Wendy's International, Inc.
NYSE : WEN

Wendy's International, Inc.

October 27, 2005 13:00 ET

Wendy's International, Inc. Announces 2005 Third Quarter Results

DUBLIN, Ohio--(CCNMatthews - Oct 27, 2005) -

Wendy's International, Inc. (NYSE:WEN):

-- Revenue increased 5.1% to $960.6 million

-- Net income increased 4.3% to $72.1 million; earnings per share were $0.61

-- Company issues updated EPS goal for 2005

Wendy's International, Inc. (NYSE:WEN) today announced results for the third quarter, which ended on Sunday, Oct. 2. The Company reported diluted earnings per share (EPS) of $0.61 for the quarter.

2005 third quarter highlights



-- Total revenue was $961 million, compared to $914 million in
the third quarter of 2004.
-- Wendy's® same-store sales decreased 5.0% at U.S. company
stores and 5.5% at U.S. franchised restaurants, compared to
positive sales in the third quarter a year ago. Same-store
sales were strong at Tim Hortons®, with a 3.6% increase in
Canada and a 4.7% increase in the United States. Baja Fresh®
Mexican Grill's system same-store sales declined 4.1%. (See
"Third Quarter Same-Store Sales Summary" below.)
-- Pretax income was $106.9 million, compared to $108.8 million
in the third quarter of 2004.
-- The Company's effective tax rate was 32.6% in the third
quarter of 2005, compared to 36.5% in the third quarter of
2004, which had a positive effect on reported results. The
lower tax rate reflects differences in treatment of certain
items for tax, versus accounting purposes, primarily
influenced by changes in Canadian currency.
-- Net income was $72.1 million, a 4.3% increase compared to
$69.1 million a year ago.
-- Diluted EPS were $0.61, compared to $0.60 a year ago.
-- Several factors affected the year-over-year comparability of
the 2005 and 2004 third quarters, resulting in a positive net
impact on reported income and EPS. The following are the most
significant items having a positive impact on the third
quarter (items are presented without the favorable tax rate
effects noted above).
-- The stronger Canadian dollar ($1.20 in 3Q 2005 vs. $1.31
in 3Q 2004) had a favorable impact on Canadian operations.
The stronger Canadian dollar also resulted in a one-time,
nontaxable mark-to-market gain on intercompany cross
border notes (in Other Income). The Company has now hedged
these notes. The EPS impact of these two items was about
$0.07.
-- The Company recorded a $0.01 per share gain from
facilities actions after completing certain real estate
sales as part of its strategic initiatives announced on
July 29.

-- The following are the most significant items having a negative
impact on the third quarter:
-- Increased beef costs ($1.55 per pound in 3Q 2005, up 18.4%
vs. $1.31 in 3Q 2004), which had a negative impact on EPS
of about $0.025.
-- Increased restricted stock expense ($0.025 in 3Q 2005 vs.
$0.01 in 3Q 2004), which had a negative impact on EPS of
about $0.015.
-- An increase in the average number of diluted shares
outstanding (117.7 million in the third quarter of 2005
versus 115.2 million in the third quarter of 2004) related
to increased stock option exercises by employees
throughout the year. This was partially offset by the
Company's two million-share accelerated repurchase
transaction that was completed in September. These items
had a net negative impact on EPS of about $0.01.
-- Expenses related to the initial public offering (IPO) of
15% to 18% of Tim Hortons (also announced on July 29),
which had a negative impact on EPS of about $0.01.

Other elements of the Company's financial performance included:
-- General and administrative expenses were $73.7 million, or
7.7% of revenue, compared to $70.4 million, or 7.7% of
revenue, in the prior year. G&A included the negative impact
of costs for restricted stock and the Tim Hortons IPO, which
was offset by lower performance-based compensation accruals.
-- The Company and its franchisees opened 96 new restaurants
during the quarter. The openings consisted of 46 Wendy's, 48
Tim Hortons and 2 Baja Fresh restaurants.
-- The Company completed its previously announced accelerated
repurchase of two million shares on Sept. 21 at an average
price of $48.85 (excluding fees) and has about $1.1 billion
remaining under its authorization from the Board of Directors.
Since 1998, the Company has repurchased more than 42.4 million
shares for approximately $1.1 billion, at an average price of
$26.43 per share.



