Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 29, 2019 | Oct. 30, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 29, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-2207 | |
Entity Registrant Name | THE WENDY’S COMPANY | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-0471180 | |
Entity Address, Address Line One | One Dave Thomas Blvd. | |
Entity Address, City or Town | Dublin, | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 43017 | |
City Area Code | 614 | |
Local Phone Number | 764-3100 | |
Title of 12(b) Security | Common Stock, $.10 par value | |
Trading Symbol | WEN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000030697 | |
Current Fiscal Year End Date | --12-29 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 230,047,087 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 439,421 | $ 431,405 |
Restricted cash | 28,769 | 29,860 |
Accounts and notes receivable, net | 105,017 | 109,805 |
Inventories | 3,549 | 3,687 |
Prepaid expenses and other current assets | 12,638 | 14,452 |
Advertising funds restricted assets | 84,380 | 76,509 |
Total current assets | 673,774 | 665,718 |
Properties | 980,872 | 1,023,267 |
Finance lease assets | 198,415 | |
Finance lease assets | 189,969 | |
Operating lease assets | 871,108 | |
Goodwill | 755,588 | 747,884 |
Other intangible assets | 1,251,699 | 1,294,153 |
Investments | 46,898 | 47,660 |
Net investment in sales-type and direct financing leases | 250,602 | |
Net investment in sales-type and direct financing leases | 226,477 | |
Other assets | 107,264 | 96,907 |
Total assets | 5,136,220 | 4,292,035 |
Current liabilities: | ||
Current portion of long-term debt | 22,750 | 23,250 |
Current portion of finance lease liabilities | 10,584 | |
Current portion of finance lease liabilities | 8,405 | |
Current portion of operating lease liabilities | 43,474 | |
Accounts payable | 23,793 | 21,741 |
Accrued expenses and other current liabilities | 146,693 | 150,636 |
Advertising funds restricted liabilities | 90,152 | 80,153 |
Total current liabilities | 337,446 | 284,185 |
Long-term debt | 2,270,866 | 2,305,552 |
Long-term finance lease liabilities | 471,704 | |
Long-term finance lease liabilities | 447,231 | |
Long-term operating lease liabilities | 911,213 | |
Deferred income taxes | 273,097 | 269,160 |
Deferred franchise fees | 91,437 | 92,232 |
Other liabilities | 130,866 | 245,226 |
Total liabilities | 4,486,629 | 3,643,586 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 230,371 and 231,233 shares outstanding, respectively | 47,042 | 47,042 |
Additional paid-in capital | 2,885,404 | 2,884,696 |
Retained earnings | 186,282 | 146,277 |
Common stock held in treasury, at cost; 240,053 and 239,191 shares, respectively | (2,415,027) | (2,367,893) |
Accumulated other comprehensive loss | (54,110) | (61,673) |
Total stockholders’ equity | 649,591 | 648,449 |
Total liabilities and stockholders’ equity | $ 5,136,220 | $ 4,292,035 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Balance Sheet Parentheticals - $ / shares shares in Thousands | Sep. 29, 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 | 230,371 | 231,233 |
Treasury Stock, Shares | 240,053 | 239,191 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Franchise rental income | $ 59,918 | $ 176,931 | ||
Franchise rental income | $ 50,474 | $ 152,110 | ||
Revenues | 437,880 | 400,550 | 1,281,811 | 1,192,116 |
Costs and expenses: | ||||
Cost of sales | 152,425 | 139,348 | 446,096 | 409,721 |
Franchise support and other costs | 9,739 | 5,349 | 19,823 | 18,553 |
Franchise rental expense | 32,364 | 22,260 | 92,842 | 69,829 |
Advertising funds expense | 87,883 | 81,541 | 257,031 | 245,011 |
General and administrative | 46,169 | 46,545 | 146,266 | 146,064 |
Depreciation and amortization | 33,306 | 29,070 | 97,975 | 94,649 |
System optimization gains, net | (1,040) | (486) | (1,162) | (8) |
Reorganization and realignment costs | 403 | 941 | 4,771 | 6,691 |
Impairment of long-lived assets | 0 | 347 | 1,684 | 2,156 |
Other operating income, net | (2,392) | (1,713) | (9,377) | (4,643) |
Costs and expenses | 358,857 | 323,202 | 1,055,949 | 988,023 |
Operating profit | 79,023 | 77,348 | 225,862 | 204,093 |
Interest expense, net | (27,930) | (29,625) | (86,943) | (89,939) |
Loss on early extinguishment of debt | 0 | 0 | (7,150) | (11,475) |
Investment income, net | 340 | 450,133 | 999 | 450,432 |
Other income, net | 1,878 | 1,061 | 6,166 | 2,423 |
Income before income taxes | 53,311 | 498,917 | 138,934 | 555,534 |
Provision for income taxes | (7,184) | (107,668) | (28,527) | (114,250) |
Net income | $ 46,127 | $ 391,249 | $ 110,407 | $ 441,284 |
Earnings per share | ||||
Earnings Per Share, Basic | $ 0.20 | $ 1.65 | $ 0.48 | $ 1.85 |
Earnings Per Share, Diluted | $ 0.20 | $ 1.60 | $ 0.47 | $ 1.79 |
Sales | ||||
Revenues | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 181,977 | $ 165,323 | $ 530,724 | $ 486,316 |
Franchise royalty revenue and fees | ||||
Revenues | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 109,155 | 103,212 | 320,233 | 308,679 |
Advertising funds revenue | ||||
Revenues | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 86,830 | $ 81,541 | $ 253,923 | $ 245,011 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Net income | $ 46,127 | $ 391,249 | $ 110,407 | $ 441,284 |
Other comprehensive (loss) income, net: | ||||
Foreign currency translation adjustment | (2,297) | 5,315 | 7,563 | (5,054) |
Change in unrecognized pension loss; Unrealized gains arising during the period | 0 | 0 | 0 | 156 |
Change in unrecognized pension loss; Income tax provision | 0 | 0 | 0 | (39) |
Change in unrecognized pension loss; Unrealized gains arising during the period, net of tax | 0 | 0 | 0 | 117 |
Other comprehensive (loss) income, net | (2,297) | 5,315 | 7,563 | (4,937) |
Comprehensive income | $ 43,830 | $ 396,564 | $ 117,970 | $ 436,347 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Common Stock Held in Treasury | Accumulated Other Comprehensive Loss |
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. 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) |
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 | 441,284 | |||||
Other comprehensive (loss) income, net | (4,937) | |||||
Stockholders' Equity, end of period at Sep. 30, 2018 | 783,318 | 47,042 | 2,883,298 | 146,983 | (2,242,870) | (51,135) |
Stockholders' Equity, beginning 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 | ||||||
Net income | 29,876 | 0 | 0 | 29,876 | 0 | 0 |
Other comprehensive (loss) income, net | (4,325) | 0 | 0 | 0 | 0 | (4,325) |
Cash Dividends | (20,290) | 0 | 0 | (20,290) | 0 | 0 |
Repurchases of common stock | (45,787) | 0 | 0 | 0 | (45,787) | 0 |
Share-based compensation | 5,133 | 0 | 5,133 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 3,236 | 0 | 396 | 0 | 2,840 | 0 |
Common stock issued upon vesting of restricted shares | (371) | 0 | (1,199) | 0 | 828 | 0 |
Other | 70 | 0 | 33 | (6) | 43 | 0 |
Stockholders' Equity, end of period at Jul. 01, 2018 | 430,539 | 47,042 | 2,883,167 | (224,120) | (2,219,100) | (56,450) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 391,249 | 0 | 0 | 391,249 | 0 | 0 |
Other comprehensive (loss) income, net | 5,315 | 0 | 0 | 0 | 0 | 5,315 |
Cash Dividends | (20,141) | 0 | 0 | (20,141) | 0 | 0 |
Repurchases of common stock | (56,421) | 0 | 0 | 0 | (56,421) | 0 |
Share-based compensation | 4,810 | 0 | 4,810 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 29,075 | 0 | (2,409) | 0 | 31,484 | 0 |
Common stock issued upon vesting of restricted shares | (1,168) | 0 | (2,300) | 0 | 1,132 | 0 |
Other | 60 | 0 | 30 | (5) | 35 | 0 |
Stockholders' Equity, end of period at Sep. 30, 2018 | 783,318 | 47,042 | 2,883,298 | 146,983 | (2,242,870) | (51,135) |
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of change in accounting principle | (1,105) | 0 | 0 | (1,105) | 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) |
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 | 110,407 | |||||
Other comprehensive (loss) income, net | 7,563 | |||||
Stockholders' Equity, end of period at Sep. 29, 2019 | 649,591 | 47,042 | 2,885,404 | 186,282 | (2,415,027) | (54,110) |
Stockholders' Equity, beginning 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 | ||||||
Net income | 32,386 | 0 | 0 | 32,386 | 0 | 0 |
Other comprehensive (loss) income, net | 3,835 | 0 | 0 | 0 | 0 | 3,835 |
Cash Dividends | (23,124) | 0 | 0 | (23,124) | 0 | 0 |
Repurchases of common stock | (20,391) | 0 | 0 | 0 | (20,391) | 0 |
Share-based compensation | 4,986 | 0 | 4,986 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 10,491 | 0 | (339) | 0 | 10,830 | 0 |
Common stock issued upon vesting of restricted shares | (888) | 0 | (1,852) | 0 | 964 | 0 |
Other | 59 | 0 | 26 | (4) | 37 | 0 |
Stockholders' Equity, end of period at Jun. 30, 2019 | 648,048 | 47,042 | 2,883,484 | 163,249 | (2,393,914) | (51,813) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 46,127 | 0 | 0 | 46,127 | 0 | 0 |
Other comprehensive (loss) income, net | (2,297) | 0 | 0 | 0 | 0 | (2,297) |
Cash Dividends | (23,087) | 0 | 0 | (23,087) | 0 | 0 |
Repurchases of common stock | (26,462) | 0 | 0 | 0 | (26,462) | 0 |
Share-based compensation | 3,981 | 0 | 3,981 | 0 | 0 | 0 |
Common stock issued upon exercises of stock options | 4,716 | 0 | 545 | 0 | 4,171 | 0 |
Common stock issued upon vesting of restricted shares | (1,489) | 0 | (2,636) | 0 | 1,147 | 0 |
Other | 54 | 0 | 30 | (7) | 31 | 0 |
Stockholders' Equity, end of period at Sep. 29, 2019 | $ 649,591 | $ 47,042 | $ 2,885,404 | $ 186,282 | $ (2,415,027) | $ (54,110) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 110,407 | $ 441,284 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 97,975 | 94,649 |
Share-based compensation | 13,989 | 14,401 |
Impairment of long-lived assets | 1,684 | 2,156 |
Deferred income tax | 5,524 | (1,527) |
Non-cash rental expense (income), net | 18,722 | (10,868) |
Change in operating lease liabilities | (31,481) | |
Net receipt of deferred vendor incentives | 2,269 | 2,689 |
System optimization gains, net | (1,162) | (8) |
Gain on sale of investments, net | (130) | (450,000) |
Distributions received from joint ventures, net of equity in earnings | 2,926 | 3,250 |
Long-term debt-related activities, net | 12,386 | 16,860 |
Changes in operating assets and liabilities and other, net | 4,391 | 116,776 |
Net cash provided by operating activities | 237,500 | 229,662 |
Cash flows from investing activities: | ||
Capital expenditures | (40,984) | (39,717) |
Acquisitions | (5,052) | (21,401) |
Dispositions | 2,038 | 2,863 |
Proceeds from sale of investments | 130 | 450,000 |
Notes receivable, net | (1,834) | (283) |
Payments for investments | 0 | (13) |
Net cash (used in) provided by investing activities | (45,702) | 391,449 |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 850,000 | 934,837 |
Repayments of long-term debt | (883,564) | (888,689) |
Repayments of finance lease liabilities | (5,178) | |
Repayments of finance lease liabilities | (4,350) | |
Deferred financing costs | (14,008) | (17,340) |
Repurchases of common stock | (76,948) | (140,199) |
Dividends | (69,280) | (60,786) |
Proceeds from stock option exercises | 24,069 | 42,299 |
Payments related to tax withholding for share-based compensation | (8,447) | (10,464) |
Contingent consideration payment | 0 | (6,269) |
Net cash used in financing activities | (183,356) | (150,961) |
Net cash provided by operations before effect of exchange rate changes on cash | 8,442 | 470,150 |
Effect of exchange rate changes on cash | 2,755 | (2,195) |
Net increase in cash, cash equivalents and restricted cash | 11,197 | 467,955 |
Cash, cash equivalents and restricted cash at beginning of period | 486,512 | 212,824 |
Cash, cash equivalents and restricted cash at end of period | 497,709 | 680,779 |
