Wendy's International (WEN)

Business Strategy; Potential Corporate Restructuring

The key elements of our business strategy have included (1) using our resources to grow our restaurant and asset management businesses, (2) evaluating and making various acquisitions and business combinations, whether in the restaurant industry, the asset management industry or other industries, (3) building strong operating management teams for each of our businesses and (4) providing strategic leadership and financial resources to enable these management teams to develop and implement specific, growth-oriented business plans. The implementation of this business strategy may result in increases in expenditures for, among other things, acquisitions and, over time, marketing and advertising. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Unless circumstances dictate otherwise, it is our policy to publicly announce an acquisition or business combination only after an agreement with respect to such acquisition or business combination has been reached.

We are continuing to explore a possible corporate restructuring that is expected to involve the disposition of our asset management operations, whether through a sale of our ownership interest in Deerfield, a spin-off of our ownership interest in Deerfield to our stockholders or such other means as our board of directors may conclude would be in the best interests of our stockholders. Any such corporate restructuring is currently expected to, and any other form of corporate restructuring could, involve Nelson Peltz, our Chairman and Chief Executive Officer, Peter W. May, our President and Chief Operating Officer, Edward P. Garden, our Vice Chairman, and certain other senior officers and employees of Triarc no longer being officers and employees of Triarc, in which case it is expected that Triarc would be led by the current management team of Arby’s. In connection with the potential restructuring, in addition to our regular quarterly dividends, in 2006 we declared and paid special cash dividends aggregating $0.45 per share on each outstanding share of our Class A Common Stock and Class B Common Stock, Series 1. The special cash dividends were paid in three installments of $0.15 per share on each of March 1, July 14 and December 20, 2006. Options for our remaining non-restaurant net assets are also under review and could include the allocation of these net assets between our two businesses (Arby’s and Deerfield) and/or additional special dividends or distributions to our stockholders.

Depending on the nature of the restructuring, various arrangements relating to the affected businesses could be necessary, the cost of which has not been determined. Among other things, we have employment agreements and severance arrangements with certain of our executive officers and corporate employees. If we proceed with a restructuring, we would incur significant severance or contractual settlement payments under these agreements and arrangements, which would result in Triarc being relieved of its long-term obligations under the employment agreements. In the case of Messrs. Peltz and May, the amount of such payments would be subject to negotiation and approval by a special committee comprised of independent members of our board of directors, which is considering these matters. There can be no assurance that a corporate restructuring will occur or the form, terms or timing of such restructuring if it does occur. Our board of directors has not reached any definitive conclusions concerning the form, scope, benefits or timing of the corporate restructuring.

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On November 1, 2005, Messrs. Peltz, May and Garden (collectively, the Principals) started a series of equity investment funds (the Funds) that are separate and distinct from Triarc and that are being managed by the Principals and certain other senior officers and employees of Triarc (the Employees) through a management company (the Management Company) formed by the Principals. The investment strategy of the Funds is to achieve capital appreciation by investing in equity securities of publicly traded companies and effecting positive change through active hands-on influence and involvement. In contrast, Deerfield is an asset manager focusing on fixed income and credit-related strategies with approximately $13.2 billion of assets under management as of December 31, 2006, none of which was invested in equity securities of publicly traded companies. Before agreeing to acquire more than 50% of the outstanding securities of a company in the quick service restaurant segment in which Arby’s operates, the Principals have agreed to offer us such acquisition opportunity.

The Principals and Employees continue to serve as officers and employees of, and receive compensation from, Triarc. Triarc is making available the services of the Principals and the Employees, as well as certain support services including investment research, legal, accounting and administrative services, to the Management Company. The length of time that these management services will be provided has not yet been determined. Triarc is being reimbursed by the Management Company for the allocable cost of these services, including an allocable portion of base salaries, rent and various overhead costs for periods both before and after the launch of the Funds. Such allocated costs amounted to $4.3 million for the year ended December 31, 2006. In addition, certain of the incentive compensation paid by Triarc to Messrs. Peltz and May and all of the incentive compensation paid by Triarc to Mr. Garden and the Employees reflects an allocation of their time between the services that they provided in 2006 to Triarc and to the Management Company. As a result of this allocation, Triarc reduced its incentive compensation expense in 2006 by an aggregate of approximately $7.4 million. A special committee comprised of independent members of our board of directors has reviewed and considered the support service arrangements and allocations, and the Compensation Committee and the Performance Compensation Subcommittee, as applicable, have approved the amounts of the incentive compensation paid by Triarc to the Principals and the Employees.

