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1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended January 3, 1999
( ) TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 1-8116
WENDY'S INTERNATIONAL, INC.
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(Exact name of Registrant as specified in its charter)
Ohio 31-0785108
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio 43017-0256
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614-764-3100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Shares, $.10 stated value New York, Boston, Chicago,
(124,110,000 shares outstanding Pacific and Philadelphia
at February 22, 1999) Stock Exchanges
$2.50 Term Convertible Securities, Series A New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 _X_ NO ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ________
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at February 22, 1999 was $2,467,655,000.
Documents incorporated by reference:
Portions of the Annual Report to Shareholders set forth in the Appendix to
the Definitive 1999 Proxy Statement dated March 10, 1999 are incorporated
by reference into Parts I and II.
Portions of the Definitive 1999 Proxy Statement dated March 10, 1999
are incorporated by reference into Part III.
Exhibit index on pages 15-17.
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PART I
ITEM 1. BUSINESS
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THE COMPANY
Wendy's International, Inc. was incorporated in 1969 under
the laws of the State of Ohio. Wendy's International, Inc.
and its subsidiaries are collectively referred to herein as
the "Company."
The Company is primarily engaged in the business of
operating, developing and franchising a system of
distinctive quick-service restaurants. At January 3, 1999,
there were 5,333 Wendy's restaurants (Wendy's) in operation
in the United States and in 31 other countries and
territories. Of these restaurants, 1,036 were operated by
the Company and 4,297 by the Company's franchisees.
Additionally, at January 3, 1999, the Company and its
franchisees operated 1,667 Tim Hortons (Hortons)
restaurants in Canada and the United States.
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OPERATIONS
Each Wendy's restaurant offers a relatively standard menu
featuring hamburgers and filet of chicken breast
sandwiches, which are prepared to order with the customer's
choice of condiments. Wendy's menu also includes a pita
sandwich, chili, baked and french fried potatoes, prepared
salads, desserts, soft drinks and other non-alcoholic
beverages and children's meals. In addition, the
restaurants sell a variety of promotional products on a
limited basis.
Each Hortons unit offers coffee, cappucino, fresh baked
goods such as donuts, muffins, pies, croissants, tarts,
cookies, cakes, bagels and in some units sandwiches and
soups.
The Company strives to maintain quality and uniformity
throughout all restaurants by publishing detailed
specifications for food products, preparation and service,
by continual in-service training of employees and by field
visits from Company supervisors. In the case of
franchisees, field visits are made by Company personnel who
review operations and make recommendations to assist in
compliance with Company specifications.
Generally, the Company does not sell food or supplies to
its Wendy's franchisees. However, the Company has arranged
for volume purchases of many of these products. Under the
purchasing arrangements, independent distributors purchase
certain products directly from approved suppliers and store
and sell them to local company and franchised restaurants.
These programs help assure availability of products and
provide quantity discounts, quality control and efficient
distribution. These advantages are available both to the
Company and to any franchisees who choose to participate in
the distribution program.
Under the Hortons franchise arrangements, the franchisee is
required to purchase certain products such as coffee,
sugar, flour and shortening from a Hortons subsidiary.
These products are distributed from six warehouses located
across Canada. Products are delivered to Hortons'
restaurants primarily by Hortons' fleet of trucks and
trailers.
The New Bakery Co. of Ohio, Inc., (Bakery) a wholly-owned
subsidiary of the of the Company, is a product of buns for
Wendy's restaurants. At January 3, 1999, the Bakery
supplied 581 restaurants operated by the Company and 1,858
restaurants operated by franchises. At the present time,
the Bakery does not manufacture or sell any other products.
See Notes 7 and 14 on pages AA-18, AA-19, AA-23 and AA-24
of the Appendix to the Company's 1999 Proxy Statement,
which Notes are incorporated herein by reference, for
further information regarding revenues, income before
taxes and total assets attributable to the Company's
segments.
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RAW MATERIALS
The Company and its franchisees have not experienced any
material shortages of food, equipment, fixtures or other
products which are necessary to restaurant operations. The
Company anticipates no such shortages of products and, in
any event, alternate suppliers are available.
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TRADEMARKS AND SERVICE MARKS OF THE COMPANY
The Company has registered certain trademarks and service
marks in the United States Patent and Trademark office and
in international jurisdictions, some of which include
"Wendy's", "Wendy", "Old Fashioned Hamburgers", "Quality Is
Our Recipe", "Tim Hortons", "TimBits" and "Your Friend
Along the Way". The Company believes that these and other
related marks are of material importance to the Company's
business. Domestic trademarks and service marks expire at
various times from 1999 to 2011, while international
trademarks and service marks have various durations of five
to 20 years. The Company generally intends to renew
trademarks and service marks which expire.
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SEASONALITY
The Company's business is moderately seasonal. Average
restaurant sales are normally higher during the summer
months than during the winter months.
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WORKING CAPITAL PRACTICES
Cash from operations, cash and investments on hand,
possible asset sales, and cash from repayment of notes
receivable should enable the Company to meet its financing
requirements. In addition, the Company has available unused
lines of credit.
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COMPETITION
Each Company and franchised restaurant is in competition
with other food service operations within the same
geographical area. The quick-service restaurant industry is
highly competitive. The Company competes with other
organizations primarily through the quality, variety and
value perception of food products offered. The number and
location of units, quality and speed of service,
attractiveness of facilities, effectiveness of marketing
and new product development by the Company and its
competitors are also important factors. The price charged
for each menu item may vary from market to market depending
on competitive pricing and the local cost structure.
The Company's competitive position at its Wendy's
restaurants is enhanced by its use of fresh ground beef,
its unique and diverse menu, promotional products, its wide
choice of condiments and the atmosphere and decor of its
restaurants. Hortons is known for the freshness of its wide
variety of baked goods and for its excellent coffee.
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RESEARCH AND DEVELOPMENT
The Company engages in research and development on an
ongoing basis, testing new products and procedures for
possible introduction into the Company's systems. While
research and development operations are considered to be of
prime importance to the Company, amounts expended for these
activities are not deemed material.
