WENDY’S INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 MANAGEMENT’S STATEMENT

In the opinion of management, the accompanying Consolidated Condensed Financial Statements contain all adjustments (all of which are normal and recurring in nature) necessary for a fair statement of the consolidated condensed financial position of Wendy’s International, Inc. and subsidiaries (the “ Company ”) as of September 30, 2007 and December 31, 2006, and the consolidated condensed results of operations and comprehensive income (see Note 7) for the quarters and year-to-date periods ended September 30, 2007 and October 1, 2006 and consolidated condensed cash flows for the year-to-date periods ended September 30, 2007 and October 1, 2006. All of these financial statements are unaudited. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s 2006 Form 10-K. The December 31, 2006 Consolidated Condensed Balance Sheet was derived from the audited Consolidated Financial Statements contained in the Company’s 2006 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

On September 29, 2006, the Company completed the spin-off of its remaining 82.75% ownership in Tim Hortons Inc. (“ THI ”), the parent company of the business previously reported as the Hortons segment. Accordingly, the results of operations of THI are reflected as discontinued operations for all periods presented. In addition, on November 28, 2006 and July 29, 2007, the Company completed the sale of Baja Fresh and Cafe Express, respectively, and accordingly, the results of operations for these two businesses are also reflected as discontinued operations for all periods presented (see Note 6). Baja Fresh and Cafe Express were previously reported as the Developing Brands segment.

NOTE 2 NET INCOME PER SHARE

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted computations are based on the treasury stock method and include assumed conversions of stock options and restricted stock and restricted stock units (together “ restricted shares ”), when outstanding and dilutive. For the third quarter and year-to-date periods ended September 30, 2007, 0.9 million and 0.3 million options, respectively, were excluded from the computation of diluted earnings per common share because the exercise prices of the options were greater than the average market price of the common shares in the period, and therefore, they are antidilutive. There were no options excluded from the computation of diluted earnings per common share for the third quarter and year-to-date periods of 2006 as they were all dilutive.

The computations of basic and diluted earnings per common share are shown below:

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The decrease in stock compensation expense recognized in continuing operations in the third quarter 2007 compared to the third quarter 2006 includes a pretax adjustment recorded in the third quarter of 2007 of $1.4 million ($0.9 million net of tax) to correct cumulative compensation expense. The adjustment was not material to the current or prior periods. Compared to third quarter 2006, the adjustment was partially offset by 2007 grants representing the fourth layer of equity award grants being expensed. The Company began expensing equity awards in 2004 and prior to the 2007 award, equity award grants vested over four years. The decrease in stock compensation expense recognized in discontinued operations in the quarter and year-to-date periods ended September 30, 2007 compared to the quarter and year-to-date periods ended October 1, 2006 is primarily due to the absence of expense related to THI and Baja Fresh which were disposed of in 2006.

On April 26, 2007, the Company’s shareholders approved the 2007 Stock Incentive Plan (the “ 2007 Plan ”), which provides for equity compensation awards in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, performance shares, performance units and share awards (collectively, “ Awards ”) to eligible employees and directors of the Company or its subsidiaries. The 2007 Plan authorizes up to 6 million common shares for grants of Awards. The common shares offered under the 2007 Plan may be authorized but unissued shares, treasury shares or any combination thereof. The Company intends to use the 2007 Plan to issue annual stock option grants and long-term performance unit awards beginning in 2007. The Company expects that approximately 50% of the value of Awards made in 2007 and subsequent years will be comprised of stock options, with the remaining 50% of the value comprised of performance awards. In calculating the fair value of the 0.9 million options granted in the second quarter of 2007, the assumptions used in the Black-Scholes model were expected lives of 4.3 years, expected volatility of 25%, dividend yield of 1.33% and risk free interest rate of 4.55%. The stock options and the performance shares granted in 2007 vest over three years compared to the four year vesting period for awards granted in 2004 through 2006.

Rent revenues for the quarter and year-to-date periods ended October 1, 2006 represent rent paid by THI to a 50/50 Canadian restaurant real estate joint venture between Wendy’s and THI. After the spin-off of THI and in accordance with accounting principles generally accepted in the United States, this joint venture and, as a result, rent revenues paid by THI, are no longer consolidated in the Company’s financial statements and Wendy’s 50% share of the joint venture income is included in other (income) expense, net as equity investment income for the quarter and year-to-date periods ended September 30, 2007. See Note 10 for discussion of store closure costs. The gain from insurance proceeds represents reimbursements related to property damaged during Hurricane Katrina. The increase in expense in other, net for the quarter ended September 30, 2007 versus

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October 1, 2006 primarily includes payment of a loan guarantee related to a franchisee terminated by the Company in 2007 and the absence of favorable legal reserve settlements of $2.9 million which occurred in the third quarter of 2006, partially offset by lower 2007 severance costs.

