1. Ratio analysis for the ratios shown on Table 1 in the Guide to Case Analysis (CA) of the textbook:
   1. Profitability ratios
   2. Liquidity ratios
   3. Leverage ratios
   4. Activity ratios
   5. Price-to-earnings ratio
   6. The changes between years are included in the calculation

TABLE 1 Key Financial Ratios: How to Calculate Them and What They Mean Ratio How Calculated What It Shows Profitability ratios 1. Gross profit margin Sales - Cost of goods sold Sales Shows the percentage of revenues available to cover operating expenses and yield a profit. Higher is better and the trend should be upward. Shows the profitability of current operations without regard to interest charges and income taxes. Higher is better and the trend should be upward. 2. Operating profit margin (or return on sales) Sales - Operating expenses Sales or Operating income Sales Profits after taxes Sales Profits after taxes + Interest Total assets 3. Net profit margin (or net return on sales) 4. Total return on assets 5. Net return on total assets (ROA) Profits after taxes Total assets Profits after taxes Total stockholders' equity 6. Return on stockholder's equity (ROE) 7. Return on invested Capital (ROIC- sometimes referred to as return on capital employed (ROCE) 8. Earnings per share (EPS) Shows after-tax profits per dollar of sales. Higher is better and the trend should be upward. A measure of the return on total monetary investment in the enterprise. Interest is added to after-tax profits to form the numerator since total assets are financed by creditors as well as by stockholders. Higher is better and the trend should be upward. A measure of the return corned by stocleholders on the firm's total assets. Higher is better, and the trend should be upward Shows the return stockholders are earning on their capital investment in the enterprise. A return in the 12-15% range is "average, and the trend should be upward. A measure of the return shareholders are eaming on the long-term monetary capital invested in the enterprise. A higher return reflects greater bottom-line effectiveness in the use of long-term capital, and the trend should be upward. Shows the earnings for each share of common stock outstanding. The trend should be upward, and the bigger the annual percentage gains, the better. Profits after taxes Long-term debt + Total stockholders' equity Profits after taxes Number of shares of common stock outstanding Liquidity ratios 1. Current ratio 2. Working capital Current assets Shows a firm's ability to pay current liabilities using Current liabilities assets that can be converted into cash in the near term Ratio should definitely be higher than 1.0, ratios of 2 or higher are better stil Current assets - Current liabilities Bigger amounts are better because the company has more internal funds available to (1) pay its current liabilities on a timely basis and (2) finance inventory expansion, additional accounts receivable, and a larger base of operations without resorting to borrowing or raising more equity capital. Leverage ratios 1. Total debt-to-assets ratio Total liabilities Total assets 2. Long-term debt-to- capital ratio Long-term debt Long-term debt Total stockholders' equity Measures the extent to which borrowed funds have been used to finance the firm's operations. Low fractions or ratios are better-high fractions indicate overuse of debt and greater risk of bankruptcy. An important measure of creditworthiness and balance sheet strength. Indicates the percentage of capital investment that has been financed by creditors and bondholders. Fractions or ratios below.25 or 25% are usually quite satisfactory since monies invested TABLE 1 (Continued) Ratio How Calculated What It Shows Leverage ratios (Continued) by stockholders account for 75% or more of the company's total capital. The lower the ratio, the greater the capacity to borrow additional funds. Debt-to-capital ratios above 50% and certainly above 75% indicate a heavy and perhaps excessive reliance on debt, lower creditworthiness, and weak balance sheet strength. 3. Debt-to-equity ratio Total liabilities Should usually be less than 1.0. High ratios Total stockholders' equity (especially above 1.0) signal excessive debt, lower creditworthiness, and weaker balance sheet strength. 