John Barker - SVP of IR Kerrii Anderson - CEO and President Paul House - President & CEO (Tim Hortons) Cynthia Devine - EVP of Finance and CFO (Tim Hortons)

John Glass - CIBC David Palmer - UBS Scott Frost - HSBC Eric Miller - Lehman Brothers Steven Kron - Goldman Sachs Charles Powell - GE Joe Buckley - Bear Stearns Winston Way (ph) - Ithaca Partners Glen Petraglia - Citigroup Paul Morris - Locuswood Capital Greg Gainey - Wellington Management David Hartley - Blackmont Capital Peter Oakes - Piper Jaffray Dennis Milton - Standard & Poor's Michael Notaro - Swiss Re

Good afternoon. My name is Jodi, and I will be your conference operator today. At this time I would like to welcome everyone to the Wendy's International and Tim Hortons first quarter results conference call. (Operator Instructions) Thank you. I would now like the turn the conference over to Mr. John Barker. Please go ahead, sir.

Thanks. Good afternoon, everyone. The purpose of our investor call and the webcast today is to discuss our first quarter business results for both Wendy's International and Tim Hortons Inc. and to update some of the key initiatives at both Companies. Wendy's and Tim Hortons published their first quarter results earlier today. The news releases and accompanying financial statements as well as other information you might find helpful are available on the various websites for Wendy's. It is www.wendys-invest.com and for Tim Hortons, www.timhortons-invest.com. The agenda for today's conference call will begin with remarks from Wendy's interim Chief Executive Officer and President Kerrii Anderson, who was appointed to her role last week. As you know by now, Kerrii's appointment follows the decision of Jack Schuessler to retire from Wendy's after a 30-year career with the Company. On behalf of the Board and all the management and franchisees of Wendy's. we all wish Jack well in the future. Jim Pickett, our new Chairman, has expressed his support for Kerrii in her new role. As many of you know, Kerrii has managed many areas of the Company in serving as our Executive Vice President and Chief Financial Officer as well as a board member of Wendy's International since the year 2000. Now following Kerrii's commentary about Wendy's' corporate results today will Tim Hortons CEO and President, Paul House; along with Executive Vice President and CFO, Cynthia Devine. Paul and Cynthia will discuss their first quarter results, their first quarter as a public Company. All of their reference to say currency will be in Canadian dollars. After those remarks we'll open up the call for questions. Looking ahead, let me remind you that both Wendy's and Tim Hortons will release second quarter sales on Friday, July 7th and second quarter earnings on Thursday, July 27th. For future reference please note that our key disclosure dates are listed on the websites for both Companies. I'd now like to refer you for a moment to the Safe Harbor Statement that is attached to this morning's news releases. Certain information that we may discuss today regarding future performance such as financial goals, plans, and development is forward-looking. Various factors can affect the Company's results and cause those results to differ materially from those expressed in our forward-looking statements. Some of those factors are set forth in the Safe Harbor Statements that are attached to the earnings releases. Finally, some of our comments today may reference non-GAAP financial measures. In the event that we reference any non-GAAP information we would post a reconciliation to the most directly comparable GAAP financial measure on our websites as mandated by Regulation G. Now, let me turn it over to Kerrii.