NOTE 5 INCOME TAXES

In June 2006, the Financial Accounting Standards Board (“ FASB ”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“ FIN 48 ”) . The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The Company adopted the provisions of FIN 48 on January 1, 2007. There was no material effect on the financial statements or a cumulative effect to retained earnings related to the adoption of FIN 48. However, certain amounts have been reclassified in the statement of financial position in order to comply with the requirements of the interpretation. The amount of unrecognized tax benefits at January 1, 2007 was approximately $23.1 million, all of which would impact the Company’s effective tax rate, if recognized.

The Internal Revenue Service (“ IRS ”) is conducting an examination of the Company’s U.S. federal income tax returns for the years 2006 and 2007 as part of the IRS’s Compliance Assurance Process program. The Company is before the U.S. Competent Authority for the years 1999 through 2001 as it relates to transfer pricing on royalties and fees between U.S. and Canada. The Company settled its 2005 IRS examination in the third quarter of 2007, and expects to settle the Competent Authority matter by the end of 2007 and the 2006 IRS examination by the end of the first quarter, 2008. Amounts related to IRS examinations of federal income tax returns for 2005 and prior years have been settled and paid.

The Company was before the IRS Appeals Division for the years 1998 through 2004 as it relates to a refund claim for the work-opportunity tax credit. The Company was notified during the second quarter of 2007 that its refund claim had been denied by the IRS Appeals Division. The Company is currently evaluating how to proceed with this issue.

State income tax returns are generally subject to examination for a period of 3-5 years after filing of the respective return. The Company has various state income tax returns in the process of examination, administrative appeals or litigation.

The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. As of January 1, 2007, the Company had accrued approximately $7.1 million of interest and penalties.

The amount of unrecognized tax benefits at September 30, 2007 was approximately $21.7 million. The Company expects that approximately $14.1 million of its liability for unrecognized tax benefits will be settled in the next 12 months. It is expected that the amount of unrecognized tax benefits will change in the next 12 months; however the change is not expected to have a material impact on the results of operations or the financial position of the Company.

The effective income tax rate from continuing operations for the quarter and year-to-date periods ended September 30, 2007 was 34.0%, and 35.7%, respectively, compared to 26.5% and 31.2% for the respective comparative periods ended October 1, 2006. Income tax expense in the third quarter 2007 and the third quarter 2006 was impacted by favorable IRS exam settlements and several individually immaterial discrete items that impacted the effective rate. The year-to-date 2006 tax expense was also impacted by several discrete items which had a proportionately larger percentage impact due to the significantly lower income from continuing operations before income taxes.

NOTE 6 DISCONTINUED OPERATIONS

THI

On September 29, 2006, the Company completed the distribution of its remaining 82.75% ownership in THI. The distribution took place in the form of a pro rata common stock dividend to Wendy’s shareholders whereby each shareholder received 1.3542759 shares of THI common stock for each share of Wendy’s common stock held.

The table below presents the significant components of THI operating results included in income from discontinued operations for the quarter and year-to-date periods ended October 1, 2006. THI represented the Hortons segment prior to the spin-off.

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Income tax expense for THI for the year-to-date period ended October 1, 2006 reflects the resolution of certain THI tax audits which resulted in a benefit of $11.1 million, a $7.0 million release of deferred Canadian withholding taxes and state income taxes on unremitted foreign earnings, and $3.8 million due to permanent differences for fair value losses on certain foreign currency contracts that were deductible for tax purposes but not for book purposes.

