Wendy's International (WEN)

Foreign Currency Risk

Our objective in managing our exposure to foreign currency fluctuations is to limit the impact of these fluctuations on earnings and cash flows. As of December 31, 2006, our primary exposure to foreign currency risk related to our $8.5 million cost-method investment in Jurlique International Pty Ltd., an Australian company which we refer to as Jurlique. In April 2006 we received a return of capital from our investment in Jurlique, and sold a portion of our investment in Jurlique representing an aggregate $21.7 million reduction in the carrying value of the investment to $8.5 million. We continue to have a put and call arrangement whereby we have limited the overall foreign currency risk of holding this investment through July 5, 2007. In connection with these April 2006 transactions, we terminated a portion of the put and call arrangement so that the remaining notional amount approximated the value of the remaining investment. To a more limited extent, we have exposure to foreign currency risk relating to our investments in certain investment limited partnerships and similar investment entities that hold foreign securities and a total return swap with respect to a foreign equity security. However, some of the investment managers hedge the foreign currency exposure, thereby substantially mitigating the risk. The fixed payment reflected in the total return swap is denominated in the same foreign currency as the underlying security thereby also mitigating the foreign currency risk. We monitor these exposures and periodically determine our need for the use of strategies intended to lessen or limit our exposure to these fluctuations. We also have a relatively limited amount of exposure to (1) investments in two foreign subsidiaries and (2) export revenues and related receivables denominated in foreign currencies, both of which are subject to foreign currency fluctuations. Our foreign subsidiary exposures relate to administrative operations in Canada and England and our export revenue exposures relate to royalties earned from Arby’s franchised restaurants in Canada. Foreign operations and foreign export revenues for each of the years ended January 1, 2006 and December 31, 2006 together represented only 3% and 4%, respectively, of our total royalties and franchise and related fees and represented less than 1% of our total revenues. Accordingly, an immediate 10% change in foreign currency exchange rates versus the United States dollar from their levels at January 1, 2006 and December 31, 2006 would not have a material effect on our consolidated financial position or results of operations.

Foreign Currency Risk

       Our objective in managing our exposure to foreign currency fluctuations is to limit the impact of these fluctuations on earnings and cash flows. As of January 1, 2006 our primary exposure to foreign currency risk related to our $30.2 million cost-method investment in Jurlique International Pty Ltd., an Australian company which we refer to as Jurlique. We have a put and call arrangement on approximately $18.2 million of our total cost related to this investment whereby we have limited the overall foreign currency risk of holding the investment through July 5, 2007. To a more limited extent, we have exposure to foreign currency risk relating to our investments in certain investment limited partnerships and similar investment entities that hold foreign securities, and for one of these funds that buys or sells foreign currencies or financial instruments denominated in foreign currencies. However, some of the investment managers hedge the foreign currency exposure, thereby substantially mitigating the risk. We monitor these exposures and periodically determine our need for the use of strategies intended to lessen or limit our exposure to these fluctuations. We also have a relatively limited amount of exposure to (1) an investment in a foreign subsidiary and (2) export revenues and related receivables denominated in foreign currencies, both of which are subject to foreign currency fluctuations. Our foreign subsidiary exposures relate to administrative operations in Canada and our export revenue exposures relate to royalties earned from Arby's franchised restaurants in Canada. Foreign operations and foreign export revenues for each of the years ended January 2, 2005 and January 1, 2006 together represented only 3% of our total royalties and franchise and related fees and represented less than 1% of our total revenues. Accordingly, an immediate 10% change in foreign currency exchange rates versus the United States dollar from their levels at January 2, 2005 and January 1, 2006 would not have a material effect on our consolidated financial position or results of operations.