4. Long-term debt-to- Long-term debt Shows the balance between debt and equity in the equity ratio Total stockholders' equity firm's long-term capital structure. Low ratios indicate greater capacity to borrow additional funds if needed. 5. Times-interest-eared Operating income Measures the ability to pay annual interest charges. for coverage) ratio Interest expenses Lenders usually insist on a minimum ratio of 2.0, but ratios above 3.0 signal better creditworthiness. Activity ratios 1. Days of inventory Inventory Measures inventory management efficiency. Fewer days Cost of goods sold + 365 of inventory are usually better. 2. Inventory turnover Cost of goods sold Measures the number of inventory turns per year. Higher Inventory is better. 3. Average collection Accounts receivable Indicates the average length of time the firm must wait period Total sales revenues. 365 after making a sale to receive cash payment. A shorter ar collection time is better Accounts receivable Average daily sales Other important measures of financial performance 1. Dividend yield on Annual dividends per share A measure of the return that shareholders receive in the common stock Current market price per share form of dividends. A'typical' dividend yield is 2-3% The dividend yield for fast-growth companies is often below 1% (maybe even of the dividend yield for slow- growth companies can run 4-5% 2. Price-earnings ratio Current market price per shere P-E ratios above 20 indicate strong investor confidence Earnings per share in a firm's outlook and earnings growth; firms whose future carnings are at risk or likely to grow slowly typically have ratios below 12. 3. Dividend payout ratio Annual dividends per share Indicates the percentage of after-tax profits paid out as Earrings per share dividends. 4. Internal cash flow After-tax profits + Depreciation A quick and rough estimate of the cash the business is generating after payment of operating expenses, interest, and taxes. Such amounts can be used for dividend payments or funding capital expenditures. 5. Free cash flow After-tax profits + Depreciation - A quick and rough estimate of the cash a company's Capital expenditures - Dividends business is generating after payment of operating expenses, Interest, taxes, dividends, and desirable reinvestments in the business. The larger a company's free cash flow, the greater is its ability to internally fund new strategic initiatives, repay debt, make new acquisitions, repurchase shares of stock, or increase dividend payments A B E H 1 Horizontal Analysis 2 CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands 12 Months Ended %change 2021 from Dec. 29, 2019 2019 Jan. 03, 2021 Absolute change Absolute Change %change 2019 from 2018 Dec. 30, 2018 3 $ 4,117,411 $ 498,637 14% $ 3,618,774 $ 185,907 5.42% $ 3,432,867 2,522,918 1,594,493 406,613 462,238 725,642 1,654 (172,166) 555,130 63,834 $ 491,296 $ 306,643 $ 191,994 $ 24,320 $ 71,439 $ 96,235 $ (2,394) $ (21,348) $ 72,493 $ (18,094) $ 90,587 14% 14% 6% 18% 15% -59% 2,216,275 1,402,499 382,293 390,799 629,407 4,048 (150,818) 482,637 81,928 $ 400,709 $ 86,087 $ 99,820 $ 9,829 $ 32,273 $ 57,718 $ 714 $ (4,473) $ 53,959 $ 15,222 $ 38,737 4.04% 7.66% 2.64% 9.00% 10.10% 21.42% 3.06% 12.59% 22.82% 10.70% 2,130,188 1,302,679 372,464 358,526 571,689 3,334 (146,345) 428,678 66,706 $361,972 14% 15% -22% 23% 0% $ 12.61 $ 12.39 $ 9.83 $ 9.56 $1 $ 1 13.64% 14.49% $ 8.65 $ 8.35 0% 4 Revenues: 5 Revenue 6 Cost of sales: 7 Cost of sales 8 Operating margin 9 General and administrative 10 U.S. franchise advertising 11 Income from operations 12 Interest income 13 Interest expense 14 Income before provision for income taxes 15 Provision for income taxes 16 Net income 17 Earnings per share: 18 Common stock - basic 19 Common stock - diluted 20 U.S. Stores (Member) | U.S. Company-owned stores (Member) 21 Revenues: 22 Revenue 23 Cost of sales: 24 Cost of sales 25 U.S. franchise advertising 26 U.S. Stores (Member) | U.S. franchise royalties and fees (Member) 27 Revenues: 28 Revenue 29 U.S. Stores (Member) | U.S. franchise advertising (Member) 30 Revenues: 31 Revenue 32 Supply Chain (Member) 33 Revenues: 34 Revenue 35 Cost of sales: 36 Cost of