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GOVERNMENT REGULATIONS
A number of states have enacted legislation which, together
with rules promulgated by the Federal Trade Commission,
affect companies involved in franchising. Much of the
legislation and rules adopted have been aimed at requiring
detailed disclosure to a prospective franchisee and
periodic registration by the franchisor with state
administrative agencies. Additionally, some states have
enacted, and others have considered, legislation which
governs the termination or non-renewal of a franchise
agreement and other aspects of the franchise relationship.
The United States Congress has also considered legislation
of this nature. The Company has complied with requirements
of this type in all applicable jurisdictions. The Company
cannot predict the effect on its operations, particularly
on its relationship with franchisees, of future enactment
of additional legislation. Various other government
initiatives such as minimum wage rates and taxes can all
have a significant impact on the Company's performance.
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ENVIRONMENT AND ENERGY
Various federal, state and local regulations have been
adopted which affect the discharge of materials into the
environment or which otherwise relate to the protection of
the environment. The Company does not believe that such
regulations will have a material effect on its capital
expenditures, earnings or competitive position. The Company
cannot predict the effect of future environmental
legislation or regulations.
The Company's principal sources of energy for its
operations are electricity and natural gas. To date, the
supply of energy available to the Company has been
sufficient to maintain normal operations.
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ACQUISITIONS AND DISPOSITIONS
The Company has from time to time acquired the interests of
and sold Wendy's restaurants to franchisees, and it is
anticipated that the Company may have opportunities for
such transactions in the future. The Company generally
retains a right of first refusal in connection with any
proposed sale of a franchisee's interest. The Company will
continue to sell and acquire Wendy's restaurants in the
future where prudent.
See Notes 9 and 10 on page AA-21 of the Appendix to the
Company's 1999 Proxy Statement, which Notes are
incorporated herein by reference, for further information
regarding acquisitions and dispositions.
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INTERNATIONAL OPERATIONS
Markets in Canada are currently being developed for both
company owned and franchised restaurants. In addition to
the countries and territories listed under Item 2 on page 7
of this Form 10-K, the Company has granted development
rights for Bahrain, Egypt, Morocco, Qatar, Tunisia, the
Yemen Arab Republic and the Municipality of Shanghai and
the Provinces of Jiangsu and Zhejiang, Peoples Republic of
China.
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FRANCHISED WENDY'S RESTAURANTS
As of January 3, 1999, the Company's franchisees operated
4,297 Wendy's restaurants in 50 states, the District of
Columbia and 31 other countries and territories.
The rights and franchises under which most franchised
restaurants in the United States are operated are set forth
in one basic document, the Restaurant Franchise Agreement.
This document gives the franchisee the right to construct,
own and operate a Wendy's restaurant upon a site accepted
by Wendy's and to use the Wendy's system in connection with
the operation of the restaurant at that site. Since 1995,
the Company has used a revised form of agreement, the
Wendy's Unit Franchise Agreement, for new franchised
restaurants operated in the United States.
Wendy's has in the past franchised under different
agreements on a multi-unit basis; however, now it is
generally the intent of the Company to grant new franchises
both in the United States and foreign countries on a
unit-by-unit basis.
After having submitted to Wendy's the requested application
and financial materials, if initially approved by Wendy's,
an individual becomes an approved applicant upon the
execution of a Preliminary Letter Agreement. This
Preliminary Letter Agreement does not guarantee that the
applicant will be accepted as a Wendy's franchisee but
entitles the applicant to commence a training program,
intended to allow both parties the opportunity to more
carefully assess a long-term franchise relationship. For
existing franchisees who in Wendy's opinion are not in need
of additional training or part of a special program, the
Preliminary Letter Agreement may not be necessary. Upon the
execution of a Preliminary Letter Agreement, the applicant
is required to pay a non-refundable fee of $5,000 to help
defray some of the cost of initial orientation, the
processing of the application and background investigation.
Both the Restaurant Franchise Agreement and the Wendy's
Unit Franchise Agreement require that the franchisee pay a
royalty of 4% of gross receipts from the operation of the
restaurant. Both Agreements also typically require that the
franchisee pay the Company a technical assistance fee. In
the United States, the technical assistance fee required
under newly executed Wendy's Unit Franchise Agreements is
currently $25,000 for each restaurant.
The technical assistance fee is used to defray some of the
cost to the Company in providing technical assistance in
the development of the Wendy's restaurant, initial training
of franchisees or their operator and in providing other
assistance associated with the opening of the Wendy's
restaurant. In certain limited instances (like the
regranting of franchise rights or the relocation of an
existing restaurant), Wendy's may charge a reduced
technical assistance fee or may waive the technical
assistance fee. The Company does not select or employ
personnel on behalf of the franchisees.
The rights and franchises currently offered for
international development are contained in the Franchise
Agreement which is issued upon approval of a restaurant
site. The Franchise Agreement is for an initial term of 10
years or the term of the lease for the restaurant site,
whichever is shorter. The Franchise Agreement licenses the
franchisee to use the Company's trademarks and know-how in
the operation of the restaurant. Upon execution of the
Franchise Agreement, the franchisee is required to pay a
technical assistance fee. Generally, the technical
assistance fee is $30,000 for each restaurant. Currently,
the franchisee is required to pay a monthly net continuing
fee based on the monthly net sales of the restaurant,
usually 4%.
See Schedule II on page 14 of this Form 10-K, and
Management's Review and Outlook on pages AA-1 through AA-8
and Note 11 on page AA-21 of the Appendix to the Company's
1999 Proxy Statement (Management's Review and Outlook and
Note 11 are incorporated herein by reference) for further
information regarding reserves, commitments and
contingencies involving franchisees.
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5
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FRANCHISED HORTONS UNITS
Hortons franchisees operate under several types of license
agreements. The standard term of a license agreement for a
standard type of unit is 10 years plus one renewal period
of 10 years less one day. The renewal is at the option of
the franchisee.