Well thanks, John, and good afternoon. Earlier this morning we held our annual meeting of shareholders here in Dublin, Ohio and all five of our directors who were on the slate were elected. In addition, PriceWaterhouse Cooper was also approve as our independent registered public accounting firm for the current year. We also announced our first quarter financial results which I'd like to review. Our financial highlights are that revenues hit $931.5 million, up about 4.2%. Our same store sales, as you know we reported a few weeks ago, Wendy's U.S. Company down 4.8%, Wendy's U.S. franchise down 5.2%, Tim Hortons in Canada, meanwhile continued to be very strong at a positive 8.7% and Tim's in the U.S. positive at 9.8%. Baja was down about 3.7%. Our net income for the quarter was basically flat, and that's a result of lower than expected operating income, but a benefit on the tax line. Overall EPS was $0.44 a share compared to $0.45 in this same period for us a year ago. We did open 57 new restaurants system-wide during the quarter. That consisted of 29 Wendy's, which about nine were Company and 20 were franchise; 27 Tim Hortons and one Baja. The factors that impacted the quarter included certainly stronger than expected sales at Tim Hortons and lower than expected sales at both Wendy's and Baja. During the first quarter we did spend about $15 million in incremental pre-tax advertising expense, which is on the operating expense line, to aggressively defend our competitive advantage with our spicy chicken sandwich. We expect to spend the balance of the previously announced $25 million during the second quarter. We are happy to report that we have not seen any erosion in spicy chicken mix of our sales since McDonald's introduced their version at the end of January. In fact, our sales have actually on spicy chicken increased slightly. Both Wendy's and Tim's picked up significant benefit in the quarter from a lower effective tax rate which resulted from two significant items. Due to the higher than expected proceeds from the IPO resulting from the price increase as well as the exercise of the over-allotment option, combined with the execution of financing for Tim Hortons third-party debt, we reversed a deferred tax accrual for $5 million in Canadian withholding taxes which we had previously expected to pay. We also picked up about a $3.8 million benefit for the permanent book and tax differences on certain hedge transactions that we had put in place. As noted in the release we do not expect to realize benefits of a similar nature in future periods. Other factors affecting the quarter were certainly a stronger Canadian currency. We experienced $1.155 versus $1.23 in 2005's first quarter. This benefited our pre-tax income by approximately $4.2 million compared to 2005. We also had the loss of approximately $4 million in rental income due to the fact that we sold a number of Wendy's properties, as you know, in the last quarter of 2005. We also lost 17.25% of the net income contribution from Tim's for one week following the IPO which resulted in a year-over-year reduction of approximately $700,000 of pre-tax income. We picked up a slight benefit in the quarter from lower prices of the fresh ground beef which averaged $1.38 per pound in the first quarter of this year versus $1.42 in the first quarter a year ago. This benefited pre-tax income by about $700,000 compared to 2005. And our outlook for beef prices in the second quarter is $1.425, and that's compared to $1.52 in last year's second quarter. So now let's talk about the operating segment. The enterprise operating margin was 7.2%, and that was compared with the prior year's 10%. The decrease is primarily the result of lower year-over-year contribution from Wendy's as well as certain IPO costs and consulting fees. Wendy's segment operating income was about $11.8 million, and that compared to $43.9 million a year ago. Operating margins were 2.1% compared to 7.5% a year ago. Clearly, the factors driving the decrease were the incremental $15 million in advertising contributions and a 5.1% decline in same-store sales. Partially offsetting this were some gains we talked about from the sale of properties. Segment operating income at Tim's was $76 million, and that compared to $62.5 million a year ago. The increase primarily resulted from a strong top line performance driven by exceptional same-store sales, new restaurant development, and some currency impact. Now let's take a closer look at some of the key lines on the first quarter income statement. Cost of sales was $505.8 million, and 67.1% of retail sales. This compares with $477.9 million and 66% of retail sales last year. Again, the factors driving the increase are attributed mostly to the increased cost of sales for Tim Hortons resulting from many additional restaurant openings, higher sales per restaurant, and the stronger Canadian dollar. These factors were partially offset by lower food costs at Wendy's. Company restaurant operating costs were about $175.7 million, and that's about 23.3% of retail sales. This compares with roughly $169 million last year which is also about 23.4%. Operating costs were $60.4 million, and that's compared to 36.2% in the first quarter of last year. The increase is primarily driven by the $15 million of incremental contribution to the Wendy's advertising fund. Factors related primarily to Tim Hortons include the start-up costs for the new frozen distribution center and a stronger Canadian dollar, as well as the growth in the number of properties being leased and subleased in addition to the higher percentage rent due to higher sales. Depreciation was basically flat with the year ago, and general administrative expenses were $82.5 million or 8.9% of revenue compared with $75.8 million or 8.5% of revenue in the first quarter last year. The increase as a percentage of revenues is really driven by lower same-store sales at Wendy's U.S. This line does also include the impact of the stronger Canadian dollar, higher consulting fees and certain IPO expenses substantially offset by a reduction in the accrual for performance based incentive compensation primarily at Wendy's. On the other income line, we produced $8.6 million in income compared to $4 million a year ago. Again, the other income expense line typically includes such items as income from Tim Hortons joint venture, Par Baking Plant with Cuisine du France, currency adjustments and other non-operating items not related to our primary business. This year's increase primarily reflects net gains on the property sold during the first quarter of 2006. From a balance sheet perspective, we ended the quarter with $1.3 billion in cash compared to $393 million at year end. This of course reflects the proceeds from the IPO of Tim Hortons and the issuance of the debt by Tim's. From a dividend perspective, the Board did approve our 113th consecutive quarterly dividend which will be paid on May 22nd, and the quarterly payment will be $0.17 per share. This is our third dividend paid since our July announcement of a 25% increase in the annual dividend rate from $0.54 to $0.68. As we think about the balance of the year and really think about guidance, we realize that many of you on this call are interested in more insight into the Wendy's stand alone financials and our outlook for the remainder of 2006. We will certainly provide more insight into our standalone financials once we have a definitive timeline for the full spend of Tim Hortons. We do not feel at this point we are in a position to give detailed guidance regarding the balance of the year due to the lack of visibility regarding several key items which include the timing of the spin-off of the remaining 82.75% of Tim Hortons. We have committed that will occur by year end, and that's our current position. Also the use of proceeds from the IPO, as well as the method and the timing of actions to return cash to our shareholders. We also have expenses and restructuring charges that we expect will be related to our $100 million savings that we discussed in release this morning. We will provide updated guidance for the rest of 2006 when we have more insight regarding those items. In the meantime, I would like to share with you the priorities we as a management team are focused on. The first is to implement our previously announced strategic initiative. We have now successfully completed the IPO offering for the 17.25% of Tim Hortons, and we expect to spin off the remainder by the end of this year. We are analyzing various methods for the spin. They could be a spin, a split or a combination thereof. Our focus is with a total that we also achieve a tax-free transaction. We are also pursuing strategic initiatives for Baja Fresh and we have obtained Goldman Sachs to assist us in that process. Finally, we are focused on the best way to utilize our strong balance sheet and this cash position of more than $1 billion. Our board has formed two new committees, finance and strategy, which will help advise our management team in implementing these initiatives. Our second priority is to execute the Wendy's combo plan and energize the Wendy's business. The initial stage of our next chapter project, which is to reduce costs, improve the Company's profitability and prepare the organization to operate as a standalone Company after the spin of Tim's is under way. As you saw in the release, we have increased our target for cost savings to $100 million from our previous range of $40 million to $60 million. We have made this decision after working with our management team and consulting group of Booz Allen who has helped us define the opportunities to proper size the Company after the expected spin-off of Tim's. Booz has helped us to identify additional process improvements as well as validated the major cost reduction opportunities. Most of the cost reductions and downsize will occur at the corporate office and field offices. And no job reductions will occur at our restaurants as part of this process. We intend to significantly improve our operations and service, specifically to our franchisees as well as our customers. Cutting costs really is only part of the plan. We must drive sales and profits by improving operations and by launching new products. This is already underway with the roll out of Frescata deli sandwiches in April. We also plan to reenergize our late night business with national media campaigns; launched the three-tier combo program and promote our kid's meal choices, featuring nutritious new sandwiches. Our third priority is to energize and strengthen this Wendy's system with the objective primarily to focus on operations by working with our franchisees and our Company operators. In support of this goal, I was excited to be able to name Dave Near to the position of Chief Operations Officer earlier this week. Dave is a superior operator who has demonstrated the ability to produce exceptional sales and profits in his restaurants for more than a decade as a Wendy's franchisee. I am happy to report that this announcement has been well received within our franchise community, and I look forward to working with Dave and our franchisees to improve the results at the Wendy's restaurants system-wide. We acknowledge that we have lagged many of our competitors recently, but consumers continue to recognize Wendy's industry leadership as a superior brand on many key attributes. Our goal is to leverage this leadership and recapture the momentum that we had less than two years ago. These priorities will be our primary focus for the immediate future, and we will update you on our progress throughout the year beginning with our second quarter call in July. In summary, I'd like to wrap up the Wendy's portion of the call and then turn it over to Paul and Cynthia so they can discuss their first quarter as a public company. As you know, we achieved our goal of the late March IPO as Tim Hortons began trading on the New York and Toronto exchanges on March 24th. It certainly was a very complicated transaction with lots of complexities and some challenges, but by all measures it was a tremendous success, and we were able to accomplish this because the spirit of the teamwork and cooperation between our Companies and our management teams. In many ways the IPO symbolizes a great relationship we have enjoyed with Tim Hortons over the past 10 years, and we are extremely proud to see Tim's begin operating as a public Company. As you can see from the results they released today, they are more than ready for the challenge. Here to give you more details on the topic is Paul House.