Supplemental non-cash investing and financing activities: | ||
Capital expenditures included in accounts payable | 7,582 | 9,588 |
Finance leases | 34,084 | |
Finance leases | 6,569 | |
Reconciliation of cash, cash equivalents and restricted cash at end of period: | ||
Total cash, cash equivalents and restricted cash | $ 497,709 | $ 212,824 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 29, 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 September 29, 2019 , the results of our operations for the three and nine months ended September 29, 2019 and September 30, 2018 and cash flows for the nine months ended September 29, 2019 and September 30, 2018 . The results of operations for the three and nine months ended September 29, 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. As a result of the realignment of our management and operating structure in May 2019, the Company is continuing to evaluate the impact these changes will have on its existing operating segment structure. The Company currently expects to report its results in the following three segments beginning with our Annual Report on Form 10-K for the fiscal year ended December 29, 2019: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 6 for further information. We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. 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 | 9 Months Ended |
Sep. 29, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards New Accounting Standards Credit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued an amendment that will require the Company to use a current expected credit loss model that will result in the immediate recognition of an estimate of credit losses that are expected to occur over the life of the financial instruments that are within the scope of the guidance, including trade receivables. The amendment is effective commencing with our 2020 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements. New Accounting Standards Adopted Cloud Computing In August 2018, the 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. Nonemployee Share-Based Payments 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,” respectively, 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 |
Revenue (Notes)
Revenue (Notes) | 9 Months Ended |
Sep. 29, 2019 | |
Revenue [Abstract] | |
Revenue from Contract with Customer | Revenue Disaggregation of Revenue The following tables disaggregate revenue by primary geographical market and source: U.S. Canada Other International Total Three Months Ended September 29, 2019 Sales at Company-operated restaurants $ 181,977 $ — $ — $ 181,977 Franchise royalty revenue 90,791 6,529 4,947 102,267 Franchise fees 5,838 877 173 6,888 Franchise rental income 50,987 8,931 — 59,918 Advertising funds revenue 81,386 5,444 — 86,830 Total revenues $ 410,979 $ 21,781 $ 5,120 $ 437,880 Nine Months Ended September 29, 2019 Sales at Company-operated restaurants $ 530,724 $ — $ — $ 530,724 Franchise royalty revenue 266,599 18,341 14,991 299,931 Franchise fees 17,563 1,997 742 20,302 Franchise rental income 151,693 25,238 — 176,931 Advertising funds revenue 238,804 15,119 — 253,923 Total revenues $ 1,205,383 $ 60,695 $ 15,733 $ 1,281,811 Three Months Ended September 30, 2018 Sales at Company-operated restaurants $ 165,323 $ — $ — $ 165,323 Franchise royalty revenue 84,648 6,260 4,593 95,501 Franchise fees 5,575 1,855 281 7,711 Franchise rental income 43,900 6,574 — 50,474 Advertising funds revenue 76,492 5,049 — 81,541 Total revenues $ 375,938 $ 19,738 $ 4,874 $ 400,550 Nine Months Ended September 30, 2018 Sales at Company-operated restaurants $ 486,316 $ — $ — $ 486,316 Franchise royalty revenue 252,094 17,696 13,812 283,602 Franchise fees 19,671 4,776 630 25,077 Franchise rental income 133,046 19,064 — 152,110 Advertising funds revenue 230,391 14,620 — 245,011 Total revenues $ 1,121,518 $ 56,156 $ 14,442 $ 1,192,116 Contract Balances The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: September 29, 2019 (a) December 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 39,669 $ 40,300 Receivables, which are included in “Advertising funds restricted assets” 49,102 47,332 Deferred franchise fees (c) 100,751 102,205 _______________ (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 condensed consolidated statements 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 $9,314 and $91,437 as of September 29, 2019 , respectively, and $9,973 and $92,232 as of December 30, 2018 , respectively. Significant changes in deferred franchise fees are as follows: Nine Months Ended September 29, September 30, Deferred franchise fees at beginning of period $ 102,205 $ 102,492 Revenue recognized during the period (6,635 ) (7,393 ) New deferrals due to cash received and other 5,181 7,913 Deferred franchise fees at end of period $ 100,751 $ 103,012 Anticipated Future Recognition of Deferred Franchise Fees The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period: Estimate for fiscal year: 2019 (a) $ 2,164 2020 7,399 2021 6,118 2022 5,858 2023 5,633 Thereafter 73,579 $ 100,751 _______________ (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) | 9 Months Ended |
Sep. 29, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions During the nine months ended September 29, 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 franchisees: Nine Months Ended September 29, 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, Net
System Optimization Gains, Net | 9 Months Ended |
Sep. 29, 2019 | |
Property, Plant and Equipment [Abstract] | |
System Optimization Gains, Net | System Optimization Gains, 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, the Company expects to continue to optimize the Wendy’s 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. During the nine months ended September 29, 2019 and September 30, 2018 , the Company facilitated three and 73 Franchise Flips, respectively. Additionally, during the nine months ended September 30, 2018 , the Company completed the sale of three Company-operated restaurants to a franchisee. No Company-operated restaurants were sold to franchisees during the nine months ended September 29, 2019 . Gains and losses recognized on dispositions are recorded to “ System optimization gains, net ” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 6 . All other costs incurred related to facilitating Franchise Flips are recorded to “ Franchise support and other costs .” The following is a summary of the disposition activity recorded as a result of our system optimization initiative: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Gain on sale of restaurants, net (a) $ — $ — $ — $ 89 Post-closing adjustments on sales of restaurants (b) 1,033 279 1,087 54 Gain (loss) on sales of other assets, net (c) 7 207 75 (135 ) System optimization gains, net $ 1,040 $ 486 $ 1,162 $ 8 _______________ (a) During the nine months ended September 30, 2018 , the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. The value of the net assets that were included in the sale totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale. (b) The three and nine months ended September 29, 2019 and September 30, 2018 include the recognition of deferred gains of $911 and $503 , respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees. The nine months ended September 30, 2018 also includes cash proceeds, net of payments of $6 . (c) During the three and nine months ended September 29, 2019 , the Company received cash proceeds of $798 and $2,038 , respectively, and during the three and nine months ended September 30, 2018 received cash proceeds of $1,049 and $1,421 , respectively, primarily from the sale of surplus properties. Assets Held for Sale As of September 29, 2019 and December 30, 2018 , the Company had assets held for sale of $2,391 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 | 9 Months Ended |
Sep. 29, 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 Nine Months Ended September 29, September 30, September 29, September 30, G&A realignment $ 396 $ 629 $ 4,695 $ 6,375 System optimization initiative 7 312 76 316 Reorganization and realignment costs $ 403 $ 941 $ 4,771 $ 6,691 General and Administrative ( “ G&A ”) Realignment In May 2017, the Company initiated a plan to further reduce its G&A expenses. Additionally, the Company announced in May 2019 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, and the elimination of the Chief Operations Officer position. During the nine months ended September 29, 2019 and September 30, 2018 , the Company recognized costs related to the plan totaling $4,695 and $6,375 , respectively, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $2,700 , comprised of (1) severance and related employee costs of approximately $1,900 , (2) recruitment and relocation costs of approximately $450 , (3) third-party and other costs of approximately $50 and (4) share-based compensation of approximately $300 . The Company expects to incur total costs aggregating approximately $35,000 to $38,000 related to the plan. As a result of the realignment of our management and operating structure as described above, the Company is continuing to evaluate the impact these changes will have on its existing operating segment structure. The Company currently expects to report its results in the following three segments beginning with our Annual Report on Form 10-K for the fiscal year ended December 29, 2019: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. The following is a summary of the activity recorded as a result of the G&A realignment plan: Three Months Ended Nine Months Ended Total September 29, September 30, September 29, September 30, Severance and related employee costs $ 214 $ 57 $ 2,816 $ 3,168 $ 21,569 Recruitment and relocation costs 58 200 654 708 2,220 Third-party and other costs 25 39 112 971 2,222 297 296 3,582 4,847 26,011 Share-based compensation (a) 99 333 1,113 1,528 7,797 Termination of defined benefit plans — — — — 1,335 Total G&A realignment $ 396 $ 629 $ 4,695 $ 6,375 $ 35,143 _______________ (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 $3,491 and $507 as of September 29, 2019 , respectively, and $6,817 and $1,432 as of September 30, 2018 , respectively. The tables below present a rollforward of our accruals for the plan. Balance December 30, 2018 Charges Payments Balance September 29, 2019 Severance and related employee costs $ 7,241 $ 2,816 $ (6,216 ) $ 3,841 Recruitment and relocation costs 83 654 (580 ) 157 Third-party and other costs — 112 (112 ) — $ 7,324 $ 3,582 $ (6,908 ) $ 3,998 Balance December 31, 2017 Charges Payments Balance September 30, 2018 Severance and related employee costs $ 12,093 $ 3,168 $ (7,103 ) $ 8,158 Recruitment and relocation costs 177 708 (794 ) 91 Third-party and other costs — 971 (971 ) — $ 12,270 $ 4,847 $ (8,868 ) $ 8,249 System Optimization Initiative The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,268 under the initiative since inception and does not expect to incur any additional costs during the remainder of 2019. |
Investments
Investments | 9 Months Ended |
Sep. 29, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | (7) Investments Equity Investments Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons ® brand. (Tim Hortons is a registered trademark of Tim Hortons USA Inc.) In addition, a wholly-owned subsidiary of Wendy’s has a 20% share in a joint venture for the operation of Wendy’s restaurants in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method of accounting, under which our results of operations include our share of the income (loss) of the investees in “ Other operating income, net .” Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements: Nine Months Ended September 29, September 30, Balance at beginning of period $ 47,021 $ 55,363 Investment — 13 Equity in earnings for the period 8,812 7,566 Amortization of purchase price adjustments (a) (1,700 ) (1,756 ) 7,112 5,810 Distributions received (10,038 ) (9,060 ) Foreign currency translation adjustment included in “Other comprehensive (loss) income, net” and other 2,164 (191 ) Balance at end of period $ 46,259 $ 51,935 _______________ (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 . Other Investments in Equity Securities On October 11, 2019, the Company received a $25,000 cash settlement related to a previously held investment. |