"We are disappointed with our overall results, and we are focused on improving top-line growth, particularly at our Wendy's and Baja Fresh brands," Chairman and Chief Executive Officer Jack Schuessler said. "We are encouraged by the progress of our strategic initiatives at Wendy's, as we move forward with our plans to sell certain real estate assets, close underperforming stores and sell selected company-owned stores to franchisees.

"We intend to pay off $100 million in debt due in December, and we will consider additional share repurchase opportunities as appropriate in the future," Schuessler added.

Due to its previously announced strategic initiatives and the anticipated S-1 filing for the Tim Hortons IPO, the Company expects to be precluded from repurchasing shares at certain times.

New products drive sales growth at Tim Hortons; Company reiterates IPO plan

The strong third quarter sales at Tim Hortons resulted in part from its seasonal promotions, which included fresh-baked cookies in July, cinnamon rolls in August and steeped tea (in Canada) and chocolate-themed desserts (in the U.S.) in September. Tim Hortons is currently promoting its hearty vegetable soup and turkey sandwich combo, while its October donut of the month is pumpkin spice. The Company also recently introduced its new Hot Smoothee, a smooth and frothy hot beverage available in five flavors: Butter Caramel, French Vanilla, Hazelnut, Orange and Raspberry.

A recent study by Waterstone Human Capital Ltd. ranked Tim Hortons second on the list of Canada's 10 Most Admired Corporate Cultures of 2005, along with companies such as WestJet Airlines, RBC Financial Group and Four Seasons Hotels and Resorts.

Management continues to move forward with its plan to sell 15% to 18% of Tim Hortons in an IPO. As previously announced, the Company plans to file its Form S-1 registration statement in early December and is targeting March 2006 for the initial public offering of shares.

Schuessler to continue leading Wendy's brand

The Company announced that Schuessler will continue to lead the Wendy's brand, in addition to his current role as Chairman and Chief Executive Officer of the Company.

"We are committed to growing the Wendy's brand through continuous improvement in operations and evolution of the marketing program," Schuessler said. "Our goal is to build upon our foundation of superior operations to exceed customer expectations."

For the seventh consecutive year, QSR Magazine's annual drive-through time study rated Wendy's as the No. 1 quick-service chain in drive-through speed, with an average service time of 135.7 seconds.

"Although we were ranked No. 1 in drive-through speed, our overall services times slowed. We are focused on improving speed, accuracy, quality and caring service," said Schuessler.

In the fourth quarter, Wendy's is promoting its Bacon Mushroom Melt Cheeseburger as part of its platform marketing strategy, which includes Internet advertising along with traditional television, radio, print and in-store marketing. Wendy's is also advertising one of its competitive advantages, hamburger personalization, which enables consumers to customize hamburgers with toppings of their choice.

Company to accelerate vesting of stock options

The Company announced today that the Compensation Committee, after discussion with the Board of Directors, approved accelerated vesting of all outstanding stock options. The decision to accelerate vesting of stock options was made primarily to reduce non-cash compensation expense that would have been recorded in future periods following the Company's adoption of FAS No.123 in January 2006.

Chief Financial Officer Kerrii Anderson said: "This action will enable the Company to eliminate expense in 2006 and 2007 estimated to total approximately $13 million to $15 million pretax. This should also have a positive effect on employee morale and retention, as well as perception of value at various levels of the Company."

The Compensation Committee imposed a holding period that will require all executive officers to refrain from selling net shares acquired upon any exercise of these accelerated options, until the date on which the exercise would have been permitted under the option's original vesting terms.

The vesting of stock options held by the independent Directors of the Company is not changed by this action.

2005 full year and fourth quarter outlook

The Company updated its full-year 2005 EPS guidance. The previous guidance was a range of $2.20 to $2.26, a 7% to 10% increase compared to 2004 pro forma EPS of $2.06 (see Table 1 under "Pro forma financial results for 2004" for reconciliation).

The new 2005 EPS guidance is a range of $2.12 to $2.15, which is a 3% to 4% increase compared to 2004.



