Wendy's International (WEN)

Due to the concentration of Arby’s restaurants in particular geographic regions, ARG’s business results could be impacted by the adverse economic conditions prevailing in those regions regardless of the state of the national economy as a whole.

As of December 31, 2006 ARG and Arby’s franchisees operated Arby’s restaurants in 48 states, the District of Columbia and four foreign countries. As of December 31, 2006, the six leading states by number of operating units were: Ohio, with 288 restaurants; Michigan, with 191 restaurants; Indiana, with 175 restaurants; Florida, with 175 restaurants; Texas, with 156 restaurants; and Georgia, with 153 restaurants. This geographic concentration can cause economic conditions in particular areas of the country to have a

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disproportionate impact on ARG’s overall results of operations. ARG believes that the adverse economic conditions in Ohio and Michigan, two states that have a significant number of Arby’s restaurants, have adversely impacted its results of operations. It is possible that adverse economic conditions in those two states or in other states or regions that contain a high concentration of Arby’s restaurants could have a material adverse impact on ARG’s results of operations in the future.

ARG and its subsidiaries are subject to various restrictions, and substantially all of their assets are pledged, under a credit agreement.

Under its credit agreement, substantially all of the assets of ARG and its subsidiaries (other than real property) are pledged as collateral security. The credit agreement also contains financial covenants that, among other things, require ARG and its subsidiaries to maintain certain financial ratios and restrict their ability to incur debt, pay dividends or make other distributions, enter into certain fundamental transactions (including sales of assets and certain mergers and consolidations) and create or permit liens. If ARG and its subsidiaries are unable to generate sufficient cash flow or otherwise obtain the funds necessary to make required payments of interest or principal under, or are unable to comply with covenants of, the credit agreement, they would be in default under the terms of the credit agreement, which would, under certain circumstances, permit the lenders to accelerate the maturity of the indebtedness. You should read the information in Note 11 to the Consolidated Financial Statements.