Wendy's 2013 Annual Report Download - page 25

To service debt and meet its other cash needs, Wendy’s will require a significant amount of cash, which may not
be generated or available to it.
The ability of Wendy’s to make payments on, or repay or refinance, its debt, including the Restated Credit
Agreement, and to fund planned capital expenditures, dividends and other cash needs will depend largely upon its
future operating performance. Future performance, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control. In addition, the ability of Wendy’s
to borrow funds in the future to make payments on its debt will depend on the satisfaction of the covenants in its
credit facilities and other debt agreements, including the Restated Credit Agreement and other agreements it may
enter into in the future. Specifically, Wendy’s will need to maintain specified financial ratios and satisfy financial
condition tests. There is no assurance that the Wendy’s business will generate sufficient cash flow from operations or
that future borrowings will be available under its credit facilities or from other sources in an amount sufficient to
enable it to pay its debt or to fund its or The Wendy’s Company’s dividend and other liquidity needs.
As a result of the indemnification provisions of the Purchase and Sale Agreement pursuant to which the sale of
Arby’s occurred on July 4, 2011, Wendy’s Restaurants may incur expenses and liabilities for taxes related to
periods up to the date of sale.
As a result of the indemnification provisions of the Purchase and Sale Agreement pursuant to which the sale of
Arby’s occurred on July 4, 2011, Wendy’s Restaurants may incur expenses and liabilities for taxes related to periods
up to the date of sale, such as income, sales and use, and other operating taxes. As of December 29, 2013, Wendy’s
Restaurants had accrued $0.8 million for certain tax liabilities related to Arby’s which are the obligations of Wendy’s
Restaurants pursuant to the indemnification provisions of the Purchase and Sale Agreement and it is possible that
further accruals may occur in future periods as audits by various taxing authorities are resolved. Further accruals in
future periods would adversely affect our results of operations.
There can be no assurance regarding whether or to what extent the Company will pay dividends on its Common
Stock in the future.
Holders of the Company’s Common Stock will only be entitled to receive such dividends as its Board of
Directors may declare out of funds legally available for such payments. Any dividends will be made at the discretion of
the Board of Directors and will depend on the Company’s earnings, financial condition, cash requirements and such
other factors as the Board of Directors may deem relevant from time to time.
Because the Company is a holding company, its ability to declare and pay dividends is dependent upon cash,
cash equivalents and short-term investments on hand and cash flows from its subsidiaries. The ability of its
subsidiaries to pay cash dividends and/or make loans or advances to the holding company will be dependent upon
their respective abilities to achieve sufficient cash flows after satisfying their respective cash requirements, including
subsidiary-level debt service and revolving credit agreements, to enable the payment of such dividends or the making
of such loans or advances. The ability of any of its subsidiaries to pay cash dividends or other payments to the
Company will also be limited by restrictions in debt instruments currently existing or subsequently entered into by
such subsidiaries, including the Restated Credit Agreement, which is described earlier in this Item 1A.
A substantial amount of the Company’s Common Stock is concentrated in the hands of certain stockholders.
Nelson Peltz, the Company’s Chairman and former Chief Executive Officer, Peter May, the Company’s Vice
Chairman and former President and Chief Operating Officer, and Edward Garden, a director of the Company,
beneficially own shares of the Company’s outstanding Common Stock that collectively constitute more than 24% of
its total voting power as of February 26, 2014. Messrs. Peltz, May and Garden may, from time to time, acquire
beneficial ownership of additional shares of Common Stock.
On December 1, 2011, the Company entered into an agreement (the “Trian Agreement”) with Messrs. Peltz,
May and Garden, and several of their affiliates (the “Covered Persons”). Pursuant to the Trian Agreement, the Board
of Directors, including a majority of the independent directors, approved, for purposes of Section 203 of the
Delaware General Corporation Law (“Section 203”), the Covered Persons becoming the owners (as defined in
Section 203(c)(9) of the DGCL) of or acquiring an aggregate of up to (and including), but not more than, 32.5%
(subject to certain adjustments set forth in the Agreement) of the outstanding shares of the Company’s Common
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