Long-Term Debt (Notes)
Long-Term Debt (Notes) | 9 Months Ended |
Sep. 29, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: September 29, December 30, Series 2019-1 Class A-2 Notes: 3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026 $ 399,000 $ — 4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029 448,875 — Series 2018-1 Class A-2 Notes: 3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025 442,125 445,500 3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 466,688 470,250 Series 2015-1 Class A-2 Notes: 4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with the June 2019 refinancing — 870,750 4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025 480,000 483,750 7% debentures, due in 2025 91,722 90,769 Unamortized debt issuance costs (34,794 ) (32,217 ) 2,293,616 2,328,802 Less amounts payable within one year (22,750 ) (23,250 ) Total long-term debt $ 2,270,866 $ 2,305,552 On June 26, 2019, Wendy’s Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, completed a debt refinancing transaction under which the Master Issuer issued fixed rate senior secured notes in the following 2019-1 series: Class A-2-I with an initial principal amount of $400,000 and Class A-2-II with an initial principal amount of $450,000 (collectively, the “Series 2019-1 Class A-2 Notes”). Interest payments on the Series 2019-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2019-1 Class A-2 Notes is in June 2049. If the Master Issuer has not repaid or refinanced the Series 2019-1 Class A-2 Notes prior to the respective anticipated repayment date, additional interest will accrue on each tranche of the Series 2019-1 Class A-2 Notes at a rate equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the amount, if any, by which the sum of (i) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years , plus (ii) 5.00% , plus (iii) (1) with respect to the Series 2019-1 Class A-2-I Notes, 1.863% , and (2) with respect to the Series 2019-1 Class A-2-II Notes, 2.051% , exceeds the original interest rate with respect to such tranche. The Master Issuer’s outstanding Series 2015-1 Class A-2-II Notes were repaid as part of the refinancing transaction. As a result, the Company recorded a loss on early extinguishment of debt of $7,150 during the nine months ended September 29, 2019 , which was comprised of the write-off of certain unamortized deferred financing costs. The Series 2019-1 Class A-2 Notes have scheduled principal payments of $4,250 in 2019, $8,500 annually from 2020 through 2025, $378,500 in 2026, $4,500 in each of 2027 and 2028 and $407,250 in 2029. In connection with the issuance of the Series 2019-1 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “Series 2019-1 Class A-1 Notes” and, together with the Series 2019-1 Class A-2 Notes, the “Series 2019-1 Senior Notes”), which allows for the drawing of up to $150,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Series 2019-1 Class A-1 Notes during the nine months ended September 29, 2019 . The Series 2019-1 Class A-1 Notes replaced the Company’s $150,000 Series 2018-1 Class A-1 Notes, which were canceled on the closing date, and the letters of credit outstanding against the Series 2018-1 Class A-1 Notes were transferred to the Series 2019-1 Class A-1 Notes. The Series 2019-1 Senior Notes are secured by substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors (the “Guarantors”), excluding certain real estate assets and subject to certain limitations. The Series 2019-1 Senior Notes are subject to the same series of covenants and restrictions as the Company’s outstanding Series 2018-1 Class A-2 Notes and Series 2015-1 Class A-2 Notes. During the nine months ended September 29, 2019 , the Company incurred debt issuance costs of $14,008 in connection with the issuance of the Series 2019-1 Senior Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2019-1 Senior Notes utilizing the effective interest rate method. Wendy’s U.S. advertising fund has a revolving line of credit of $25,000 . Neither the Company nor Wendy’s is the guarantor of the debt. The advertising fund facility was established to fund the advertising fund operations. During the nine months ended September 30, 2018 , the Company borrowed $9,837 and repaid $11,124 under the line of credit. There were no borrowings or repayments under the line of credit during the nine months ended September 29, 2019 . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 29, 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: September 29, December 30, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 206,094 $ 206,094 $ 222,228 $ 222,228 Level 1 Other investments in equity securities (a) 639 1,818 639 2,181 Level 3 Financial liabilities Series 2019-1 Class A-2-I Notes (b) 399,000 405,863 — — Level 2 Series 2019-1 Class A-2-II Notes (b) 448,875 463,598 — — Level 2 Series 2018-1 Class A-2-I Notes (b) 442,125 448,580 445,500 424,026 Level 2 Series 2018-1 Class A-2-II Notes (b) 466,688 476,208 470,250 439,353 Level 2 Series 2015-1 Class A-2-II Notes (b) — — 870,750 865,342 Level 2 Series 2015-1 Class A-2-III Notes (b) 480,000 492,624 483,750 482,522 Level 2 7% debentures, due in 2025 (b) 91,722 107,500 90,769 102,750 Level 2 Guarantees of franchisee loan obligations (c) 2 2 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, favorable lease assets and ROU 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 10 for further information on impairment of our long-lived assets. Fair Value Measurements September 29, Level 1 Level 2 Level 3 Held and used $ 1,866 $ — $ — $ 1,866 Held for sale 988 — — 988 Total $ 2,854 $ — $ — $ 2,854 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 | 9 Months Ended |
Sep. 29, 2019 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company records impairment charges as a result of (1) closing Company-operated restaurants and classifying such surplus properties as held for sale, (2) the deterioration of operating performance of certain Company-operated restaurants and (3) 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 Nine Months Ended September 29, September 30, September 29, September 30, Surplus properties $ — $ 229 $ 1,397 $ 270 Company-operated restaurants — — 287 1,603 Restaurants leased or subleased to franchisees — 118 — 283 $ — $ 347 $ 1,684 $ 2,156 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended September 29, 2019 and September 30, 2018 was 13.5% and 21.6% respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% primarily due to (1) a reduction in unrecognized tax benefits due to a lapse of statute of limitations in the three months ended September 29, 2019 , (2) a reduction for stock-based compensation, which included net excess tax benefits of $1,103 and $5,251 for the three months ended September 29, 2019 and September 30, 2018 , respectively, and (3) an increase due to state income taxes, including non-recurring changes to state deferred taxes net of federal benefits. The Company’s effective tax rate for the nine months ended September 29, 2019 and September 30, 2018 was 20.5% and 20.6% respectively. The Company’s effective tax rate varied immaterially from the U.S. federal statutory rate of 21% primarily due to (1) a reduction in unrecognized tax benefits due to a lapse of statute of limitations in the nine months ended September 29, 2019 , (2) a reduction for stock-based compensation, which included net excess tax benefits of $4,028 and $12,142 for the nine months ended September 29, 2019 and September 30, 2018 , respectively, and (3) an increase due to state income taxes, 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 during the first nine months of 2018 under Staff Accounting Bulletin 118, we adjusted our provisional amounts for a discrete net tax expense of $2,076 . This included a net expense of $2,426 related to the impact of the corporate rate reduction on our net deferred tax liabilities and a net expense of $991 related to limitations on the deductibility of certain executive compensation, partially offset by $1,341 for the tax benefit of foreign tax credits. Unrecognized tax benefits for the Company decreased by $5,639 and $6,475 during the three and nine months ended September 29, 2019 , respectively. The decrease was primarily related to the lapse of statutes of limitations during the third quarter of 2019. During the next twelve months, we believe it is reasonably possible the Company’s unrecognized tax benefits will decrease by up to $2,081 due to the lapse of statutes of limitations and expected settlements with taxing authorities. The current portion of refundable income taxes was $6,719 and $14,475 as of September 29, 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 September 29, 2019 and December 30, 2018 . |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 29, 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 Nine Months Ended September 29, September 30, September 29, September 30, Common stock: Weighted average basic shares outstanding 230,723 237,696 230,779 238,872 Dilutive effect of stock options and restricted shares 4,995 7,070 5,122 7,574 Weighted average diluted shares outstanding 235,718 244,766 235,901 246,446 Diluted net income per share for the three and nine months ended September 29, 2019 and September 30, 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 3,257 and 2,488 for the three and nine months ended September 29, 2019 , respectively, and 1,121 and 1,287 for the three and nine months ended September 30, 2018 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 29, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Dividends During each of the first three quarters of 2019, the Company paid quarterly cash dividends of $.10 per share. During each of the first three quarters of 2018, the Company paid quarterly cash dividends of $.085 per share. 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 nine months ended September 29, 2019 , the Company repurchased 4,153 shares with an aggregate purchase price of $76,165 , of which $1,102 was accrued at September 29, 2019 , and excluding commissions of $58 , under the November 2018 and February 2019 authorizations. As of September 29, 2019 , the Company had $170,292 of availability remaining under its February 2019 authorization. Subsequent to September 29, 2019 through October 30, 2019 , the Company repurchased 443 shares under the February 2019 authorization with an aggregate purchase price of $9,190 , excluding commissions of $6 . As part of the February 2019 authorization, the Company announced on October 11, 2019 its intention to launch a $100,000 accelerated share repurchase program during the fourth quarter of 2019. 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 nine months ended September 30, 2018 , the Company repurchased 6,896 shares under the February 2018 repurchase authorization with an aggregate purchase price of $118,866 , of which $2,675 was accrued at September 30, 2018 , and excluding commissions of $97 . Additionally, during the nine months ended September 30, 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 , 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 7,563 — 7,563 Balance at September 29, 2019 $ (54,110 ) $ — $ (54,110 ) Balance at December 31, 2017 $ (45,149 ) $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (5,054 ) 117 (4,937 ) Balance at September 30, 2018 $ (50,203 ) $ (932 ) $ (51,135 ) |
