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Wendy 200710K

Wendy 200710K

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Published by: LarryYang on Mar 07, 2010
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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
 
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Fiscal Year Ended December 30, 2007
 
 
TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from toCommission File Number: 1-8116
WENDY’S INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)Ohio
 
31-0785108
 
(State or other jurisdiction of 
 
incorporation or organization)
 
(I.R.S. Employer
 
Identification Number)
 
P.O. Box 256, 4288 West Dublin-
 
Granville Road, Dublin, Ohio
 
43017-0256
 
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code 614-764-3100Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Common Shares, $.10 stated value
 
Name of each exchange on which registered
 
New York Stock Exchange
 
Preferred Stock Purchase Rights
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES
NO
.Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES
NO
.Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90days. YES
NO
.Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer
Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)
Smaller reporting company
.Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
NO
.The aggregate market value of the voting stock held by non-affiliates of the Registrant computed by reference to the price, at which such voting stock was last sold, as of June 30, 2007, was $3,209,602,000.Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of February 14, 2008. 87,405,000
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant’s 2008 Proxy Statement, or its Form 10-K/A, which will be filed no later than 120 days after December 30, 2007, are incorporated by referenceinto Part III hereof.Exhibit index on pages 89-92.
 
 
WENDY’S INTERNATIONAL, INC.2007 FORM 10-K ANNUAL REPORTTABLE OF CONTENTS
Page
 
PART I
Item 1.
 
Business............................................................................................................................................................................1Item 1A.Risk Factors......................................................................................................................................................................5Item 1B.
 
Unresolved Staff Comments.............................................................................................................................................10Item 2.
 
Properties..........................................................................................................................................................................10Item 3.
 
Legal Proceedings.............................................................................................................................................................13Item 4.
 
Submission of Matters to a Vote of Security Holders.......................................................................................................13
PART II
Item 5.
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities14Item 6.
 
Selected Financial Data....................................................................................................................................................19Item 7.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...........................................21Item 7A.Quantitative and Qualitative Disclosures About Market Risk..........................................................................................39Item 8.
 
Financial Statements and Supplementary Data.................................................................................................................41Item 9.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........................................83Item 9A.Controls and Procedures...................................................................................................................................................83Item 9B.
 
Other Information.............................................................................................................................................................83
PART III
Item 10.
 
Directors and Executive Officers and Corporate Governance..........................................................................................84Item 11.
 
Executive Compensation..................................................................................................................................................84Item 12.
 
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.........................84Item 13.
 
Certain Relationships and Related Transactions, and Director Independence..................................................................84Item 14.
 
Principal Accounting Fees and Services...........................................................................................................................85
PART IV
Item 15.
 
Exhibits, Financial Statement Schedules .........................................................................................................................86SIGNATURES ............................................................................................................................................................................... 87
 
1
PART I
 Item 1. Business
The Company
Wendy’s International, Inc. was incorporated in 1969 under the laws of the State of Ohio. Wendy’s International, Inc. and itssubsidiaries are collectively referred to herein as the “
Company
” or “
Wendy’s
”.The Company is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-servicerestaurants serving high quality food. At December 30, 2007, there were 6,645 Wendy’s restaurants in operation in the United Statesand in 19 other countries and territories. Of these restaurants, 1,414 were operated by the Company and 5,231 by the Company’sfranchisees.On March 29, 2006, the Company completed its initial public offering (“
 IPO
”) of Tim Hortons Inc. (“
THI 
”). A total of 33.4 millionshares of THI were offered at an initial per share price of $23.162 ($27.00 Canadian). The shares sold in the IPO represented 17.25%of total THI shares issued and outstanding and the Company retained the remaining 82.75%. On September 29, 2006, the Companycompleted the spin-off of its remaining 82.75% ownership in THI, the parent company of the business previously reported as theHortons segment. Accordingly, the results of operations of THI are reflected as discontinued operations for all periods presented. OnNovember 28, 2006 and July 29, 2007, the Company completed the sales of Baja Fresh and Cafe Express, respectively, andaccordingly, the results of operations of Baja Fresh and Cafe Express are reflected as discontinued operations for all periods presented.The assets and liabilities of Cafe Express were held for sale at December 31, 2006 and are presented as current and non-current assetsand liabilities from discontinued operations as of that date. Baja Fresh and Cafe Express were previously reported as the DevelopingBrands segment (see Note 10 of the Financial Statements and Supplementary Data included in Item 8 herein).
Operations
Each Wendy’s restaurant offers a relatively standard menu featuring hamburgers and filet of chicken breast sandwiches, which areprepared to order with the customer’s choice of condiments. Wendy’s menu also includes chicken nuggets, chili, baked and Frenchfried potatoes, freshly prepared salads, soft drinks, milk, Frosty dessert, floats and kids meals. In addition, the restaurants sell a varietyof promotional products on a limited basis.The Company strives to maintain quality and uniformity throughout all restaurants by publishing detailed specifications for foodproducts, preparation and service, by continual in-service training of employees, restaurant reviews and by field visits from Companysupervisors. In the case of franchisees, field visits are made by Company personnel who review operations, including quality, serviceand cleanliness and make recommendations to assist in compliance with Company specifications.Generally, the Company does not sell food or supplies, other than sandwich buns and kids’ meal toys, to its Wendy’s franchisees.However, the Company has arranged for volume purchases of many of these products. Under the purchasing arrangements,independent distributors purchase certain products directly from approved suppliers and then store and sell them to local company andfranchised restaurants. These programs help assure availability of products and provide quantity discounts, quality control andefficient distribution. These advantages are available both to the Company and to its franchisees.The New Bakery Co. of Ohio, Inc. (“
 Bakery
”), a wholly-owned subsidiary of the Company, is a producer of buns for Wendy’srestaurants, and to a lesser extent for outside parties. At December 30, 2007, the Bakery supplied 637 restaurants operated by theCompany and 2,366 restaurants operated by franchisees. At the present time, the Bakery does not manufacture or sell any otherproducts.

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