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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2023

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission file number: 1-2207
THE WENDY’S COMPANY
(Exact name of registrant as specified in its charter)
Delaware38-0471180
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
One Dave Thomas Blvd.
Dublin,
Ohio43017
(Address of principal executive offices)(Zip Code)

(614) 764-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.10 par valueWENThe Nasdaq Stock Market LLC

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 the preceding 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 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

There were 206,259,422 shares of The Wendy’s Company common stock outstanding as of October 26, 2023.



THE WENDY’S COMPANY AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page
3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.
THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Par Value)
October 1,
2023
January 1,
2023
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$598,025 $745,889 
Restricted cash36,727 35,203 
Accounts and notes receivable, net138,064 116,426 
Inventories6,813 7,129 
Prepaid expenses and other current assets33,311 26,963 
Advertising funds restricted assets113,112 126,673 
Total current assets926,052 1,058,283 
Properties886,792 895,778 
Finance lease assets227,289 234,570 
Operating lease assets718,387 754,498 
Goodwill773,187 773,088 
Other intangible assets1,225,290 1,248,800 
Investments34,441 46,028 
Net investment in sales-type and direct financing leases313,969 317,337 
Other assets185,041 170,962 
Total assets$5,290,448 $5,499,344 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities:  
Current portion of long-term debt$29,250 $29,250 
Current portion of finance lease liabilities19,734 18,316 
Current portion of operating lease liabilities49,155 48,120 
Accounts payable41,693 43,996 
Accrued expenses and other current liabilities148,936 116,010 
Advertising funds restricted liabilities116,432 132,307 
Total current liabilities405,200 387,999 
Long-term debt2,768,226 2,822,196 
Long-term finance lease liabilities566,739 571,877 
Long-term operating lease liabilities753,301 792,051 
Deferred income taxes270,614 270,421 
Deferred franchise fees89,363 90,231 
Other liabilities94,441 98,849 
Total liabilities4,947,884 5,033,624 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;
     470,424 shares issued; 207,468 and 213,101 shares outstanding, respectively
47,042 47,042 
Additional paid-in capital2,950,916 2,937,885 
Retained earnings414,324 414,749 
Common stock held in treasury, at cost; 262,956 and 257,323 shares, respectively
(3,006,116)(2,869,780)
Accumulated other comprehensive loss(63,602)(64,176)
Total stockholders’ equity342,564 465,720 
Total liabilities and stockholders’ equity$5,290,448 $5,499,344 

See accompanying notes to condensed consolidated financial statements.
4

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)

Three Months EndedNine Months Ended
October 1,
2023
October 2,
2022
October 1,
2023
October 2,
2022
(Unaudited)
Revenues:
Sales$234,721 $228,786 $703,358 $668,930 
Franchise royalty revenue and fees149,345 141,733 444,070 414,145 
Franchise rental income57,567 58,463 173,407 174,944 
Advertising funds revenue108,922 103,587 320,092 300,976 
550,555 532,569 1,640,927 1,558,995 
Costs and expenses:
Cost of sales199,522 196,168 597,068 578,506 
Franchise support and other costs14,806 12,728 41,853 34,456 
Franchise rental expense31,876 31,687 94,901 92,699 
Advertising funds expense107,895 108,269 319,174 317,042 
General and administrative59,288 62,523 184,306 186,506 
Depreciation and amortization (exclusive of amortization of cloud computing arrangements shown separately below)34,288 34,252 101,258 100,911 
Amortization of cloud computing arrangements3,844 888 7,692 888 
System optimization gains, net(120)(452)(119)(4,138)
Reorganization and realignment costs611 8 8,100 628 
Impairment of long-lived assets59 206 513 2,682 
Other operating income, net(3,117)(11,843)(9,174)(20,482)
448,952 434,434 1,345,572 1,289,698 
Operating profit101,603 98,135 295,355 269,297 
Interest expense, net(30,957)(31,916)(93,798)(90,406)
Loss on early extinguishment of debt(319) (1,585) 
Investment (loss) income, net  (10,389)2,107 
Other income, net7,637 2,910 22,546 4,355 
Income before income taxes77,964 69,129 212,129 185,353 
Provision for income taxes(19,915)(18,587)(54,627)(49,258)
Net income$58,049 $50,542 $157,502 $136,095 
Net income per share:
Basic$.28 $.24 $.75 $.64 
Diluted.28 .24 .74 .63 