Thanks, Kerrii. As Kerrii said, we have enjoyed a great relationship with Wendy's over the past 10 years and we appreciate the support that they have provided for us as we have grown during that time period, with this IPO being the latest example of this. Now as far as the IPO goes, we've had a very successful outcome as we raised $833 million Canadian dollars in net proceeds. This amount included pricing on March 24th of $27 per share, up from our original range of $21 to $23 per share as well as the deal turned out to be 25X over-subscribed institutionally, 49X over-subscribed from a retail standpoint. These proceeds enabled us to pay back the $622 million note outstanding to Wendy's in April. Because the offering was in such high demand, one of our biggest challenges was working with the underwriters to allocate the shares. Despite speculation in the media, more than 50% of the shares went to Canadian investors. In addition, the allotment of shares to retail investors was at the high end recent comparable restaurant IPOs. We were happy to be able to meet the overwhelming demand for shares from our franchisees and employees. These group of investors have had the most to do with the building of Tim Hortons into the brand that it is today. So we consider this allocation to be the best outcome we could have hoped for. While the offering was successful, even more important is that we continue to deliver strong results, and I am happy to report in our first quarter earnings surpassed our expectations, $0.79 per share. Highlights from the quarter included system sales that exceeded our expectations, driven by a strong promotional activity and great operational execution by our store owners. It was also aided by favorable retail pricing impact as well as unseasonable mild weather during the quarter. Our promotional activity included our annual Roll Up The Rim to Win Contest in April, coffee-specific advertising during the Olympics and our chicken noodle soup and turkey bacon club combo to name a few. Other key accomplishments during the quarter were new store development that is on track, the successful launch of our new hot breakfast sandwich in the United States, and the opening of our new distribution center in Guelph, Ontario. We began shipping dry goods from the Guelph facility in the first quarter and will start distributing frozen products in the second quarter. Finally, I'd like to mention that we're welcoming three new board members during this first quarter. Michael Endres, Randy Lewis, and Wayne Sales. In addition we are happy to appoint Jim Pickett Chairman of the Board. Now let me tell you a bit about each of these individuals. Michael Endres is a principle of Stonehenge Financial Holdings Inc. He was formerly Vice Chairman of Bank One Capital Holdings Corporation and Chairman of Bank One Capital Partners. He also serves on the Board of Directors for Huntington Bank Shares Incorporated, Pro Century Corporation and Worthington Industries among others. Randy Lewis is a Senior Vice President of Distribution and Logistics for the Walgreen Company, the nation's largest drug store. He's also a member of the Board of Directors of Wendy's International Inc. Wayne Sales is President and Chief Executive Officer of Canadian Tire. He has helped grow Canadian Tire's business into a top quartile performer among North American retailers, total return to shareholders. Canadian Tire's retail sales have increased nearly $2 billion since he became CEO in 2000 and now surpass $8 billion. Jim Pickett will serve as the Chairman of our Board as Chairman of the Pickett Realty Advisors Inc. here in Dublin, Ohio. He is also currently Chairman at Wendy's International Inc. where he has served on the Board of Directors since 1982. With that overview, I will now turn it over to Cynthia who will provide more detail on the quarter. Cynthia?