Leases (Notes)
Leases (Notes) | 9 Months Ended |
Sep. 29, 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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % Operating leases 5.10 % The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
Transactions with Related Parti
Transactions with Related Parties | 9 Months Ended |
Sep. 29, 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 nine months ended September 29, 2019 and September 30, 2018 , Wendy’s paid TimWen $12,710 and $9,967 , respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $155 and $161 during the nine months ended September 29, 2019 and September 30, 2018 , respectively, which has been included as a reduction to “General and administrative.” |
Guarantees and Other Commitment
Guarantees and Other Commitments and Contingencies | 9 Months Ended |
Sep. 29, 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 $74,898 as of September 29, 2019 . These leases extend through 2056. We have not received any notice of default related to these leases as of September 29, 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 September 29, 2019 , the Company had outstanding letters of credit with various parties totaling $25,082 . The outstanding letters of credit include amounts outstanding against the Series 2019-1 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 that 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 nine months ended September 29, 2019 were $8,417 . As of September 29, 2019 , the Company estimates future purchases to be approximately $2,700 for the remainder of 2019, $10,800 in 2020, $11,100 in 2021, $11,600 in 2022 and $12,100 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 | 9 Months Ended |
Sep. 29, 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. Except as set forth below, there were no material developments in those legal proceedings as of September 29, 2019. As previously reported, the Company was named as a defendant in putative class action lawsuits alleging, among other things, that the Company failed to safeguard customer credit card information and failed to provide notice that credit card information had been compromised. Jonathan Torres and other consumers filed an action in the U.S. District Court for the Middle District of Florida (the “Torres Case”). On August 23, 2018, the court preliminarily approved a class-wide settlement. A final approval hearing of the settlement of the Torres Case was held on February 26, 2019, and final approval was granted by the court. At this time, the action has been dismissed with prejudice (with no appeal taken), all claims and other amounts payable per the terms of the settlement agreement have been paid, and the matter is considered closed. Also as previously reported, certain financial institutions have also filed class actions lawsuits in the U.S. District Court for the Western District of Pennsylvania, which sought to certify a nationwide class of financial institutions that issued payment cards that were allegedly impacted. Those cases were consolidated into a single case (the “FI Case”). On February 13, 2019, the Company and the plaintiffs filed a settlement agreement and a motion for preliminary approval of a class-wide settlement of the FI Case with the court. Under the terms of the settlement agreement, if approved and finalized, a settlement class of financial institutions will receive $50,000 , inclusive of attorneys’ fees and costs. After exhaustion of applicable insurance, the Company now expects to pay approximately $25,000 of this amount. In exchange, the Company and its franchisees will receive a full release of all claims that have or could have been brought by financial institutions who do not opt out of the settlement related to the cybersecurity incidents described herein. On February 26, 2019, the court preliminarily approved the settlement agreement and scheduled a final approval hearing for November 6, 2019. The settlement agreement remains subject to a notice and objection process and final court approval. If approved, the Company anticipates that payment will occur in early 2020. The Company recorded a liability of $50,000 and insurance receivables of $22,500 for the FI case during 2018. As a result of cost savings related to the settlement of the Torres Case in the three months ended September 29, 2019, the Company adjusted its insurance receivables for the FI case to approximately $25,000 . |
Leases (Policies)
Leases (Policies) | 9 Months Ended |
Sep. 29, 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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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 September 29, 2019 , Wendy’s and its franchisees operated 6,743 Wendy’s restaurants. Of the 356 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 144 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 512 and leased 1,255 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) | 9 Months Ended |
Sep. 29, 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 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Revenue [Abstract] | |
Disaggregation of Revenue | The following tables disaggregate revenue by primary geographical market and source: U.S. Canada Other International Total Three Months Ended September 29, 2019 Sales at Company-operated restaurants $ 181,977 $ — $ — $ 181,977 Franchise royalty revenue 90,791 6,529 4,947 102,267 Franchise fees 5,838 877 173 6,888 Franchise rental income 50,987 8,931 — 59,918 Advertising funds revenue 81,386 5,444 — 86,830 Total revenues $ 410,979 $ 21,781 $ 5,120 $ 437,880 Nine Months Ended September 29, 2019 Sales at Company-operated restaurants $ 530,724 $ — $ — $ 530,724 Franchise royalty revenue 266,599 18,341 14,991 299,931 Franchise fees 17,563 1,997 742 20,302 Franchise rental income 151,693 25,238 — 176,931 Advertising funds revenue 238,804 15,119 — 253,923 Total revenues $ 1,205,383 $ 60,695 $ 15,733 $ 1,281,811 Three Months Ended September 30, 2018 Sales at Company-operated restaurants $ 165,323 $ — $ — $ 165,323 Franchise royalty revenue 84,648 6,260 4,593 95,501 Franchise fees 5,575 1,855 281 7,711 Franchise rental income 43,900 6,574 — 50,474 Advertising funds revenue 76,492 5,049 — 81,541 Total revenues $ 375,938 $ 19,738 $ 4,874 $ 400,550 Nine Months Ended September 30, 2018 Sales at Company-operated restaurants $ 486,316 $ — $ — $ 486,316 Franchise royalty revenue 252,094 17,696 13,812 283,602 Franchise fees 19,671 4,776 630 25,077 Franchise rental income 133,046 19,064 — 152,110 Advertising funds revenue 230,391 14,620 — 245,011 Total revenues $ 1,121,518 $ 56,156 $ 14,442 $ 1,192,116 |
Contract balances, assets and liabilities | The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers: September 29, 2019 (a) December 30, 2018 (a) Receivables, which are included in “Accounts and notes receivable, net” (b) $ 39,669 $ 40,300 Receivables, which are included in “Advertising funds restricted assets” 49,102 47,332 Deferred franchise fees (c) 100,751 102,205 _______________ (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 condensed consolidated statements 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 $9,314 and $91,437 as of September 29, 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: Nine Months Ended September 29, September 30, Deferred franchise fees at beginning of period $ 102,205 $ 102,492 Revenue recognized during the period (6,635 ) (7,393 ) New deferrals due to cash received and other 5,181 7,913 Deferred franchise fees at end of period $ 100,751 $ 103,012 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period: Estimate for fiscal year: 2019 (a) $ 2,164 2020 7,399 2021 6,118 2022 5,858 2023 5,633 Thereafter 73,579 $ 100,751 _______________ (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) | 9 Months Ended |
Sep. 29, 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 franchisees: Nine Months Ended September 29, 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, Net
System Optimization Gains, Net (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
System optimization gains, net | |
Summary of Disposition Activity | The following is a summary of the disposition activity recorded as a result of our system optimization initiative: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Gain on sale of restaurants, net (a) $ — $ — $ — $ 89 Post-closing adjustments on sales of restaurants (b) 1,033 279 1,087 54 Gain (loss) on sales of other assets, net (c) 7 207 75 (135 ) System optimization gains, net $ 1,040 $ 486 $ 1,162 $ 8 _______________ (a) During the nine months ended September 30, 2018 , the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. The value of the net assets that were included in the sale totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale. (b) The three and nine months ended September 29, 2019 and September 30, 2018 include the recognition of deferred gains of $911 and $503 , respectively, as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees. The nine months ended September 30, 2018 also includes cash proceeds, net of payments of $6 . (c) During the three and nine months ended September 29, 2019 , the Company received cash proceeds of $798 and $2,038 , respectively, and during the three and nine months ended September 30, 2018 received cash proceeds of $1,049 and $1,421 |
Reorganization and Realignmen_2
Reorganization and Realignment Costs (Tables) | 9 Months Ended |
Sep. 29, 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 Nine Months Ended September 29, September 30, September 29, September 30, G&A realignment $ 396 $ 629 $ 4,695 $ 6,375 System optimization initiative 7 312 76 316 Reorganization and realignment costs $ 403 $ 941 $ 4,771 $ 6,691 |
G&A Realignment – May 2017 Plan | |
Restructuring Cost and Reserve | |
Restructuring and Related Costs | The following is a summary of the activity recorded as a result of the G&A realignment plan: Three Months Ended Nine Months Ended Total September 29, September 30, September 29, September 30, Severance and related employee costs $ 214 $ 57 $ 2,816 $ 3,168 $ 21,569 Recruitment and relocation costs 58 200 654 708 2,220 Third-party and other costs 25 39 112 971 2,222 297 296 3,582 4,847 26,011 Share-based compensation (a) 99 333 1,113 1,528 7,797 Termination of defined benefit plans — — — — 1,335 Total G&A realignment $ 396 $ 629 $ 4,695 $ 6,375 $ 35,143 _______________ (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 $3,491 and $507 as of September 29, 2019 , respectively, and $6,817 and $1,432 as of September 30, 2018 , respectively. The tables below present a rollforward of our accruals for the plan. Balance December 30, 2018 Charges Payments Balance September 29, 2019 Severance and related employee costs $ 7,241 $ 2,816 $ (6,216 ) $ 3,841 Recruitment and relocation costs 83 654 (580 ) 157 Third-party and other costs — 112 (112 ) — $ 7,324 $ 3,582 $ (6,908 ) $ 3,998 Balance December 31, 2017 Charges Payments Balance September 30, 2018 Severance and related employee costs $ 12,093 $ 3,168 $ (7,103 ) $ 8,158 Recruitment and relocation costs 177 708 (794 ) 91 Third-party and other costs — 971 (971 ) — $ 12,270 $ 4,847 $ (8,868 ) $ 8,249 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 29, 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: Nine Months Ended September 29, September 30, Balance at beginning of period $ 47,021 $ 55,363 Investment — 13 Equity in earnings for the period 8,812 7,566 Amortization of purchase price adjustments (a) (1,700 ) (1,756 ) 7,112 5,810 Distributions received (10,038 ) (9,060 ) Foreign currency translation adjustment included in “Other comprehensive (loss) income, net” and other 2,164 (191 ) Balance at end of period $ 46,259 $ 51,935 _______________ (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 . |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Debt Disclosure [Abstract] | |