sales 37 International Franchise (Member) | International franchise royalties and fees [Member] 38 Revenues: 39 Revenue de $ 485,569 $ 32,009 7% $ 453,560 $ (61,244) -11.90% $ 514,804 10% 346,168 -13.06% 379,598 35,700 $ 33,430 $ (1,900) $ (51,990) $ (5,800) 398,158 43,400 -5% 37,600 -13.36% 503,196 $ 74,692 17% 428,504 $ 37,011 9.45% 391,493 462,238 $ 71,439 18% 390,799 $ 32,273 9.00% 358,526 2,416,651 $ 311,715 15% 2,104,936 $ 161,639 8.32% 1,943,297 2,143,320 $ 273,213 15% 1,870,107 $ 138,077 7.97% 1,732,030 $ 249,757 $ 8,782 4% $ 240,975 $ 16,228 7.22% $ 224,747 B E Jan. 03,2021 Absolute %change 2021 from Dec. 29,2019 2 $ 168,821 217453 244,560 66,683 24,169 147,698 869,384 $(21,794) $ 8,184 $ 34,300 $ 13,728 $5,040 $ 42,309 $ 81,767 -11.43% 3.91% 16.31% 25.92% 26.35% 40.15% 10.38% $ 190,615 209,269 210,260 52,955 19,129 105,389 787,617 88,063 186456 292,456 13,014 579,989 (282,625) 297,364 $ 43,218 $ 22,385 $ 48,748 $(29,691) $ 84,660 $(30,177) $ 54,483 96.37% 13.64% 20.00% -69.53% 17.09% 11.95% 22.43% 44,845 164,071 243,708 42,705 495,329 (252,448) 242,881 A 1 Horizontal Analysis CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands 3 Current assets: 4 Cash and cash equivalents 5 Restricted cash and cash equivalents 6 Accounts receivable, net of reserves of $1,793 in 2020 and $2,856 in 2019 7 Inventories 8 Prepaid expenses and other 9 Advertising fund assets, restricted 10 Totalcurrent assets 11 Property, plant and equipment: 12 Land and buildings 13 Leasehold and other improvements 14 Equipment 15 Construction in progress 16 Property, plant and equipment, Gross 17 Accumulated depreciation and amortization 18 Property, plant and equipment, net 19 Other assets: 20 Operating lease right-of-use assets 21 Investments in marketable securities, restricted 22 Goodwill 23 Capitalized software, net of accumulated amortization of $124,043 in 2020 and $104,237 in 2019 24 Other assets 25 Deferred income taxes 26 Total other assets 27 Total assets 28 Current liabilities: 29 Current portion of long-term debt 30 Accounts payable 31 Accrued compensation 32 Accrued interest 33 Operating lease liabilities 34 Insurance reserves 35 Advertising fund liabilities 36 Other accrued liabilities 37 Totalcurrent liabilities 38 Long-term liabilities: 39 Long-term debt, less current portion 40 Operating lease liabilities 41 Insurance reserves 42 Deferred income taxes 43 Other accrued liabilities 44 Total long-term liabilities 45 Total liabilities 46 Commitments and contingencies 47 Stockholders' deficit Common stock,par value $0.01 per share; 170,000,000 shares authorized; 38,868,350 in 2020 and 48 38,934,009 in 2019 issued and outstanding 49 Preferred stock, par value $0.01 per share; 5,000,000 shares authorized, none issued 50 Additional paid-in capital 51 Retained deficit 52 Accumulated other comprehensive loss 53 Total stockholders' deficit 54 Total liabilities and stockholders' deficit 228,268 13,251 15,061 81,306 60,630 1,904 400,420 1,567,168 $(517) $ 1,269 $ (32) $ 8,166 $ 48,109 $(8,169) $ 48,826 $ 185,076 -0.23% 10.59% -0.21% 11.16% 384.23% -81. 10% 13.89% 13.39% 228,785 11,982 15,093 73,140 12,521 10,073 351,594 1,382,092 2,855 94499 58,520 31,695 35,861 26,377 141,175 79,837 470,819 $(40,539) $(16,602) $ 12,306 $3,814 $ 2,543 $ 2,642 $ 39,254 $ 13,570 $ 16,988 -93.42% -14.94% 26.63% 13.68% 7.63% 11.13% 38.51% 20.48% 3.74% 43,394 111,101 46,214 27,881 33,318 23,735 101,921 66,267 453,831 $ 44,963 $(463) $2,450 1. 10% -0.23% 7.07% 4,071,055 202,731 34,675 4,116,018 202,268 37,125 6,099 35,244 4,396,754 4,867,573 $(315) $ 52,734 $ 69,722 -0.89% 1.21% 1.45% 35,559 4,344,020 4,797,851 389 $0 0.00% 389 0 5,122 (3,303,492) (2,424) (3,300,405) $ 1,567,168 $4,879 $ 109,157 $ 1,318 $ 115,354 $ 185,076 2007.82% -3.20% -35.22% -3.38% 13.39% 0 243 (3,412,649) (3,742) (3,415,759) $ 1,382,092 A B D E F G H 1 Horizontal Analysis 12 Months Ended CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands Jan. 03, 2021 Absolute %change 2021 from 2019 Dec. 29, 2019 Absolute % change 2019 from 2018 Dec. 30, 2018 , $ 491,296 $ 90,587 22.61% $ 400,709 10.70% $361,972 65,038 2,922 5,526 14,424 24,244 (60,364) 2,134 $ 5,108 $ 899 $ 778 $ 17,721 $ 3,979 $ (34,629) $ 939 8.52% 44.44% 16.39% -537.49% 19.63% 