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Management is focused on continuing to profitably grow its core businesses of Wendy's® in North America and Tim Hortons® in Canada while strengthening its evolving businesses of International Wendy's and Tim Hortons U.S.
At the same time, management has developed a strategy and initiatives to ensure long-term growth for the corporation. These initiatives include:
* The hiring of a new head of mergers and acquisitions.
* Expanding the corporate business development responsibilities of a senior executive.
* Positioning the Company for financial flexibility.
Company hires Catherwood to head M&A
The company has hired Jonathan F. Catherwood as senior vice president of mergers and acquisitions. Catherwood has 12 years of experience in M&A, investment banking, corporate strategy and management consulting. Most recently he was a general partner at the Windsor Group, LLC, an investment bank focusing on M&A in the technology sector. Previously, Catherwood was vice president of corporate strategy for GTE Corp., with responsibility for identifying new business opportunities. His background also includes more than five years with Booz Allen & Hamilton management consulting as a senior associate and two years with Thomson McLintock chartered accountants.
"Jonathan brings a depth of experience in the M&A area that will be invaluable as we continue to identify business opportunities for the corporation over the next several years,'' said chairman and chief executive officer Jack Schuessler. "He completed nine transactions since 1998 and has worked on several other business opportunities for the Windsor Group and GTE. We are very pleased to have Jonathan join our senior management team.''
Catherwood graduated from Columbia University in 1989 with an MBA and from Sussex University in 1987 with a B.A.
Chesnut adding corporate business development role
The company announced that executive vice president Kathie T. Chesnut has assumed responsibilities for corporate business development, a new position. Chesnut also leads Wendy's research and development, supply chain management and quality assurance departments. She joined the company in 1990.
"Kathie is one of the key architects of Wendy's success over the past several years,'' said Schuessler. "She has led the evolution of Wendy's menu and new product development, spearheaded our programs to enhance Wendy's quality position with consumers, and significantly improved our supply chain effectiveness.
"In her expanded role, she will work with Jonathan and our M&A team to develop new business ventures and to identify opportunities to enhance the Wendy's brand. Kathie is an expert in the restaurant and food industry. She brings tremendous depth to our efforts to identify and capitalize on consumer trends,'' Schuessler said.
Management is preparing for financial flexibility
The company is working on financial initiatives as part of its long-term strategic direction. These include amending revolving credit agreements to raise the amount the Company could borrow from $167 million to $200 million. To provide maximum financial flexibility, the Company also believes it could issue commercial paper (unsecured short-term notes) to leading financial institutions.
"We are developing multiple financial options to execute our strategic initiatives,'' said Executive Vice President and Chief Financial Officer Kerrii Anderson. "For example, earlier this year we announced a joint venture between our Tim Hortons subsidiary and IAWS-Cuisine de France. We are investing about $35 million in the JV to build a baking facility in Canada with Cuisine de France to supply our Tim Hortons stores with French baguettes and breads. Other initiatives could include vertical integration, mergers, acquisitions or investments. We want to have the ability to move quickly on opportunities.
"Our balance sheet is in great shape with a debt-to-equity ratio of 21%. We believe that we could borrow additional cash and maintain our investment grade ratings,'' Anderson added.
"Our business generates strong cash flow, which enables us to aggressively grow our Wendy's and Tim Hortons chains,'' said Anderson.
"This is important because our core businesses will provide the lion's share of our revenues and earnings growth over the next five years. These financing initiatives are really aimed at positioning the company over the longer term and funding growth opportunities.''
The company currently funds internally all of its cash needs for new store growth and other capital expenditures such as renovations and technology. Since 1998 through the end of the second quarter, the company repurchased 23 million common shares for $517 million. At the end of the second quarter, the company had $164 million in cash.
Company announces preliminary August sales
The company announced today its preliminary sales results for August (Period 8), which ended on September 3, 2001.
At Wendy's company operated restaurants in the United States, same-store sales grew by 1.9% in August, on top of a 4.6% increase in the same period a year ago. The company recorded its three highest sales weeks in history during August. Same-store sales are up 2.2% through the first two months of the third quarter. Wendy's company stores have produced average unit sales increases for 64 consecutive months.
At Tim Hortons® restaurants in Canada, same-store sales in August were up 5.8%, on top of an 8.9% increase in the same period a year ago. Same- store sales are up 6.5% through the first two months of the third quarter. Tim Hortons has delivered positive average unit sales for nine consecutive years.
"We continue to post positive sales increases at Wendy's and Tim Hortons against strong comparisons a year ago,'' said Anderson. "We feel good about our performance considering that the restaurant industry is feeling some impact from tough economic conditions.''
2001 Analyst Meeting at Tim Hortons
Management will host its 2001 Analyst and Investor Meeting on September 24-25, in Canada. For more information about the meeting contact the Company's Investor Relations department at 614-764-3251.
* On September 24, the meeting will feature executive management presentations and dinner at The Fairmont Royal York Hotel in Toronto.
* On September 25, the meeting will feature a tour of several Tim Hortons restaurants in Toronto, a tour of the chain's research and development facility in Oakville, Ontario, and management presentations about Tim Hortons.