Long-term debt | Long-term debt consisted of the following: September 29, December 30, Series 2019-1 Class A-2 Notes: 3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026 $ 399,000 $ — 4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029 448,875 — Series 2018-1 Class A-2 Notes: 3.573% Series 2018-1 Class A-2-I Notes, anticipated repayment date 2025 442,125 445,500 3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028 466,688 470,250 Series 2015-1 Class A-2 Notes: 4.080% Series 2015-1 Class A-2-II Notes, repaid in connection with the June 2019 refinancing — 870,750 4.497% Series 2015-1 Class A-2-III Notes, anticipated repayment date 2025 480,000 483,750 7% debentures, due in 2025 91,722 90,769 Unamortized debt issuance costs (34,794 ) (32,217 ) 2,293,616 2,328,802 Less amounts payable within one year (22,750 ) (23,250 ) Total long-term debt $ 2,270,866 $ 2,305,552 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 29, 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: September 29, December 30, Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Measurements Financial assets Cash equivalents $ 206,094 $ 206,094 $ 222,228 $ 222,228 Level 1 Other investments in equity securities (a) 639 1,818 639 2,181 Level 3 Financial liabilities Series 2019-1 Class A-2-I Notes (b) 399,000 405,863 — — Level 2 Series 2019-1 Class A-2-II Notes (b) 448,875 463,598 — — Level 2 Series 2018-1 Class A-2-I Notes (b) 442,125 448,580 445,500 424,026 Level 2 Series 2018-1 Class A-2-II Notes (b) 466,688 476,208 470,250 439,353 Level 2 Series 2015-1 Class A-2-II Notes (b) — — 870,750 865,342 Level 2 Series 2015-1 Class A-2-III Notes (b) 480,000 492,624 483,750 482,522 Level 2 7% debentures, due in 2025 (b) 91,722 107,500 90,769 102,750 Level 2 Guarantees of franchisee loan obligations (c) 2 2 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) measured at fair value on a nonrecurring basis | Fair Value Measurements September 29, Level 1 Level 2 Level 3 Held and used $ 1,866 $ — $ — $ 1,866 Held for sale 988 — — 988 Total $ 2,854 $ — $ — $ 2,854 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) | 9 Months Ended |
Sep. 29, 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 Nine Months Ended September 29, September 30, September 29, September 30, Surplus properties $ — $ 229 $ 1,397 $ 270 Company-operated restaurants — — 287 1,603 Restaurants leased or subleased to franchisees — 118 — 283 $ — $ 347 $ 1,684 $ 2,156 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 29, 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 Nine Months Ended September 29, September 30, September 29, September 30, Common stock: Weighted average basic shares outstanding 230,723 237,696 230,779 238,872 Dilutive effect of stock options and restricted shares 4,995 7,070 5,122 7,574 Weighted average diluted shares outstanding 235,718 244,766 235,901 246,446 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 29, 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 7,563 — 7,563 Balance at September 29, 2019 $ (54,110 ) $ — $ (54,110 ) Balance at December 31, 2017 $ (45,149 ) $ (1,049 ) $ (46,198 ) Current-period other comprehensive (loss) income (5,054 ) 117 (4,937 ) Balance at September 30, 2018 $ (50,203 ) $ (932 ) $ (51,135 ) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of lease cost are as follows: Three Months Ended Nine Months Ended September 29, September 29, Finance lease cost: Amortization of finance lease assets $ 3,201 $ 7,949 Interest on finance lease liabilities 10,116 26,808 13,317 34,757 Operating lease cost 23,358 67,087 Variable lease cost (a) 15,435 44,910 Short-term lease cost 1,141 3,420 Total operating lease cost (b) 39,934 115,417 Total lease cost $ 53,251 $ 150,174 _______________ (a) The three and nine months ended September 29, 2019 includes expenses for executory costs of $9,908 and $29,211 , respectively, for which the Company is reimbursed by sublessees. (b) The three and nine months ended September 29, 2019 includes $32,342 and $92,815 , respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,892 and $20,492 , respectively, 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: Nine Months Ended September 29, Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 29,683 Operating cash flows from operating leases 69,277 Financing cash flows from finance leases 5,178 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities 34,084 Operating lease liabilities 8,212 |
Schedule of Supplemental Information Related to Leases | The following table includes supplemental information related to leases: September 29, Weighted-average remaining lease term (years): Finance leases 17.3 Operating leases 15.5 Weighted average discount rate: Finance leases 10.03 % 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 September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 are included in “Current portion of operating lease liabilities” and “Long-term operating 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 September 29, 2019 : Finance Leases Operating Leases Fiscal Year Company-Operated Franchise and Other Company-Operated Franchise and Other 2019 (a) $ 707 $ 12,759 $ 5,001 $ 17,602 2020 2,862 45,340 19,921 70,690 2021 2,973 46,826 19,733 70,540 2022 3,023 47,830 19,421 70,696 2023 2,975 49,504 19,400 70,655 Thereafter 39,104 704,276 201,762 827,387 Total minimum payments $ 51,644 $ 906,535 $ 285,238 $ 1,127,570 Less interest (23,407 ) (452,484 ) (88,577 ) (369,544 ) Present value of minimum lease payments (b) (c) $ 28,237 $ 454,051 $ 196,661 $ 758,026 _______________ (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 $10,584 and $471,704 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 $43,474 and $911,213 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively. |
Capital Lease, Liability, Maturity | 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 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 Nine Months Ended September 29, September 29, Sales-type and direct-financing leases: Selling (loss) profit $ (97 ) $ 1,874 Interest income 7,240 19,045 Operating lease income $ 44,892 $ 134,056 Variable lease income 15,026 42,875 Franchise rental income (a) $ 59,918 $ 176,931 _______________ (a) Includes sublease income of $44,821 and $130,763 recognized during the three and nine months ended September 29, 2019 , respectively, of which $9,683 and $28,894 , respectively, 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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . |
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 September 29, 2019 : Sales-Type and Direct Financing Leases Operating Leases Fiscal Year Subleases Owned Properties Subleases Owned Properties 2019 (a) $ 6,953 $ 489 $ 27,614 $ 13,129 2020 28,528 2,036 111,227 52,912 2021 29,668 2,068 111,946 54,700 2022 30,342 2,148 113,017 56,173 2023 31,381 2,192 114,021 56,378 Thereafter 486,141 27,115 1,339,940 861,865 Total future minimum receipts 613,013 36,048 $ 1,817,765 $ 1,095,157 Unearned interest income (376,192 ) (19,472 ) Net investment in sales-type and direct financing leases (b) $ 236,821 $ 16,576 _______________ (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 $2,795 and $250,602 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 $195 . |
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 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, Lease Receivable, Maturity | 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: September 29, Land $ 281,744 Buildings and improvements 310,936 Restaurant equipment 1,726 594,406 Accumulated depreciation and amortization (153,379 ) $ 441,027 |
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 | Sep. 29, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle | |||
Operating lease assets | $ 871,108 | ||
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 | Sep. 29, 2019 | Dec. 30, 2018 |
Prior Period Adjustments Restatement | ||
Properties | $ 980,872 | $ 1,023,267 |
Finance lease assets | 189,969 | |
Current portion of long-term debt | 22,750 | 23,250 |
Current portion of finance lease liabilities | 8,405 | |
Long-term debt | $ 2,270,866 | 2,305,552 |
Long-term finance lease liabilities | 447,231 | |
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 | |
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 |
Revenue Disaggregation of Reven
Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue | ||||
Franchise rental income | $ 59,918 | $ 176,931 | ||
Franchise rental income | $ 50,474 | $ 152,110 | ||
Total revenues | 437,880 | 400,550 | 1,281,811 | 1,192,116 |
United States | ||||
Disaggregation of Revenue | ||||
Franchise rental income | 50,987 | 151,693 | ||
Franchise rental income | 43,900 | 133,046 | ||
Total revenues | 410,979 | 375,938 | 1,205,383 | 1,121,518 |
Canada | ||||
Disaggregation of Revenue | ||||
Franchise rental income | 8,931 | 25,238 | ||
Franchise rental income | 6,574 | 19,064 | ||
Total revenues | 21,781 | 19,738 | 60,695 | 56,156 |
Other International | ||||
Disaggregation of Revenue | ||||
Franchise rental income | 0 | 0 | ||
Franchise rental income | 0 | 0 | ||
Total revenues | 5,120 | 4,874 | 15,733 | 14,442 |
Sales at Company-operated restaurants | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 181,977 | 165,323 | 530,724 | 486,316 |
Sales at Company-operated restaurants | United States | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 181,977 | 165,323 | 530,724 | 486,316 |
Sales at Company-operated restaurants | Canada | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | 0 | 0 |
Sales at Company-operated restaurants | Other International | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | 0 | 0 |
Franchise royalty revenue | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 102,267 | 95,501 | 299,931 | 283,602 |
Franchise royalty revenue | United States | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 90,791 | 84,648 | 266,599 | 252,094 |
Franchise royalty revenue | Canada | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 6,529 | 6,260 | 18,341 | 17,696 |
Franchise royalty revenue | Other International | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 4,947 | 4,593 | 14,991 | 13,812 |
Franchise fees | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 6,888 | 7,711 | 20,302 | 25,077 |
Franchise fees | United States | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,838 | 5,575 | 17,563 | 19,671 |
Franchise fees | Canada | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 877 | 1,855 | 1,997 | 4,776 |
Franchise fees | Other International | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 173 | 281 | 742 | 630 |
Advertising funds revenue | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 86,830 | 81,541 | 253,923 | 245,011 |
Advertising funds revenue | United States | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 81,386 | 76,492 | 238,804 | 230,391 |
Advertising funds revenue | Canada | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,444 | 5,049 | 15,119 | 14,620 |
Advertising funds revenue | Other International | ||||
Disaggregation of Revenue | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue Contract Balances (Deta
Revenue Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Dec. 30, 2018 | |
Contract balances | |||
Receivables, which are included in Accounts and notes receivable, net | $ 39,669 | $ 40,300 | |
Receivables, which are included in Advertising funds restricted assets | 49,102 | 47,332 | |
Deferred franchise fees at beginning of period | 102,205 | $ 102,492 | |
Revenue recognized during the period | (6,635) | (7,393) | |
New deferrals due to cash received and other | 5,181 | 7,913 | |
Deferred franchise fees at end of period | 100,751 | $ 103,012 | |
Deferred franchisee fees, current | 9,314 | 9,973 | |
