Wendy's 2009 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2009 Wendy's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 166

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166

(e) Represents (1) $15.5 million for funding related to the Wendy’s Co-op Agreement, (2) $6.1 million
severance for Wendy’s and Wendy’s/Arby’s personnel in connection with the Wendy’s Merger and New
York headquarters’ employees and (3) $5.8 million for stock repurchases in 2009 not settled until 2010.
(f) Excludes obligations for uncertain income tax positions of $31.0 million. We are unable to predict when,
and if, cash payments on any of this accrual will be required.
Capital Expenditures
In 2009, cash capital expenditures amounted to $101.9 million and non-cash capital expenditures,
consisting of capitalized leases and certain sale-leaseback obligations, amounted to $6.4 million. In 2010, we
expect that cash capital expenditures will amount to approximately $165.0 million, principally relating to (1)
remodeling approximately 100 Arby’s and 100 Wendy’s Company-owned restaurants, (2) ongoing maintenance
capital expenditures for our Company-owned restaurants and (3) the opening of an estimated 12 new Wendy’s
Company-owned restaurants. We have $18.6 million of outstanding commitments for capital expenditures as
of January 3, 2010, of which we expect $14.0 million to be paid in 2010.
Dividends
On March 30, 2009, June 15, 2009, September 15, 2009 and December 15, 2009, we paid quarterly cash
dividends of $0.015 per share on our Common Stock, aggregating $28.0 million. During the 2010 first
quarter, we declared dividends of $0.015 per share to be paid on March 15, 2010 to shareholders of record as of
March 1, 2010. If we pay regular quarterly cash dividends for the remainder of 2010 at the same rate as
declared in our 2010 first quarter, our total cash requirement for dividends for all of 2010 would be
approximately $26.6 million based on the number of shares of our Common Stock outstanding at February 26,
2010. We currently intend to continue to declare and pay quarterly cash dividends; however, there can be no
assurance that any quarterly dividends will be declared or paid in the future or of the amount or timing of such
dividends, if any.
Stock Repurchases
As approved by our Board of Directors, our management is currently authorized, when and if market
conditions warrant and to the extent legally permissible, to repurchase through January 2, 2011 up to a total of
$200.0 million of our Common Stock. As of January 3, 2010, we had repurchased 16.9 million shares with an
aggregate purchase price of $78.4 million, excluding commissions of $0.3 million and including $5.8 million
of repurchases that were not settled until after year end. Since that date and through February 26, 2010, we
repurchased an additional 9.1 million shares for an aggregate purchase price of $41.8 million, excluding
commissions of $0.2 million and excluding the repurchases that were not settled until after the 2009 year end.
Income Taxes
The Wendy’s Merger qualified as a tax-free reorganization. Based on the merger exchange ratio, the
former shareholders of Wendy’s owned approximately 80% of the total stock of Wendy’s/Arby’s outstanding
immediately after the Wendy’s Merger. Therefore, the Wendy’s Merger was treated as a reverse acquisition for
U.S. Federal income tax purposes. As a result of the reverse acquisition, Wendy’s/Arby’s and its subsidiaries
became part of the Wendy’s consolidated group with Wendy’s/Arby’s as its new parent. In addition,
Wendy’s/Arby’s had a short taxable year in 2008 ending on the date of the Wendy’s Merger. Also as a result of
the Wendy’s Merger, for U.S. Federal tax purposes there was an ownership change which places a limit on the
amount of a company’s net operating losses that can be deducted annually.
The Internal Revenue Service (the “IRS”) is currently conducting an examination of our 2010 and 2009
U.S. Federal income tax years as part of the Compliance Assurance Process (“CAP”). As part of CAP, tax years
are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax
return. Wendy’s has been participating in CAP since its 2006 tax year. The Wendy’s federal income tax
returns for 2007 and prior years have been settled. The Company participated in CAP beginning with the tax
period ended December 28, 2008 and this return is settled. Our December 28, 2008 U.S. Federal income tax
return included Wendy’s for all of 2008 and Wendy’s/Arby’s for the period September 30, 2008 to
December 28, 2008.
54