For franchisees who lease land and/or buildings from
Hortons, the license agreement generally requires between
3% and 4.5% of weekly gross sales for royalties plus a
monthly rental which is the greater of a base monthly
rental payment or a percentage (usually 10%) rental payment
based on monthly gross sales. For franchisees who do not
lease land and/or buildings from Hortons, the license
agreement generally requires 4.5% of weekly gross sales for
royalties. Hortons generally retains the right to reacquire
a franchisee's interest in a restaurant in the event the
franchisee wants to sell its interest during the first five
years of the term of the license agreement. After such
period, Hortons generally retains a right of first refusal
with regard to any proposed transfer of the franchisee's
interest in the restaurant, together with the right to
consent to transfer to a new franchisee.
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ADVERTISING AND PROMOTIONS
Products sold by Wendy's restaurants are advertised through
television, radio, newspapers and a variety of promotional
campaigns. The Company attempts to keep franchisees
informed of current advertising techniques and effective
promotions. The Company's advertising materials are also
made available to the franchisees. Both the Restaurant
Franchise Agreement and the Wendy's Unit Franchise
Agreement provide that franchisees will spend 4% of their
gross receipts for advertising and promotions. The
Restaurant Franchise Agreement specifies 2% is to be spent
on local and regional advertising (including in many cases
cooperative advertising) and 2% is the required
contribution to The Wendy's National Advertising Program,
Inc. (WNAP). Under the Restaurant Franchise Agreement, the
Company has the ability to increase the required local and
regional expenditures to 3%, for a total of 5% for
advertising and promotions, subject to certain conditions.
The Company has the ability under the Wendy's Unit
Franchise Agreement to specify and to change the 4%
advertising and promotions allocation subject to certain
restrictions. Currently, the Company requires franchisees
under the Wendy's Unit Franchise Agreement to allocate 2%
to local and regional advertising and promotions and 2% to
national advertising and promotions. In addition, under
that agreement the Company may increase the total
advertising and promotions contribution to 5% for
franchisees operating restaurants pursuant to that
agreement, if such increase is approved by an affirmative
vote representing 75% or more of all domestic Wendy's
restaurants.
Since 1993, a systemwide vote has been taken on a proposal
to increase national advertising for the following calendar
year. This voluntary program reallocates the 4% required
minimum advertising expenditures such that 2.5% goes toward
national advertising and 1.5% toward local and regional
advertising. For the period from September 1, 1998 through
February 28, 1999, the national advertising contribution
rate was temporarily reduced to 1.75%. These minimum
requirements will revert back to 2% for national and 2% for
local and regional advertising unless a new systemwide vote
in 1999 approves reallocation for 2000.
In 1998, 1997 and 1996, approximately $126 million, $109
million and $101 million, respectively, were spent on
advertising, promotions and related expenses by WNAP. WNAP
is a not-for-profit corporation which was established to
collect and administer the funds contributed by the Company
and all domestic franchisees. WNAP's Trustees are comprised
of representatives of both the Company and its franchisees.
Products sold by Hortons restaurants are advertised through
television, radio, newspapers and a variety of promotional
campaigns. Hortons provides franchisees with suggested
advertising and promotional materials. Tim Hortons Canada
currently collects 4% of monthly gross sales from
franchisees as a contribution to the Tim Hortons Canada
advertising fund, known as the Tim Hortons Advertising and
Promotion Fund (Canada) Inc. (Ad Fund). Tim Hortons U.S.
collects 4% of monthly net sales from franchisees as a
contribution to the advertising program utilized by Tim
Hortons U.S., known as Tim's National Advertising Program
(TNAP). During 1998, 1997 and 1996, approximately $33
million, $30 million and $25 million, respectively, was
spent by the Ad Fund and approximately $3 million, $2
million and $299,000, respectively, was spent by TNAP.
Products sold by Wendy's international restaurants outside
of Canada are advertised through various media including
television, radio, newspaper and a variety of promotional
campaigns. Most international franchisees are required by
their franchise agreement to spend at least 4% of the net
sales of their restaurants on advertising and marketing.
The Company assists its international franchisees in
preparing and executing marketing plans and endeavors to
keep its international franchisees informed of current
advertising techniques and effective promotions. The
Company has established an advertising cooperative in the
United Kingdom. Franchisees and the Company's subsidiary,
Wendy's Limited, are contributing 2.5% of the net sales of
their restaurants to the cooperative. The Company may from
time to time establish other regional advertising
cooperatives.
See Note 13 on page AA-22 of the Appendix to the Company's
1999 Proxy Statement, which Note is incorporated herein by
reference, for further information regarding advertising.
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PERSONNEL
As of January 3, 1999, the Company employed approximately
39,000 people, of whom approximately 36,000 were employed
in company operated restaurants. The total number of
full-time employees at that date was approximately 6,800.
The Company believes that its employee relations are
satisfactory.
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ITEM 2. PROPERTIES
Wendy's restaurants are built to Company specifications as
to exterior style and interior decor. The majority are
free-standing, one-story brick buildings, substantially
uniform in design and appearance, constructed on sites of
approximately 40,000 square feet, with parking for
approximately 45 cars. Some restaurants, located in
downtown areas or shopping malls, are of a store-front type
and vary according to available locations but generally
retain the standard sign and interior decor. The typical
new free-standing restaurant contains about 2,910 square
feet and has a food preparation area, a dining room
capacity for 94 persons and a double pick-up window for
drive-through service. The restaurants are generally
located in urban or heavily populated suburban areas, and
their success depends upon serving a large number of
customers. Wendy's also operates restaurants in special
site locations such as travel centers, gas
station/convenience stores, military bases, arenas, malls,
hospitals, airports and college campuses.
The standard Hortons restaurant currently being built
consists of a free-standing producing unit totaling 3,000
square feet. Each of these includes a bakery capable of
supplying fresh baked goods every 12 hours to several
satellite Hortons within a defined area. In addition,
Hortons has a 2,000 square foot restaurant which is a full
sized restaurant without a bakery, a prefabricated, 500
square foot, drive-through-only unit, kiosks, full-service
carts and mobile carts which are typically located in high
traffic areas.
There are also Wendy's and Hortons concepts combined in one
free-standing unit which averages about 5,200 square feet.
This unit shares a common dining room seating 104 persons.
Each unit has separate food preparation and storage areas
and most have separate pick-up windows for each concept.
