brazil JV | ||
Schedule of Equity Method Investments | ||
Balance at beginning of period | $ 47,021 | $ 55,363 |
Investment | 0 | 12 |
Equity in earnings for the period | 2,397 | 2,420 |
Amortization of Purchase Price Adjustment | (566) | (596) |
Equity in earnings for the period, net of amortization of purchase price adjustments | 1,831 | 1,824 |
Distributions received | (2,246) | (2,907) |
Foreign currency translation adjustment included in “Other comprehensive income (loss), net” and other | 1,166 | (1,262) |
Balance at end of period | $ 47,772 | $ 53,030 |
Fair Value Measurements Financi
Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Reported Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | $ 205,393 | $ 222,228 |
Other investments in equity securities | 639 | 639 |
Guarantees of franchisee loan obligations | 12 | 17 |
Reported Value Measurement | Series 2018-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 444,375 | 445,500 |
Reported Value Measurement | Series 2018-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 469,063 | 470,250 |
Reported Value Measurement | Series 2015-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 868,500 | 870,750 |
Reported Value Measurement | Series 2015-1 Class A-2-III Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 482,500 | 483,750 |
Reported Value Measurement | 7% Debentures | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 91,086 | 90,769 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | 205,393 | 222,228 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Other investments in equity securities | 2,179 | 2,181 |
Guarantees of franchisee loan obligations | 12 | 17 |
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 | 439,656 | 424,026 |
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 | 461,952 | 439,353 |
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 | 876,065 | 865,342 |
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 | 495,711 | 482,522 |
Estimate of Fair Value Measurement | 7% Debentures | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | $ 99,000 | $ 102,750 |
Fair Value Measurements Non-Rec
Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and Used, Long Lived, Fair Value Disclosure | $ 0 | $ 462 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 2,516 | 1,031 |
Total | 2,516 | 1,493 |
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 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 0 | 0 |
Total | 0 | 0 |
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 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 0 | 0 |
Total | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and Used, Long Lived, Fair Value Disclosure | 0 | 462 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 2,516 | 1,031 |
Total | $ 2,516 | $ 1,493 |
Impairment of Long-Lived Asse_3
Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Impaired Long-Lived Assets Held and Used | ||
Impairment of long-lived assets | $ 1,486 | $ 206 |
Surplus Properties | ||
Impaired Long-Lived Assets Held and Used | ||
Impairment of long-lived assets | 1,285 | 41 |
Company-operated restaurants | ||
Impaired Long-Lived Assets Held and Used | ||
Impairment of long-lived assets | 201 | 0 |
Restaurants leased or subleased to franchisees | ||
Impaired Long-Lived Assets Held and Used | ||
Impairment of long-lived assets | $ 0 | $ 165 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | Dec. 30, 2018 | |
Effective Income Tax Rate | 20.00% | (40.50%) | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | |
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | $ 2,036 | $ 6,093 | |
(Provision for) benefit from income taxes | (7,990) | 5,806 | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 7,764 | ||
Income Taxes Receivable | 9,560 | $ 14,475 | |
Income Taxes Receivable, Noncurrent | $ 0 | $ 0 | |
Tax Act | |||
(Provision for) benefit from income taxes | 3,623 | ||
Effective Income Tax Rate Reconciliation, Tax Credit, Foreign, Amount | 5,578 | ||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ (1,955) |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Common Stock: | ||
Weighted average basic shares outstanding | 230,584 | 239,928 |
Dilutive effect of stock options and restricted shares | 5,310 | 8,491 |
Weighted average diluted shares outstanding | 235,894 | 248,419 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,158 | 2,711 |
Stockholders' Equity Dividends
Stockholders' Equity Dividends (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Dividend Paid | ||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.10 | $ 0.085 |
Stockholders' Equity Repurchase
Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | |||||
May 01, 2019 | Mar. 31, 2019 | Apr. 01, 2018 | Feb. 28, 2019 | Nov. 30, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Subsequent Event | |||||||
Equity, Class of Treasury Stock | |||||||
Treasury Stock, Shares, Acquired | 308 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 5,654 | ||||||
Stock Repurchase Program, Cost Incurred | $ 4 | ||||||