Thank you, Paul, and good afternoon, everyone. Before I get started let me remind you that all amounts I will reference in these comments are in Canadian dollars. As Paul mentioned we started the year with a strong first quarter. We exceeded our net income expectations due almost entirely to two factors: one operational, and one non-operational. The operational factor was very strong same store sales growth of 8.7% in Canada and 9.8% in the United States. Paul mentioned some of the key marketing and operational factors that drove this performance as well as price increases that we implemented in Ontario during February and some of the Western and Atlantic regions during the fourth quarter of 2005. In addition, we did benefit from the shift of Easter from March in 2005 to April in 2006. The non-operational factor is a tax benefit that Kerrii described in her comments. As Kerrii mentioned, both Wendy's consolidated and Tim Hortons Inc. benefited from a lower effective tax rate. Canadian equivalent to the U.S. dollar amounts that Kerrii provided are $5.8 million for the deferred tax reversal of previously accrued Canadian withholding taxes and $4.3 million for book tax differences relating to certain hedge transactions. We do not expect to realize benefits of a similar nature in subsequent periods. As far as our operating margins go, our operating income was $83.1 million compared to $72.5 million a year ago. And our operating margins were 22.3% compared to 22.4% in the prior year. As Kerrii mentioned, this operating income increase of approximately $10 million was primarily resulted from our very strong top line performance driven by exceptional same store sales and our new restaurant development. Our operating margins are slightly lower than prior year due to the start-up costs of our new distribution center in Guelph as Paul mentioned. We have incurred incremental costs especially with our new distribution center in the first quarter, but we did not begin distributing frozen product until the second quarter. Therefore we have not recorded any revenues to offset these costs. Now let me review in more detail some of the key line items of our income statement. Our total revenue increased 15.2% to $372.8 million. Primarily the result of Easter sales growth, as I mentioned earlier, and new restaurant development. We opened 27 new restaurants in the quarter compared to 23 in the first quarter of 2005. Our cost of sales was $213.9 million. This compares to $183.1 million, a 16.8% increase over 2005. This is consistent with sales growth of 15.2% which resulted from additional restaurant openings and higher sales per restaurant. Cost of sales also includes the start-up costs associated with our new distribution center. Operating expenses were $43 million compared to $38.2 million in the first quarter last year, a 12.6% increase. This line item consists primarily of our rent expense and other property-related costs related to our real estate. Most of the increase is attributable to a higher number of properties being leased and subleased in addition to higher percentage rents due to higher sales on certain properties where we pay percentage rent. These are primarily our non-standard stores. Franchise fee costs were up 15.6% due to a higher number of store openings compared to the first quarter of 2005. General and administrative expenses were $28.3 million, or 7.6% of revenues, compared to $25.5 million or 7.9% of revenue in the first quarter of 2005. This line item includes the impact of certain IPO expenses and other costs related to becoming a standalone public company as well as incremental restricted stock expense. Excluding the IPO costs our G&A dollar increase was up just 4.4% versus the first quarter of 2005. Equity income was $8.5 million compared to $7.6 million in the first quarter of 2005. This line includes the impact of our equity investment in joint ventures and other minority investments. Increase relates to improved performance in both the Maidstone Bakery joint venture and the combo units we share with Wendy's. These items benefited from our improved sales performance in the first quarter. Other income was $1 million compared to 100,000 in the first quarter of 2005. The change is primarily due to currency gains in the first quarter of 2006. The last line item I'd like to discuss is our interest expense which contains some noteworthy year-over-year changes. Net interest expense in the first quarter of 2006 was $8.5 million compared to $1.9 million in the first quarter of 2005. The 2006 first quarter amount includes interest expense incurred under our new third party debt, as well as $6.8 million in net affiliated interest expense that reflects our net borrowings by Tim Hortons from Wendy's. To give you a better understanding of the interest expense line both in the first quarter and going forward, let's now move to the balance sheet. During the first quarter we entered into third party debt of $500million. This consisted of a $300 million five-year term loan and a $200 million bridge facility. Due to our strong cash position of nearly $1 billion due to the IPO proceeds and our solid first quarter results we expect to repay $200 million in bridge facility in its entirety and we have repaid our remaining note to Wendy's during the second quarter. Other components of our credit facilities consist of $100 million revolver, U.S. $100 million revolver and $200 million Canadian dollar revolver. These facilities are both currently undrawn. One final note regarding guidance. Many of you have asked for insight into our outlook for the remainder of 2006. Due to the many complicating factors regarding the impact of the Wendy's distribution of its remaining ownership stake in Tim Hortons, we are not providing P&L guidance for 2006 at this point. We will continue to benchmark current best practices and consider the needs of various constituents as we evaluate our position on guidance going forward. During the second quarter we do however plan to provide quarterly income statements for 2005. This will give you more insight into our historical performance and show the comps that we will be facing for the rest of the year. With that I'd like to now turn it back to John Barker for the q-and-a session.

Okay. Thanks, Cynthia. Because this is our first combined conference call with Wendy's and Tim Hortons we'd like to try to keep this somewhat orderly. So we'd like to request you cooperate with us on this q-and-a session. I'd ask as you queue up for questions and the operator pushes you through to preface your questions by letting me know if the question is specifically for Wendy's or for Tim Hortons. Also, we'd like to make sure everybody gets an opportunity to ask questions. So if you could limit it to one question per caller, then we'd let you queue back up for additional ones. We know we have many, many people on the line today. One more thing, please keep in mind that the answers that we will give for the q-and-a for Wendy's will be in U.S. dollars, for Wendy's international Inc. results and just as a reminder Tim's will be in Canadian dollars. Operator, we'd now like to have queue up for questions.

(Operator Instructions) Your first question is from John Glass of CIBC. John Glass - CIBC: Thanks. This is for Wendy's or the overall enterprise and hopefully it's simple. Kerrii, can you break out the consulting and IPO costs in the first quarter and if it's possible are there some that are borne by Tim's and not Wendy's? If there is an allocation issue, if you could let us know that as well?

The consulting was around $2 million, John, and IPO costs were about $1.5 million, and of course most of the IPO costs would therefore go to Tim's. These were the expense items. We may have other IPO costs that of course would offset the proceeds of the offering. John Glass - CIBC: Were those all found in the G&A line?

Right. Well, anything offsetting the proceeds of the offering get recorded in the equity section. Except the $1.5 million in IPO costs were in the G&A line. John Glass - CIBC: Thank you.

