Industry News | July 31, 2001

Wendy's Reports 2Q Results

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Wendy's International, Inc. (NYSE: WEN) announced today financial results for the second quarter of 2001. The company's quarter ended on July 1. The Company also announced July sales results at Wendy's® and Tim Hortons®.

Systemwide sales grew 8.5% to $2.1 billion.

The company and its franchisees opened 101 new restaurants in the quarter, including 64 Wendy's and 37 Tim Hortons.

Total revenues increased 7.2% to a record $610 million.

Same-store sales grew 2.8% at Wendy's U.S. company restaurants, on top of a 2.8% increase during the same period in 2000.

Same-store sales at Tim Hortons restaurants in Canada grew 7.1% on top of an 8.7% increase a year ago while same-store sales at Tim Hortons restaurants in the U.S. grew 5.6% vs. 11.8% a year ago.

Wendy's domestic operating margin was 16.1%, compared to 17.3% in the same quarter a year ago. Wendy's restaurants experienced higher costs for beef, utilities and labor.

Pretax income was $88.9 million, up 10% compared to a year ago.

Net income was $56.0 million, up 11% compared to a year ago, and diluted earnings per share were $0.47, a 9% increase over $0.43 per share a year ago. The EPS results include $0.02 per share in asset gains in the second quarter both this year and a year ago.

The company purchased 450,000 shares of Wendy's common stock in the quarter for $10.4 million. Year to date, the company has purchased a total of 1.15 million shares for $25.3 million. Since initiating a share repurchase program in 1998, the company has bought a total of 23 million shares for $517 million.

Chairman and CEO Jack Schuessler said: "We delivered a very good performance for the quarter driven by new restaurant openings, solid sales growth at Wendy's and outstanding sales at Tim Hortons. Our ongoing focus on restaurant operations, overall quality and superior products continues to attract customers and produce good results. It's encouraging to grow our net income at a rate higher than 10% in a period when we faced commodity cost increases and utility cost pressures.

"Our Wendy's business in North America is solid and we have excellent promotional products planned for the rest of the year. The Mozzarella Chicken Supreme(TM) sandwich is our promotional product for August, with national advertising beginning today,'' Schuessler added. "Tim Hortons continues to perform better than expected, which is important since the business represents about one-third of our pretax income. Tim Hortons will be promoting its popular Timbits® in August.''

Company expects 11-13% growth for the year 2001

Management confirmed its July announcement that it expects to produce net income and EPS growth in the 11-13% range for the full year 2001, which would produce EPS in the $1.70 to $1.73 range.

"We think the second half of 2001 will be on plan with ongoing sales growth at Wendy's and Tim Hortons, some moderation in utility costs and continued moderation of crew labor rate increases,'' said Executive Vice President and Chief Financial Officer Kerrii Anderson. "Our new restaurant development program is on track for more than 500 units systemwide for the year and we expect continued improvement in our International Wendy's business.''

Management's long-term EPS growth goal remains in the 12-15% range.

Wendy's and Tim Hortons positive sales trends continue in July

At Wendy's company operated restaurants in the United States, same-store sales during the July period increased about 2.5%, on top of a 1.6% increase during the same period a year ago. At Tim Hortons in Canada, same-store sales in July increased in the 7 to 8% range, on top of a 9.5% increase during the same period a year ago. The Company's July sales period ends on August 5.

Quarterly dividend approved

The Board of Directors approved a quarterly dividend of 6 cents per share, payable on August 27 to shareholders of record as of August 13. It will be the Company's 94th consecutive dividend payment to shareholders.

Earnings conference call and Internet web cast

Management will host a conference call and Internet web cast today (August 1, 2001), at 4:00 p.m. EDT. To access the Company's web cast, go to www.wendys.com , select "investor information and news releases'' and then select earnings web cast.

2001 Analyst Meeting at Tim Hortons

Management is planning to host its 2001 Analyst and Investor Meeting on September 24-25, in Toronto, Canada. The meeting will feature presentations about Tim Hortons, a tour of the chain's research and development facility in Oakville, Ontario, and several restaurant visits.