February 2019 Share Repurchase Program | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 225,000 | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 217,112 | ||||||
November 2018 and February 2019 Share Repurchase Programs | |||||||
Equity, Class of Treasury Stock | |||||||
Treasury Stock, Shares, Acquired | 1,744 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 29,345 | ||||||
Stock Repurchase Program, Repurchase Accrual | 268 | ||||||
Stock Repurchase Program, Cost Incurred | $ 25 | ||||||
February 2018 Share Repurchase Program | |||||||
Equity, Class of Treasury Stock | |||||||
Stock Repurchase Program, Authorized Amount | $ 175,000 | ||||||
Treasury Stock, Shares, Acquired | 989 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 16,741 | ||||||
Stock Repurchase Program, Repurchase Accrual | 1,294 | ||||||
Stock Repurchase Program, Cost Incurred | $ 14 | ||||||
November 2018 Share Repurchase Program | |||||||
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 | ||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 22,633 | ||||||
Stock Repurchase Program, Cost Incurred | $ 19 |
Stockholders' Equity Accumulate
Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance, beginning of year | $ (61,673) | $ (46,198) |
Current-period other comprehensive income (loss) | 6,025 | (5,927) |
Balance, end of the period | (55,648) | (52,125) |
Foreign Currency Translation | ||
Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance, beginning of year | (61,673) | (45,149) |
Current-period other comprehensive income (loss) | 6,025 | (6,044) |
Balance, end of the period | (55,648) | (51,193) |
Pension | ||
Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance, beginning of year | 0 | (1,049) |
Current-period other comprehensive income (loss) | 0 | 117 |
Balance, end of the period | $ 0 | $ (932) |
Leases Lessee Lease Narrative (
Leases Lessee Lease Narrative (Details) | Mar. 31, 2019number_of_restaurants |
Lessee, Lease, Description | |
Number of restaurants | 6,710 |
Minimum | |
Lessee, Lease, Description | |
Lessee, operating lease, term of contract | 15 years |
Maximum | |
Lessee, Lease, Description | |
Lessee, operating lease, term of contract | 20 years |
Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 358 |
Land And Building - Company Owned | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 144 |
Building - Company Owned; Land - Leased | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 144 |
Land And Building - Leased | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 70 |
Leases Lessor Lease Narrative (
Leases Lessor Lease Narrative (Details) | Mar. 31, 2019number_of_restaurants |
Lessor, Lease, Description | |
Number of restaurants | 6,710 |
Land And Building - Company Owned | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 513 |
Land And Building - Leased | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 1,275 |
Leases Components of Lease Cost
Leases Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Finance Lease, Cost | ||
Amortization of finance lease assets | $ 3,117 | |
Interest on finance lease liabilities | 6,753 | |
Total finance lease cost | 9,870 | |
Operating lease cost | 24,643 | |
Variable lease cost | 14,104 | |
Short-term lease cost | 1,126 | |
Total operating lease cost | 39,873 | |
Franchise rental expense | 32,451 | $ 23,263 |
Total lease cost | 49,743 | |
Cost of sales | ||
Finance Lease, Cost | ||
Total operating lease cost | 6,593 | |
Executory costs paid by lessee | ||
Finance Lease, Cost | ||
Variable lease cost | $ 9,524 |
Leases Supplemental Cash Flow a
Leases Supplemental Cash Flow and Non-cash Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Cash Flow, Operating Activities, Lessee | ||
Operating cash flows from finance leases | $ 9,708 | |
Operating cash flows from operating leases | 23,312 | |
Cash Flow, Financing Activities, Lessee | ||
Financing cash flows from finance leases | 1,881 | $ 1,353 |
Lessee, Lease, Description | ||
Right-of-use assets obtained in exchange for finance lease liabilities | 13,810 | $ 1,101 |
Right-of-use asset obtained in exchange for operating lease liabilities | $ 3,255 |
Leases Supplemental Information
Leases Supplemental Information (Details) | Mar. 31, 2019 |
Lessee, Lease, Description | |
Weighted-average remaining lease term (years): Finance leases | 17 years 10 months |
Weighted-average remaining lease term (years): Operating leases | 15 years 11 months |
Weighted-average discount rate: Finance leases | 10.19% |
Weighted-average discount rate: Operating leases | 5.10% |
Leases Future Minimum Rental Pa
Leases Future Minimum Rental Payments for Non-cancelable Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Entity Operated Units | ||
Finance Lease Liabilities, Payments, Due | ||
Future minimum finance lease payments, remainder of fiscal year | $ 1,917 | |
Future minimum finance lease payments, due next twelve months | $ 1,962 | |
Future minimum finance lease payments, due year two | 2,577 | 1,978 |
Future minimum finance lease payments, due year three | 2,687 | 2,082 |