Your next question comes from David Palmer of UBS. David Palmer - UBS: Hi. Kerrii, this question is on Wendy's. I wanted just to dig into the cost savings and how it might flow through the income statement. I know that the release said it will come primarily from corporate and field overhead, and that no job reductions would occur at the restaurants. However that doesn't necessarily mean that all of it will come out of G&A. I was wondering roughly what portion of the savings will be to G&A and what benefit might be accrued to Company restaurant margins? Secondly, how might it break down in terms of Wendy's segment versus corporate unallocated or even the developing brands? Thanks very much.

From a cost savings perspective, David, certainly primarily most of the savings is going to occur on the G&A line, probably about 80% of it. There will be other savings that would occur in what we call Company restaurant operating costs. As and as you know I shared with the analysts in New York that you have certain costs at CROC and certain costs in G&A. It's primarily in the corporate line. As far as how it effects exactly restaurant operating margins, the piece that comes out of CROC certainly improves the operating margins at the restaurant. As far as corporate, as to your next question about allocation, I think between developing brands and Wendy's. That's not a part of the number at this point. The focus is on Wendy's. David Palmer - UBS: So if Baja Fresh is spun off, there may be additional savings either from discontinuing an operating loss and/or additional corporate overhead savings?

That would be correct, David. David Palmer - UBS: Thank you.

Your next question comes from Scott Frost of HSBC. Scott Frost - HSBC: Yes, hi. Could you go over again the reconciliation of the Wendy's operating income, $32 million down, $15 million of that's the ad spend I'm assuming. Is the entire rest of it the same-store sales decline? Effect on operating income?

Yes, it sure is, Scott. We need positive same-store sales in the 3% to 4% range in order to maintain, and with a negative 5%, that's basically the impact on operating beyond the $15 million of investment in advertising. Scott Frost - HSBC: On your statements of the cash, how much is that all at Wendy's or is part of that at Tim's and part of it at Wendy's?

I'm sorry, your question again, Scott? Scott Frost - HSBC: The cash balances, is the 1.3, is that all at Wendy's or part of it at Wendy's and part of it Tim?

There is a part of it at Tim's. They have operating cash for their business. Scott Frost - HSBC: Primarily all from the proceeds, right?

Right. Scott Frost - HSBC: Okay. Thanks.

Your next question comes from Eric Miller of Lehman Brothers. Eric Miller - Lehman Brothers: Yes, good afternoon. This question is for Wendy's. Just in terms of if you look at your stock buyback increases obviously you have a pretty healthy dividend increase. Now obviously with the Tim Hortons spin off; and now today across the news wire a possible special cash dividend and what you talked about on today's call as well. Where do bondholders stand in terms of your targeted credit quality? You obviously were once a BAA1, BBB+ credit, obviously coming down pretty quickly from there. It seems likely that you're going to go below investment grade. Do you have a targeted debt rating or credit ratio that you're trying to get to? Is it mid double B, is it high double B? Are you willing to go to single B? What is the expectation in terms of a pro forma Wendy's and where do bondholders stand? Thank you.

Yes, thanks. Well certainly our preference is we don't have a target, but our preference is to maintain the investment grade rating. But I will be candid with you and tell you that we cannot control all the factors involved in that, including decisions that the rating agencies might make. I believe that the most critical element that the rating agencies consider is the performance of our core brand of Wendy's, and that's where our focus is because I think that's going to have the greatest influence on their decisions about our ratings going forward. Eric Miller - Lehman Brothers: Right. But with the spin of Tim's completely off by the end of '06, would you look at -- today at your shareholders meeting and on this call you mentioned the possible one-time or special cash dividend using the $1 billion plus. Clearly that would be in your control as to whether or not you decide to impair your balance sheet any further. Obviously the Wendy's business is critical to your ratings today, but in terms of how you allocate capital going forward is going to have an impact on your ratings. Would the Company not give a dividend if it meant going to below investment grade or is that sort of insignificant in your mind in terms of making that decision?

I believe that with respect to the rating agencies, the bigger impact to their decisions about our credit ratings is not the cash on our balance sheet but the performance of our core brand. Eric Miller - Lehman Brothers: Right. Okay. Liquidity is absolutely one of the considerations when they look at the credit metrics of a company. It's obviously operational, but also a critical element is how your balance sheet is shaped up, et cetera. Maybe I'm not asking the question correctly, but understanding that you're trying to improve the Wendy's operation, bondholders will now lose access to all the Tim Hortons assets. When you look at you balance sheet, there's no specific targeted metric in terms of debt to EBITDA or net debt to EBITDA when you look at the liquidity that that extra cash provides you?

Right. There is not. Eric Miller - Lehman Brothers: Okay. Thank you.

Your next question comes from Steven Kron of Goldman Sachs. Steven Kron - Goldman Sachs: Great. Thanks. Question for Cynthia. You mentioned Easter shift and price increases impacting comps. Was wondering if you could just give a little bit more color around that?

Sure. Hi, Steve. We believe that the impacted of that is approximately 2.5% in the comps. Steven Kron - Goldman Sachs: Where were the price increases? I know you mentioned Ontario.

They were in Ontario. They were in Alberta, and Atlantic Canada, and New Brunswick, Nova Scotia and PEI. Steven Kron - Goldman Sachs: How much were those price increases?

The one in Ontario was approximately, again it's hard to measure it because it varies with the mix of your products, but it was approximately 3% to 3.5%. And the ones in the West and in the Atlantic vary from about 3% to 4%. Steven Kron - Goldman Sachs: Okay. I will requeue for another. Thank you.

Your next question comes from Charles Powell of GE. Charles Powell - GE: Hi. A question for Tim Hortons. As far as new store openings, it looks as though net/net you're only up about 18 stores. Do you still think you will maintain the target of 180 to 200 openings in '06?