134.56% 78.58% 59,930 2,023 4,748 (3,297) 20,265 (25,735) 1,195 $ 38,737 $0 $ 6,265 $ 6,760 $ (3,285) $ (2,425) $ 12,527) $ (1,949) $ 296 11.67% -142.71% -40.89% 278.10% -11.09% 8.19% 32.93% 53,665 (4,737) 8,033 (872) 22,792 (23,786) 899 (33,334) (24,959) 68,954 5,544 2,592 28,777 592,794 $ (12,434) $ (18,218) $ 2,817 $ 222 $ (710) $ 38,785 $ 95,844 59.49% 270.26% 4.26% 4.17% -21.50% 387.54% 19.29% (20,900) 16,741) 66,137 5,322 3,302 (10,008) 496,950 $ 12,728) $ 5,714 $ 56,127 $ 3,148 $ 3,302 $ (4,656) $ 102,779 15.01% 45.88% % 560.71% 144.80% (18,172) (12,455) 10,010 2,174 87.00% 26.07% (5,352) 394,171 3.74% (85,565) $ 34,323 -28.63% (119,888) 188,768) (40,000) 174 $ (3,203) $ $ 140,000) $ (12,084) $ (50,152) -98.58% -100.00% 12,258 50,152 46.50% -46.65% -100.00% 4 Cash flows from operating activities: 5 Net income 6 Adjustments to reconcile net income to net cash provided by operating activities: 7 Depreciation and amortization 8 Loss (gain) on sale/disposal of assets ) / 9 Amortization of debt issuance costs 10 Provision (Benefit) for deferred income taxes 11 Non-cash equity-based compensation expense 12 Excess tax benefits from equity-based compensation 13 Provision for losses on accounts and notes receivable 14 Changes in operating assets and liabilities: 15 Changes in accounts receivable 16 Changes in inventories, prepaid expenses and other 17 Changes in accounts payable and accrued liabilities 18 Changes in insurance reserves 19 Changes in operating lease assets and liabilities 20 Changes in advertising fund assets and liabilities, restricted 21 Net cash provided by operating activities 22 Cash flows from investing activities: 23 Capital expenditures 24 Purchase of investments (Note 9) 9 25 Proceeds from sale of assets 26 Maturities of advertising fund investments, restricted 27 Purchases of advertising fund investments, restricted 28 Purchases of franchise operations and other assets 29 Other 30 Net cash used in investing activities 31 Cash flows from financing activities: 32 Proceeds from issuance of long-term debt 33 Repayments of long-term debt and finance lease obligations 34 Proceeds from exercise of stock options 35 Purchases of common stock 36 Tax payments for restricted stock upon vesting 37 Payments of common stock dividends and equivalents 38 Cash paid for financing costs 39 Net cash used in financing activities 40 Effect of exchange rate changes on cash 41 Change in cash and cash equivalents, restricted cash and cash equivalents 42 Cash and cash equivalents, beginning of period 43 Restricted cash and cash equivalents, beginning of period , 44 Cash and cash equivalents included in advertising fund assets, restricted, beginning of period Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents 45 included in advertising fund assets, restricted, beginning of period 46 Cash and cash equivalents, end of period 47 Restricted cash and cash equivalents, end of period 48 Cash and cash equivalents included in advertising fund assets, restricted, end of period Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents 49 included in advertising fund assets, restricted, end of period 8,367 94,007 (70,152) $ 3,891 $ 143,855) $ 70,152 $ (3,423) $ (685) $ 60,403 (333) (128,927) $ 3,423 $ 943 $ (101,073) -100.00% -73.90% 362.87% (3,423) (1,276) (27,854) 115.91% -68.44% (591) (88,257) 158,000 (202,058) 30,970 (304,590) 16,803) (121,925) $ (517,000) $ (109,973) $ 17,906 $ 394,417 $ (852) ) $ (16,210) $ 8,098 $ (223,614) $ 560 $ (228,283) $ 165,177 $ 42,276 $ 39,052 $ 246,505 -76.59% 119.43% 137.06% -56.43% 14.32% 15.33% -100.00% 100.37% 278.61% -92.61% 649.33% 25.32% 86.81% 103.83% 675,000 192,085) 13,064 (699,007) (5,951) ( (105,715) (8,098) (222,792) 201 246,505 25.438 166,993 44.988 237,419 $ (295,000) $ 512,003 $ 3,232 $ (107,795) ( $ 1,011 $ (13,549) $ 109 $ 100,011 $ 739 $ 263,932 $ (10,330) $ 124,769) $ 17,672 $ (17,427) -30.41% -84.76% 32.87% 18.23% -14.52% 14.70% -1.33% -30.98% -137.36% -1514.50% -28.88% -12.92% 64.69% -6.84% 970,000 (604,088) 9,832 (591,212) (6,962) (92,166) (8,207) (322,803) (538) (17,427) 35.768 191,762 27,316 254,846 (446,406) 761 18,222 190,615 209,269 84,040 483,924 168,821 217,453 115,872 $ 502,146 $ (21,794) $ 8,184 $ 31,832 $ 18,222 -11,43% 3.91% 37.88% 3.77% 190,615 209,269 84,040 $ 483,924 $ 165,177 $ 42,276 $ 39,052 $ 246,505 649.33% 25.32% 86.81% 103.83% 25,438 166,993 44,988 $ 237,419 TABLE 1 Key Financial Ratios: How to Calculate Them and What They Mean Ratio How Calculated What It Shows Profitability ratios 1. Gross profit margin Sales - Cost of goods sold Sales Shows the percentage of revenues available to cover operating expenses and yield a profit. Higher is better and the trend should be upward. Shows the profitability of current operations without regard to interest charges and income taxes. Higher is better and the trend should be upward. 