Wendy's International (WEN)

Short-Term Investments

Short-term investments include (1) debt securities and marketable equity securities with readily determinable fair values, (2) other short-term investments that are not readily marketable, including investments in limited partnerships and similar investment entities, (3) preferred shares of collateralized debt obligation vehicles (“CDOs”) for which the Company acts as collateral manager and (4) short-term derivative instruments. The Company’s debt and marketable equity securities are classified and accounted for either as “available-for-sale” or “trading” and are reported at fair market value with the resulting net unrealized holding gains or losses, net of income taxes, reported as a separate component of comprehensive income (loss) bypassing net income or included as a component of net income, respectively. The Company uses the specific identification method to determine the cost or the amount reclassified out of accumulated other comprehensive income (deficit) into earnings or loss of securities sold for all marketable securities, as applicable. Other short-term equity investments that are not readily marketable as of January 1, 2006 and December 31, 2006 consist entirely of investments in which the Company does not have significant influence over the investees (“Cost Investments”). Cost Investments are accounted for under the cost method (the “Cost Method”). Preferred shares of CDOs are considered financial assets subject to prepayment, are accounted for similar to debt securities as described above and are classified as available-for-sale securities. Interest income is accreted on the preferred shares of CDOs over the respective estimated lives of the CDOs primarily using the effective yield method. Derivative instruments are carried at fair value and, to the extent they are held in trading portfolios, are accounted for similar to, and classified as, trading securities. Short-term investments that represent collateral for other financial instruments are separately classified in the accompanying consolidated balance sheets as “Short-term investments pledged as collateral.”

See Note 5 for further disclosure of the Company’s short-term investments.

Short-Term Investments

       Short-term investments include (1) debt securities and marketable equity securities with readily determinable fair values, (2) other short-term investments that are not readily marketable, including investments in limited partnerships and similar investment entities, (3) preferred shares of collateralized debt obligation vehicles (“CDOs”) for which the Company acts as collateral manager and (4) short-term derivative instruments. The Company's debt and marketable equity securities are classified and accounted for either as “available-for-sale” or “trading” and are reported at fair market value with the resulting net unrealized holding gains or losses, net of income taxes, reported as a separate component of comprehensive income (loss) bypassing net income or included as a component of net income, respectively. The cost or the amount reclassified out of accumulated other comprehensive income (deficit) into earnings or loss of securities sold for all marketable securities is determined using the specific identification method. Other short-term equity investments that are not readily marketable as of January 2, 2005 and January 1, 2006 consist entirely of investments in which the Company does not have significant influence over the investees (“Cost Investments”). Cost Investments are accounted for under the cost method (the “Cost Method”). Preferred shares of CDOs are considered financial assets subject to prepayment, are accounted for similar to debt securities as described above and are therefore classified as available-for-sale securities. Interest income is accreted on the preferred shares of CDOs over the respective estimated lives of the CDOs using the effective yield method. Derivative instruments are carried at fair value and, to the extent they are held in trading portfolios, are accounted for similar to, and classified as, trading securities. Short-term investments that represent collateral for other financial instruments are separately classified in the accompanying consolidated balance sheets as “Short-term investments pledged as collateral.”

       See Note 5 for further disclosure of the Company's short-term investments.