See accompanying notes to condensed consolidated financial statements.
5

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)

Three Months EndedNine Months Ended
October 1,
2023
October 2,
2022
October 1,
2023
October 2,
2022
(Unaudited)
Net income$58,049 $50,542 $157,502 $136,095 
Other comprehensive (loss) income:
Foreign currency translation adjustment(4,533)(14,183)574 (20,520)
Other comprehensive (loss) income(4,533)(14,183)574 (20,520)
Comprehensive income $53,516 $36,359 $158,076 $115,575 

See accompanying notes to condensed consolidated financial statements.
6

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands)

Common
Stock
Additional
Paid-In
Capital
Retained EarningsCommon Stock Held in TreasuryAccumulated Other Comprehensive LossTotal
(Unaudited)
Balance at January 1, 2023$47,042 $2,937,885 $414,749 $(2,869,780)$(64,176)$465,720 
Net income  39,821   39,821 
Other comprehensive income    158 158 
Cash dividends  (53,103)  (53,103)
Repurchases of common stock   (38,810) (38,810)
Share-based compensation 4,609    4,609 
Common stock issued upon exercises of stock options
 808  1,808  2,616 
Common stock issued upon vesting of restricted shares
 (2,222) 678  (1,544)
Other 58 (22)54  90 
Balance at April 2, 2023$47,042 $2,941,138 $401,445 $(2,906,050)$(64,018)$419,557 
Net income  59,632   59,632 
Other comprehensive income    4,949 4,949 
Cash dividends  (52,612)  (52,612)
Repurchases of common stock   (50,183) (50,183)
Share-based compensation 5,609    5,609 
Common stock issued upon exercises of stock options
 1,136  3,829  4,965 
Common stock issued upon vesting of restricted shares
 (2,182) 1,283  (899)
Other 53 (16)60  97 
Balance at July 2, 2023$47,042 $2,945,754 $408,449 $(2,951,061)$(59,069)$391,115 
Net income  58,049   58,049 
Other comprehensive loss    (4,533)(4,533)
Cash dividends  (52,156)  (52,156)
Repurchases of common stock    (56,714) (56,714)
Share-based compensation 6,551    6,551 
Common stock issued upon exercises of stock options
 210  894  1,104 
Common stock issued upon vesting of restricted shares
 (1,658) 702  (956)
Other 59 (18)63  104 
Balance at October 1, 2023$47,042 $2,950,916 $414,324 $(3,006,116)$(63,602)$342,564 

See accompanying notes to condensed consolidated financial statements.
7

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(In Thousands)
Common
Stock
Additional
Paid-In
Capital
Retained EarningsCommon Stock Held in TreasuryAccumulated Other Comprehensive LossTotal
(Unaudited)
Balance at January 2, 2022$47,042 $2,898,633 $344,198 $(2,805,268)$(48,200)$436,405 
Net income  37,402   37,402 
Other comprehensive income    1,118 1,118 
Cash dividends  (26,911)  (26,911)
Repurchases of common stock, including accelerated share repurchase 18,750  (18,750)  
Share-based compensation 6,348    6,348 
Common stock issued upon exercises of stock options
 237  1,354  1,591 
Common stock issued upon vesting of restricted shares
 (1,989) 459  (1,530)
Other 63 (8)57  112 
Balance at April 3, 2022$47,042 $2,922,042 $354,681 $(2,822,148)$(47,082)$454,535 
Net income  48,151   48,151 
Other comprehensive loss    (7,455)(7,455)
Cash dividends  (26,635)  (26,635)
Repurchases of common stock   (51,950) (51,950)
Share-based compensation 6,122    6,122 
Common stock issued upon exercises of stock options
 (300) 399  99 
Common stock issued upon vesting of restricted shares
 (1,178) 1,073  (105)
Other 53 (10)58  101 
Balance at July 3, 2022$47,042 $2,926,739 $376,187 $(2,872,568)$(54,537)$422,863 
Net income  50,542   50,542 
Other comprehensive loss    (14,183)(14,183)
Cash dividends  (26,607)  (26,607)
Share-based compensation 5,027    5,027 
Common stock issued upon exercises of stock options
 450  241  691 
Common stock issued upon vesting of restricted shares
 (1,876) 817  (1,059)
Other 48 (11)68  105 
Balance at October 2, 2022$47,042 $2,930,388 $400,111 $(2,871,442)$(68,720)$437,379 