Yes we do believe that we're still on track for that target. Our store openings are typically a lot lighter in the first quarter than they are in the balance of the year. Typically the third and fourth quarter are very strong for us in terms of store development. Charles Powell - GE: Great. Thank you.

Your next question comes from Joe Buckley of Bear Stearns. Joe Buckley - Bear Stearns: Hi. Question for Kerrii, and I apologize if you covered this. At the beginning of the call we had trouble getting on. Just update plans on returning cash to shareholders?

Hi, Joe. Our position at this point is that we are continuing to go evaluate the best use of the $1 billion. I will tell you from our discussions this morning at the annual meeting, our first priority in thinking about how to invest this cash is in the core business of Wendy's. Of course we've done a little bit with the $25 million of incremental advertising. We also continue to try to find ways to facilitate things like the installation of double-sided grills with our franchisees, and really reinvest back into the current facilities we have both from Company and incentivize our franchisees to do so. So our first priority will be that. Secondly, of course, returning cash to the shareholders, whether it be in the form of an increased dividend, a special dividend or share repurchases. And we did not articulate, Joe, specifically what we will do today. We're continuing to analyze that in light of all other strategic initiatives. Joe Buckley - Bear Stearns: Is the timing on that decision likely to be before or after the spin?

The timing of that decision I would say, would probably be closer to we said the end of the second quarter we would talk about the spin and the timing, and I would expect us to have an update on our position on the $1 billion of cash at that time also. Joe Buckley - Bear Stearns: Thank you.

Thanks, Joe.

Your next question comes from Winston Way of Ithaca Partners. Winston Way - Ithaca Partners: Hi. This question for Wendy's. Hi, Kerrii. My question is it seems like to certain investors that's interested in just investing in Wendy's standalone, and the way to do it right now is you need to borrow shares from Tim Hortons and then sell short that. It seems like there's a market for it to lend out these shares. I think currently people are getting charged 9% to 10% on annualized interest to borrow your shares. Have you considered maybe lending out these shares to make some extra money for the Company?

I am sorry, Winston, have we considered share -- I'm sorry, considered what? Winston Way - Ithaca Partners: Considered lending out these shares you have in Tim Hortons to the Street so it can earn the 9% to 10% on the interest that you are lending out the shares on?

No, Winston, we have not. Winston Way - Ithaca Partners: Will you consider that?

I would say that that is not currently under consideration. Winston Way - Ithaca Partners: I see.

Thanks.

Your next question comes from Glen Petraglia of Citigroup. Glen Petraglia - Citigroup: Good afternoon. This is a question for Kerrii. Kerrii, with same-store sales at the core Wendy's business continuing to trend downward at least through the first quarter, I'm wondering if and when a decision will be made as to incremental advertising spending going toward? Is this $25 million just a one-time shot or is there the potential that going into the second half of this year and potentially into next year that you do some incremental advertising spending as well?

Well, certainly at this point in time the $25 million that's been announced is all that we have currently on the table. I think as we talk about our $1 billion in cash and how we might best really energize the core brand we will consider all alternatives. Glen Petraglia - Citigroup: About when does that planning takes place? Is that through the summer months or what sort of time frame would that decision be made?

I would say it's ongoing as we move forward now. Glen Petraglia - Citigroup: Thanks.

Thanks.

Your next question comes from Paul Morris of Locustwood Capital. Paul Morris - Locuswood Capital: Hi. Could you tell me on Wendy's what the cash and debt will be after Tim makes final payment on the note to Wendy's? Also, could you tell me depreciation for Tim's in the first quarter?

Okay. The cash and debt on Wendy's is currently today we have $525 million of debt on Wendy's books, and the first payment of debt right now is 2011. Any debt that we owe as far as payments go. Today the cash on our balance sheet at the end of the quarter today because we have now received payment from Tim's is $1 billion. As far as depreciation goes, Cynthia will answer that in Canadian dollars.

Depreciation was approximately $17 million for the quarter, Canadian dollars. Paul Morris - Locuswood Capital: Thank you.

Your next question comes from Greg Gainey of Wellington Management. Greg Gainey - Wellington Management: Hi. Thank you for taking my call. This is for Wendy's. Just back to Eric Miller's question, I would have to totally disagree with you in terms of what the rating agencies are looking for you to do. In talking to them, they are concerned about the performance of core Wendy's, but one of their big issues is also what the ultimate capital structure of Wendy's is post the spin-off of Tim Hortons at the end of year. Now this is in your control, and you decide the fate of whether or not you keep investment grade ratings or not. So really, what is your plans to bondholders, and if you really want to keep investment grade ratings, it's really up to you. So, can you give bondholders some sort of feeling as to how important is it for you to be investment grade rated? Because if you do go to high yield, any new debt issuance you do issue will have covenants, restricted payments and will require a road show. It's quite a hassle actually. So can you just give us more clarification on your plans from a ratings perspective? Thank you.

Well, to kind of reiterate what I have really said before, and that is our preference certainly is to maintain investment grade rating, but I would tell you that I would have to beg to disagree with your statement. We have had conversations with the rating agencies, and they are very clear about what influences, certainly, a big part of their ratings thoughts. I would tell you that it is the performance of the Wendy's core business. Greg Gainey - Wellington Management: Correct, but it's the performance -- if you were to spin off Tim Hortons today you guys are not invest grade. Your credit metrics are not investment grade rated based on the amount of debt have you on your balance sheet. You could take out one or two debt issues and keep one outstanding, and that's moved your credit metrics back into the investment grade land while you turn around the performance of core Wendy's? Would you agree with that statement?