Deferred franchise fees, noncurrent | $ 91,437 | $ 92,232 |
Revenue Revenue, Remaining Perf
Revenue Revenue, Remaining Performance Obligation (Details) $ in Thousands | Sep. 29, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-09-30 | |
Revenue, Remaining Performance Obligation, Amount | $ 2,164 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-12-30 | |
Revenue, Remaining Performance Obligation, Amount | 7,399 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-04 | |
Revenue, Remaining Performance Obligation, Amount | 6,118 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-03 | |
Revenue, Remaining Performance Obligation, Amount | 5,858 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-02 | |
Revenue, Remaining Performance Obligation, Amount | 5,633 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Amount | 73,579 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: (nil) | |
Revenue, Remaining Performance Obligation, Amount | $ 100,751 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($) | Sep. 29, 2019USD ($)number_of_restaurants | Dec. 30, 2018USD ($)number_of_restaurants | |
Business Acquisition | |||
Goodwill | $ 755,588 | $ 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 Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles | $ 2,989 | ||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Assets | $ 140 |
System Optimization Gains, Ne_2
System Optimization Gains, Net Summary of Disposition Activity (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 29, 2019USD ($)number_of_restaurants | Sep. 30, 2018USD ($)number_of_restaurants | Jan. 01, 2017 | |
System optimization gains, net | |||||
Company-operated restaurant ownership percentage | 5.00% | ||||
System optimization gains, net | $ 1,040 | $ 486 | $ 1,162 | $ 8 | |
Proceeds from sales | $ 2,038 | $ 2,863 | |||
Sale of Company-operated restaurants to franchisees | |||||
System optimization gains, net | |||||
Significant Changes, Franchises Sold | number_of_restaurants | 0 | 3 | |||
System optimization gains, net | 0 | 0 | $ 0 | $ 89 | |
Post closing adjustments on sales of restaurants | 1,033 | 279 | 1,087 | 54 | |
Proceeds from sales | 1,436 | ||||
Net Assets Sold | 1,139 | ||||
Goodwill, Period Increase (Decrease) | (208) | ||||
Recognition of deferred gain on sale of property | 911 | 503 | $ 911 | 503 | |
Cash proceeds from post closing adjustments, net of payments | $ 6 | ||||
Sale of franchise-operated restaurant to franchisee | |||||
System optimization gains, net | |||||
Significant Changes, Franchises Sold | number_of_restaurants | 3 | 73 | |||
Sale of Other Assets | |||||
System optimization gains, net | |||||
System optimization gains, net | 7 | 207 | $ 75 | $ (135) | |
Proceeds from sales | $ 798 | $ 1,049 | $ 2,038 | $ 1,421 |
System Optimization Gains, Ne_3
System Optimization Gains, Net Assets Held for Sale (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Property, Plant and Equipment [Abstract] | ||
Assets held for sale | $ 2,391 | $ 2,435 |
Reorganization and Realignmen_3
Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | $ 403 | $ 941 | $ 4,771 | $ 6,691 |
G&A Realignment – May 2017 Plan | ||||
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | 396 | 629 | 4,695 | 6,375 |
System Optimization | ||||
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | $ 7 | $ 312 | $ 76 | $ 316 |
Reorganization and Realignmen_4
Reorganization and Realignment Costs G&A Realignment - May 2017 Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Reserve | ||||
Reorganization and realignment costs | $ 403 | $ 941 | $ 4,771 | $ 6,691 |
G&A Realignment – May 2017 Plan | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 2,700 | 2,700 | ||
Restructuring and Related Cost, Incurred Cost | 297 | 296 | 3,582 | 4,847 |
Restructuring and Related Cost, Cost Incurred to Date | 26,011 | 26,011 | ||
Reorganization and realignment costs | 396 | 629 | 4,695 | 6,375 |
Restructuring Charges, Cost Incurred to Date | 35,143 | 35,143 | ||
G&A Realignment – May 2017 Plan | Severance and related employee costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 1,900 | 1,900 | ||
Restructuring and Related Cost, Incurred Cost | 214 | 57 | 2,816 | 3,168 |
Restructuring and Related Cost, Cost Incurred to Date | 21,569 | 21,569 | ||
G&A Realignment – May 2017 Plan | Recruitment and relocation costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 450 | 450 | ||
Restructuring and Related Cost, Incurred Cost | 58 | 200 | 654 | 708 |
Restructuring and Related Cost, Cost Incurred to Date | 2,220 | 2,220 | ||
G&A Realignment – May 2017 Plan | Third-party and other costs | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 50 | 50 | ||
Restructuring and Related Cost, Incurred Cost | 25 | 39 | 112 | 971 |
Restructuring and Related Cost, Cost Incurred to Date | 2,222 | 2,222 | ||
G&A Realignment – May 2017 Plan | Share based compensation | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost Remaining | 300 | 300 | ||
Restructuring and Related Cost, Incurred Cost | 99 | 333 | 1,113 | 1,528 |
Restructuring and Related Cost, Cost Incurred to Date | 7,797 | 7,797 | ||
G&A Realignment – May 2017 Plan | Termination of defined benefit plans | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Incurred Cost | 0 | $ 0 | 0 | $ 0 |
Restructuring and Related Cost, Cost Incurred to Date | 1,335 | 1,335 | ||
G&A Realignment – May 2017 Plan | Minimum | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost | 35,000 | 35,000 | ||
G&A Realignment – May 2017 Plan | Maximum | ||||
Restructuring Cost and Reserve | ||||
Restructuring and Related Cost, Expected Cost | $ 38,000 | $ 38,000 |
Reorganization and Realignmen_5
Reorganization and Realignment Costs G&A Realignment - May 2017 Plan Accrual Rollforward (Details) - G&A Realignment – May 2017 Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Reserve | ||||
Beginning balance | $ 7,324 | $ 12,270 | ||
Charges | $ 297 | $ 296 | 3,582 | 4,847 |
Payments for Restructuring | (6,908) | (8,868) | ||
Ending balance | 3,998 | 8,249 | 3,998 | 8,249 |
Severance and related employee costs | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 7,241 | 12,093 | ||
Charges | 214 | 57 | 2,816 | 3,168 |
Payments for Restructuring | (6,216) | (7,103) | ||
Ending balance | 3,841 | 8,158 | 3,841 | 8,158 |
Recruitment and relocation | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 83 | 177 | ||
Charges | 58 | 200 | 654 | 708 |
Payments for Restructuring | (580) | (794) | ||
Ending balance | 157 | 91 | 157 | 91 |
Other Restructuring | ||||
Restructuring Cost and Reserve | ||||
Beginning balance | 0 | 0 | ||
Charges | 25 | 39 | 112 | 971 |
Payments for Restructuring | (112) | (971) | ||
Ending balance | 0 | 0 | 0 | 0 |
Accrued expenses and other current liabilities | ||||
Restructuring Cost and Reserve | ||||
Ending balance | 3,491 | 6,817 | 3,491 | 6,817 |
Other Liabilities | ||||
Restructuring Cost and Reserve | ||||
Ending balance | $ 507 | $ 1,432 | $ 507 | $ 1,432 |
Reorganization and Realignmen_6
Reorganization and Realignment Costs System Optimization Costs (Details) $ in Thousands | Sep. 29, 2019USD ($) |
System Optimization | |
Restructuring Cost and Reserve | |
Restructuring and Related Cost, Cost Incurred to Date | $ 72,268 |
Investments Equity Investment S
Investments Equity Investment Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Schedule of Equity Method Investments | ||||
Investment | $ 0 | $ 13 | ||
Foreign currency translation adjustment included in “Other comprehensive (loss) income, net” and other | $ (2,297) | $ 5,315 | $ 7,563 | $ (5,054) |
TimWen | ||||
Schedule of Equity Method Investments | ||||
Equity Method Investment, Ownership Percentage | 50.00% | 50.00% | ||
Equity Method Investment, Purchase Price Adjustment, Amortization Period | 21 years | 21 years | ||
Brazil JV | ||||
Schedule of Equity Method Investments | ||||
Equity Method Investment, Ownership Percentage | 20.00% | 20.00% | ||
TimWen and Brazil JV | ||||
Schedule of Equity Method Investments | ||||
Balance at beginning of period | $ 47,021 | $ 55,363 | ||
Investment | 0 | 13 | ||
Equity in earnings for the period | 8,812 | 7,566 | ||
Amortization of purchase price adjustments | (1,700) | (1,756) | ||
Equity in earnings for the period, net of amortization of purchase price adjustments | 7,112 | 5,810 | ||
Distributions received | (10,038) | (9,060) | ||
Foreign currency translation adjustment included in “Other comprehensive (loss) income, net” and other | 2,164 | (191) | ||
Balance at end of period | $ 46,259 | $ 51,935 | $ 46,259 | $ 51,935 |
Investments Other Investments i
Investments Other Investments in Equity Securities (Details) $ in Thousands | Oct. 11, 2019USD ($) |
Subsequent Event | |
Proceeds from sale of investment | $ 25,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | Jun. 26, 2019 | Dec. 30, 2018 | |
Debt Instrument | ||||||
Unamortized debt issuance costs | $ (34,794) | $ (34,794) | $ (32,217) | |||
Total debt | 2,293,616 | 2,293,616 | 2,328,802 | |||
Less amounts payable within one year | (22,750) | (22,750) | (23,250) | |||
Total long-term debt | 2,270,866 | 2,270,866 | 2,305,552 | |||
Loss on Extinguishment of Debt | 0 | $ 0 | 7,150 | $ 11,475 | ||
Series 2019-1 Class A-2-I Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 399,000 | $ 399,000 | $ 400,000 | 0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.783% | 3.783% | ||||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 1.863% | |||||
Series 2019-1 Class A-2-II Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 448,875 | $ 448,875 | $ 450,000 | 0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.08% | 4.08% | ||||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 2.051% | |||||
Series 2018-1 Class A-2-I Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 442,125 | $ 442,125 | 445,500 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.573% | 3.573% | ||||
Series 2018-1 Class A-2-II Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 466,688 | $ 466,688 | 470,250 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.884% | 3.884% | ||||
Series 2015-1 Class A-2-II Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 0 | $ 0 | 870,750 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.08% | 4.08% | ||||
Series 2015-1 Class A-2-III Notes | ||||||
Debt Instrument | ||||||
Senior Notes | $ 480,000 | $ 480,000 | 483,750 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.497% | 4.497% | ||||
7% Debentures | ||||||
Debt Instrument | ||||||
7% debentures, due in 2025 | $ 91,722 | $ 91,722 | $ 90,769 | |||
Series 2019-1 Class A-2 Notes | ||||||
Debt Instrument | ||||||
Additional Interest Rate On Debt, After Anticipated Repayment Date | 5.00% | |||||
Additional Term on Debt, After Anticipated Repayment Date | 10 years | |||||
Long-term Debt, Maturities, Repayments of Principal Annually through 2019 | $ 4,250 | |||||
Long-term Debt, Maturities, Repayments of Principal Annually from 2020 through 2025 | 8,500 | |||||
Long-term Debt, Maturities, Repayments of Principal Annually in 2026 | 378,500 | |||||
Long-term Debt, Maturities, Repayments of Principal Annually from 2027 through 2028 | 4,500 | |||||
Long-term Debt, Maturities, Repayments of Principal Annually in 2029 | 407,250 | |||||
Series 2019-1 Class A-1 Notes | Line of Credit | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 150,000 | |||||
Proceeds from Lines of Credit | $ 0 | |||||
Series 2018-1 Class A-1 Notes | Line of Credit | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000 | |||||
Series 2019-1 Senior Notes | ||||||
Debt Instrument | ||||||
Debt Issuance Costs, Gross | 14,008 | 14,008 | ||||
Wendy's U.S. Advertising Fund | ||||||
Debt Instrument | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 25,000 | 25,000 | ||||
Proceeds from Lines of Credit | 0 | 9,837 | ||||