See accompanying notes to condensed consolidated financial statements.
8

THE WENDY’S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
October 1,
2023
October 2,
2022
(Unaudited)
Cash flows from operating activities:
Net income$157,502 $136,095 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (exclusive of amortization of
cloud computing arrangements shown separately below)
101,258 100,911 
Amortization of cloud computing arrangements7,692 888 
Share-based compensation16,769 17,497 
Impairment of long-lived assets513 2,682 
Deferred income tax(502)10,214 
Non-cash rental expense, net30,724 26,164 
Change in operating lease liabilities(35,319)(34,241)
Net receipt of deferred vendor incentives4,007 1,884 
System optimization gains, net(119)(4,138)
Distributions received from joint ventures, net of equity in earnings1,349 3,468 
Long-term debt-related activities, net7,310 5,746 
Cloud computing arrangements expenditures(25,154)(22,685)
Changes in operating assets and liabilities and other, net3,495 (61,846)
Net cash provided by operating activities269,525 182,639 
Cash flows from investing activities:  
Capital expenditures(55,689)(50,036)
Franchise development fund(1,947)(2,484)
Dispositions280 3,731 
Notes receivable, net1,825 2,713 
Net cash used in investing activities(55,531)(46,076)
Cash flows from financing activities:  
Proceeds from long-term debt 500,000 
Repayments of long-term debt(61,280)(19,437)
Repayments of finance lease liabilities(16,947)(13,411)
Deferred financing costs (10,232)
Repurchases of common stock(142,413)(51,950)
Dividends(157,871)(80,153)
Proceeds from stock option exercises9,113 2,668 
Payments related to tax withholding for share-based compensation(3,827)(2,980)
Net cash (used in) provided by financing activities(373,225)324,505 
Net cash (used in) provided by operations before effect of exchange rate changes on cash(159,231)461,068 
Effect of exchange rate changes on cash307 (7,176)
Net (decrease) increase in cash, cash equivalents and restricted cash(158,924)453,892 
Cash, cash equivalents and restricted cash at beginning of period831,801 366,966 
Cash, cash equivalents and restricted cash at end of period$672,877 $820,858 

See accompanying notes to condensed consolidated financial statements.
9

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)



(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of October 1, 2023, the results of our operations for the three and nine months ended October 1, 2023 and October 2, 2022 and cash flows for the nine months ended October 1, 2023 and October 2, 2022. The results of operations for the nine months ended October 1, 2023 are not necessarily indicative of the results to be expected for the full 2023 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023 (the “Form 10-K”).

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 17 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

(2) Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:
Wendy’s U.S.Wendy’s InternationalGlobal Real Estate & DevelopmentTotal
Three Months Ended October 1, 2023
Sales at Company-operated restaurants$227,674 $7,047 $ $234,721 
Franchise royalty revenue112,698 17,390  130,088 
Franchise fees17,079 1,597 581 19,257 
Franchise rental income  57,567 57,567 
Advertising funds revenue99,789 9,133  108,922 
Total revenues$457,240 $35,167 $58,148 $550,555 
Three Months Ended October 2, 2022
Sales at Company-operated restaurants$225,245 $3,541 $ $228,786 
Franchise royalty revenue108,780 15,777  124,557 
Franchise fees15,294 1,257 625 17,176 
Franchise rental income  58,463 58,463 
Advertising funds revenue96,615 6,972  103,587 
Total revenues$445,934 $27,547 $59,088 $532,569 
10

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


Wendy’s U.S.Wendy’s InternationalGlobal Real Estate & DevelopmentTotal
Nine Months Ended October 1, 2023
Sales at Company-operated restaurants$685,168 $18,190 $ $703,358 
Franchise royalty revenue333,958 50,408  384,366 
Franchise fees51,812 4,515 3,377 59,704 
Franchise rental income  173,407 173,407 
Advertising funds revenue296,043 24,049  320,092 
Total revenues$1,366,981 $97,162 $176,784 $1,640,927 
Nine Months Ended October 2, 2022
Sales at Company-operated restaurants$659,649 $9,281 $ $668,930 
Franchise royalty revenue315,572 45,743  361,315 
Franchise fees46,685 3,695 2,450 52,830 
Franchise rental income  174,944 174,944 
Advertising funds revenue281,779 19,197  300,976 
Total revenues$1,303,685 $77,916 $177,394 $1,558,995 

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:
October 1,
2023 (a)
January 1, 2023 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)
$54,931 $54,497 
Receivables, which are included in “Advertising funds restricted assets”
66,676 70,422 
Deferred franchise fees (c)99,889 99,208 
_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)The current portion of deferred franchise fees is included in “Accrued expenses and other current liabilities” and the long-term portion of deferred franchise fees is included in “Deferred franchise fees” and totaled $10,526 and $89,363, respectively, as of October 1, 2023, and $8,977 and $90,231, respectively, as of January 1, 2023.