At January 3, 1999, the Company and its franchisees
operated 5,333 Wendy's restaurants in the locations listed
under Item 2 on page 7 of this Form 10-K. In the fourth
quarter of 1997, the Company identified 82 underperforming
Wendy's restaurants, of which substantially all were closed
or franchised in 1998 (see Note 3 on page AA-16 of the
Appendix to the Company's 1999 Proxy Statement, which Note
is incorporated herein by reference). Of the 1,036 company
operated Wendy's restaurants, the Company owned the land
and building for 459 restaurants, owned the building and
held long-term land leases for 301 restaurants and held
leases covering land and building for 276 restaurants. The
Company's land and building leases are written for terms of
10 to 25 years with one or more five-year renewal options.
In certain lease agreements the Company has the option to
purchase the real estate. Certain leases require the
payment of additional rent equal to a percentage (ranging
from 1% to 10%) of annual sales in excess of specified
amounts. Some of the real estate owned by the Company is
subject to mortgages which mature over various terms. The
Company also owned land and buildings for, or leased, 663
Wendy's restaurant locations which were leased or subleased
to franchisees. Surplus land and buildings are generally
held for sale.
At January 3, 1999, there were 1,667 Hortons units, of
which all but 154 were franchise operated. Of the 1,513
franchised units, 250 were owned by Hortons and leased to
franchisees, 866 were leased by Hortons and in turn
subleased to a franchisee, with the remainder either owned
or leased directly by the franchisee.
The Company owns approximately 37.6 acres of land in
Dublin, Ohio on which is located the Company's corporate
headquarters. This complex contains approximately 200,000
square feet of office space.
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DOMESTIC WENDY'S DOMESTIC TIM HORTONS
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STATE COMPANY FRANCHISE COMPANY FRANCHISE
Alabama -- 92 -- --
Alaska -- 10 -- --
Arizona 33 38 -- --
Arkansas -- 49 -- --
California 8 186 -- --
Colorado 37 61 -- --
Connecticut -- 30 -- --
Delaware -- 17 -- --
Florida 90 260 -- --
Georgia 32 190 -- --
Idaho -- 20 -- --
Illinois 80 113 -- --
Indiana 2 154 -- --
Iowa -- 37 -- --
Kansas 15 45 -- --
Kentucky 2 105 1 --
Louisiana 43 44 -- --
Maine 2 10 -- --
Maryland -- 102 -- --
Massachusetts 44 20 -- --
Michigan 31 174 33 4
Minnesota 23 17 -- --
Mississippi -- 66 -- --
Missouri 18 57 -- --
Montana -- 15 -- --
Nebraska -- 31 -- --
Nevada -- 41 -- --
New Hampshire 1 17 -- --
New Jersey 14 89 -- --
New Mexico -- 24 -- --
New York 53 126 7 10
North Carolina 28 158 -- --
North Dakota -- 7 -- --
Ohio 116 287 38 2
Oklahoma -- 41 -- --
Oregon 14 40 -- --
Pennsylvania 76 146 -- --
Rhode Island -- 10 -- --
South Carolina -- 95 -- --
South Dakota -- 9 -- --
Tennessee -- 169 -- --
Texas 60 231 -- --
Utah 27 11 -- --
Vermont - 3 -- --
Virginia 38 134 -- --
Washington 24 37 -- --
West Virginia 17 47 5 --
Wisconsin -- 63 -- --
Wyoming -- 13 -- --
District of Columbia -- 7 -- --
--- ----- --- ---
928 3,748 84 16
--- ----- --- ---
INTERNATIONAL WENDY'S INTERNATIONAL TIM HORTONS
--------------------- -------------------------
COUNTRY/TERRITORY COMPANY FRANCHISE COMPANY FRANCHISE
Argentina -- 18 -- --
Aruba -- 3 -- --
Bahamas -- 5 -- --
Canada 93 174 70 1,497
Cayman Islands -- 1 -- --
Colombia -- 1 -- --
Dominican Republic -- 6 -- --
El Salvador -- 5 -- --
Greece -- 12 -- --
Guam -- 4 -- --
Guatemala -- 6 -- --
Hawaii 1 4 -- --
Honduras -- 12 -- --
Hong Kong -- 7 -- --
Hungary -- 2 -- --
Iceland -- 1 -- --
Indonesia -- 34 -- --
Japan -- 89 -- --
Kuwait -- 3 -- --
Mexico -- 6 -- --
New Zealand -- 11 -- --
Philippines -- 44 -- --
Puerto Rico -- 28 -- --
Saipan -- 1 -- --
Saudi Arabia -- 12 -- --
Switzerland -- 4 -- --
Taiwan -- 18 -- --
Turkey -- 9 -- --
United Arab Emirates -- 2 -- --
United Kingdom 14 4 -- --
Venezuela -- 21 -- --
Virgin Islands -- 2 -- --
---- --- ---- -----
108 549 70 1,497
---- --- ---- -----
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ITEM 3. LEGAL PROCEEDINGS
On June 9, 1997, Arthur L. Wilson, individually and
purportedly on behalf of a putative class of other persons
similarly situated, filed a complaint against the Company
in the U.S. District Court for the Southern District of
Mississippi. The complaint alleged that the Company had
engaged in racial discrimination in violation of Title
VII and 42 U.S.C. Section 1981. The plaintiff sought
judgment in an undetermined amount against the Company for
punitive and compensatory damages (including benefits) as
well as injunctive and equitable relief. After the
plaintiff's motion to add five additional plaintiffs was
denied, a second complaint was filed in the same court on
July 13, 1998. The second complaint was brought by the five
plaintiffs both individually and purportedly on behalf of a
putative class of other persons similarly situated. The
allegations in the second complaint were substantially
similar to those in the Wilson action. The Company's motion
to dismiss the class claims in the Wilson action was
granted, as was the Company's motion for summary judgment
on the plaintiff's claims that the Company was the
"employer" of employees of its franchisees. The Wilson
action was settled and the complaint was dismissed on
December 30, 1998. The second action was also settled and
that complaint was dismissed on December 9, 1998. The
settlements were not material to the Company's results of
operations, liquidity or financial condition. This case was
last referenced in the Company's Form 10-Q for the quarter
ended October 4, 1998.