2. Operating profit margin (or return on sales) Sales - Operating expenses Sales or Operating income Sales Profits after taxes Sales Profits after taxes + Interest Total assets 3. Net profit margin (or net return on sales) 4. Total return on assets 5. Net return on total assets (ROA) Profits after taxes Total assets Profits after taxes Total stockholders' equity 6. Return on stockholder's equity (ROE) 7. Return on invested Capital (ROIC- sometimes referred to as return on capital employed (ROCE) 8. Earnings per share (EPS) Shows after-tax profits per dollar of sales. Higher is better and the trend should be upward. A measure of the return on total monetary investment in the enterprise. Interest is added to after-tax profits to form the numerator since total assets are financed by creditors as well as by stockholders. Higher is better and the trend should be upward. A measure of the return corned by stocleholders on the firm's total assets. Higher is better, and the trend should be upward Shows the return stockholders are earning on their capital investment in the enterprise. A return in the 12-15% range is "average, and the trend should be upward. A measure of the return shareholders are eaming on the long-term monetary capital invested in the enterprise. A higher return reflects greater bottom-line effectiveness in the use of long-term capital, and the trend should be upward. Shows the earnings for each share of common stock outstanding. The trend should be upward, and the bigger the annual percentage gains, the better. Profits after taxes Long-term debt + Total stockholders' equity Profits after taxes Number of shares of common stock outstanding Liquidity ratios 1. Current ratio 2. Working capital Current assets Shows a firm's ability to pay current liabilities using Current liabilities assets that can be converted into cash in the near term Ratio should definitely be higher than 1.0, ratios of 2 or higher are better stil Current assets - Current liabilities Bigger amounts are better because the company has more internal funds available to (1) pay its current liabilities on a timely basis and (2) finance inventory expansion, additional accounts receivable, and a larger base of operations without resorting to borrowing or raising more equity capital. Leverage ratios 1. Total debt-to-assets ratio Total liabilities Total assets 2. Long-term debt-to- capital ratio Long-term debt Long-term debt Total stockholders' equity Measures the extent to which borrowed funds have been used to finance the firm's operations. Low fractions or ratios are better-high fractions indicate overuse of debt and greater risk of bankruptcy. An important measure of creditworthiness and balance sheet strength. Indicates the percentage of capital investment that has been financed by creditors and bondholders. Fractions or ratios below.25 or 25% are usually quite satisfactory since monies invested TABLE 1 (Continued) Ratio How Calculated What It Shows Leverage ratios (Continued) by stockholders account for 75% or more of the company's total capital. The lower the ratio, the greater the capacity to borrow additional funds. Debt-to-capital ratios above 50% and certainly above 75% indicate a heavy and perhaps excessive reliance on debt, lower creditworthiness, and weak balance sheet strength. 3. Debt-to-equity ratio Total liabilities Should usually be less than 1.0. High ratios Total stockholders' equity (especially above 1.0) signal excessive debt, lower creditworthiness, and weaker balance sheet strength. 