Wendy's International, Inc
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Wendy’s International, Inc. O i n n o v a t i o n INTRODUCING Contents C Corporate Overview . inside cover Tim Hortons. 10-15 Franchise Partnership . 27 Chairman’s Letter. 2-7 Wendy’s . 16-21 Corporate Information . 28-29 CFO’s Letter . 8 -9 Baja Fresh. 22-23 Financial Statements . 30-32 Summary Annual Report to Shareholders Our Brands . 10-23 Corporate Responsibility . 24-26 11-Year Selected Financial Data. 33 ar a l a . ©2005 Oldemark LLC. This Summary Annual Report should be read in conjunction with the audited consolidated financial statements in the Financial 2004 Statements and Other Information furnished with the Company’s Proxy Statement for the 2005 Annual Meeting of Shareholders. WENDY’S TIM HORTONS BAJA FRESH Operations (in millions) 2004(1)(2) 2003 2002 2001 2000(1) 1999 1998(1)(2) 1997(1) 1996 1995(1) 1994(1) Revenues $ 3,635 3,149 2,730 2,391 2,237 2,067 1,942 2,031 1,890 1,739 1,585 Wendy’s $ 2,433 2,191 2,010 1,819 1,712 1,603 1,543 1,695 1,625 1,501 1,397 Tim Hortons $ 996 807 651 572 525 464 399 336 265 238 188 Developing Brands(3) (7) $20615169–––––––– Retail sales $ 2,936 2,534 2,187 1,925 1,808 1,666 1,580 1,646 1,560 1,455 1,359 Income before income taxes $ 184 378 346 307 271 269 208 219 255 165 150 Net income $ 52 236 219 194 170 167 123 130 156 110 97 Capital expenditures $ 341 342 331 301 276 248 242 295 307 218 172 Financial Position (in millions) Total assets $ 3,198 3,133 2,723 2,084 1,958 1,884 1,838 1,942 1,781 1,509 1,215 Property and equipment, net $ 2,350 2,154 1,845 1,648 1,497 1,389 1,281 1,266 1,208 1,007 865 Long-term obligations $ 594 693 682 451 248 249 246 250 242 337 145 Shareholders’ equity $ 1,716 1,759 1,449 1,030 1,126 1,065 1,068 1,184 1,057 819 702 Per Share Data Year Founded: 1969 Year Founded: 1964 Year Founded: 1990 Net income – diluted $ .45 2.05 1.89 1.65 1.44 1.32 .95 .97 1.19 .88 .79 Founder: Dave Thomas Founders: Tim Horton and Ron Joyce Founders: Jim and Linda Magglos Dividends $ .48 .24 .24 .24 .24 .24 .24 .24 .24 .24 .24 Headquarters: Dublin, Ohio Headquarters: Oakville, Ontario Headquarters: Thousand Oaks, California Shareholders’ equity $ 15.26 15.33 12.63 9.79 9.86 9.01 8.61 8.95 8.16 6.81 5.94 Market price at year-end $ 39.26 39.24 27.07 29.17 26.25 20.81 21.81 22.88 20.88 21.25 14.38 Brand President/COO (North America): Tom Mueller Brand President/COO: Paul House Brand CEO: Bill Moreton EVP (International): Brion Grube Industry Niche: Coffee, Lunch, Fresh Baked Goods Industry Niche: Fast-Casual, Fresh Mexican Ratios Industry Niche: Quick-Service Hamburger Number of Units: 2,721 Number of Units: 295 Pretax profit margin % 5.1 12.0 12.7 12.9 12.1 13.0 10.7 10.8 13.5 9.5 9.5 Return on average assets(4) % 1.7 8.4 9.2 9.7 9.2 9.1 6.7 7.0 9.9 8.1 8.5 Number of Units: 6,671 Revenues: $996 million Revenues: $176 million Return on average equity % 2.9 14.9 17.0 16.9 15.9 15.4 11.0 11.5 16.6 14.5 14.7 Revenues: $2.4 billion Average Annual Sales Average Annual Sales Long-term debt to equity(5) %3539474422232321234121 (5) Average Annual Sales per Canadian Restaurant: $1.7 million (Canadian) per Domestic Restaurant: $1.2 million Debt to total capitalization %2628323018191917192917 Price to earnings(6) %8719141818162324182418 per Domestic Restaurant: $1.3 million Market Share (Canadian Systemwide Average Check: $7.00 - $8.00 Market Share (U.S. QSR Hamburger): 14% Coffee and Baked Goods): 70% www.bajafresh.com Restaurant Data Domestic Company Average Check: $5.00 - $5.25 Canadian Average Check: $2.50 - $3.00 (Canadian) North American Wendy’s open at year-end www.wendys.com® www.timhortons.com Company 1,482 1,460 1,316 1,223 1,148 1,082 1,021 1,186 1,306 1,305 1,264 Franchise 4,837 4,668 4,587 4,431 4,271 4,079 3,922 3,634 3,292 3,095 2,911 International Wendy’s open at year-end Company 5 5 4 5 5 30 15 16 9 6 – Franchise 347 348 346 384 368 336 375 371 326 261 236 Wendy’s® innovative menu appeals to a wide variety Founded more than 40 years ago as a coffee and donut Founded 15 years ago, Total Wendy’s 6,671 6,481 6,253 6,043 5,792 5,527 5,333 5,207 4,933 4,667 4,411 ® ® Tim Hortons U.S. open at year-end of consumer tastes, with offerings such as our Garden shop,Tim Hortons has grown into today’s“fast-casual with Baja Fresh continues to Company 67 25 40 57 58 74 84 59 7 – – ™ ® a drive thru” format, which offers convenient, great-tasting build on its reputation Franchise 184 159 120 83 62 34 16 20 15 17 13 Sensations salads, our Chicken Temptations sandwiches Tim Hortons Canada open at year-end Wand our everyday Super Value Menu.