Repayments of Lines of Credit | $ 0 | $ 11,124 |
Fair Value Measurements Financi
Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Reported Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | $ 206,094 | $ 222,228 |
Other investments in equity securities | 639 | 639 |
Guarantees of franchisee loan obligations | 2 | 17 |
Reported Value Measurement | Series 2019-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 399,000 | 0 |
Reported Value Measurement | Series 2019-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 448,875 | 0 |
Reported Value Measurement | Series 2018-1 Class A-2-I Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 442,125 | 445,500 |
Reported Value Measurement | Series 2018-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 466,688 | 470,250 |
Reported Value Measurement | Series 2015-1 Class A-2-II Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 0 | 870,750 |
Reported Value Measurement | Series 2015-1 Class A-2-III Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 480,000 | 483,750 |
Reported Value Measurement | 7% Debentures | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 91,722 | 90,769 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash equivalents | 206,094 | 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 | 1,818 | 2,181 |
Guarantees of franchisee loan obligations | 2 | 17 |
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-I Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 405,863 | 0 |
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-II Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | 463,598 | 0 |
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 | 448,580 | 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 | 476,208 | 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 | 0 | 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 | 492,624 | 482,522 |
Estimate of Fair Value Measurement | 7% Debentures | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt instrument | $ 107,500 | $ 102,750 |
Fair Value Measurements Non-Rec
Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis | ||
Assets Held and Used, Long Lived, Fair Value Disclosure | $ 1,866 | $ 462 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 988 | 1,031 |
Total | 2,854 | 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 | 1,866 | 462 |
Assets Held-for-sale, Long Lived, Fair Value Disclosure | 988 | 1,031 |
Total | $ 2,854 | $ 1,493 |
Impairment of Long-Lived Asse_3
Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | $ 0 | $ 347 | $ 1,684 | $ 2,156 |
Surplus properties | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | 0 | 229 | 1,397 | 270 |
Company-operated restaurants | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | 0 | 0 | 287 | 1,603 |
Restaurants leased or subleased to franchisees | ||||
Impaired Long-Lived Assets Held and Used | ||||
Impairment of long-lived assets | $ 0 | $ 118 | $ 0 | $ 283 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | Dec. 30, 2018 | |
Effective Income Tax Rate | 13.50% | 21.60% | 20.50% | 20.60% | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | 21.00% | 21.00% | |
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | $ 1,103 | $ 5,251 | $ 4,028 | $ 12,142 | |
(Provision for) benefit from income taxes | (7,184) | $ (107,668) | (28,527) | (114,250) | |
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | 5,639 | 6,475 | |||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 2,081 | 2,081 | |||
Income Taxes Receivable | 6,719 | 6,719 | $ 14,475 | ||
Income Taxes Receivable, Noncurrent | $ 0 | $ 0 | $ 0 | ||
Tax Act | |||||
(Provision for) benefit from income taxes | (2,076) | ||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | (2,426) | ||||
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount | (991) | ||||
Effective Income Tax Rate Reconciliation, Tax Credit, Foreign, Amount | $ 1,341 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Common Stock: | ||||
Weighted average basic shares outstanding | 230,723 | 237,696 | 230,779 | 238,872 |
Dilutive effect of stock options and restricted shares | 4,995 | 7,070 | 5,122 | 7,574 |
Weighted average diluted shares outstanding | 235,718 | 244,766 | 235,901 | 246,446 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,257 | 1,121 | 2,488 | 1,287 |
Stockholders' Equity Dividends
Stockholders' Equity Dividends (Details) - $ / shares | 3 Months Ended | |||||
Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | |
Dividend Paid | ||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.085 | $ 0.085 | $ 0.085 |
Stockholders' Equity Repurchase
Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | ||||||
Oct. 30, 2019 | Sep. 29, 2019 | Sep. 30, 2018 | Oct. 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | |
Subsequent Event | ||||||||
Equity, Class of Treasury Stock | ||||||||
Treasury Stock, Shares, Acquired | 443 | |||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 9,190 | |||||||
Stock Repurchase Program, Cost Incurred | $ 6 | |||||||
2019 Accelerated Share Repurchase Program | Subsequent Event | ||||||||
Equity, Class of Treasury Stock | ||||||||
Stock Repurchase Program, Authorized Amount | $ 100,000 | |||||||
February 2019 Share Repurchase Program | ||||||||
Equity, Class of Treasury Stock | ||||||||
Stock Repurchase Program, Authorized Amount | $ 225,000 | |||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 170,292 | |||||||
November 2018 and February 2019 Share Repurchase Programs | ||||||||
Equity, Class of Treasury Stock | ||||||||
Treasury Stock, Shares, Acquired | 4,153 | |||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 76,165 | |||||||
Stock Repurchase Program, Repurchase Accrual | 1,102 | |||||||
Stock Repurchase Program, Cost Incurred | $ 58 | |||||||
February 2018 Share Repurchase Program | ||||||||
Equity, Class of Treasury Stock | ||||||||
Stock Repurchase Program, Authorized Amount | $ 175,000 | |||||||
Treasury Stock, Shares, Acquired | 6,896 | |||||||
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions | $ 118,866 | |||||||
Stock Repurchase Program, Repurchase Accrual | 2,675 | |||||||
Stock Repurchase Program, Cost Incurred | $ 97 | |||||||
November 2018 Share Repurchase Program | ||||||||
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 | 9 Months Ended | ||||||
Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Accumulated Other Comprehensive Loss, Net of Tax | ||||||||
Balance, beginning of year | $ (61,673) | $ (46,198) | $ (61,673) | $ (46,198) | ||||
Current-period other comprehensive income (loss) | $ (2,297) | $ 3,835 | 6,025 | $ 5,315 | $ (4,325) | (5,927) | 7,563 | (4,937) |
Balance, end of the period | (54,110) | (51,135) | (54,110) | (51,135) | ||||
Foreign Currency Translation | ||||||||
Accumulated Other Comprehensive Loss, Net of Tax | ||||||||
Balance, beginning of year | (61,673) | (45,149) | (61,673) | (45,149) | ||||
Current-period other comprehensive income (loss) | 7,563 | (5,054) | ||||||
Balance, end of the period | (54,110) | (50,203) | (54,110) | (50,203) | ||||
Pension | ||||||||
Accumulated Other Comprehensive Loss, Net of Tax | ||||||||
Balance, beginning of year | $ 0 | $ (1,049) | 0 | (1,049) | ||||
Current-period other comprehensive income (loss) | 0 | 117 | ||||||
Balance, end of the period | $ 0 | $ (932) | $ 0 | $ (932) |
Leases Lessee Lease Narrative (
Leases Lessee Lease Narrative (Details) | Sep. 29, 2019number_of_restaurants |
Lessee, Lease, Description | |
Number of restaurants | 6,743 |
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 | 356 |
Land And Building - Company Owned | Entity Operated Units | |
Lessee, Lease, Description | |
Number of restaurants | 143 |
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 | 69 |
Leases Lessor Lease Narrative (
Leases Lessor Lease Narrative (Details) | Sep. 29, 2019number_of_restaurants |
Lessor, Lease, Description | |
Number of restaurants | 6,743 |
Land And Building - Company Owned | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 512 |
Land And Building - Leased | Franchised Units | |
Lessor, Lease, Description | |
Number of restaurants | 1,255 |
Leases Components of Lease Cost
Leases Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 23,358 | $ 67,087 |
Variable lease cost | 15,435 | 44,910 |
Short-term lease cost | 1,141 | 3,420 |
Total operating lease cost | 39,934 | 115,417 |
Finance Lease, Cost | ||
Amortization of finance lease assets | 3,201 | 7,949 |
Interest on finance lease liabilities | 10,116 | 26,808 |
Total finance lease cost | 13,317 | 34,757 |
Total lease cost | 53,251 | 150,174 |
Franchise rental expense | ||
Lease, Cost [Abstract] | ||
Franchise rental expense | 32,342 | 92,815 |
Cost of sales | ||
Lease, Cost [Abstract] | ||
Total operating lease cost | 6,892 | 20,492 |
Executory costs paid by lessee | ||
Lease, Cost [Abstract] | ||
Variable lease cost | $ 9,908 | $ 29,211 |
Leases Supplemental Cash Flow a
Leases Supplemental Cash Flow and Non-cash Information (Details) $ in Thousands | 9 Months Ended |
Sep. 29, 2019USD ($) | |
Cash Flow, Operating Activities, Lessee | |
Operating cash flows from finance leases | $ 29,683 |
Operating cash flows from operating leases | 69,277 |
Cash Flow, Financing Activities, Lessee | |
Financing cash flows from finance leases | 5,178 |
Lessee, Lease, Description | |
Right-of-use assets obtained in exchange for finance lease liabilities | 34,084 |
Right-of-use asset obtained in exchange for operating lease liabilities | $ 8,212 |
Leases Supplemental Information
Leases Supplemental Information (Details) | Sep. 29, 2019 |
Lessee, Lease, Description | |
Weighted-average remaining lease term (years): Finance leases | 17 years 3 months 18 days |
Weighted-average remaining lease term (years): Operating leases | 15 years 6 months |
Weighted-average discount rate: Finance leases | 10.03% |
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 | Sep. 29, 2019 | Dec. 30, 2018 |
Finance Lease Liabilities, Payments, Due | ||
Capital Lease Obligations, Current | $ 8,405 | |
Capital Lease Obligations, Noncurrent | 447,231 | |
Entity Operated Units | ||
Finance Lease Liabilities, Payments, Due | ||
Future minimum finance lease payments, remainder of fiscal year | $ 707 | |
Future minimum finance lease payments, due year two | 2,862 | |
Future minimum finance lease payments, due year three | 2,973 | |
Future minimum finance lease payments, due year four | 3,023 | |
Future minimum finance lease payments, due year five | 2,975 | |
Future minimum finance lease payments, due after year five | 39,104 | |
Total minimum finance lease payments | 51,644 | |
Interest incurred on total minimum finance lease payments | (23,407) | |
Present value of minimum finance lease payments | 28,237 | |
Rental Payments, Capital Leases, 2019 | 1,962 | |
Rental Payments, Capital Leases, 2020 | 1,978 | |
Rental Payments, Capital Leases, 2021 | 2,082 | |
Rental Payments, Capital Leases, 2022 | 2,114 | |
Rental Payments, Capital Leases, 2023 | 2,084 | |
Rental Payments, Capital Leases, Thereafter | 23,558 | |
Rental Payments, Capital Leases, Total minimum payments | 33,778 | |
Less interest | (16,874) | |
Present value of minimum capital lease payments | 16,904 | |
Operating Lease Liabilities, Payments Due | ||
Future minimum operating lease payments, remainder of fiscal year | 5,001 | |
Future minimum operating lease payments, due year two | 19,921 | |
Future minimum operating lease payments, due year three | 19,733 | |
Future minimum operating lease payments, due year four | 19,421 | |
Future minimum operating lease payments, due year five | 19,400 | |
Future minimum operating lease payments, due after year five | 201,762 | |
Total minimum operating lease payments | 285,238 | |
Interest incurred on total minimum operating lease payments | (88,577) | |
Present value of minimum operating lease payments | 196,661 | |
