Wendy's International (WEN)

Depreciation and Amortization, Excluding Amortization of Deferred Financing Costs

Our depreciation and amortization, excluding amortization of deferred financing costs increased $16.5 million, principally reflecting $13.4 million of depreciation and amortization of RTM and $2.8 million attributable to the effect of the Deerfield Acquisition occurring on July 22, 2004.

Depreciation and Amortization, Excluding Amortization of Deferred Financing Costs

       Our depreciation and amortization, excluding amortization of deferred financing costs increased $6.0 million, partially reflecting $2.2 million of depreciation and amortization related to Deerfield. Aside from the effect of the Deerfield Acquisition, depreciation and amortization increased $3.8 million principally due to a $3.0 million increase in impairment losses on Sybra Stores and our T.J. Cinnamons trademark and a $0.7 million effect of our implementation of new back office and point-of-sale restaurant systems in the second half of 2004. The impairment loss in 2004 of $3.4 million consisted of $1.8 million related to the Sybra Stores and $1.6 million related to our T.J. Cinnamons trademark. Restaurant impairment losses in 2003 and 2004 predominantly reflect (1) impairment charges resulting from the deterioration in operating performance of certain restaurants and (2) in 2004, additional charges for restaurants impaired in 2003 which did not recover in 2004, principally for the investment in their back office and point-of-sale systems installed in each of the Company-owned restaurants in 2004. The trademark impairment loss in 2004 resulted from our assessment during the fourth quarter of the T.J. Cinnamons brand, which offers, through franchised and Company-owned restaurants, a product line of gourmet cinnamon rolls, coffee rolls, coffees and other related products. This assessment resulted in (1) our decision to not actively pursue new T.J. Cinnamons franchisees until additional new product offerings within its existing product line are tested and become available and (2) the corresponding significant reduction in anticipated T.J. Cinnamons unit growth.

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