On October 22, 1998, Theldon Branch, individually and
purportedly on behalf of a putative class of other persons
similarly situated, filed a complaint against the Company
in the U.S. District Court for the Southern District of
Texas. The complaint alleged that the Company discriminated
in its dealings with some of its African-American
franchisees. The plaintiff sought equitable relief and $150
million in compensatory and punitive damages. This action
was settled and the complaint was dismissed on February 10,
1998. The settlement was not material to the Company's
results of operations, liquidity or financial condition.
This case was last referenced in the Company's Form 10-Q
for the quarter ended October 4, 1998.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
This information is incorporated herein by reference from
page AA-27 of the Appendix to the Company's 1999 Proxy
Statement.
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ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated herein by reference from
page AA-27 of the Appendix to the Company's 1999 Proxy
Statement.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Review and Outlook on pages AA-1 through AA-8
of the Appendix to the Company's 1999 Proxy Statement is
incorporated herein by reference.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company at
January 3, 1999 and December 28, 1997 and for each of the
three fiscal years in the periods ended January 3, 1999,
December 28, 1997, and December 29, 1996 and the Report of
Independent Accountants on these Consolidated Financial
Statements are incorporated herein by reference from pages
AA-9 through AA-25 of the Appendix to the Company's 1999
Proxy Statement.
The Report of Independent Accountants on the Company's
Consolidated Financial Statement Schedule is included on
page 13 of this report.
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ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEMS 10, 11, 12, AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE POSITION WITH COMPANY OFFICER SINCE
R. David Thomas 66 Senior Chairman of the Board and Founder, Director 1969
Gordon F. Teter 55 Chairman of the Board, Chief Executive Officer and
President, Director 1987
Frederick R. Reed 50 Chief Financial Officer, and Secretary, Director 1996
John T. Schuessler 48 President and Chief Operating Officer U.S. Operations 1983
George Condos 45 Executive Vice President 1982
Ronald E. Musick 58 Executive Vice President, Director 1986
Edward L. Austin 41 Senior Vice President 1990
Emil J. Brolick 51 Senior Vice President 1988
John F. Brownley 56 Senior Vice President and Treasurer 1981
Donald F. Calhoon 47 Senior Vice President 1984
Kathie T. Chesnut 47 Senior Vice President 1990
Joyce L. Eufemi 52 Senior Vice President 1993
Stephen D. Farrar 48 Senior Vice President 1984
Brion G. Grube 47 Senior Vice President 1990
Lawrence A. Laudick 51 Senior Vice President, General Controller and 1976
Assistant Secretary
Leon M. McCorkle, Jr. 58 Senior Vice President and General Counsel 1998
Kathleen A. McGinnis 47 Senior Vice President 1989
Thomas J. Mueller 47 Senior Vice President 1998
James J. Rieger 52 Senior Vice President 1994
Jack C. Whiting 49 Senior Vice President 1987
No arrangements or understandings exist pursuant to which
any person has been, or is to be, selected as an officer,
except in the event of a change in control of the Company,
as provided in the Company's Key Executive Agreements. The
executive officers of the Company are appointed by the
Board of Directors.
With the exception of Messrs. Teter, Reed, Schuessler,
Austin, Brolick, Calhoon, Mrs. Chesnut, Ms. Eufemi,
Mr. Laudick, Mr. McCorkle, Mr. Mueller and Mr. Rieger
each of the above individuals has held the same principal
occupation with the Company for at least the last
five years.
Mr. Teter was President of Casa Lupita Restaurants and
Executive Vice President of its parent company, Ponderosa,
Inc., from 1985 to 1987. Mr. Teter became a Senior Vice
President of the Company in 1987 and Executive Vice
President in 1988. He was named President and Chief
Operating Officer in 1991. Mr. Teter assumed the title of
Chief Executive Officer in 1994. He became Chairman of the
Board in 1997.
Mr. Reed joined the Company in 1996 as Executive Vice
President, General Counsel and Secretary. Prior to that he
was a senior partner of Vorys, Sater, Seymour and Pease
LLP. Mr. Reed has been a member of the Company's Board of
Directors since his election in 1995. Mr. Reed was named
Chief Financial Officer in 1997.
Mr. Schuessler joined the Company in 1974. He served in
Company Operations as Regional Vice President from 1983 to
1984, Zone Vice President from 1984 to 1986, and Division
Vice President from 1986 until 1987, when he was promoted
to Senior Vice President of the Northeast Region. In 1995,
Mr. Schuessler was promoted to Executive Vice President of
U.S. Operations. He was named President and Chief Operating
Officer U.S. Operations in 1997.
Mr. Austin joined the Company in 1976. Before being named
Senior Vice President of the Southeast Region in 1996, Mr.
Austin had held the position of Division Vice President for
the New Orleans Division since 1994 and for the Los Angeles
Division since 1990.
9
10
Mr. Brolick joined the Company in 1988 as Vice President of
Planning. In 1988 he became Vice President, Strategic
Planning and Research and New Product Marketing. He was
named Senior Vice President, Strategic Planning and
Research and New Product Marketing in 1995. Prior to
joining Wendy's, Mr. Brolick was with Ponderosa, Inc. as
Vice President, Marketing and Concept Development.
Mr. Calhoon joined the Company in 1978 and held various
positions with the Company until being named Vice
President, Field Marketing in 1984. In 1989 he was promoted
to Vice President, Corporate Marketing and in 1995 was
named Senior Vice President, Corporate Marketing.
Mrs. Chesnut joined the Company in 1990 as Vice President,
Special Projects. In 1991, Mrs. Chesnut was named Vice
President, Research and Development and in 1994, she was
promoted to Senior Vice President, Research and
Development, Quality Assurance and Purchasing. Mrs. Chesnut
was formerly with Showbiz Pizza Time, Inc. as Director of
Research and Development.
Ms. Eufemi joined the Company in 1993. After holding the
position of Division Vice President for both the Colonial
Division and Chicago Division, she was named Senior Vice
President of the Upper U.S. Region in 1995. Prior to
joining the Company, Ms. Eufemi was with Nutri/System, Inc.
from 1989 to 1993 as Vice President/General Manager of the
Western Region.