4. Long-term debt-to- Long-term debt Shows the balance between debt and equity in the equity ratio Total stockholders' equity firm's long-term capital structure. Low ratios indicate greater capacity to borrow additional funds if needed. 5. Times-interest-eared Operating income Measures the ability to pay annual interest charges. for coverage) ratio Interest expenses Lenders usually insist on a minimum ratio of 2.0, but ratios above 3.0 signal better creditworthiness. Activity ratios 1. Days of inventory Inventory Measures inventory management efficiency. Fewer days Cost of goods sold + 365 of inventory are usually better. 2. Inventory turnover Cost of goods sold Measures the number of inventory turns per year. Higher Inventory is better. 3. Average collection Accounts receivable Indicates the average length of time the firm must wait period Total sales revenues. 365 after making a sale to receive cash payment. A shorter ar collection time is better Accounts receivable Average daily sales Other important measures of financial performance 1. Dividend yield on Annual dividends per share A measure of the return that shareholders receive in the common stock Current market price per share form of dividends. A'typical' dividend yield is 2-3% The dividend yield for fast-growth companies is often below 1% (maybe even of the dividend yield for slow- growth companies can run 4-5% 2. Price-earnings ratio Current market price per shere P-E ratios above 20 indicate strong investor confidence Earnings per share in a firm's outlook and earnings growth; firms whose future carnings are at risk or likely to grow slowly typically have ratios below 12. 3. Dividend payout ratio Annual dividends per share Indicates the percentage of after-tax profits paid out as Earrings per share dividends. 4. Internal cash flow After-tax profits + Depreciation A quick and rough estimate of the cash the business is generating after payment of operating expenses, interest, and taxes. Such amounts can be used for dividend payments or funding capital expenditures. 5. Free cash flow After-tax profits + Depreciation - A quick and rough estimate of the cash a company's Capital expenditures - Dividends business is generating after payment of operating expenses, Interest, taxes, dividends, and desirable reinvestments in the business. The larger a company's free cash flow, the greater is its ability to internally fund new strategic initiatives, repay debt, make new acquisitions, repurchase shares of stock, or increase dividend payments A B E H 1 Horizontal Analysis 2 CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands 12 Months Ended %change 2021 from Dec. 29, 2019 2019 Jan. 03, 2021 Absolute change Absolute Change %change 2019 from 2018 Dec. 30, 2018 3 $ 4,117,411 $ 498,637 14% $ 3,618,774 $ 185,907 5.42% $ 3,432,867 2,522,918 1,594,493 406,613 462,238 725,642 1,654 (172,166) 555,130 63,834 $ 491,296 $ 306,643 $ 191,994 $ 24,320 $ 71,439 $ 96,235 $ (2,394) $ (21,348) $ 72,493 $ (18,094) $ 90,587 14% 14% 6% 18% 15% -59% 2,216,275 1,402,499 382,293 390,799 629,407 4,048 (150,818) 482,637 81,928 $ 400,709 $ 86,087 $ 99,820 $ 9,829 $ 32,273 $ 57,718 $ 714 $ (4,473) $ 53,959 $ 15,222 $ 38,737 4.04% 7.66% 2.64% 9.00% 10.10% 21.42% 3.06% 12.59% 22.82% 10.70% 2,130,188 1,302,679 372,464 358,526 571,689 3,334 (146,345) 428,678 66,706 $361,972 14% 15% -22% 23% 0% $ 12.61 $ 12.39 $ 9.83 $ 9.56 $1 $ 1 13.64% 14.49% $ 8.65 $ 8.35 0% 4 Revenues: 5 Revenue 6 Cost of sales: 7 Cost of sales 8 Operating margin 9 General and administrative 10 U.S. franchise advertising 11 Income from operations 12 Interest income 13 Interest expense 14 Income before provision for income taxes 15 Provision for income taxes 16 Net income 17 Earnings per share: 18 Common stock - basic 19 Common stock - diluted 20 U.S. Stores (Member) | U.S. Company-owned stores (Member) 21 Revenues: 22 Revenue 23 Cost of sales: 24 Cost of sales 25 U.S. franchise advertising 26 U.S. Stores (Member) | U.S. franchise royalties and fees (Member) 27 Revenues: 28 Revenue 29 U.S. Stores (Member) | U.S. franchise advertising (Member) 30 Revenues: 31 Revenue 32 Supply Chain (Member) 33 Revenues: 34 Revenue 35 Cost of sales: 36 Cost of sales 37 International Franchise (Member) | International franchise royalties and fees [Member] 38 Revenues: 39 Revenue de $ 485,569 $ 32,009 7% $ 