Wendy's International (WEN)

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Interest Expense

Interest expense increased $34.6 million reflecting (1) a $19.7 million increase in interest expense on debt securities sold with an obligation to purchase or under agreements to repurchase in connection with the use of significant leverage in the Opportunities Fund, which did not commence until October 2004, (2) a $7.1 million net increase in interest expense in connection with the RTM Acquisition, (3) the release in 2004 of $4.3 million of interest accruals no longer required upon the finalization by the Internal Revenue Service of its examination of our Federal income tax returns for the years ended December 31, 2000 and December 30, 2001, which we refer to as the IRS Examination, and (4) $3.6 million of interest expense relating to sale-leaseback and capitalized lease obligations of RTM which we acquired but which were not refinanced and, to a much lesser extent, additional obligations for new restaurants opened subsequent to the RTM Acquisition. The net increase in interest expense in connection with the RTM Acquisition reflects a $351.6 million net increase in our level of new debt following the Refinancing compared with our previous debt that was refinanced due to (1) the refinancing of $212.0 million of acquired debt of RTM and (2) $139.6 million of new debt proceeds used to fund a portion of the purchase price in the RTM Acquisition and to pay related fees and expenses, including $31.0 million related to the early extinguishment of debt discussed below under “Loss on Early Extinguishments of Debt.” This effect on interest expense of the $351.6 million increased level of debt is partially offset by the effect of the lower interest rate on the new debt.

Interest Expense

       Interest expense decreased $3.0 million principally due to (1) the release in 2004 of $4.3 million of interest accruals no longer required upon the finalization of the IRS Examination, (2) a $2.5 million decrease attributable to lower outstanding amounts of a majority of our long-term debt and (3) $0.4 million of interest expense in 2003 which did not recur in 2004 relating to a post-closing sales price adjustment settled in December 2003 in connection with the sale of our former beverage businesses. These decreases were partially offset by a $3.7 million increase in interest expense, including related amortization of deferred financing costs, due to the full period effect in 2004 of the $175.0 million principal amount of our 5% convertible notes, which we refer to as the Convertible Notes, issued in May 2003 and a $0.9 million increase in interest expense on debt securities sold with an obligation to purchase.