Wendy's 2013 Annual Report Download - page 54

Under the prior repurchase program, which expired at the end of fiscal 2011, our Board of Directors had
authorized in aggregate the repurchase of $495.0 million of our common stock. Through the expiration of the prior
repurchase program, the Company repurchased in aggregate 83.3 million shares with a purchase price of
$402.5 million, excluding commissions of $1.5 million.
In January 2014, our Board of Directors authorized a new repurchase program for up to $275.0 million of our
common stock through the end of fiscal year 2014, when and if market conditions warrant and to the extent legally
permissible. As part of the repurchase program, the Board of Directors also authorized the commencement of a
modified Dutch auction tender offer to repurchase shares of our common stock for an aggregate purchase price of up
to $275.0 million.
On February 11, 2014, the tender offer expired and on February 19, 2014, the Company repurchased
29.7 million shares for an aggregate purchase price of $275.0 million. As a result, the repurchase program authorized
in January 2014 has been completed. The Company incurred costs of approximately $1.8 million in connection with
the tender offer, which will be recorded to “Additional paid-in capital.”
Guarantees and Other Contingencies
Year End
2013
Lease guarantees and contingent rent on leases (a) .................................... $47.8
Recourse on loans (b) ......................................................... 11.5
Letters of credit (c) ........................................................... 18.8
Total .................................................................. $78.1
(a) Wendy’s is contingently liable for certain leases and other obligations primarily from former company-owned
restaurant locations now operated by franchisees amounting to $42.7 million as of December 29, 2013. These
leases extend through 2050. In addition, Wendy’s is contingently liable for certain other leases which have been
assigned to unrelated third parties, who have indemnified Wendy’s against future liabilities amounting to
$5.1 million as of December 29, 2013. These leases expire on various dates through 2021.
(b) Wendy’s has provided loan guarantees to various lenders on behalf of franchisees under debt arrangements for
new restaurant development and equipment financing to promote systemwide initiatives. Recourse on the
majority of these loans is limited, generally to a percentage of the original loan amount or the current loan
balance on individual franchisee loans or an aggregate minimum for the entire loan arrangement. In addition
during 2012, Wendy’s provided a $2.0 million guarantee to a lender for a franchisee, in connection with the
refinancing of the franchisee’s debt which originated in 2007. Pursuant to the agreement, the guarantee is
subject to an annual reduction over a five year period.
(c) The Company has outstanding letters of credit with various parties totaling $18.8 million, of which
$18.6 million are cash collateralized. The Company does not expect any material loss to result from these letters
of credit because we do not believe performance will be required.
Inflation and Changing Prices
We believe that general inflation did not have a significant effect on our consolidated results of operations,
except as mentioned below for certain commodities, during the reporting periods. We manage any inflationary costs
and commodity price increases through selective menu price increases. Delays in implementing such menu price
increases and competitive pressures may limit our ability to recover such cost increases in the future. Inherent
volatility experienced in certain commodity markets, such as those for beef, chicken, corn and wheat had a significant
effect on our results of operations in 2013, 2012 and 2011 and may have an adverse effect on us in the future. The
extent of any impact will depend on our ability and timing to increase food prices.
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