The revised EPS guidance includes:
-- Lower-than-expected sales at Wendy's, including the previously
announced impact of lost sales and increased expenses related
to hurricanes that have negatively impacted year-to-date
earnings by approximately $0.02 per share.
-- An estimated $5 million pretax expense in the fourth quarter
for the accelerated stock option vesting.
-- Anticipated IPO costs in the fourth quarter.
-- Lower store development goals. The Company now expects to open
425-450 new restaurants systemwide in 2005 compared to its
original goal of 510-560.



The guidance does not include the anticipated impact of gains and losses related to strategic initiatives announced on July 29, as well as other non-recurring items that may occur in the fourth quarter.

During the fourth quarter, the Company will conduct a review for goodwill impairment. The Company will also continue to evaluate individual restaurants for possible closure and markets for possible impairment.

The Company's beef price will be $1.39 per pound in the fourth quarter, down 10.3% from the 2005 third quarter price. This compares to $1.40 per pound in the fourth quarter of 2004.

Pro forma financial results for 2004

The Company reported diluted EPS of $0.45 for the full year 2004. The 2004 reported EPS results include the impact of a goodwill impairment charge related to Baja Fresh. Excluding this item, the Company realized Pro Forma EPS of $2.06 (see Table 1 below).



Table 1: Reconciliation of 2004 EPS

---------------------------------------------------
2004 reported diluted EPS: $0.45
---------------------------------------------------
Goodwill charge: $(1.61)
---------------------------------------------------
2004 Pro Forma EPS: $2.06
---------------------------------------------------



The Company believes that presenting its 2004 financial results excluding the non-cash write-down for the reduction in the goodwill of Baja Fresh provides investors with a meaningful perspective of the current underlying operating performance of the Enterprise. Management uses EPS excluding the goodwill write-down as an internal measure of business operating performance and as the baseline for improved performance in 2005.

Board approves 111th consecutive dividend

The Board of Directors approved a quarterly dividend of $0.17, payable on Nov. 21 to shareholders of record as of Nov. 7. The dividend will be the Company's 111th consecutive dividend. The Company announced on July 29 that its Board of Directors authorized a 25% increase in the Company's annual dividend rate per share from $0.54 to $0.68.

Third Quarter conference call and webcast scheduled for Oct. 27

The Company will host a conference call at 4:00 p.m. ET on Thursday, Oct. 27 to discuss third quarter results. Investors may participate either via conference call at (877) 572-6014 (domestic) or (706) 679-4852 (international), or by live webcast at www.wendys-invest.com. A replay will also be available for 90 days on the site and for 10 days by telephone at (800) 642-1687 (conference ID No. 9867893).



Third Quarter Same-Store Sales Summary

3Q 2005 3Q 2004 2005 YTD
----------------------------------------------------------------------
Wendy's U.S. Company (5.0%) 2.0% (3.9%)
----------------------------------------------------------------------
Wendy's U.S. Franchise (5.5%) 0.9% (3.5%)
----------------------------------------------------------------------
Tim Hortons Canada 3.6% 8.4% 5.0%
----------------------------------------------------------------------
Tim Hortons U.S. 4.7% 9.8% 7.0%
----------------------------------------------------------------------
Baja Fresh System (4.1%) (7.5%) (3.9%)
----------------------------------------------------------------------



Company launches online Corporate Responsibility Report

During the third quarter, the Company published its inaugural Corporate Responsibility Report. The online report is accessible from the Company's Investor Relations home page at www.wendys-invest.com.

The report contains information about corporate ethics, corporate governance, community relations, nutrition and animal welfare. It also provides detailed information regarding the Company's value-enhancing initiatives for the customers, employees, franchisees, shareholders and suppliers who support Wendy's International, Inc. and each of its brands.

The Company expects that its corporate responsibility efforts will be ongoing and plans to update the individual sections of the report as appropriate in the future.

Tim Hortons IPO

A registration statement relating to the common shares to be sold in the Tim Hortons IPO is expected to be filed with the Securities and Exchange Commission, but has not been filed or become effective. The common shares may not be sold and offers may not be accepted prior to the time the registration statement becomes effective.

This release does not constitute an offer to sell or the solicitation of any offer to buy, and there shall not be any sale of the common shares in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.