Mr. Laudick joined the Company in 1976 as Assistant
Controller. He was named Controller in 1977, General
Controller in 1981, Vice President and General Controller
in 1983 and Senior Vice President and General Controller in
1997. Mr. Laudick has also been named Assistant Secretary
since 1976.
Mr. McCorkle joined the Company in 1998 as Senior Vice
President and General Counsel. Prior to joining the
Company, he was a senior partner of Vorys, Sater, Seymour
and Pease LLP.
Mr. Mueller joined the Company in 1998 as Senior Vice
President, Special Projects, and in March of 1999 he was
named Senior Vice President for the Northeast Region. Prior
to joining the Company, Mr. Mueller was with Burger King
from 1973 to 1997, where his most recent position was
Senior Vice President, North American Operations.
Mr. Rieger joined the Company in 1994 as Regional Vice
President - International for the Latin America Region and
in 1996 became Vice President - International Development.
In 1998, Mr. Rieger was promoted to Senior Vice President -
International Division. Prior to joining the Company, Mr.
Rieger had been with Metromedia Steakhouses Company since
1982 where he served as Senior Vice President, Chief
Financial Officer, Treasurer and Corporate Controller.
The information required by these Items, other than the
information set forth above, is omitted and incorporated
herein by reference from the Company's 1999 Proxy Statement
dated March 10, 1999. However, no information set forth in
the 1999 Proxy Statement regarding the Report of the
Compensation Committee on Executive Compensation (pages
9-13) or the performance graphs (pages 13-14) shall be
deemed incorporated by reference into this Form 10-K.
PART IV
- --------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) - The following Consolidated Financial
Statements of Wendy's International, Inc. and
Subsidiaries, included in the Appendix to the Company's
1999 Proxy Statement on pages AA-9 to AA-25 and
incorporated by reference in Item 8, are filed as part
of this Annual Report on Form 10-K.
Consolidated Statements of Income - Years
ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Balance Sheets - January 3, 1999
and December 28, 1997.
Consolidated Statements of Cash Flows - Years
ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Statements of Shareholders' Equity -
Years ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Statements of Comprehensive Income -
Years ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Notes to the Consolidated Financial Statements.
Report of Independent Accountants
(3) Listing of Exhibits - See Index to Exhibits.
The following management contracts or compensatory
plans or arrangements are required to be filed as
exhibits to this report:
Sample Restated Key Executive Agreement between
the Company and Messrs. Brolick, Brownley,
Calhoon, Condos, Laudick, McCorkle, Musick,
Rath, Reed, Schuessler, Teter, Thomas, Mrs Chesnut
and Mrs. McGinnis.
Agreement between the Company and Mr. Teter.
Employment Agreement between The TDL Group Ltd.
(a subsidiary of the Company) and Mr. Joyce.
10
11
Amendment to Employment Agreement between The
TDL Group Ltd. and Mr. Joyce.
Employment Agreement between The TDL Group Co.
(a subsidiary of the Company), Mr. Joyce and the
Company.
Amended and Restated Senior Executive Earnings
Maximization Plan.
Description of Earnings Maximization Plan.
Description of Management Incentive Plan.
Supplemental Executive Retirement Plan,
as amended.
1978 Non-Qualified Stock Option Plan, as amended.
1982 Stock Option Plan, as amended.
1984 Stock Option Plan, as amended.
1987 Stock Option Plan, as amended.
1990 Stock Option Plan, as amended.
(b) The Company filed a Form 8-K on November 13, 1998
announcing (under Item 5) October 1998 sales, summary
segment results for the third quarter and year-to-date
periods of 1998 and 1997, and goals for earnings and
new restaurant development. A copy of the press release
issued November 12, 1998 was attached.
(c) Exhibits filed with this report are listed in the Index
to Exhibits.
(d) The following Consolidated Financial Statement Schedule
of Wendy's International, Inc. and Subsidiaries is
included in Item 14(d): II - Valuation and Qualifying
Accounts
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions, are inapplicable, or the information has
been disclosed elsewhere.
11
12
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Wendy's International, Inc.
By /s/ FREDERICK R. REED 3/31/99
----------------------------------
Frederick R. Reed
Chief Financial Officer
and Secretary
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
/s/ R. DAVID THOMAS* 3/31/99 /s/ RONALD V. JOYCE* 3/31/99
-------------------------------------------- -----------------------------------------
R. David Thomas, Senior Ronald V. Joyce, Director
Chairman of the Board and
Founder, Director
/s/ GORDON F. TETER* 3/31/99 /s/ FREDERICK R. REED 3/31/99
-------------------------------------------- -----------------------------------------
Gordon F. Teter, Chairman of the Board, Frederick R. Reed, Chief Financial Officer
Chief Executive Officer and and Secretary, Director
President, Director
/s/ RONALD E. MUSICK* 3/31/99 /s/ PAUL D. HOUSE* 3/31/99
-------------------------------------------- -----------------------------------------
Ronald E. Musick, Executive Vice Paul D. House, Director
President, Director
/s/ LAWRENCE A. LAUDICK* 3/31/99 /s/ W. CLAY HAMNER* 3/31/99
-------------------------------------------- -----------------------------------------
Lawrence A. Laudick, Senior Vice W. Clay Hamner, Director
President, General Controller
and Assistant Secretary
/s/ ERNEST S. HAYECK* 3/31/99 /s/ JANET HILL* 3/31/99
-------------------------------------------- -----------------------------------------
Ernest S. Hayeck, Director Janet Hill, Director
/s/ THOMAS F. KELLER* 3/31/99 /s/ TRUE H. KNOWLES* 3/31/99
-------------------------------------------- -----------------------------------------
Thomas F. Keller, Director True H. Knowles, Director
/s/ ANDREW G. McCAUGHEY* 3/31/99 /s/ FIELDEN B. NUTTER, SR.* 3/31/99
-------------------------------------------- -----------------------------------------
Andrew G. McCaughey, Director Fielden B. Nutter, Sr., Director
/s/ JAMES V. PICKETT* 3/31/99 /s/ THEKLA R. SHACKELFORD* 3/31/99
-------------------------------------------- -----------------------------------------
James V. Pickett, Director Thekla R. Shackelford, Director
*By /s/ FREDERICK R. REED 3/31/99
-----------------------------------------
Frederick R. Reed
Attorney-in-Fact
12
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REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
- --------------------------------------------------------------------------------
To The Board of Directors and
Shareholders of Wendy's International, Inc.