453,560 $ (61,244) -11.90% $ 514,804 10% 346,168 -13.06% 379,598 35,700 $ 33,430 $ (1,900) $ (51,990) $ (5,800) 398,158 43,400 -5% 37,600 -13.36% 503,196 $ 74,692 17% 428,504 $ 37,011 9.45% 391,493 462,238 $ 71,439 18% 390,799 $ 32,273 9.00% 358,526 2,416,651 $ 311,715 15% 2,104,936 $ 161,639 8.32% 1,943,297 2,143,320 $ 273,213 15% 1,870,107 $ 138,077 7.97% 1,732,030 $ 249,757 $ 8,782 4% $ 240,975 $ 16,228 7.22% $ 224,747 B E Jan. 03,2021 Absolute %change 2021 from Dec. 29,2019 2 $ 168,821 217453 244,560 66,683 24,169 147,698 869,384 $(21,794) $ 8,184 $ 34,300 $ 13,728 $5,040 $ 42,309 $ 81,767 -11.43% 3.91% 16.31% 25.92% 26.35% 40.15% 10.38% $ 190,615 209,269 210,260 52,955 19,129 105,389 787,617 88,063 186456 292,456 13,014 579,989 (282,625) 297,364 $ 43,218 $ 22,385 $ 48,748 $(29,691) $ 84,660 $(30,177) $ 54,483 96.37% 13.64% 20.00% -69.53% 17.09% 11.95% 22.43% 44,845 164,071 243,708 42,705 495,329 (252,448) 242,881 A 1 Horizontal Analysis CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands 3 Current assets: 4 Cash and cash equivalents 5 Restricted cash and cash equivalents 6 Accounts receivable, net of reserves of $1,793 in 2020 and $2,856 in 2019 7 Inventories 8 Prepaid expenses and other 9 Advertising fund assets, restricted 10 Totalcurrent assets 11 Property, plant and equipment: 12 Land and buildings 13 Leasehold and other improvements 14 Equipment 15 Construction in progress 16 Property, plant and equipment, Gross 17 Accumulated depreciation and amortization 18 Property, plant and equipment, net 19 Other assets: 20 Operating lease right-of-use assets 21 Investments in marketable securities, restricted 22 Goodwill 23 Capitalized software, net of accumulated amortization of $124,043 in 2020 and $104,237 in 2019 24 Other assets 25 Deferred income taxes 26 Total other assets 27 Total assets 28 Current liabilities: 29 Current portion of long-term debt 30 Accounts payable 31 Accrued compensation 32 Accrued interest 33 Operating lease liabilities 34 Insurance reserves 35 Advertising fund liabilities 36 Other accrued liabilities 37 Totalcurrent liabilities 38 Long-term liabilities: 39 Long-term debt, less current portion 40 Operating lease liabilities 41 Insurance reserves 42 Deferred income taxes 43 Other accrued liabilities 44 Total long-term liabilities 45 Total liabilities 46 Commitments and contingencies 47 Stockholders' deficit Common stock,par value $0.01 per share; 170,000,000 shares authorized; 38,868,350 in 2020 and 48 38,934,009 in 2019 issued and outstanding 49 Preferred stock, par value $0.01 per share; 5,000,000 shares authorized, none issued 50 Additional paid-in capital 51 Retained deficit 52 Accumulated other comprehensive loss 53 Total stockholders' deficit 54 Total liabilities and stockholders' deficit 228,268 13,251 15,061 81,306 60,630 1,904 400,420 1,567,168 $(517) $ 1,269 $ (32) $ 8,166 $ 48,109 $(8,169) $ 48,826 $ 185,076 -0.23% 10.59% -0.21% 11.16% 384.23% -81. 10% 13.89% 13.39% 228,785 11,982 15,093 73,140 12,521 10,073 351,594 1,382,092 2,855 94499 58,520 31,695 35,861 26,377 141,175 79,837 470,819 $(40,539) $(16,602) $ 12,306 $3,814 $ 2,543 $ 2,642 $ 39,254 $ 13,570 $ 16,988 -93.42% -14.94% 26.63% 13.68% 7.63% 11.13% 38.51% 20.48% 3.74% 43,394 111,101 46,214 27,881 33,318 23,735 101,921 66,267 453,831 $ 44,963 $(463) $2,450 1. 10% -0.23% 7.07% 4,071,055 202,731 34,675 4,116,018 202,268 37,125 6,099 35,244 4,396,754 4,867,573 $(315) $ 52,734 $ 69,722 -0.89% 1.21% 1.45% 35,559 4,344,020 4,797,851 389 $0 0.00% 389 0 5,122 (3,303,492) (2,424) (3,300,405) $ 1,567,168 $4,879 $ 109,157 $ 1,318 $ 115,354 $ 185,076 2007.82% -3.20% -35.22% -3.38% 13.39% 0 243 (3,412,649) (3,742) (3,415,759) $ 1,382,092 A B D E F G H 1 Horizontal Analysis 12 Months Ended CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands Jan. 03, 2021 Absolute %change 2021 from 2019 Dec. 29, 2019 Absolute % change 2019 from 2018 Dec. 30, 2018 , $ 491,296 $ 90,587 22.61% $ 400,709 10.70% $361,972 65,038 2,922 5,526 14,424 24,244 (60,364) 2,134 $ 5,108 $ 899 $ 778 $ 17,721 $ 3,979 $ (34,629) $ 939 8.52% 44.44% 16.39% -537.49% 19.63% 134.56% 78.58% 59,930 2,023 4,748 (3,297) 20,265 (25,735) 1,195 $ 38,737 $0 $ 6,265 $ 6,760 $ (3,285) $ (2,425) $ 12,527) $ (1,949) $ 296 