I would not agree with that statement. We have had those conversations with the rating agencies, and I would not agree with your statement about first of all we can't prepay the debt, that is something that's very clear in the terms. Greg Gainey - Wellington Management: You can tender for it.

I understand we could. But I still do not think that that would be the total influence on the rating agency. Greg Gainey - Wellington Management: Well, then you and I must be having a different conversation with them, then.

Perhaps we are. Greg Gainey - Wellington Management: Thanks.

Your next question comes from David Palmer of UBS. David Palmer - UBS: Hey, Kerrii, in the release there was some positive comments made about the Frescata and mentioning it was the most exciting product to launch in years. I'm wondering if you might be willing to say that you've gotten to positive same-store sales and whether you're kind of watching that hoping to see some repeat before you go any further with it. Could you give us some indication there?

Well, David, I have to give you credit. That's a pretty nice try. As you know as a matter of practice we don't give out specific information about our monthly sales trends in the current quarter, but I will tell you that the Frescata roll out was in late March, and the marketing really just started mid-April, right after the Easter holiday, and we are very encouraged by what we've seen so far both Company and franchise and that's about the best I can do for you. David Palmer - UBS: Another quick one, the breakfast testing, have you broadened that test? Could you give us an update on that?

Well, we talked about having one store here in Columbus, Ohio. We have a couple of stores that we are preliminary testing even in Raleigh, North Carolina, and then we are prepared to roll out the test more in the fall in a controlled situation. David Palmer - UBS: Okay. Thank you very much.

Thanks, David.

Your next question comes from David Hartley of Blackmont Capital. David Hartley - Blackmont Capital: Hi. Thank you very much. I'm wondering if you can give me a breakdown of the profitability, this is for Tim Hortons in Canada and the U.S. and also maybe give us indication of your marketing spend in the quarter relative to what it's been in the past?

Sure. With respect to the breakdown of our earnings between the U.S. and Canada, my preference is to wait until the financial results are finalized and that would be in the Q. David Hartley - Blackmont Capital: Could you tell us if we were profitable in the quarter in the U.S. or --

Again, I'd like to wait until the Q comes out and talk about it at that time, but we did have very favorable same-store sales results in the U.S. and we feel good about the progress that we're making in the U.S. business. David Hartley - Blackmont Capital: Fair enough.

Second question was about marketing spend.

Marketing spend within our advertising?

It would be up slightly just based on the fact that our sales last year increased, and so our budget grew accordingly, and so there would be a bit more money to spend in the first quarter versus last year, but not of major significance.

Again, that goes through the advertising fund which is not shown in the P&L here. David Hartley - Blackmont Capital: Fair enough. That's great. Thanks, guys.

David, this is John. We're going to get back to you. I know you had a call into us. We were a little busy the last day or so. We will get back to you and get back on some of the questions you had. David Hartley - Blackmont Capital: Much appreciated, John.

Sure.

Your next question comes from Peter Oakes of Piper Jaffray. Peter Oakes - Piper Jaffray: Hi. I was actually hoping for clarification on a couple of numbers on Wendy's, Kerrii. First is, if I heard you correct you said of the $100 million cost savings, approximately $80 million are going to be allocated to G&A, and our back of the envelope suggests Wendy's run rate G&A is about $225 million, so that would imply about a 35% reduction in G&A for Wendy's in the context of enhancing your service to franchisees and customers. Does that allocation sound reasonable?

I will say that it is, Peter. It's a little less than 35%. It might be on the lower end of the 30%. But, yes. Peter Oakes - Piper Jaffray: Okay. And then for the quarter, I realize it is seasonal, but the Wendy's business posted operating income of $12 million which included the benefit of the real estate gain. So taking into consideration the income from the franchising side of the business, that would imply that Wendy's Company operated margins were negative during the quarter. Does that sound reasonable to you also?

Well, I think you have to remember that we did lose the $4 million in rental income compared to a year ago in the same quarter because we've now sold those properties. The gains on the sales of the properties were basically offset to that. Peter Oakes - Piper Jaffray: Right. So the operating income for both Company and franchise units was just $12 million for the quarter, and obviously the franchise business really didn't have a huge change in cost structure?

Right. Right. Peter Oakes - Piper Jaffray: Okay. Thank you.

Thanks, Peter.

(Operator Instructions) You have a follow-up question from Steven Kron of Goldman Sachs. Steven Kron - Goldman Sachs: Thanks. Kerrii, just a question I'm just getting in the mind set of the franchisees, there's been changes in the Chief Operating Officer over the past six to twelve months a couple of times. I am just trying to understand comps continue to lag. You spend more money on advertising in the first quarter and I'm not exactly sure of the timing of that. But, it didn't seem as though it provided a lift at least for the whole quarter. Could you just describe kind of conversations you've had with franchisees and kind of where they're at right now from a mindset standpoint?

Well, I'd like to first respond to your question about the incremental advertising. It was more in March and nothing is immediate. It does take time for the message to resonate with customers, and you generally see a lag impact. I will tell you while we made the incremental investment I did share with you that we actually, with McDonalds coming out with spicy chicken sandwich, did not see erosion of our spicy chicken. So I that's actually is a positive in our mind. So that's from that perspective. I have spent quite a bit of time over the last couple of weeks talking to franchisees. I would say generally, franchisees are very much focused on their business. They were certainly concerned about the negative comps, concerned about where we are with respect to effective marketing campaigns as well as new product introduction. Our conversations have really come around wanting to have leadership in the operations role, and quite honestly that was part of making the appointment of Dave Near. I think we have not had anyone in that role of key role of operations since Tom Mueller, as you pointed out left last September/October, So from that perspective I think that is a key factor to meeting the needs of the franchisees and for all of us to be focusing on what is happening in the operations of our both franchise and Company business. I'd tell you in general, everybody is focused, we now have new products, the Frescata and some of the salads we rolled at the end of March were the first new products we had rolled in almost 18 months. So I think we're having new news. We have a strong calendar going forward. As you know, we're continuing to make a $10 million investment here in the second quarter which is the rest of the $25 million. So I think we have a number of very positive initiatives, and as a management team we are focused on driving this business in a positive way, and really strengthening our relationship with our franchisees. They are our partners. If they are successful, we will be successful. But we will not get there without them. So we are focused on making sure that we're working together. Steven Kron - Goldman Sachs: Okay. And just one follow-up on the G&A question earlier. I know you talked about the different line items that's going to flow through in the P&L. Did you talk about the timing with which we can expect to realize this $100 million?