Our audits of the consolidated financial statements
referred to in our report dated February 10, 1999,
appearing on page AA-25 of the Appendix to the 1999 Proxy
Statement of Wendy's International, Inc. (which report and
consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item
14(d) of this Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material
respects, the information set forth therein when read in
conjunction with the related consolidated financial
statements.
Columbus, Ohio PRICEWATERHOUSECOOPERS LLP
February 10, 1999
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of Wendy's International, Inc. on
Form S-8 (File Nos. 2-67253, 2-98696, 33-18177, 2-82823,
33-36602, 33-36603, 333-9261, 333-32675, 33-57913,
333-60031, and 333-60033) of our reports dated February 10,
1999, on our audits of the consolidated financial
statements and financial statement schedule of Wendy's
International, Inc. as of January 3, 1999 and December 28,
1997 and for the years ended January 3, 1999, December 28,
1997 and December 29, 1996, which reports are either
included or incorporated by reference in this Annual Report
on Form 10-K.
Columbus, Ohio PRICEWATERHOUSECOOPERS LLP
March 31, 1999
13
14
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
BALANCE AT CHARGED (CREDITED) BALANCE AT
BEGINNING TO COSTS & ADDITIONS END OF
CLASSIFICATION OF YEAR EXPENSES (DEDUCTIONS) (A) YEAR
-------------- ------- -------- ---------------- ----
Fiscal year ended January 3, 1999:
Reserve for royalty receivables $ 1,962 $ 1,237 $ (201) $ 2,998
Reserve for possible franchise-
related losses & contingencies 5,883 12,012 (613) 17,282
-------- -------- -------- --------
$ 7,845 $ 13,249 $ (814) $ 20,280
-------- -------- -------- --------
Fiscal year ended December 28, 1997:
Reserve for royalty receivables $ 2,044 $ 71 $ (153) $ 1,962
Reserve for possible franchise-
related losses & contingencies 6,630 109 (856) 5,883
-------- -------- -------- --------
$ 8,674 $ 180 $ (1,009) $ 7,845
-------- -------- -------- --------
Fiscal year ended December 29, 1996:
Reserve for royalty receivables $ 3,579 $ (1,294) $ (241) $ 2,044
Reserve for possible franchise-
related losses & contingencies 7,231 1,011 (1,612) 6,630
-------- -------- -------- --------
$ 10,810 $ (283) $ (1,853) $ 8,674
-------- -------- -------- --------
(a) Primarily represents reserves written off or reversed
or transferred due to the resolution of certain
franchise situations.
Year-end balances are reflected in the Consolidated Balance Sheet as follows:
JANUARY 3, DECEMBER 28, DECEMBER 29,
1998 1997 1996
---- ---- ----
Deducted from accounts receivable $ 7,816 $5,979 $4,339
Deducted from notes receivable - current 596 106 480
Deducted from notes receivable - long-term 11,350 1,255 2,355
Included in accrued expenses - other 518 505 1,500
------- ------ ------
$20,280 $7,845 $8,674
------- ------ ------
14
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- --------------------------------------------------------------------------------
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
2(a) Share Purchase Agreement, dated as of Incorporated herein by reference from
October 31, 1995, by and among Wendy's Exhibit 2 of Form 10-Q for the quarter
International, Inc., 1149658 Ontario Inc., ended October 1, 1995.
632687 Alberta Ltd. and Ronald V. Joyce
(b) Amendment to the Share Purchase Incorporated herein by reference to Exhibit 2.2
Agreement, dated as of December 28, 1995, to Ronald V. Joyce's Schedule 13D, dated
by and among Wendy's International, Inc., January 5, 1996.
1149658 Ontario Inc., 1052106 Ontario
Limited and Ronald V. Joyce
(c) Agreement between Ronald V. Joyce, Incorporated herein by reference from Exhibit 2
WENTIM, LTD., Wendy's International, Inc. of Form 10-Q for the quarter ended
and the Irrevocable Trust for the Benefit October 4, 1998.
of Ronald V. Joyce, dated as of
September 16, 1998
(d) Amendment to Share Purchase Agreement, Attached hereto.
dated as of February 25, 1999, by and among
Wendy's International, Inc., WENTIM, LTD.
and Ronald V. Joyce
(e) Share Exchange Agreement, dated as of Incorporated herein by reference to Exhibit 2.3
December 29, 1995, by and among to Ronald V. Joyce's Schedule 13D, dated
Wendy's International, Inc., 1149658 Ontario January 5, 1996.
Inc., and Ronald V. Joyce
(f) Amending Agreement No. 2 to the Share Attached hereto.
Exchange Agreement, dated as of February
25, 1999, by and among Wendy's International,
Inc., WENTIM, LTD. and Ronald V. Joyce
(g) Provisions attaching to Exchangeable Incorporated herein by reference to Exhibit 2.4
Shares to Ronald V. Joyce's Schedule 13D, dated
January 5, 1996.
(h) Support Agreement, dated as of December Incorporated herein by reference to Exhibit 2.5
29, 1995, by and among Wendy's to Ronald V. Joyce's Schedule 13D, dated
International, Inc., 1149658 Ontario Inc., January 5, 1996.
and Ronald V. Joyce
(i) Irrevocable Trust Agreement for the Benefit Incorporated herein by reference to Exhibit 2.6
of Ronald V. Joyce, dated as of December to Ronald V. Joyce's Schedule 13D, dated
29, 1995, between Dana Klein and The January 5, 1996.
Huntington Trust Company, N.A.
(j) Subscription Agreement, dated as of Incorporated herein by reference to Exhibit 2.7
December 29, 1995, by and between to Ronald V. Joyce's Schedule 13D, dated
the Irrevocable Trust for the Benefit January 5, 1996.
of Ronald V. Joyce and Wendy's
International, Inc.