Developing Brands

On November 28, 2006, the Company completed the sale of Baja Fresh, and on July 29, 2007, the Company completed the sale of Cafe Express. The income statement impact of the sale of Cafe Express was not material. Both of these businesses historically comprised the Developing Brands segment. Accordingly, the results of operations of Baja Fresh and Cafe Express are reflected as discontinued operations for all periods presented. The assets and liabilities of Cafe Express were held for sale at December 31, 2006 and were presented as current and non-current assets and liabilities from discontinued operations. On February 28, 2007, in accordance with the terms of the partnership agreement, Wendy’s acquired, at no cost, the remaining 30% of equity of Cafe Express. The Company owned 100% of Cafe Express until it was sold on July 29, 2007. According to the terms of the sale agreements, the dispositions of Baja Fresh and Cafe Express were subject to certain working capital and other adjustments, which have not been finalized. The impact of any such adjustments is not expected to have a material impact on the results of operations of the Company.

The table below presents the significant components of Baja Fresh and Cafe Express operating results included in income from discontinued operations for the quarter and year-to-date periods ended September 30, 2007 and October 1, 2006.

The assets and liabilities of Cafe Express are reflected as discontinued operations in the Consolidated Condensed Balance Sheets as of December 31, 2006 and are comprised of the following:

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Other comprehensive income is primarily comprised of translation adjustments related to fluctuations in the Canadian dollar and changes in the Company’s pension liability. In the first three quarters of 2006, other comprehensive income also included activity related to the Company’s cash flow hedges. There was a strengthening in the Canadian dollar during the third quarter and year-to-date periods of 2007 and during the year-to-date period ended October 1, 2006. Partially offsetting the 2006 year-to-date strengthening of the Canadian dollar was a $4.4 million loss, net of taxes of $2.5 million, related to the settlement of the Company’s hedge of certain net investment positions. This after-tax loss is included in the 2006 year-to-date translation adjustments component of other comprehensive income. At the end of the third quarter 2007, the Canadian exchange rate was $0.99 versus $1.07 at July 1, 2007 and $1.17 at December 31, 2006. At the end of the third quarter 2006, the Canadian exchange rate was $1.12 versus $1.12 at July 2, 2006 and $1.16 at January 1, 2006.

NOTE 8 CASH FLOWS

In order to maintain comparability between periods, intercompany cash flows have been eliminated from the appropriate cash flow lines in the Company’s Consolidated Condensed Statements of Cash Flows. During the nine-month period ended September 30, 2007, intercompany cash flows included net cash payments of $0.4 million from Wendy’s to Cafe Express for intercompany trade payables and taxes. These payments have been eliminated as a cash outflow from continuing operations’ operating activities and as a cash inflow from discontinued operations’ operating activities, respectively.

During the nine month period ended October 1, 2006, intercompany cash flows included $960.0 million in net cash payments made by THI to Wendy’s for payment of an intercompany note from Wendy’s. The $960.0 million payment has been eliminated as a cash outflow from discontinued operations’ financing activities and as a cash inflow from continuing operations’ financing activities, respectively. Intercompany cash flows also included payments made by THI to Wendy’s totaling $25.6 million in intercompany interest and intercompany trade payables. These payments have been eliminated as a cash outflow from discontinued operations’ operating activities and as a cash inflow from continuing operations’ operating activities, respectively.

Intercompany cash flows for the nine month period ended October 1, 2006 also included net cash payments from Baja Fresh to Wendy’s for $0.4 million for intercompany trade payables. These payments have been eliminated as a cash inflow from continuing operations’ operating activities and as a cash outflow from discontinued operations’ operating activities, respectively. Additionally, during the nine-month period ended October 1, 2006, Cafe Express made net cash payments of $0.7 million to Wendy’s for intercompany trade payables. These payments have been eliminated as a cash inflow from continuing operations’ operating activities and as a cash outflow from discontinued operations’ operating activities, respectively.

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The $5.0 million change in the gross carrying amount and accumulated amortization of purchase options reflects the expiration of an option to purchase properties in Utah.

Included in other above is $2.6 million and $2.9 million as of September 30, 2007 and December 31, 2006, respectively, net of accumulated amortization of $2.2 million and $1.9 million, respectively, related to the use of the name and likeness of Dave Thomas, the late founder of Wendy’s.

Total intangibles amortization expense was $0.1 million and $0.7 million for the quarter and year-to-date periods ended September 30, 2007 respectively, and $0.3 million and $0.8 million for the quarter and year-to-date periods ended October 1, 2006, respectively. The estimated annual intangibles amortization expense for the years 2008 through 2012 is less than $0.5 million.

Goodwill was $85,863 and $85,353 at September 30, 2007 and December 31, 2006, respectively. The change in goodwill represents translation adjustments on Canadian dollar denominated goodwill.

