990745 Wendy's Reports Strong 2nd Quarter Results

Dublin, OH - Wendy's International, Inc.announced sales and earnings results for the second quarter, which ended on July 4, 1999. The results included robust same-store sales growth at Wendy's in the United States and Tim Hortons in Canada, the best quarterly domestic margin in 14 years and a 21% increase in Base EPS compared to the 13-week period a year ago.

Second Quarter Highlights Systemwide sales increased 3.7% to $1.8 billion. Average unit volumes at Wendy's company restaurants in the U.S. increased 10.4%. It was the 38th consecutive month of positive AUVs. Same-store sales were up 8.3% and AUVs at franchise restaurants in the U.S. increased 6.7%.

Tim Hortons' same-store sales increased 10.9% in Canada and strongly in the U.S. Wendy's domestic margin improved to 17.7%, up 110 basis points from 16.6% a year ago, due to the sales growth and effective store-level productivity initiatives. Net income was $49.5 million compared to $45.6 million a year ago. Total diluted earnings per share for the second quarter were $0.39, a 15% increase from $0.34 reported a year ago. Total EPS for the quarter included $0.04 in asset gains from the sale of real estate, franchising and fees. That compared to $0.02 in asset gains in the same quarter a year ago. Total EPS results for the second quarter a year ago included 14 weeks and $0.03 in EPS from the extra accounting week. Base EPS (total diluted EPS less asset gains) was $0.35 for the quarter, up 21% from $0.29 in the equivalent 13-week quarter a year ago.

“Our core businesses of Wendy's in North America and Tim Hortons in Canada are extremely healthy,” said Gordon F. Teter, Chairman, CEO and President. “The North American economy is strong, consumer traffic in our restaurants is growing and we have good sales momentum.

“We are encouraged with results from our Service Excellence program at Wendy's. It is delivering incremental sales and improved customer service at the restaurant level,” said Teter. “In addition, other sales driving programs were effective in the second quarter and productivity initiatives at the store level helped offset increasing crew wage rates.”

Earlier this month, management raised the Company's Base EPS growth goal for 1999 to 18% to 21%, up from a previous range of 16% to 18%. Base EPS was $1.03 in 1998 excluding non-recurring charges. Total EPS for 1999 is expected to include a total of $0.06 to $0.07 in asset gains.

First Half Highlights

- For the first six months of the year, ended July 4, 1999, systemwide sales increased 7.4% to $3.4 billion.

- AUVs at Wendy's company restaurants in the U.S. increased 11.7% while same-store sales were up 9.0%. Tim Hortons' same-store sales in Canada were up 10.5%.

- Wendy's domestic margin for the first half improved to 16.8%, up 180 basis points from 15.0% a year ago.

- Net income was $81.5 million compared to $69.4 million a year ago.

- Total diluted EPS for the first six months was $0.64, compared to $0.52 a year ago.

- Base EPS was $0.59 for the first six months compared to $0.50 a year ago (the first half of 1999 included 26 weeks compared to 27 weeks in 1998).

- The Company opened a total of 188 new restaurants during the first six months of the year: 24 company Wendy's in the U.S.; 79 franchised Wendy's in the U.S.; 27 Wendy's in international markets and 58 Tim Hortons in Canada and the U.S.

Quality Products and Service Excellence at Wendy's

The Company continues to emphasize quality products and balanced marketing at Wendy's and Tim Hortons. Customers reacted favorably to Wendy's “Cheddar Lovers' Bacon Cheeseburger” introduced during the second quarter. A new promotional sandwich, the “French Onion Chicken Grill,” was introduced earlier this month and a national advertising campaign for the sandwich debuts today. The French onion grilled chicken sandwich achieved strong results in test markets.

Wendy's “Service Excellence” program is being expanded from the Company's Western U.S. region to the rest of the U.S. and Canada. About 30% of the system has implemented the program. All company stores are expected to be converted by late 1999 and franchised units by the end of the first quarter 2000.

“Our restaurant managers and crew have utilized Service Excellence to deliver incremental sales gains, improved speed and better service at pick-up windows in the Western region,” said Teter. “We look forward to a positive impact in our other regions as we extend the program to company and franchise stores throughout North America.”

Iced Cappuccino Popular at Tim Hortons

Customer demand for the new iced cappuccino drink at Tim Hortons continues to be strong following the introduction of the product during the second quarter. Tim Hortons is currently promoting its popular Timbits products with a national television campaign in Canada.

“In addition to the outstanding results in Canada, Tim Hortons' same-store sales are improving in our three U.S. markets as we focus on operations,” said Teter. “Customers in the U.S. are becoming more familiar with the Tim Hortons brand and quality products.”

Progress on Strategic Initiatives The Company made progress during the second quarter on its strategic initiatives:

-Repurchasing 1.9 million shares for $52.6 million during the quarter. Through the end of the second quarter the Company repurchased a total of nearly 12 million shares and completed $280 million of the $350 million stock repurchase program authorized by the board and previously announced.

-Completing more than $50 million of the program to refinance with third- party lenders $150 million in notes receivable held by the Company. The program is essentially complete.

“We are pleased with our progress and to be ahead of plan on the share repurchase and the notes programs,” said Frederick R. Reed, Chief Financial Officer. “Furthermore, the domestic margin expansion has been much stronger than expected. Our cash flow is strong and the balance sheet is healthy.”

Dividend Approved

The Board of Directors today approved a quarterly dividend of 6 cents per share, payable on August 23 to shareholders of record as of August 9. It will be the Company's 86th consecutive dividend payment to shareholders.

Tim Hortons Website Launched

The Company recently launched a website profiling Tim Hortons. The new website can be accessed at www.wendys.com or www.timhortons.com . The Tim Hortons website features interesting historical and current information, in both English and French, about the coffee and fresh baked goods restaurant chain. It also has information about products, promotions, a nutrition guide and the Tim Hortons Children's Foundation.

Wendy's International, Inc. is one of the world's largest restaurant operating and franchising companies with $6.5 billion in systemwide sales during 1998. Wendy's Old Fashioned Hamburgers was founded in 1969 by Dave Thomas and is the third-largest quick-service hamburger restaurant chain with more than 5,400 units in the United States, Canada and other international markets. Tim Hortons was founded in 1964 by Tim Horton and Ron Joyce and is the largest coffee and baked goods restaurant chain in Canada. There are more than 1,700 Tim Hortons restaurants in North America.

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