Future minimum finance lease payments, due year four | 2,738 | 2,114 |
Future minimum finance lease payments, due year five | 2,690 | 2,084 |
Future minimum finance lease payments, due after year five | 34,441 | 23,558 |
Total minimum finance lease payments | 47,050 | 33,778 |
Interest incurred on total minimum finance lease payments | (22,400) | (16,874) |
Present value of minimum finance lease payments | 24,650 | 16,904 |
Operating Lease Liabilities, Payments Due | ||
Future minimum operating lease payments, remainder of fiscal year | 15,168 | |
Future minimum operating lease payments, due next twelve months | 20,174 | |
Future minimum operating lease payments, due year two | 20,022 | 20,052 |
Future minimum operating lease payments, due year three | 19,764 | 19,820 |
Future minimum operating lease payments, due year four | 19,398 | 19,530 |
Future minimum operating lease payments, due year five | 19,376 | 19,430 |
Future minimum operating lease payments, due after year five | 200,962 | 203,073 |
Total minimum operating lease payments | 294,690 | 302,079 |
Interest incurred on total minimum operating lease payments | (93,278) | |
Present value of minimum operating lease payments | 201,412 | |
Franchised Units | ||
Finance Lease Liabilities, Payments, Due | ||
Future minimum finance lease payments, remainder of fiscal year | 34,251 | |
Future minimum finance lease payments, due next twelve months | 45,125 | |
Future minimum finance lease payments, due year two | 44,313 | 43,969 |
Future minimum finance lease payments, due year three | 45,706 | 45,522 |
Future minimum finance lease payments, due year four | 46,724 | 46,573 |
Future minimum finance lease payments, due year five | 48,389 | 48,109 |
Future minimum finance lease payments, due after year five | 688,400 | 676,139 |
Total minimum finance lease payments | 907,783 | 905,437 |
Interest incurred on total minimum finance lease payments | (464,458) | (466,705) |
Present value of minimum finance lease payments | 443,325 | 438,732 |
Operating Lease Liabilities, Payments Due | ||
Future minimum operating lease payments, remainder of fiscal year | 54,760 | |
Future minimum operating lease payments, due next twelve months | 75,703 | |
Future minimum operating lease payments, due year two | 73,121 | 73,320 |
Future minimum operating lease payments, due year three | 73,067 | 73,167 |
Future minimum operating lease payments, due year four | 73,330 | 73,300 |
Future minimum operating lease payments, due year five | 73,407 | 73,377 |
Future minimum operating lease payments, due after year five | 853,051 | 854,964 |
Total minimum operating lease payments | 1,200,736 | 1,223,831 |
Interest incurred on total minimum operating lease payments | (400,752) | |
Present value of minimum operating lease payments | 799,984 | |
Current portion of finance lease liabilities | ||
Finance Lease Liabilities, Payments, Due | ||
Present value of minimum finance lease payments | 9,380 | 8,405 |
Long-term finance lease liabilities | ||
Finance Lease Liabilities, Payments, Due | ||
Present value of minimum finance lease payments | 458,595 | $ 447,231 |
Current portion of operating lease liabilities | ||
Operating Lease Liabilities, Payments Due | ||
Present value of minimum operating lease payments | 43,657 | |
Long-term operating lease liabilities | ||
Operating Lease Liabilities, Payments Due | ||
Present value of minimum operating lease payments | $ 957,739 |
Leases Components of Lease Inco
Leases Components of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Lessor Lease Income | ||
Sales-type and direct-financing leases, selling profit | $ 1,934 | |
Sales-type and direct-financing leases, interest income | 4,733 | |
Operating lease rental income | 45,205 | |
Variable lease income | 13,247 | |
Franchise rental income | 58,452 | $ 50,107 |
Sublease income | 43,021 | |
Executory costs paid to lessor | ||
Lessor Lease Income | ||
Variable lease income | $ 9,432 |
Leases Future Minimum Rental Re
Leases Future Minimum Rental Receipts for Non-cancelable Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Direct Financing Lease, Net Investment in Leases | ||
Net investment in unguaranteed residual assets | $ 233 | |
Subleases, sales-type and direct financing | ||
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity | ||
Future minimum sales-type and direct financing lease receipts, remainder of fiscal year | 20,182 | |
Future minimum sales-type and direct financing lease receipts, next twelve months | $ 26,239 | |
Future minimum sales-type and direct financing lease receipts, due year two | 27,484 | 26,859 |
Future minimum sales-type and direct financing lease receipts, due year three | 28,522 | 27,904 |
Future minimum sales-type and direct financing lease receipts, due year four | 29,159 | 28,563 |
Future minimum sales-type and direct financing lease receipts, due year five | 30,193 | 29,512 |
Future minimum sales-type and direct financing lease receipts, due after year five | 466,197 | 448,851 |
