Wendy's International (WEN)

Net Sales

Our net sales, which were generated entirely from the Company-owned restaurants, increased $365.2 million to $570.8 million for 2005 from $205.6 million for 2004, reflecting $357.5 million of net sales attributable to the restaurants acquired in the RTM Acquisition and 31 net restaurants added during 2005 after the RTM Acquisition. Aside from the effect of (1) the RTM Acquisition and the 31 net restaurants added thereafter during 2005 and (2) a $3.6 million effect of the inclusion of a 53rd week in 2004, net sales increased $11.3 million principally due to an approximate 5% growth in same-store sales of the 233 restaurants we already owned prior to the RTM Acquisition. The increase in same-store sales reflected (1) introductions of new Market Fresh® sandwiches and wraps and other menu items in 2005, (2) improved marketing including (a) an increase in print media advertising, primarily couponing, (b) the implementation of then new menu boards focused on combination meals and (c) more focused value menu programs and (3) operational initiatives targeting continued improvement in customer service levels and convenience. The positive effects of these factors were partially offset by (1) less favorable performance in Company-owned restaurants in the economically- weaker Michigan region, an area where approximately one-third of the restaurants we already owned prior to the RTM Acquisition are located and (2) the effect of higher fuel prices on consumers’ discretionary income which we believe had a negative impact on our sales during the second half of 2005. The restaurants we acquired in the RTM Acquisition had lower same-store sales performance for the 2005 period subsequent to the RTM Acquisition principally reflecting new product performance in the 2005 third quarter

46

that was less successful than that of 2004, which had particularly strong same-store sales performance with respect to those restaurants.

Net Sales

       Our net sales, which were generated entirely from the Company-owned restaurants, increased $4.1 million, or 2%, to $205.6 million for 2004 from $201.5 million for 2003. Aside from a $3.6 million effect of the inclusion of the 53rd week in 2004, our net sales were relatively flat.

       Our net sales improved $1.2 million due to a 1% growth in same-store sales of the Company-owned restaurants during 2004 compared with the weak same-store sales performance during 2003, partially offset by a $0.7 million decrease in net sales due to the closing during 2004 of four underperforming Company-owned restaurants, two of which were closed at the end of 2004 and did not affect the decrease. The increase in same-store sales reflected new menu offerings consisting of salads and wraps and new sandwiches which were introduced beginning in the second and third quarters of 2004, the effects of which were partially offset by unfavorable performance in Sybra Stores in the Michigan region, an area where approximately one-third of our Sybra Stores are located and which has been particularly impacted by high unemployment. The growth in same-store sales of Company-owned restaurants of 1% was less than the 4% growth in same-store sales of franchised restaurants discussed under “Royalties and Franchise and Related Fees” below. Factors contributing to this difference include the (1) economic conditions in the Michigan region as previously discussed and (2) weaker revenue performance in the Dallas region as a result of lower advertising spending in the region for our combined Company-owned and franchised restaurants than would have occurred if that market were more fully penetrated. Same-store sales during 2004 also reflect increased price promotions compared with 2003, although we are unable to determine if the incremental effect on sales volume of the price promotions was sufficient to exceed or partially offset the unfavorable effect on pricing.