Significant changes in deferred franchise fees are as follows:
Nine Months Ended
October 1,
2023
October 2,
2022
Deferred franchise fees at beginning of period$99,208 $97,186 
Revenue recognized during the period
(9,016)(7,193)
New deferrals due to cash received and other9,697 10,143 
Deferred franchise fees at end of period$99,889 $100,136 

11

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
Estimate for fiscal year:
2023 (a)$6,332 
20246,090 
20255,908 
20265,797 
20275,689 
Thereafter70,073 
$99,889 
_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2023, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(3) System Optimization Gains, Net

The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of January 1, 2017, the Company achieved its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development. During the nine months ended October 1, 2023 and October 2, 2022, the Company facilitated 88 and 54 Franchise Flips, respectively. Additionally, during the nine months ended October 2, 2022, the Company completed the sale of 1 Company-operated restaurant to a franchisee. No Company-operated restaurants were sold to franchisees during the nine months ended October 1, 2023.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”


12

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
Three Months EndedNine Months Ended
October 1,
2023
October 2,
2022
October 1,
2023
October 2,
2022
Number of restaurants sold to franchisees11
Proceeds from sales of restaurants (a)$ $79 $ $79 
Net assets sold (b) (141) (141)
Net unfavorable leases (360) (360)
Other 6  6 
 (416) (416)
Post-closing adjustments on sales of restaurants (c)537  537 3,522 
Gain (loss) on sales of restaurants, net537 (416)537 3,106 
(Loss) gain on sales of other assets, net (d)(417)868 (418)1,032 
System optimization gains, net$120 $452 $119 $4,138 
_______________

(a)In addition to the proceeds noted herein, the Company received cash proceeds of $126 and $284 during the three and nine months ended October 2, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

(b)Net assets sold consisted primarily of equipment.

(c)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(d)During the nine months ended October 1, 2023, the Company received net cash proceeds of $280 primarily from the sale of surplus and other properties. During the three and nine months ended October 2, 2022, the Company received net cash proceeds of $2,510 and $3,368, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of October 1, 2023 and January 1, 2023, the Company had assets held for sale of $1,320 and $1,661, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”

(4) Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”
Three Months EndedNine Months Ended
October 1,
2023
October 2,
2022
October 1,
2023
October 2,
2022
Organizational redesign$579 $ $7,986 $ 
Other reorganization and realignment plans32 8 114 628 
Reorganization and realignment costs$611 $8 $8,100 $628 

13

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


Organizational Redesign

In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). As a result of the Organizational Redesign Plan, the Company expects to hold its general and administrative expense in 2023 and 2024 relatively flat compared with 2022. The Company expects to incur total costs of approximately $11,000 to $13,000 related to the Organizational Redesign Plan. During the nine months ended October 1, 2023, the Company recognized costs totaling $7,986, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $3,000 to $5,000, comprised of (1) severance and related employee costs of approximately $1,500, (2) recruitment and relocation costs of approximately $500, (3) third-party and other costs of approximately $500 and (4) share-based compensation of approximately $1,500. The Company expects costs related to the Organizational Redesign Plan to continue into 2026, with approximately three-fourths of the total costs to be recognized during 2023.

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:
Three Months EndedNine Months Ended
October 1,
2023
October 1,
2023
Severance and related employee costs$114 $5,674 
Recruitment and relocation costs140 304 
Third-party and other costs173 904 
427 6,882 
Share-based compensation (a)152 1,104 
Total organizational redesign$579 $7,986 
_______________

(a)Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

As of October 1, 2023, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities”. The table below presents a rollforward of our accruals for the Organizational Redesign Plan.
Balance
January 1,
2023
ChargesPayments
Balance
October 1,
2023
Severance and related employee costs$ $5,674 $(3,524)$2,150 
Recruitment and relocation costs 304 (304) 
Third-party and other costs 904 (904) 
$ $6,882 $(4,732)$2,150 

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the nine months ended October 1, 2023 and October 2, 2022. The Company does not expect to incur any material additional costs under these plans.