Wendy's International, Inc. overview

Wendy's International, Inc. is one of the world's largest restaurant operating and franchising companies with more than 9,800 total restaurants and quality brands - Wendy's Old Fashioned Hamburgers®, Tim Hortons and Baja Fresh Mexican Grill. The Company also has investments in two additional quality brands - Cafe Express™ and Pasta Pomodoro®. More information about the Company is available at www.wendys-invest.com.

Safe Harbor statement

Certain information in this news release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, is forward looking. Factors set forth in our Safe Harbor under the Private Securities Litigation Reform Act of 1995, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company's Safe Harbor statement at http://www.wendys-invest.com/safeharbor.

Cafe Express is a trademark of Cafe Express, LLC

Pasta Pomodoro is a registered trademark of Pasta Pomodoro, Inc.



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

(Unaudited)

Third Quarter Ended
10/2/2005 9/26/2004 $ Change % Change
---------- ---------- -------- ---------

REVENUES
Retail sales $769,428 $741,053 $28,375 3.8%
Franchise revenues 191,186 172,975 18,211 10.5%
---------- ---------- -------- ---------
TOTAL REVENUES 960,614 914,028 46,586 5.1%
---------- ---------- -------- ---------

COSTS & EXPENSES
Cost of sales 513,119 482,796 30,323 6.3%
Company restaurant operating
costs 165,913 159,962 5,951 3.7%
Operating costs 43,806 36,783 7,023 19.1%
Depreciation of property &
equipment 51,232 46,631 4,601 9.9%
General & administrative
expenses 73,703 70,419 3,284 4.7%
Other income (4,414) (2,039) (2,375) 116.5%
---------- ---------- -------- ---------
TOTAL COSTS & EXPENSES 843,359 794,552 48,807 6.1%
---------- ---------- -------- ---------

OPERATING INCOME 117,255 119,476 (2,221) -1.9%

Interest expense (12,247) (11,598) (649) -5.6%
Interest income 1,907 940 967 102.9%
---------- ---------- -------- ---------

PRETAX INCOME 106,915 108,818 (1,903) -1.7%

INCOME TAXES 34,827 39,719 (4,892) -12.3%
---------- ---------- -------- ---------

NET INCOME $72,088 $69,099 $2,989 4.3%
---------- ---------- -------- ---------
---------- ---------- -------- ---------

Diluted earnings per common
share $0.61 $0.60 $0.01 1.7%
---------- ---------- -------- ---------
---------- ---------- -------- ---------

Diluted shares 117,656 115,151 2,505 2.2%
---------- ---------- -------- ---------
---------- ---------- -------- ---------



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

(Unaudited)

Year-to-Date Ended
10/2/2005 9/26/2004 $ Change % Change
----------- ----------- --------- ---------

REVENUES
Retail sales $2,264,483 $2,158,242 $106,241 4.9%
Franchise revenues 541,326 499,441 41,885 8.4%
----------- ----------- --------- ---------
TOTAL REVENUES 2,805,809 2,657,683 148,126 5.6%
----------- ----------- --------- ---------

COSTS & EXPENSES
Cost of sales 1,506,009 1,400,108 105,901 7.6%
Company restaurant
operating costs 498,766 469,957 28,809 6.1%
Operating costs 116,841 108,481 8,360 7.7%
Depreciation of property &
equipment 149,583 135,933 13,650 10.0%
General & administrative
expenses 222,768 209,958 12,810 6.1%
Other income (11,949) (3,402) (8,547) 251.2%
----------- ----------- --------- ---------
TOTAL COSTS & EXPENSES 2,482,018 2,321,035 160,983 6.9%
----------- ----------- --------- ---------

OPERATING INCOME 323,791 336,648 (12,857) -3.8%

Interest expense (35,111) (34,979) (132) -0.4%
Interest income 4,431 3,013 1,418 47.1%
----------- ----------- --------- ---------

PRETAX INCOME 293,111 304,682 (11,571) -3.8%

INCOME TAXES 99,007 111,209 (12,202) -11.0%
----------- ----------- --------- ---------

NET INCOME $194,104 $193,473 $631 0.3%
----------- ----------- --------- ---------
----------- ----------- --------- ---------