™ Consumers can FFoptions for breakfast, lunch and dinner. In addition to the of expert preparation Company 31 32 31 40 47 42 70 65 58 38 22 original coffee-and-donut cornerstone products, our and flavorful and fresh Franchise 2,439 2,311 2,157 1,983 1,813 1,667 1,497 1,434 1,304 1,142 908 also now substitute a small chili, baked potato, Caesar side Total Tim Hortons 2,721 2,527 2,348 2,163 1,980 1,817 1,667 1,578 1,384 1,197 943 salad or regular side salad for French fries with any menu today consists of a delicious variety of sandwiches, ingredients, distinguish- Baja Fresh open at year-end(3) such as our new BLT and Egg Salad; soups and stews, ing us from our compe- Company 144 132 98 – – – – – – – – combo meal at no additional charge. Our Kids’ Meals Franchise 151 151 112 – – – – – – – – offer similar options: Families can order reduced-fat including our new Beef Stew in a Bread Bowl; and a wide tition in the fast-casual, Total Baja Fresh 295 283 210 – – – – – – – – Cafe Express open at year-end(7) 19–––––––––– white milk or low-fat chocolate milk in place of soft assortment of baked goods, such as TimBits,® muffins and Fresh Mexican market. Total Units 9,706 9,291 8,811 8,206 7,772 7,344 7,000 6,785 6,317 5,864 5,354 cookies, to name just a few. All our menu offerings, drinks and Mandarin oranges instead of fries. Average net sales per domestic including new items Wendy’s restaurant (in thousands) Maidstone Bakery Along with these menu innovations, we’re renovating our such as our Chile Lime Company $ 1,416 1,389 1,387 1,337 1,314 1,284 1,174 1,111 1,049 1,014 1,001 restaurants with a new upscale look and feel.We expect Our 50/50 joint venture with Cuisine de France, a subsidiary of Franchise $ 1,291 1,268 1,251 1,164 1,130 1,102 1,031 1,017 978 974 982 IAWS Group plc, has enabled us to build a world-class, 300,000- Chicken salad and our Total domestic $ 1,319 1,294 1,280 1,199 1,167 1,138 1,062 1,042 998 986 988 to begin remodeling our restaurants to one of three new square-foot par-baking facility in Brantford, Ontario, known as Average net sales per Canadian kids’ taquitos, are pre- Tim Hortons standard restaurant styles designed to encourage more consumers to relax Maidstone Bakery.The launch of Maidstone Bakery at the end of pared only after the (in thousands of Canadian dollars) $ 1,730 1,625 1,555 1,458 1,354 1,216 1,091 986 908 878 854 and enjoy their meals inside our stores. 2003 transformed our business, as we can now produce fresh baked Average net sales per goods in just a few minutes at our Tim Hortons restaurants. For customer orders them. Baja Fresh restaurant(3) (in thousands) $ 1,205 1,369 1,500 – – – – – – – – more information about IAWS Group and Cuisine de France, see We’re also redesign- Average net sales per Wendy’s Bakery Cafe Express restaurant(7) (in thousands) $ 1,745 – – – – – – – – – – Wendy’s owns and operates two bakeries in Zanesville, Ohio, that www.iaws.com. ing our store interiors, supply more than half of Wendy’s restaurants in the United States with easy-to-read menu (1)Includes unusual pretax charges of $190.0 million ($186.6 million after tax), $18.4 million (4)Return on average assets is computed by dividing net income by average assets, with consistently fresh, high-quality sandwich buns.The Bakery is Maidstone Coffee boards, warmer colors ($11.5 million after tax), $33.9 million ($25.2 million after tax) and $72.7 million excluding restricted assets. part of the Company’s vertical integration strategy, which enables us Our Rochester, NewYork-based coffee-roasting facility is part of our ($50.0 million after tax) for 2004, 2000, 1998 and 1997, respectively.