14

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


(5) Investments

The following is a summary of the carrying value of our investments:
October 1,
2023
January 1,
2023
Equity method investments$32,723 $33,921 
Other investments in equity securities1,718 12,107 
$34,441 $46,028 

Equity Method Investments

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). The Company has significant influence over this investee. Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”

Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:
Nine Months Ended
October 1,
2023
October 2,
2022
Balance at beginning of period$33,921 $39,870 
Equity in earnings for the period10,012 9,091 
Amortization of purchase price adjustments (a)(2,051)(2,163)
7,961 6,928 
Distributions received(9,310)(10,396)
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other
151 (3,027)
Balance at end of period$32,723 $33,375 
_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

Other Investments in Equity Securities

During 2021, the Company made an investment in equity securities of $10,000 and, during the nine months ended October 2, 2022, recognized a gain of $2,107 as a result of an observable price change for a similar investment of the same issuer. During the nine months ended October 1, 2023, the Company recorded impairment charges of $10,389 for the difference between the estimated fair value and the carrying value of the investment.

15

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


(6) Long-Term Debt

Long-term debt consisted of the following:
October 1,
2023
January 1,
2023
Class A-2 Notes (a):
4.236% Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029
$98,750 $99,500 
4.535% Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032
395,000 398,000 
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029
439,875 443,250 
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031
635,375 640,250 
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026
361,000 364,000 
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029
406,125 409,500 
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028
447,688 451,250 
7% debentures, due in 2025 (b)
49,190 86,369 
Unamortized debt issuance costs(35,527)(40,673)
2,797,476 2,851,446 
Less amounts payable within one year(29,250)(29,250)
Total long-term debt$2,768,226 $2,822,196 
_______________

(a)Subsequent to October 1, 2023 through October 26, 2023, the Company repurchased $29,171 in principal of its Class A-2 senior secured notes for $24,935.

(b)Wendy’s 7% debentures are unsecured and were reduced to fair value in connection with the 2008 merger of Triarc Companies, Inc. and Wendy’s International, Inc. (the “Wendy’s Merger”). The fair value adjustment is being accreted and the related charge included in “Interest expense, net” until the debentures mature. During the nine months ended October 1, 2023, Wendy’s repurchased $39,266 in principal of its 7% debentures for $39,343. As a result, the Company recognized a loss on early extinguishment of debt of $1,585 during the nine months ended October 1, 2023. Subsequent to October 1, 2023 through October 26, 2023, the Company repurchased $1,164 in principal of its 7% debentures for $1,174.

(7) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

16

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
October 1,
2023
January 1,
2023
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Fair Value
Measurements
Financial assets
Cash equivalents$419,744 $419,744 $560,682 $560,682 Level 1
Other investments in equity securities (a)1,718 1,718 12,107 12,107 Level 2
Financial liabilities (b)
Series 2022-1 Class A-2-I Notes98,750 89,191 99,500 89,401 Level 2
Series 2022-1 Class A-2-II Notes395,000 345,744 398,000 349,444 Level 2
Series 2021-1 Class A-2-I Notes439,875 360,785 443,250 357,304 Level 2
Series 2021-1 Class A-2-II Notes635,375 497,753 640,250 499,011 Level 2
Series 2019-1 Class A-2-I Notes361,000 334,683 364,000 334,334 Level 2
Series 2019-1 Class A-2-II Notes406,125 360,111 409,500 361,875 Level 2
Series 2018-1 Class A-2-II Notes447,688 404,217 451,250 405,809 Level 2
7% debentures, due in 2025
49,190 51,115 86,369 92,367 Level 2
_______________

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which was based on observable price changes.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) the deterioration in operating performance of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

17

THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Per Share Amounts)


Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 8 for further information on impairment of our long-lived assets.
Fair Value Measurements
October 1,
2023
Level 1Level 2Level 3
Held and used$593 $ $ $593 
Held for sale1,044   1,044 
Total$1,637 $ $ $1,637 
Fair Value Measurements
January 1,
2023
Level 1Level 2Level 3
Held and used$4,590 $ $ $4,590 
Held for sale1,314   1,314 
Total$5,904 $ $ $5,904 

(8) Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”
Three Months EndedNine Months Ended
October 1,
2023
October 2,
2022
October 1,
2023
October 2,
2022
Company-operated restaurants$ $159 $