Diluted earnings per common
share $1.67 $1.67 $0.00 0.0%
----------- ----------- --------- ---------
----------- ----------- --------- ---------

Diluted shares 116,293 115,903 390 0.3%
----------- ----------- --------- ---------
----------- ----------- --------- ---------



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

October 2, January 2,
2005 2005
----------- -----------
(Unaudited)
(Dollars in thousands)

ASSETS

Current assets
Cash and cash equivalents $263,883 $176,749
Accounts receivable, net 157,506 127,158
Notes receivable, net 12,263 11,626
Deferred income taxes 24,250 27,280
Inventories and other 63,848 56,010
Advertising fund restricted assets 61,374 60,021
Assets held for disposition 134,846 0
----------- -----------
717,970 458,844
----------- -----------

Property and equipment 3,409,091 3,362,158
Accumulated depreciation (1,093,725) (1,012,338)
----------- -----------
2,315,366 2,349,820
----------- -----------

Notes receivable, net 15,316 12,652

Goodwill 162,484 166,998

Deferred income taxes 8,459 6,772

Intangible assets, net 43,027 41,787

Other assets 163,661 160,671
----------- -----------
$3,426,283 $3,197,544
----------- -----------
----------- -----------



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

October 2, January 2,
2005 2005
----------- -----------
(Unaudited)
(Dollars in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable $150,074 $197,247
Accrued expenses:
Salaries and wages 43,949 46,971
Taxes 87,189 108,025
Insurance 58,471 53,160
Other 86,063 92,838
Advertising fund restricted liabilities 71,444 60,021
Current portion of long-term obligations 107,486 130,125
----------- -----------
604,676 688,387
----------- -----------
Long-term obligations
Term debt 555,786 538,055
Capital leases 58,993 55,552
----------- -----------
614,779 593,607
----------- -----------

Deferred income taxes 124,613 109,674
Other long-term liabilities 100,190 90,187

Commitments and contingencies

Shareholders' equity
Preferred stock, Authorized: 250,000 shares
Common stock, $.10 stated value per share,
Authorized: 200,000,000 shares,
Issued: 123,699,000 and 118,090,000
shares, respectively 12,370 11,809
Capital in excess of stated value 333,407 111,286
Retained earnings 1,848,571 1,700,813
Accumulated other comprehensive income
(expense):
Cumulative translation adjustments and
other 122,356 102,950
Pension liability (913) (913)
----------- -----------
2,315,791 1,925,945
Treasury stock, at cost:
7,681,000 and 5,681,000 shares,
respectively (294,668) (195,124)
Unearned compensation - restricted stock (39,098) (15,132)
----------- -----------
1,982,025 1,715,689
----------- -----------
$3,426,283 $3,197,544
----------- -----------
----------- -----------


WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
REVENUES BY SEGMENT

(in Increase (Decrease)
thousands): Third Quarter Ended From Prior Year
------------------------------------- -------------------
October 2, % of September 26, % of
2005 Total 2004 Total Dollars Percentage
---------- ------ ------------ ------ -------- ----------
Retail Sales
------------
Wendy's $523,218 68.0% $532,047 71.8% ($8,829) -1.7%
Tim Hortons 195,718 25.4% 157,579 21.3% 38,139 24.2%
Developing
Brands(a) 50,492 6.6% 51,427 6.9% (935) -1.8%
----------- ------------- ---------
$769,428 100.0% $741,053 100.0% $28,375 3.8%
----------- ------------- ---------
----------- ------------- ---------

Franchise
Revenues
------------
Wendy's $77,639 40.6% $78,796 45.6% ($1,157) -1.5%
Tim Hortons 111,553 58.4% 91,896 53.1% 19,657 21.4%
Developing
Brands(a) 1,994 1.0% 2,283 1.3% (289) -12.7%
----------- ------------- ---------
$191,186 100.0% $172,975 100.0% $18,211 10.5%
----------- ------------- ---------
----------- ------------- ---------

Total
Revenues
------------
Wendy's $600,857 62.5% $610,843 66.8% ($9,986) -1.6%
Tim Hortons 307,271 32.0% 249,475 27.3% 57,796 23.2%
Developing
Brands(a) 52,486 5.5% 53,710 5.9% (1,224) -2.3%
----------- ------------- ---------
$960,614 100.0% $914,028 100.0% $46,586 5.1%
----------- ------------- ---------
----------- ------------- ---------

(a) Developing Brands include Baja Fresh and Cafe Express.