The timing really is the first quarter of 2007. That is our objective. That is what we shared this morning that we would want to be on a run rate by the beginning of '07 to realize the $100 million. Steven Kron - Goldman Sachs: Thanks.

Thanks.

Your next question comes from Dennis Milton of Standard & Poor's. Dennis Milton - Standard & Poor's: Yes, good afternoon. Christine, I wanted to ask you about the tax rate. If I add the $8.8 million that you had in gains that you had this quarter, I come up to about $15.5 million on the taxes which is a much lower effective tax rate than you normally run. Can you kind of flush out the effective tax rate and what we can expect going forward?

We are not going to talk about the forward-looking tax rate at this time. I mean I think what we talked about on the road show was 34% was the long-term rate for the Company, but at this point in time because of things related to the spin and the distribution of Wendy's remaining interest in Tim Hortons, there are certain areas where it could impact the tax line and we want to make sure that we are watching that as that unfolds. Steven Kron - Goldman Sachs: Can you explain at least what happened in the first quarter?

First quarter I think we talked about it, but there were really two items in the first quarter, and they were $5.8 million and $4.3 million. The $5.8 million was a release of a deferred tax on a Canadian withholding tax, and the $4.3 million was a tax loss on some hedge transactions that we had in place. Dennis Milton - Standard & Poor's: That was the only thing? I am still seeing an effective tax rate that's still pretty low.

No. Those are the two key things that went through the tax line. Dennis Milton - Standard & Poor's: Okay. Thank you.

Your next question comes from Michael Notaro with Swiss Re. Michael Notaro - Swiss Re: Hi. I have a question with respect to the IPO of Tim's and the future full spin. Have you guys taken any time to look at the entirety clause? Within the indenture of what the 2011 and the 2014 maturities are given that Tim Hortons generates over 50% of the operating income and that now trades at a much higher multiple relative to Wendy's. Do you think there's anything there with respect to that covenant?

I'll be honest and tell you that the answer we believe is no, the call does refer to transfer of substantially all assets, and the fact that Tim's comprises more than half of our net income has no bearing on the covenant. Michael Notaro - Swiss Re: What about the fair market value of assets given that since Tim's has since been IPO'd we can kind of derive the full value of what Tim's is relative to Wendy's and what the market is implying those values are? The fair value of assets, not the book value of assets.

Today accounting is based off the assets as reported and not fair value. So we would say it does not have an impact on the covenant. Michael Notaro - Swiss Re: Okay. Thank you.

Thanks.

Your next question comes from Peter Oakes of Piper Jaffray. Peter Oakes - Piper Jaffray: Hi, Kerrii, back over to Wendy's for a second, the February 6 press release where you detailed the combo plan had three components being increasing comps, improving restaurant margin 500 bips and then the $50 million of cost saves. The cost saves you updated that component. Are you still comfortable with the framework of the other two and how you're getting there?

I will say we are absolutely. I mean we are focused on growing sales as well as a number of margin improvements. This morning at the annual meeting I talked about a number of key initiatives that we're working on to improve margins that aren't related specifically to just growing sales or reducing costs, and I think we are making significant progress on that. Peter Oakes - Piper Jaffray: Just to make sure the 500 basis points of restaurant margin you're targeting are independent of that $100 million that we're talking about or the $20 million is part of that?

It was inclusive in that. Peter Oakes - Piper Jaffray: Okay. Thank you.

Thanks, Peter.

Your next question comes from John Glass of CIBC. John Glass - CIBC: Thanks. Just sort following up on that; part of the original program was to refranchise the U.S. It sounds like you slowed down or halted the program. So I guess can you update us on how you think about refranchising? Do you have to first realize the cost savings before you go after that or might we still see some of that later this year?

You are exactly right, John from the standpoint of our focus right now is to get the cost out with the current restaurants we have at Company-owned today. Certainly we still think it's important to refranchise some of our restaurants, but not at the current levels that we are producing margins today. We do not think it would be reflective of the value of those assets, so as a result we have slowed down that process until we improve our operating margins at the store level. John Glass - CIBC: Thank you.

(Operator Instructions) Your next question is from Scott Frost of HSBC. Scott Frost - HSBC: This is a follow-up to Mike Notaro's question as far as the conveyance covenant goes. I'm assuming that when you did the spin you guys obtained opinion of counsel, internal and external, that this wouldn't violate the covenants and you're very comfortable that you can do this without tripping that off? If I said that, that would be correct, right?

Yes. John Glass - CIBC: Great. Thank you.

Thank you.

Operator, we'd like to take one more question to close out the conference call if there is someone.

Yes, sir. (Operator Instructions) There are no further questions at this time, sir.

Okay. Thank you very much. We want to thank everyone for joining the call. You can follow up with Dave Poplar or myself later today and tomorrow. We'll talk to you all later. Thank you.

Thank you. This concludes our conference call for today. We appreciate your participation and ask that you disconnect your lines.