At December 31, 2006, our consolidated indebtedness was approximately $720.0 million, including approximately $709.0 million of debt of our restaurant subsidiaries. The debt of our restaurant subsidiaries has neither been guaranteed by Triarc nor secured by Triarc’s cash, cash equivalents or investments.

Business Strategy; Potential Corporate Restructuring

       The key elements of our business strategy have included (1) using our resources to grow our restaurant and asset management businesses, (2) evaluating and making various acquisitions and business combinations, whether in the restaurant industry, the asset management industry or other industries, (3) building strong operating management teams for each of our current and future businesses and (4) providing strategic leadership and financial resources to enable these management teams to develop and implement specific, growth-oriented business plans. The implementation of this business strategy may result in increases in expenditures for, among other things, acquisitions and, over time, marketing and advertising. See “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.” Unless circumstances dictate otherwise, it is our policy to publicly announce an acquisition or business combination only after an agreement with respect to such acquisition or business combination has been reached.

       We are continuing to explore the feasibility, as well as the risks and opportunities, of a possible corporate restructuring that may involve the spin-off to our stockholders or other disposition of our ownership interest in Deerfield, our alternative asset management business. In connection with the potential restructuring, on January 26, 2006, in addition to our regular quarterly dividends, we announced our intention to declare and pay during 2006 special cash dividends aggregating $0.45 per share on each outstanding share of our Class A Common Stock and Class B Common Stock, Series 1, the first installment of which, in the amount of $0.15 per share, was paid on March 1, 2006. The declaration and payment of the future additional special cash dividends aggregating $0.30 per share on each outstanding share of our Class A Common Stock and Class B Common Stock is subject to applicable law, will be made at the discretion of our Board of Directors and will be based on such factors as Triarc's earnings, financial condition, cash requirements and other factors, including whether such future installments of the special dividends will result in a material adjustment to the conversion price of our 5% Convertible Notes due 2023. There can be no assurance that any additional special cash dividends will be declared or paid, or of the amount or timing of such dividends, if any. (See “Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” below.) Options for our other remaining non-restaurant assets are also under review and could include the allocation of our remaining cash, cash equivalents, short-term and other investments between our two businesses (Arby's and Deerfield) and/or additional special dividends or distributions to shareholders. There can be no assurance that the corporate restructuring will occur or the form, terms or timing of such restructuring if it does occur. Other than as described herein, as of the date hereof, our Board of Directors has not reached any definitive conclusions concerning the scope, benefits or timing of the corporate restructuring.

       On November 1, 2005, Nelson Peltz, Peter May and Edward Garden, Triarc's Vice Chairman (collectively, the “Principals”) started a series of equity investment funds (the “Funds”) that are separate and distinct from Triarc and that are being managed by the Principals and other senior officers of Triarc (the “Employees”)

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through a management company (the “Management Company”) formed by the Principals. The Principals and the Employees continue to serve as officers of, and receive compensation from, Triarc. Triarc is making available the services of the Principals and the Employees, as well as certain support services including investment research, legal, accounting and administrative services, to the Management Company. The length of time that these services will be provided has not yet been determined. Triarc is being reimbursed by the Management Company for the allocable cost of these services, including an allocable portion of salaries, rent and various overhead costs for periods both before and after the launch of the Funds. Such reimbursement with respect to 2005 amounts to $775,000. A special committee comprised of independent members of our Board of Directors has reviewed and considered these arrangements and approved the allocation of costs and reimbursement for 2005.

       Our consolidated cash, cash equivalents and investments (including restricted cash, but excluding investments related to deferred compensation arrangements) at January 1, 2006 totaled approximately $502 million. At such date, our consolidated indebtedness was approximately $914 million, including approximately $723 million of debt of our restaurant subsidiaries. The debt of our restaurant subsidiaries has neither been guaranteed by Triarc nor secured by Triarc's cash, cash equivalents or investments. The foregoing amounts do not reflect the special cash dividend paid on March 1, 2006, as described above, the regular quarterly dividend paid on March 15, 2006 in an aggregate amount of approximately $7.6 million or the repurchase of a significant portion of our outstanding 5% Convertible Notes due 2023, as described below under “—Repurchase of 5% Convertible Notes due 2023; Right to Convert Notes During 2006 Second Fiscal Quarter.”