(in Increase (Decrease)
thousands): Year-to-Date Ended From Prior Year
------------------------------------- -------------------
October 2, % of September 26, % of
2005 Total 2004 Total Dollars Percentage
---------- ------ ------------ ------ -------- ----------
Retail Sales
------------
Wendy's $1,575,078 69.5% $1,581,544 73.3% ($6,466) -0.4%
Tim Hortons 538,355 23.8% 429,278 19.9% 109,077 25.4%
Developing
Brands(a) 151,050 6.7% 147,420 6.8% 3,630 2.5%
----------- ------------- ---------
$2,264,483 100.0% $2,158,242 100.0% $106,241 4.9%
----------- ------------- ---------
----------- ------------- ---------

Franchise
Revenues
------------
Wendy's $229,783 42.4% $229,049 45.9% $734 0.3%
Tim Hortons 305,300 56.4% 263,433 52.7% 41,867 15.9%
Developing
Brands(a) 6,243 1.2% 6,959 1.4% (716) -10.3%
----------- ------------- ---------
$541,326 100.0% $499,441 100.0% $41,885 8.4%
----------- ------------- ---------
----------- ------------- ---------

Total
Revenues
------------
Wendy's $1,804,861 64.3% $1,810,593 68.1% ($5,732) -0.3%
Tim Hortons 843,655 30.1% 692,711 26.1% 150,944 21.8%
Developing
Brands(a) 157,293 5.6% 154,379 5.8% 2,914 1.9%
----------- ------------- ---------
$2,805,809 100.0% $2,657,683 100.0% $148,126 5.6%
----------- ------------- ---------
----------- ------------- ---------

(a) Developing Brands include Baja Fresh and Cafe Express.



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATING INCOME BY SEGMENT


(in
thousands): Third Quarter Ended Change
-------------------------------------- -------------------
October 2, % of September 26, % of
2005 Revenues 2004 Revenues Dollars Percentage
-------- -------- ----------- -------- -------- ----------
Operating
Income
(Loss)
------------
Wendy's $54,747 9.1% $70,894 11.6% ($16,147) -22.8%
Tim Hortons 79,484 25.9% 66,839 26.8% 12,645 18.9%
Developing
Brands(a) (4,645) -8.9% (2,337) -4.4% (2,308) -98.8%
--------- ------------ ---------
Segment
operating
income 129,586 13.5% 135,396 14.8% (5,810) -4.3%
Corporate
charges(b) (12,331) -1.3% (15,920) -1.7% 3,589 22.5%
--------- ------------ ---------
Operating
income $117,255 12.2% $119,476 13.1% ($2,221) -1.9%
--------- ------------ ---------
--------- ------------ ---------

(a) Developing Brands include Baja Fresh and Cafe Express.

(b) Corporate charges include certain overhead costs which are not
allocated to individual segments.


(in
thousands): Year-to-Date Ended Change
-------------------------------------- -------------------
October 2, % of September 26, % of
2005 Revenues 2004 Revenues Dollars Percentage
-------- -------- ----------- -------- -------- ----------
Operating
Income
(Loss)
------------
Wendy's $156,115 8.6% $209,116 11.5% ($53,001) -25.3%
Tim Hortons 218,615 25.9% 181,332 26.2% 37,283 20.6%
Developing
Brands(a) (9,260) -5.9% (9,086) -5.9% (174) -1.9%
--------- ------------ ---------
Segment
operating
income 365,470 13.0% 381,362 14.3% (15,892) -4.2%
Corporate
charges(a) (41,679) -1.5% (44,714) -1.7% 3,035 6.8%
--------- ------------ ---------
Operating
income $323,791 11.5% $336,648 12.7% ($12,857) -3.8%
--------- ------------ ---------
--------- ------------ ---------

(a) Developing Brands include Baja Fresh and Cafe Express.

