Wendy's International (WEN)

10. Debt

Long-term debt consists of:

The Group has two revolving line-of-credit agreements. As of May 29, 2005, one agreement allowed for borrowings up to $25,000 through December 15, 2005. This agreement bears interest at the prime rate (4.00% at May 30, 2004 and 6.00% at May 29, 2005). This agreement is secured by assets having a net book value of $1,168 as of May 30, 2004 and $6,399 as of May 29, 2005. The Group must pay a quarterly fee of 0.375% on unused amounts and up to $6,600 of this line can be used for letters of credit. The second agreement allows for borrowings of up to $15,000 with interest based on the rate of 30-day commercial paper (1.00% at May 30, 2004 and 2.98% at May 29, 2005) plus 2.65%. This agreement expires November 30, 2005 and is secured by assets having a net book value of $767 as of May 29, 2005. There were no outstanding balances under the line-of-credit agreements as of May 30, 2004. As of May 29, 2005, there was an outstanding balance of $8,991 which is included in short-term borrowings in the accompanying Combined Balance Sheet.

The Group incurred interest expense of $35,664 and $38,218 and the Group also recorded interest income of $501 and $434 in 2004 and 2005, respectively. The Group capitalized $878 and $379 of interest expense in 2004 and 2005, respectively. The total net interest expense from continuing operations in 2004 and 2005 was $34,285 and $37,405, respectively.

21

RTM Restaurant Group
May 29, 2005
Notes to Combined Financial Statements (continued)
(In Thousands, Except Share and Per Share Amounts)

10. Debt (continued)

The Group has pledged certain receivables, land, buildings and equipment, leases and license agreements as collateral for the above notes. Certain notes include financial covenants, of which the most significant are minimum requirements of cash flow, debt-to-equity ratios and net worth. At May 29, 2005, the Group was not in compliance with certain financial covenants. The Group obtained waivers through at least May 31, 2005 from each financial institution to which these covenants apply. The violations were cured when all of the Group’s debt was retired in connection with the Triarc Transaction. See Note 19. Certain of the notes also include other customary provisions including subjective acceleration clauses for material adverse changes. The Group evaluated the likelihood of acceleration of debt under these clauses as remote.

In connection with the Triarc Transaction, all of the Group’s debt was retired, along with the debt of Winners guaranteed by the Group. Prepayment penalties were incurred of approximately $16,000, including approximately $2,500 for the debt guaranteed by the Group.

Note 7: Debt

The Company is obligated under borrowings as follows (in thousands):

10. Debt

      Long-term debt consists of:

      The Group incurred interest expense of $26,940 and $28,967 and the Group also recorded interest income of $347 and $575, during the 40 weeks ended February 29, 2004 and March 6, 2005, respectively. The Group capitalized $675 and $432 during the 40 week periods ended February 29, 2004 and March 6, 2005, respectively. During the 40 week periods ended February 29, 2004 and March 6, 2005, the total net interest expense from continuing operations was $25,918 and $27,960, respectively.

      The Group has pledged certain receivables, land, buildings and equipment, leases and license agreements with a net book value of approximately $170,000 as collateral for the above notes. Certain notes include financial covenants, of which the most significant are minimum requirements of cash flow, debt-to-equity ratios and net worth. At May 30, 2004, the Group was not in compliance with certain financial covenants. The Group has obtained waivers through at least May 31, 2005 from each financial institution to which these covenants apply. Based on its preliminary results for the year ended May 29, 2005, the Group believes it is probable that the Group will be in compliance with such covenants at May 29, 2005. At March 6, 2005, the Group was in compliance with the covenants that are measured on a quarterly basis. Certain of the notes

44

RTM RESTAURANT GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)

10. Debt—(Continued)

also include other customary provisions including subjective acceleration clauses for material adverse changes. The Group has evaluated the likelihood of acceleration of debt under these clauses as remote.

      The Group has two revolving line-of-credit agreements. As of March 6, 2005, one agreement allows for borrowings up to $25,000 through December 15, 2005. This agreement bears interest at the prime rate (4.00% at May 30, 2004 and 5.00% at March 6, 2005). This agreement is secured by assets having a net book value of $1,168 as of May 30, 2004 and $2,029 as of March 6, 2005. The Group pays a quarterly fee of 0.375% on unused amounts and up to $6,000 of this line can be used for letters of credit. The second agreement allows for borrowings of up to $15,000 with interest based on the rate of 30-day commercial paper (1.00% at May 30, 2004 and 2.46% at March 6, 2005) plus 2.65%. This agreement expires November 30, 2005 and is secured by assets having a net book value of $500 as of May 30, 2004 and $794 as of March 6, 2005. There were no outstanding balances under the line-of-credit agreements as of May 30, 2004. As of March 6, 2005, there was an outstanding balance of $12,759 which is included in the current portion of long-term debt.

      Aggregate maturities of long-term debt at March 6, 2005 are as follows:

      As more fully described in Note 19, the Group intends to combine with Arby's Restaurant Group Inc. and, in connection therewith, substantially all of the Group's debt is expected to be retired or refinanced, along with the debt of Winners guaranteed by the Group. Were such debt to be retired as of March 6, 2005, management estimates prepayment penalties would aggregate approximately $20,000 at March 6, 2005, including $5,000 for the debt guaranteed by the Group.