(k) Amending Agreement No. 2 to the Attached hereto.
Subscription Agreement, dated as of February
25, 1999, by and between the Irrevocable
Trust for the Benefit of Ronald V. Joyce and
Wendy's International, Inc.
(l) Guaranty Agreement, dated as of Incorporated herein by reference to Exhibit 2.8
December 29, 1995, by and between the to Ronald V. Joyce's Schedule 13D, dated
Irrevocable Trust for the Benefit of Ronald January 5, 1996.
V. Joyce and Ronald V. Joyce
15
16
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
(m) Amending Agreement No. 2 to the Guaranty Attached hereto.
Agreement, dated as of February 25,
1999, by and between the Irrevocable Trust
for the Benefit of Ronald V. Joyce and
Ronald V. Joyce
(n) Registration Rights Agreement, dated as of Incorporated herein by reference to Exhibit 2.10
December 29, 1995, by and between Wendy's to Ronald V. Joyce's Schedule 13D,
International, Inc. and Ronald V. Joyce dated January 5, 1996.
(o) Amending Agreement No. 1 to the Registration Attached hereto.
Rights Agreement, dated as of February 25,
1999, by and between Wendy's International,
Inc. and Ronald V. Joyce
3(a) Articles of Incorporation, as amended to Attached hereto.
date
(b) New Regulations, as amended Incorporated herein by reference from Exhibit 3(b) of
Form 10-Q for the quarter ended March 31, 1996.
*4(a) Indenture between the Company and Incorporated herein by reference from
The Huntington National Bank pertaining Form S-3 Registration Statement, File No. 33-57101.
to 7% debentures and 6.35% notes due
December 15, 2025 and December 15, 2005,
respectively
(b) Indenture for subordinated debt securities Incorporated herein by reference from
between the Company and NBD Bank, Exhibit 4(a) of Form 10-Q for the quarter
as trustee ended September 29, 1996.
(c) First Supplemental Indenture between the Incorporated herein by reference from
Company and NBD Bank Exhibit 4(b) of Form 10-Q for the quarter
ended September 29, 1996.
(d) Amended and Restated Declaration of Trust Incorporated herein by reference from
Wendy's Financing I Exhibit 4(c) of Form 10-Q for the quarter
ended September 29, 1996.
(e) Certificate P-1 Evidencing Trust Preferred Incorporated herein by reference from
Securities of Wendy's Financing I Exhibit 4(d) of Form 10-Q for the quarter
ended September 29, 1996.
(f) Certificate P-2 Evidencing Trust Preferred Incorporated herein by reference from
Securities of Wendy's Financing I Exhibit 4(e) of Form 10-Q for the quarter
ended September 29, 1996.
(g) Preferred Securities Guarantee Agreement Incorporated herein by reference from
the benefit of the holders of Trust Exhibit 4(f) of Form 10-Q for the quarter
Preferred Securities of Wendy's Financing I ended September 29, 1996.
(h) 5% Convertible Subordinated Debenture Incorporated herein by reference from
of the Company Exhibit 4(g) of Form 10-Q for the quarter
ended September 29, 1996.
(i) Amended and Restated Rights Agreement Incorporated herein by reference from
between the Company and American Stock Amendment No. 2 to Form 8-A/1A Registration
Transfer and Trust Company Statement, File No. 1-8116.
10(a) Sample Restated Key Executive Agreement Attached hereto.
between the Company and Messrs. Brolick,
Brownley, Calhoon, Condos, Laudick, McCorkle,
Musick, Rath, Reed, Schuessler, Teter, Thomas,
Mrs. Chesnut and Mrs. McGinnis
* Neither the Company nor its subsidiaries are party to
any other instrument with respect to long-term debt for
which securities authorized thereunder exceed 10 percent
of the total assets of the Company and its subsidiaries
on a consolidated basis. Copies of instruments with
respect to long-term debt of lesser amounts will be
furnished to the Commission upon request.
16
17
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
(b) Agreement between the Company Incorporated herein by reference from
and Mr. Teter Exhibit 10(e) of Form 10-K for the year
ended January 1, 1995.
(c) Employment Agreement between The Incorporated herein by reference from
TDL Group Ltd. and Ronald V. Joyce Exhibit 10(f) of Form 10-K for the year
ended December 31, 1995.
(d) Amendment to Employment Agreement Incorporated herein by reference from
between The TDL Group Ltd. (a subsidiary Exhibit 10 of Form 10-Q for the quarter of
the Company) and Ronald V. Joyce ended March 31, 1996.
(e) Employment Agreement between The TDL Group Incorporated herein by reference from
Co. (a subsidiary of the Company), Exhibit 10 of Form 10-Q for the quarter
Ronald V. Joyce and the Company ended October 4, 1998.
(f) Amended and Restated Senior Executive Incorporated herein by reference from the
Earnings Maximization Plan Annex to the Company's Definitive 1999
Proxy Statement, dated March 10, 1999.
(g) Description of Earnings Maximization Plan Attached hereto.
(h) Description of Management Incentive Plan Attached hereto.
(i) Supplemental Executive Retirement Plan, Incorporated herein by reference from
as amended Exhibit 10(j) of Form 10-K for the year
ended December 31, 1995.
(j) 1978 Non-Qualified Stock Option Plan, Incorporated herein by reference from
as amended the Company's Definitive Proxy
Statement, dated March 11, 1994.
(k) 1982 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(l) 1984 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(m) 1987 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(n) 1990 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 5, 1997.
13 Portions of the Annual Report to Shareholders Incorporated herein by reference from the
set forth in the Appendix to the Company's Appendix to the Company's Definitive 1999
Definitive 1999 Proxy Statement, dated March Proxy Statement, dated March 10, 1999.
10, 1999, as described in Parts I and II of
this Annual Report on Form 10-K
21 Subsidiaries of the Registrant Attached hereto.
23 Consent of PricewaterhouseCoopers LLP Incorporated by reference to page 13
of this Form 10-K.
24 Powers of Attorney Attached hereto.
99 Safe harbor under the Private Securities Attached hereto.
Litigation Reform Act of 1995
17