Rental Payments, Operating Leases, 2019 | 20,174 | |
Rental Payments, Operating Leases, 2020 | 20,052 | |
Rental Payments, Operating Leases, 2021 | 19,820 | |
Rental Payments, Operating Leases, 2022 | 19,530 | |
Rental Payments, Operating Leases, 2023 | 19,430 | |
Rental Payments, Operating Leases, Thereafter | 203,073 | |
Rental Payments, Operating Leases, Total minimum payments | 302,079 | |
Franchised Units | ||
Finance Lease Liabilities, Payments, Due | ||
Future minimum finance lease payments, remainder of fiscal year | 12,759 | |
Future minimum finance lease payments, due year two | 45,340 | |
Future minimum finance lease payments, due year three | 46,826 | |
Future minimum finance lease payments, due year four | 47,830 | |
Future minimum finance lease payments, due year five | 49,504 | |
Future minimum finance lease payments, due after year five | 704,276 | |
Total minimum finance lease payments | 906,535 | |
Interest incurred on total minimum finance lease payments | (452,484) | |
Present value of minimum finance lease payments | 454,051 | |
Rental Payments, Capital Leases, 2019 | 45,125 | |
Rental Payments, Capital Leases, 2020 | 43,969 | |
Rental Payments, Capital Leases, 2021 | 45,522 | |
Rental Payments, Capital Leases, 2022 | 46,573 | |
Rental Payments, Capital Leases, 2023 | 48,109 | |
Rental Payments, Capital Leases, Thereafter | 676,139 | |
Rental Payments, Capital Leases, Total minimum payments | 905,437 | |
Less interest | (466,705) | |
Present value of minimum capital lease payments | 438,732 | |
Operating Lease Liabilities, Payments Due | ||
Future minimum operating lease payments, remainder of fiscal year | 17,602 | |
Future minimum operating lease payments, due year two | 70,690 | |
Future minimum operating lease payments, due year three | 70,540 | |
Future minimum operating lease payments, due year four | 70,696 | |
Future minimum operating lease payments, due year five | 70,655 | |
Future minimum operating lease payments, due after year five | 827,387 | |
Total minimum operating lease payments | 1,127,570 | |
Interest incurred on total minimum operating lease payments | (369,544) | |
Present value of minimum operating lease payments | 758,026 | |
Rental Payments, Operating Leases, 2019 | 75,703 | |
Rental Payments, Operating Leases, 2020 | 73,320 | |
Rental Payments, Operating Leases, 2021 | 73,167 | |
Rental Payments, Operating Leases, 2022 | 73,300 | |
Rental Payments, Operating Leases, 2023 | 73,377 | |
Rental Payments, Operating Leases, Thereafter | 854,964 | |
Rental Payments, Operating Leases, Total minimum payments | 1,223,831 | |
Current portion of finance lease liabilities | ||
Finance Lease Liabilities, Payments, Due | ||
Present value of minimum finance lease payments | 10,584 | |
Capital Lease Obligations, Current | 8,405 | |
Long-term finance lease liabilities | ||
Finance Lease Liabilities, Payments, Due | ||
Present value of minimum finance lease payments | 471,704 | |
Capital Lease Obligations, Noncurrent | $ 447,231 | |
Current portion of operating lease liabilities | ||
Operating Lease Liabilities, Payments Due | ||
Present value of minimum operating lease payments | 43,474 | |
Long-term operating lease liabilities | ||
Operating Lease Liabilities, Payments Due | ||
Present value of minimum operating lease payments | $ 911,213 |
Leases Components of Lease Inco
Leases Components of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | |
Lessor Lease Income | ||
Sales-type leases, selling (loss) profit | $ (97) | $ 1,874 |
Sales-type and direct-financing leases, interest income | 7,240 | 19,045 |
Operating lease rental income | 44,892 | 134,056 |
Variable lease income | 15,026 | 42,875 |
Franchise rental income | 59,918 | 176,931 |
Sublease income | 44,821 | 130,763 |
Executory costs paid to lessor | ||
Lessor Lease Income | ||
Variable lease income | $ 9,683 | $ 28,894 |
Leases Future Minimum Rental Re
Leases Future Minimum Rental Receipts for Non-cancelable Leases (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Direct Financing Lease, Net Investment in Leases | ||
Net investment in unguaranteed residual assets | $ 195 | |
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 | 6,953 | |
Future minimum sales-type and direct financing lease receipts, due year two | 28,528 | |
Future minimum sales-type and direct financing lease receipts, due year three | 29,668 | |
Future minimum sales-type and direct financing lease receipts, due year four | 30,342 | |
Future minimum sales-type and direct financing lease receipts, due year five | 31,381 | |
Future minimum sales-type and direct financing lease receipts, due after year five | 486,141 | |
Total future minimum sales-type and direct financing lease receipts | 613,013 | |
Unearned interest on total minimum sales-type and direct financing lease receipts | (376,192) | |
Present value of minimum sales-type and direct financing lease receipts | 236,821 | |
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 | 26,859 | |
Future minimum sales-type and direct financing lease receipts, due year three | 27,904 | |
Future minimum sales-type and direct financing lease receipts, due year four | 28,563 | |
Future minimum sales-type and direct financing lease receipts, due year five | 29,512 | |
Future minimum sales-type and direct financing lease receipts, due after year five | 448,851 | |
Total future minimum sales-type and direct financing lease receipts | 587,928 | |
Unearned interest income | (377,046) | |
Present value of minimum sales-type and direct financing lease receipts | 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 | 489 | |
Future minimum sales-type and direct financing lease receipts, due year two | 2,036 | |
Future minimum sales-type and direct financing lease receipts, due year three | 2,068 | |
Future minimum sales-type and direct financing lease receipts, due year four | 2,148 | |
Future minimum sales-type and direct financing lease receipts, due year five | 2,192 | |
Future minimum sales-type and direct financing lease receipts, due after year five | 27,115 | |
Total future minimum sales-type and direct financing lease receipts | 36,048 | |
Unearned interest on total minimum sales-type and direct financing lease receipts | (19,472) | |
Present value of minimum sales-type and direct financing lease receipts | 16,576 | |
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 | 2,006 | |
Future minimum sales-type and direct financing lease receipts, due year three | 2,043 | |
Future minimum sales-type and direct financing lease receipts, due year four | 2,119 | |
Future minimum sales-type and direct financing lease receipts, due year five | 2,159 | |
Future minimum sales-type and direct financing lease receipts, due after year five | 26,404 | |
Total future minimum sales-type and direct financing lease receipts | 36,668 | |
Unearned interest income | (20,338) | |
Present value of minimum sales-type and direct financing lease receipts | 16,330 | |
Subleases, operating | ||
Lessor, Operating Lease, Payments, Fiscal Year Maturity | ||
Future minimum operating lease receipts, remainder of fiscal year | 27,614 | |
Future minimum operating lease receipts, due year two | 111,227 | |
Future minimum operating lease receipts, due year three | 111,946 | |
Future minimum operating lease receipts, due year four | 113,017 | |
Future minimum operating lease receipts, due year five | 114,021 | |
Future minimum operating lease receipts, due after year five | 1,339,940 | |
Total future minimum operating lease receipts | 1,817,765 | |
Future minimum operating lease receipts, next twelve months | 113,180 | |
Future minimum operating lease receipts, due year two | 113,578 | |
Future minimum operating lease receipts, due year three | 114,447 | |
Future minimum operating lease receipts, due year four | 115,552 | |
Future minimum operating lease receipts, due year five | 116,463 | |
Future minimum operating lease receipts, due after year five | 1,372,646 | |
Total future minimum operating lease receipts | 1,945,866 | |
Owned properties, operating | ||
Lessor, Operating Lease, Payments, Fiscal Year Maturity | ||
Future minimum operating lease receipts, remainder of fiscal year | 13,129 | |
Future minimum operating lease receipts, due year two | 52,912 | |
Future minimum operating lease receipts, due year three | 54,700 | |
Future minimum operating lease receipts, due year four | 56,173 | |
Future minimum operating lease receipts, due year five | 56,378 | |
Future minimum operating lease receipts, due after year five | 861,865 | |
Total future minimum operating lease receipts | 1,095,157 | |
Future minimum operating lease receipts, next twelve months | 52,527 | |
Future minimum operating lease receipts, due year two | 53,066 | |
Future minimum operating lease receipts, due year three | 54,615 | |
Future minimum operating lease receipts, due year four | 56,092 | |
Future minimum operating lease receipts, due year five | 56,284 | |
Future minimum operating lease receipts, due after year five | 858,755 | |
Total future minimum operating lease receipts | 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 | 2,795 | |
Present value of minimum sales-type and direct financing lease receipts | 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 | $ 250,602 | |
Present value of minimum sales-type and direct financing lease receipts | $ 226,477 |
Leases Properties Leased to Thi
Leases Properties Leased to Third Parties (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Property, Plant and Equipment | ||
Properties | $ 980,872 | $ 1,023,267 |
Assets Leased to Others | ||
Property, Plant and Equipment | ||
Land | 281,744 | |
Buildings and improvements | 310,936 | |
Restaurant equipment | 1,726 | |
Property, plant and equipment leased to others, gross | 594,406 | |
Accumulated depreciation and amortization | (153,379) | |
Properties | $ 441,027 |
Transactions with Related Par_2
Transactions with Related Parties (Details) - TimWen - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2019 | Sep. 30, 2018 | |
Related Party Transaction | ||
TimWen lease expense | $ 12,710 | $ 9,967 |
General and administrative | ||
Related Party Transaction | ||
Related Party Transaction, Other Revenues from Transactions with Related Party | $ 155 | $ 161 |
Guarantees and Other Commitme_2
Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands | Sep. 29, 2019USD ($) |
Property Lease Guarantee | |
Guarantor Obligations | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 74,898 |
Guarantees and Other Commitme_3
Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands | Sep. 29, 2019USD ($) |
Guarantor Obligations | |
Letters of Credit Outstanding, Amount | $ 25,082 |
Guarantees and Other Commitme_4
Guarantees and Other Commitments and Contingencies Beverage Agreements (Details) $ in Thousands | 9 Months Ended |
Sep. 29, 2019USD ($) | |
Long-term Purchase Commitment | |
Purchase Obligation, Purchases During Period | $ 8,417 |
Purchase Obligation, Remainder of Fiscal Year | 2,700 |
Purchase Obligation, Due in Second Year | 10,800 |
Purchase Obligation, Due in Third Year | 11,100 |
Purchase Obligation, Due in Fourth Year | 11,600 |
Purchase Obligation, Due in Fifth Year | $ 12,100 |
Legal and Environmental Matte_2
Legal and Environmental Matters (Details) - Financial Institutions Case - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 30, 2018 |
Loss Contingencies | ||
Accruals for legal and environmental matters | $ 50,000 | $ 50,000 |
Loss Contingency, Estimate of Possible Loss | 25,000 | |
Insurance Settlements Receivable | $ 25,000 | $ 22,500 |
Uncategorized Items - twc10qq32
Label | Element | Value |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 29,519,000 |
Restricted cash included in advertising funds restricted assets | wen_Restrictedcashincludedinadvertisingfundsrestrictedassets | $ 25,247,000 |