NOTE 10 FIXED ASSET DISPOSITIONS AND IMPAIRMENTS

In accordance with Statement of Financial Accounting Standards ( “SFAS” ) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company has classified assets with a net book value of $11.6 million and $15.5 million as assets held for disposition on the Consolidated Condensed Balance Sheets as of September 30, 2007 and December 31, 2006, respectively. The assets are sites that are no longer being depreciated and are classified as held for disposition based on the Company’s intention to sell these assets within the next 12 months. At September 30, 2007, the net book value of assets held for disposition includes $7.0 million of land and $4.6 million of buildings and leasehold improvements.

During the quarter ended September 30, 2007, the Company sold seven sites previously classified as held for disposition, with a net book value of $3.3 million, for a net gain of $1.2 million, which is classified as other (income) expense, net on the Consolidated Condensed Statements of Income. During the third quarter of 2007, four additional sites with a net book value of $2.7 million were designated as held for disposition. The Company recognized impairment charges of $1.0 million in the third quarter of 2007 related to these sites, which were recorded in other (income) expense, net on the Consolidated Condensed Statements of Income.

Additionally, during the quarter ended September 30, 2007, the Company sold 14 sites not classified as held for disposition with a net book value of $3.1 million. The Company recognized a gain of $2.8 million from these sales, of which $1.7 million is classified as other (income) expense, net and $1.0 million is classified in franchise revenues on the Consolidated Condensed Statements of Income for sites sold to franchisees.

During the nine months ended September 30, 2007, the Company sold 19 sites classified as held for disposition at December 31, 2006, with a net book value of $7.7 million, for a net gain of $2.8 million, of which $2.5 million is classified as other (income) expense, net and $0.3 million is classified in franchise revenues on the Consolidated Condensed Statements of Income for sites sold to franchisees. Also during the nine months ended September 30, 2007, the Company sold 26 sites not classified as held for disposition with a net book value of $5.5 million. The Company recognized a gain of $4.1 million from these sites, of which $1.8 million is classified as other (income) expense, net and $2.3 million is classified as franchise revenues on the Consolidated Condensed Statements of Income. Year-to-date 2007, seven sites with a net book value of $4.2 million were designated as held for disposition. The Company recognized impairment charges of $1.3 million in the first nine months of 2007 related to Wendy’s sites expected to be sold which were recorded in other (income) expense, net on the Consolidated Condensed Statements of Income.

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During the third quarter and year-to-date of 2007, the Company incurred $1.4 million and $5.7 million, respectively, of store closing and asset impairment charges, compared to $5.5 million and $8.9 million in 2006 which are included in other (income) expense, net on the Consolidated Condensed Statements of Income. These amounts include the impairment charges referred to above as well as lease termination costs and other asset write-offs.

NOTE 11 RESTRUCTURING RESERVES

In 2006, the Company accrued restructuring costs related to its voluntary enhanced retirement plan and reduction in force and accrued professional fees and other costs as part of a cost reduction plan. Most of these costs were paid in 2006. Additional costs have also been recorded in 2007.

The table below presents a reconciliation of the beginning and ending restructuring liabilities (included in accrued expenses – other) at January 1, 2007 and September 30, 2007, respectively:

In addition to the restructuring liabilities recorded in 2006 and 2007, in the third quarter and year-to-date periods ended September 30, 2007, the Company recognized pretax pension settlement charges of $1.0 million and $6.4 million, respectively (see also Note 14). In the third quarter and year-to-date periods ended September 30, 2007, the Company also accrued severance and related benefit costs of $1.5 million and $2.5 million, respectively, and year-to-date 2007 accrued professional fees of $0.6 million, primarily related to relocation costs and outplacement services. The adjustments in the table above primarily reflect the reclassification of certain severance liabilities from long-term to current liabilities. As of September 30, 2007, all amounts related to this cost reduction plan are classified as current liabilities.

The 2007 and 2006 restructuring costs are presented in the Restructuring and Special Committee related charges line on the Consolidated Condensed Statements of Income.

The Restructuring and Special Committee related charges line on the Consolidated Condensed Statements of Income for the third quarter and year-to-date periods ended September 30, 2007 also includes $13.4 million and $18.1 million, respectively, of primarily financial and legal advisory fees related to the activities of the Special Committee formed by the Company’s Board of Directors. The Special Committee was formed to investigate strategic options including, among other things, revisions to the Company’s strategic plan, changes to its capital structure, or a possible sale, merger or other business combination. No Special Committee costs were recorded in 2006.

