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February 11, 2008 |
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WENDY'S INT'L: Earnings at US$14 Mil. in Qtr. Ended Dec. 30 Wendy's International Inc. reported its preliminary, unaudited financial results for the full year and fourth quarter of 2007. The company reported net income of US$14.07 million in fourth quarter ended Dec. 30, 2007, compared to net income of US$3.03 million for the same period in the previous year. For full year ended Dec. 30, 2007, the company reported net income of US$87.90 million, compared to US$94.31 million for the same period in the previous year. "I am proud of our restaurant crews, franchisees and company employees for what we accomplished in 2007," Kerrii Anderson, chief executive officer and president, said. "We executed our strategic plan, implemented many initiatives to drive the business and made tough decisions to position Wendy's for future growth. "We produced significantly improved company store operating margins and earnings growth in the face of an incredibly challenging environment, with rising commodities and the distraction of the Special Committee process," Mr. Anderson added. "Our goal was to deliver EBITDA in the range of US$295- US$315 million for the year, and we achieved that objective with EBITDA of US$305 million, up 38% over the previous year." "Our improved financial performance reflected modest same-store sales growth, higher average check and excellent expense control by our employees," Jay Fitzsimmons, chief financial officer, said. "There is no question that our business is stronger today than a year ago." Phase 2 of its Strategic Plan The company launched Phase 2 of its strategic plan, which focuses on further growth in same-store sales and earnings in 2008. "We have a powerful brand, and our objective in 2008 is to re- ignite sales growth and drive quality and innovation throughout our business," Mr. Anderson said. "In addition to a strong new product lineup for 2008 and a re-energized focus on restaurant operations, we are excited about our new advertising that highlights Wendy's unique competitive advantage of quality. Today, we are launching our 'Waaaay Better' campaign, and the hero of our new advertising will be our quality food." The company's evolution of its advertising approach is based on extensive consumer research over the last eight months, working in close collaboration with its agency partners and franchise advertising committee. "Our new campaign leverages Wendy's red-hair iconography, but does so in a way that is more genuine and true to our brand," Mr. Anderson said. "Each television spot opens and closes with an animated version of our familiar logo - the enduring image of Wendy, a red-headed, little girl. Our Wendy icon stands for wholesome authenticity and honest quality. It's one of the most powerful, under-used assets in the consumer world today." Discontinued operations Wendy's completed its spinoff of Tim Hortons in the third quarter of 2006 and completed the sale of Baja Fresh(R: 56.92, - 0.10, -0.17%) Mexican Grill during the fourth quarter of 2006. During the third quarter of 2007, the Company completed the sale of Cafe Express. Accordingly, the after-tax operating results of Tim Hortons, Baja Fresh and Cafe Express appear in the "Discontinued Operations" line on the income statement. Wendy's Joint Venture with Tim Hortons Wendy's and Tim Hortons continue to operate approximately 100 combination restaurants in Canada as part of the joint venture. The company refers to the entity that controls the real estate of these combination restaurants as its Canadian restaurant real estate joint venture with Tim Hortons. Wendy's and Tim Hortons also operate approximately 40 combination restaurants in the U.S., which are not included in the joint venture. As a result of its 2006 spinoff of Tim Hortons, the company, in accordance with generally accepted accounting principles, accounts for its 50% share of the Canadian restaurant real estate joint venture with Tim Hortons under the equity method of accounting, rather than consolidating the results of the joint venture in the company's financial statements. Without this change, company-operated restaurant EBITDA margins would have been 10.9% for the full year. This change in accounting for the company's joint venture with Tim Hortons impacts several lines on the company's statement of income and resulted in an overall reduction to full-year 2007 operating income of US$7.2 million compared to the full-year of 2006. At Dec. 30, 2007, the company's balance sheet showed total assets of US$1.79 billion, total liabilities of US$0.99 billion, and total shareholders' equity of US$0.80 billion. Headquartered in Dublin, Ohio, Wendy's International Inc. (NYSE: WEN) -- http://www.wendysintl.com/ -- and its subsidiaries operate, develop, and franchise a system of quick service and fast casual restaurants in the United States, Canada, Mexico, Argentina, and the Philippines, among others. * * * As reported in the Troubled Company Reporter on June 21, 2007, Moody's Investors Service lowered all ratings of Wendy's International, Inc. and placed all ratings on review for further possible downgrade. Affected ratings include the company's Ba2 corporate family rating which was lowered to Ba3 and its (P)B1 preferred stock shelf rating which was lowered to (P)B2. Additionally, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Wendy's International Inc. to 'BB-' from 'BB+'. All ratings remain on CreditWatch with negative implications, where they were placed on April 26, 2007. |
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