(b) Corporate charges include certain overhead costs which are not
allocated to individual segments.



WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
RATIOS

As of As of
October 2, 2005 September 26, 2004
-------------------------------------

Debt to Equity 31% 37%
Debt to Total Capitalization 24% 27%




WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SYSTEMWIDE RESTAURANTS

Increase/ Increase/
As of As of (Decrease) As of (Decrease)
October 2, July 3, From Prior September 26, From Prior
2005 2005 Quarter 2004 Year
--------------------------------------------------------
Wendy's
--------------
U.S.
Company 1,351 1,340 11 1,302 49
Franchise 4,666 4,652 14 4,552 114
--------------------------------------------------------
6,017 5,992 25 5,854 163
Canada
Company 159 158 1 150 9
Franchise 226 226 0 223 3
--------------------------------------------------------
385 384 1 373 12
Other
International
Company 5 5 0 5 0
Franchise 343 346 (3) 340 3
--------------------------------------------------------
348 351 (3) 345 3

Total Wendy's
Company 1,515 1,503 12 1,457 58
Franchise 5,235 5,224 11 5,115 120
--------------------------------------------------------
6,750 6,727 23 6,572 178
--------------------------------------------------------
--------------------------------------------------------

Tim Hortons
--------------
U.S.
Company 65 67 (2) 66 (1)
Franchise 207 197 10 167 40
--------------------------------------------------------
272 264 8 233 39
Canada
Company 31 32 (1) 28 3
Franchise 2,498 2,459 39 2,371 127
--------------------------------------------------------
2,529 2,491 38 2,399 130

Total Tim
Hortons
Company 96 99 (3) 94 2
Franchise 2,705 2,656 49 2,538 167
--------------------------------------------------------
2,801 2,755 46 2,632 169
--------------------------------------------------------
--------------------------------------------------------

Baja Fresh
--------------
U.S.
Company 146 146 0 148 (2)
Franchise 156 157 (1) 157 (1)
--------------------------------------------------------
Total Baja
Fresh 302 303 (1) 305 (3)
--------------------------------------------------------
--------------------------------------------------------

Cafe Express
--------------
U.S.
Company 19 19 0 18 1
--------------------------------------------------------
Total Cafe
Express 19 19 0 18 1
--------------------------------------------------------
--------------------------------------------------------

Total System
Company 1,776 1,767 9 1,717 59
Franchise 8,096 8,037 59 7,810 286
--------------------------------------------------------
9,872 9,804 68 9,527 345
--------------------------------------------------------
--------------------------------------------------------



WENDY'S INTERNATIONAL, INC.
Income Statement Definitions


Retail Sales Includes sales from company operated restaurants.
Also included are the sales to franchisees from
Wendy's bun baking facilities, and sales to
franchisees from Tim Hortons' coffee roaster and
distribution warehouses.

Franchise Revenues Consists primarily of royalties, rental income
and franchise fees. Franchise fees include
charges for various costs and expenses related
to establishing a franchisee's business, and
include initial equipment packages for the
Hortons' franchises.

Cost of Sales Includes food, paper and labor costs for
restaurants. Also included are the cost of
goods sold to franchisees from Wendy's bun
baking facilities, and Tim Hortons' coffee
roaster and distribution warehouses.

Company Restaurant Consists of all costs necessary to manage and
Operating Costs operate restaurants, except cost of sales and
depreciation. These include advertising,
insurance, maintenance, rent, etc., as well as
support costs for personnel directly related to
restaurant operations.

Operating Costs Includes rent expense related to properties
leased to franchisees, and cost of equipment
sold to franchisees as part of the initiation of
the franchise business. Training and other
costs necessary to ensure a successful Hortons'
franchise opening and costs to operate and
maintain the Tim Hortons' distribution
warehouses, Tim Hortons' coffee roaster and
Wendy's bun baking facilities are also included
in operating costs.

General and Costs that cannot be directly related to
Administrative generating revenue.
Expenses

Other Income and Includes expenses (income) that are not directly
Expense derived from the Company's primary businesses.
This includes income from the Company's
investments in joint ventures and other minority
investments. Expenses include store closures
and other asset write-offs.



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