NOTE 12 CHANGES IN SHAREHOLDERS’ EQUITY

In March 2007, 9.0 million common shares were repurchased under an accelerated share repurchase ( “ ASR ” ) transaction for an initial value of $282.5 million. The initial price paid as part of the ASR transaction was $31.33 per share plus certain other costs. The repurchased shares were also subject to a purchase price adjustment based upon the weighted average price during the period from the repurchase date until settlement, which occurred in May 2007. The price adjustment was $15.5 million and was paid by the Company. The ASR agreement included the option to settle the contract in cash or shares of the Company’s common stock and, accordingly, the contract was treated as an equity transaction. The total purchase price of $298.0 million was reflected in the treasury stock component of shareholders’ equity.

NOTE 13 GUARANTEES AND INDEMNIFICATIONS

The Company has guaranteed certain lease and debt payments primarily related to franchisees, amounting to $163.8 million for the continuing Wendy’s business. In the event of default by a franchise owner, the Company generally retains the right to acquire possession of the related restaurants. The Company is contingently liable for certain leases amounting to $20.4 million. These leases have been assigned to unrelated third parties, who have agreed to indemnify the Company against future liabilities arising under the leases. These leases expire on various dates through 2022. The Company is also the guarantor on $6.6 million in letters of credit with various parties; however, management does not expect any material loss to result from these instruments because it does not believe performance will be required. The length of the lease, loan and other arrangements guaranteed by the Company or for which the Company is contingently liable varies, but generally does not exceed 20 years.

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In addition to the guarantees described above, the Company is party to many agreements executed in the ordinary course of business that provide for indemnification of third parties under specified circumstances, such as lessors of real property leased by the Company, distributors, service providers for various types of services (including commercial banking, investment banking, tax, actuarial and other services), software licensors, marketing and advertising firms, securities underwriters and others. Generally, these agreements obligate the Company to indemnify the third parties only if certain events occur or claims are made, as these contingent events or claims are defined in each of these agreements. The Company believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the earnings or financial condition of the Company.

NOTE 14 RETIREMENT PLANS

The Company has two domestic defined benefit plans, the account balance defined benefit pension plan (the “ ABP Plan ”) and the Crew defined benefit plan (the “ Crew Plan ”), together referred to as the “ Plans ”, covering all eligible employees of the Company.

The Crew Plan discontinued employee participation and accruing additional employee benefits in 2001. In February 2006, the Company announced that it would freeze the ABP Plan as of December 31, 2006. Beginning January 1, 2007, no new participants entered the ABP Plan, although participant account balances continue to receive interest credits of approximately 6% in 2007 on existing account balances. Beginning January 1, 2007, Company benefits credited to ABP Plan participant accounts which were historically made based on a percentage of participant salary and years of service are no longer made. Freezing of the ABP Plan was accounted for as a curtailment in the first quarter of 2006 under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, and during the first quarter 2006, the Company recorded a $0.1 million curtailment charge related to service cost unrecognized prior to freezing the ABP Plan. In the fourth quarter of 2006, the Company decided to terminate the Plans. The Company has requested termination determination letters on the Plans from the IRS and has received approval of the termination by the Pension Benefit Guaranty Corporation. Once approved by the IRS, the Company intends to distribute individual account balances or purchase annuities to settle the account balances. The Company makes contributions to the Plans in amounts sufficient, on an actuarial basis, to fund at a minimum, the Plans’ normal cost on a current basis, and to fund the actuarial liability for past service costs in accordance with Department of Treasury regulations. The Company does not expect to make contributions to its pension plans in 2007.

The Company had previously disclosed it expected to recognize settlement charges of $50 to $60 million when the Plans are terminated. Of this, $6.6 million in non-cash pension settlement charges has been recognized in 2007 (of which, $6.4 million was reflected in restructuring charges), which reflected approximately $17 million of cash distributions made to participants from the Plans during the nine month period ended September 30, 2007. These distributions reduced both Plan assets and the accumulated benefit obligation. Based upon updated information, the Company now expects to recognize future pretax settlement charges up to $35 million, including up to $10 million in cash contributions to fund the Plans’ obligations when the Plans are terminated.

Net periodic pension cost for the Plans for the quarter and year-to-date periods ended September 30, 2007 and October 1, 2006 consisted of the following:

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