11.67% -142.71% -40.89% 278.10% -11.09% 8.19% 32.93% 53,665 (4,737) 8,033 (872) 22,792 (23,786) 899 (33,334) (24,959) 68,954 5,544 2,592 28,777 592,794 $ (12,434) $ (18,218) $ 2,817 $ 222 $ (710) $ 38,785 $ 95,844 59.49% 270.26% 4.26% 4.17% -21.50% 387.54% 19.29% (20,900) 16,741) 66,137 5,322 3,302 (10,008) 496,950 $ 12,728) $ 5,714 $ 56,127 $ 3,148 $ 3,302 $ (4,656) $ 102,779 15.01% 45.88% % 560.71% 144.80% (18,172) (12,455) 10,010 2,174 87.00% 26.07% (5,352) 394,171 3.74% (85,565) $ 34,323 -28.63% (119,888) 188,768) (40,000) 174 $ (3,203) $ $ 140,000) $ (12,084) $ (50,152) -98.58% -100.00% 12,258 50,152 46.50% -46.65% -100.00% 4 Cash flows from operating activities: 5 Net income 6 Adjustments to reconcile net income to net cash provided by operating activities: 7 Depreciation and amortization 8 Loss (gain) on sale/disposal of assets ) / 9 Amortization of debt issuance costs 10 Provision (Benefit) for deferred income taxes 11 Non-cash equity-based compensation expense 12 Excess tax benefits from equity-based compensation 13 Provision for losses on accounts and notes receivable 14 Changes in operating assets and liabilities: 15 Changes in accounts receivable 16 Changes in inventories, prepaid expenses and other 17 Changes in accounts payable and accrued liabilities 18 Changes in insurance reserves 19 Changes in operating lease assets and liabilities 20 Changes in advertising fund assets and liabilities, restricted 21 Net cash provided by operating activities 22 Cash flows from investing activities: 23 Capital expenditures 24 Purchase of investments (Note 9) 9 25 Proceeds from sale of assets 26 Maturities of advertising fund investments, restricted 27 Purchases of advertising fund investments, restricted 28 Purchases of franchise operations and other assets 29 Other 30 Net cash used in investing activities 31 Cash flows from financing activities: 32 Proceeds from issuance of long-term debt 33 Repayments of long-term debt and finance lease obligations 34 Proceeds from exercise of stock options 35 Purchases of common stock 36 Tax payments for restricted stock upon vesting 37 Payments of common stock dividends and equivalents 38 Cash paid for financing costs 39 Net cash used in financing activities 40 Effect of exchange rate changes on cash 41 Change in cash and cash equivalents, restricted cash and cash equivalents 42 Cash and cash equivalents, beginning of period 43 Restricted cash and cash equivalents, beginning of period , 44 Cash and cash equivalents included in advertising fund assets, restricted, beginning of period Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents 45 included in advertising fund assets, restricted, beginning of period 46 Cash and cash equivalents, end of period 47 Restricted cash and cash equivalents, end of period 48 Cash and cash equivalents included in advertising fund assets, restricted, end of period Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents 49 included in advertising fund assets, restricted, end of period 8,367 94,007 (70,152) $ 3,891 $ 143,855) $ 70,152 $ (3,423) $ (685) $ 60,403 (333) (128,927) $ 3,423 $ 943 $ (101,073) -100.00% -73.90% 362.87% (3,423) (1,276) (27,854) 115.91% -68.44% (591) (88,257) 158,000 (202,058) 30,970 (304,590) 16,803) (121,925) $ (517,000) $ (109,973) $ 17,906 $ 394,417 $ (852) ) $ (16,210) $ 8,098 $ (223,614) $ 560 $ (228,283) $ 165,177 $ 42,276 $ 39,052 $ 246,505 -76.59% 119.43% 137.06% -56.43% 14.32% 15.33% -100.00% 100.37% 278.61% -92.61% 649.33% 25.32% 86.81% 103.83% 675,000 192,085) 13,064 (699,007) (5,951) ( (105,715) (8,098) (222,792) 201 246,505 25.438 166,993 44.988 237,419 $ (295,000) $ 512,003 $ 3,232 $ (107,795) ( $ 1,011 $ (13,549) $ 109 $ 100,011 $ 739 $ 263,932 $ (10,330) $ 124,769) $ 17,672 $ (17,427) -30.41% -84.76% 32.87% 18.23% -14.52% 14.70% -1.33% -30.98% -137.36% -1514.50% -28.88% -12.92% 64.69% -6.84% 970,000 (604,088) 9,832 (591,212) (6,962) (92,166) (8,207) (322,803) (538) (17,427) 35.768 191,762 27,316 254,846 (446,406) 761 18,222 190,615 209,269 84,040 483,924 168,821 217,453 115,872 $ 502,146 $ (21,794) $ 8,184 $ 31,832 $ 18,222 -11,43% 3.91% 37.88% 3.77% 190,615 209,269 84,040 $ 483,924 $ 165,177 $ 42,276 $ 39,052 $ 246,505 649.33% 25.32% 86.81% 103.83% 25,438 166,993 44,988 $ 237,419