Total future minimum sales-type and direct financing lease receipts | 601,737 | 587,928 |
Unearned interest on total minimum sales-type and direct financing lease receipts | (380,607) | (377,046) |
Present value of minimum sales-type and direct financing lease receipts | 221,130 | 210,882 |
Owned properties, sales-type and direct financing | ||
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity | ||
Future minimum sales-type and direct financing lease receipts, remainder of fiscal year | 1,543 | |
Future minimum sales-type and direct financing lease receipts, next twelve months | 1,937 | |
Future minimum sales-type and direct financing lease receipts, due year two | 2,130 | 2,006 |
Future minimum sales-type and direct financing lease receipts, due year three | 2,162 | 2,043 |
Future minimum sales-type and direct financing lease receipts, due year four | 2,243 | 2,119 |
Future minimum sales-type and direct financing lease receipts, due year five | 2,287 | 2,159 |
Future minimum sales-type and direct financing lease receipts, due after year five | 28,031 | 26,404 |
Total future minimum sales-type and direct financing lease receipts | 38,396 | 36,668 |
Unearned interest on total minimum sales-type and direct financing lease receipts | (20,831) | (20,338) |
Present value of minimum sales-type and direct financing lease receipts | 17,565 | 16,330 |
Subleases, operating | ||
Lessor, Operating Lease, Payments, Fiscal Year Maturity | ||
Future minimum operating lease receipts, remainder of fiscal year | 84,371 | |
Future minimum operating lease receipts, next twelve months | 113,180 | |
Future minimum operating lease receipts, due year two | 113,275 | 113,578 |
Future minimum operating lease receipts, due year three | 114,167 | 114,447 |
Future minimum operating lease receipts, due year four | 115,363 | 115,552 |
Future minimum operating lease receipts, due year five | 116,342 | 116,463 |
Future minimum operating lease receipts, due after year five | 1,367,503 | 1,372,646 |
Total future minimum operating lease receipts | 1,911,021 | 1,945,866 |
Owned properties, operating | ||
Lessor, Operating Lease, Payments, Fiscal Year Maturity | ||
Future minimum operating lease receipts, remainder of fiscal year | 39,451 | |
Future minimum operating lease receipts, next twelve months | 52,527 | |
Future minimum operating lease receipts, due year two | 52,990 | 53,066 |
Future minimum operating lease receipts, due year three | 54,561 | 54,615 |
Future minimum operating lease receipts, due year four | 56,034 | 56,092 |
Future minimum operating lease receipts, due year five | 56,239 | 56,284 |
Future minimum operating lease receipts, due after year five | 859,548 | 858,755 |
Total future minimum operating lease receipts | 1,118,823 | 1,131,339 |
Accounts and notes receivable, net | ||
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity | ||
Present value of minimum sales-type and direct financing lease receipts | 2,269 | 735 |
Net investment in sales-type and direct financing leases | ||
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity | ||
Present value of minimum sales-type and direct financing lease receipts | $ 236,426 | $ 226,477 |
Leases Properties Leased to Thi
Leases Properties Leased to Third Parties (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Property, Plant and Equipment | ||
Properties | $ 1,003,231 | $ 1,023,267 |
Assets Leased to Others | ||
Property, Plant and Equipment | ||
Land | 281,571 | |
Buildings and improvements | 310,912 | |
Restaurant equipment | 2,120 | |
Property, plant and equipment leased to others, gross | 594,603 | |
Accumulated depreciation and amortization | (145,812) | |
Properties | $ 448,791 |
Transactions with Related Par_2
Transactions with Related Parties (Details) - TimWen - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Related Party Transaction | ||
TimWen lease expense | $ 3,855 | $ 2,872 |
General and administrative | ||
Related Party Transaction | ||
Related Party Transaction, Other Revenues from Transactions with Related Party | $ 52 | $ 54 |
Guarantees and Other Commitme_2
Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Property Lease Guarantee | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 69,753 |
Guarantees and Other Commitme_3
Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Guarantor Obligations | |
Letters of Credit Outstanding, Amount | $ 27,089 |
Guarantees and Other Commitme_4
Guarantees and Other Commitments and Contingencies Beverage Agreements (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Long-term Purchase Commitment | |
Purchase Obligation, Purchases During Period | $ 2,414 |
Purchase Obligation, Due in Next Twelve Months | 7,500 |
Purchase Obligation, Due in Second Year | 10,600 |
Purchase Obligation, Due in Third Year | 11,100 |
Purchase Obligation, Due in Fourth Year | 11,900 |
Purchase Obligation, Due in Fifth Year | $ 12,500 |
Uncategorized Items - wen-20190
Label | Element | Value |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 25,247,000 |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 28,138,000 |