Wendy's Co (WEN) 2008 Q4 法說會逐字稿

Welcome to the Wendy's and Arby's Group Inc.

fourth quarter and full year 2008 conference call.

Our hosts today are John Barker, Chief Communications Officer; Roland Smith, President and Chief Executive Officer; and Steve Hare, Chief Financial Officer.

(Operator Instructions)

I would like to turn the call over to John Barker.

You may begin, sir.

Thanks, good morning, everybody.

The agenda for today's conference call and this webcast will begin with remarks from our President and CEO, Roland Smith, who will discuss the future growth for the Company, an overview of our fourth quarter results, an update on our strategies to drive performance in our brands, the progress we are making on the merger integration and key profit drivers.

Then our Chief Financial Officer Steve Hare will review financial results and several other topics.

Roland will then wrap up the call with some concluding thoughts before we open the line for questions.

Our main focus on today's call is to discuss the fourth quarter, which is the period when the current management team began leading the Company, as well as our future plans to grow the business and generate shareholder value.

I would like to summarize what is included in the financial statements which are attached to today's earnings release.

We provide I a full P&L with consolidated fourth quarter and 2008 results.

This includes nine months of pre merger results for Triarc and on quarter of post merger results for the combined Wendy's and Arby's.

You need to be understand the difference when looking at the quarterly and the annual comparisons between 2008 and 2007, as they are not meaningful.

We also are providing a key balance sheet items.

Also included today is a table that shows for the fourth quarter of 2008 our EBITDA, a reconciliation of EBITDA to the reported net loss and adjusted EBITDA, which, includes facilities relocation, corporate restructuring and integration costs.

We are providing quarterly data only for the 2008 fourth quarter because it reflects the period in which the current management team operated the Company.

We also provided selected financial highlights for each brand, and you'll find same store sales, revenues, four wall EBITDA margin, restaurant EBITDA margin, that is and the total number of restaurants.

The final page of the attached tables includes selected pro forma data for the twelve months ended December 28, 2008 and Steve Hare will talk more about this later.

I would like to point out we are not providing pro forma results for the 2008 quarters with this earnings release.

Our previous filings from the Company included year to date pro forma, data through the third quarter of 2008.

Today's release includes 2008 pro forma adjusted EBITDA, which will help investors understand the Company's underlying operating performance and we are providing information about our outlook for 2009 through 2011, which we believe is more meaningful.

Roland and Steve will both talk about our outlook information.

Please note that our earnings release as well as all the financial statements, other historical investor information and filings is all available on our investor relations section of our website, at www.Wendy'sArby's.com.

Now before we begin I would like to refer you for just a minute to the Safe Harbor statement that is attached to today's earnings release.

Certain information that we may discuss today regarding future performance such as financial goals, plans, developments is forward-looking.

Various factors could 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 statement that is attached to the news release.

Also some of the comments today will reference non-GAAP financial measures such as earnings before interest, taxes, depreciation, and amortization.

Investors should review the reconciliations of non-GAAP terms to the most directly comparable GAAP financial measure.

Now let me turn it over to Roland.

Thanks, John.

Good morning, everyone, and thanks for joining us on our first quarterly conference call for Wendy's/Arby's group.

On our call today I plan to discuss an overview of the results we reported this morning an update of our brand strategies and the current restaurant environment, progress we are making on our merger integration and key profit drivers and our outlook for achieving EBITDA growth for the next three years.

Let me start with our out look for the business.

We are beginning to revitalize the Wendy's brand and we have an excellent strategy to drive improved performance at the Arby's brand.

At their foundation both brands feature high quality products and have a long history of success, excellent franchisees and very experienced management teams.

As we noted in our earnings release today we are building good momentum in the Wendy's brand with positive North American system wide same store sales in the quarter up 3.7%.

We have key initiatives to improve Arby's sales built on the introduction of new product, marketing and operation strategies.

And we are on track with our key profit drivers, to reduce G&A on an analyzed basis by $60 million and to generate $100 million in incremental annual EBITDA by improving Wendy's restaurant margins by 500 basis points.

By executing our plans, we are confident we can deliver average annual EBITDA growth in the mid teens through 2011.

We have identified seven key growth drivers.

Same store sales growth at Wendy's and Arby's, margin growth at both brands, excellent control of G&A, the addition of breakfast at Wendy's and Arby's, new restaurant development at both brands, dual branding and international expansion.

I'll talk more about long-term growth opportunities later on the call, but I would like to begin with a brief review of the results for the fourth quarter, which occurred after we closed the merger on September 29.

Our adjusted EBITDA for the fourth quarter was $74.4 million.

Our quarterly results reflect good controls of G&A expenses and positive same store sales at Wendy's.

But were negatively impacted by negative same store sales at Arby's and significant food cost pressure at both brands.

I'll talk more about the brands in a few minutes.

As stated in our earnings release, we recorded after tax special charges totaling about $418 million in the fourth quarter related primarily to goodwill impairment.

Steve will discuss the financial details of the special charges later.

Now I would like to talk about our Wendy's and Arby's businesses.

At Wendy's, we produced strong North America same store sales in the fourth quarter of 3.6% at Company restaurants and up 3.8% at franchise restaurants.

This was among the best performance in the restaurant industry.

We launched initiatives during the fourth quarter begin improving transaction trends, enhance our marketing and reestablish operational excellence in our restaurants.

To compete for the value oriented customer and drive traffic during this very challenging economic environment, we launched a new campaign anchored in what we call our value trio.

The value trio offers a double stack, a junior bacon cheeseburger and crispy chicken sandwich for $0.99 each.

We advertise this as Freakonomics and I hope you've seen it on TV.

The ads are resonating with consumers and scored highly in awareness and persuasion.

Additionally the good news is that even with our value trio the percentage of sales from our $0.99 products is now only about 15% which is down from close to 20% a year ago and more in line with our peers.

Last year, we moved certain menu items such as chili, baked potato and chicken nuggets off our $0.99 value menu and they are now priced higher at $1.19 to $1.39 in Company stores.

Today our value menu at Company stores has only five items priced at $0.99, including the value trio sandwiches.

This strategy allows us to continuing offering compelling value to our customers with some core $0.99 items but also begin to lower our food costs and contribute to our margin recovery.

Excuse me.

We are also focused on improving several of our core products, including our sandwich buns, french fries and bacon as we commit to reestablishing Wendy's as the clear quality leaders in the QSR hamburger segment.

Customers knows Wendy's offers fresh food, quality ingredients and made to order sandwiches.

We started to talk about these benefits in our advertising and will focus even more in the future on messages about our fresh, never frozen beef and premium chicken.

In February, we begin featuring our premium fish sandwich, which is a great tasting product.

We will offer the product through our Lenten season and we are aggressively advertising the quality of this product.

It's hand cut, (inaudible) breaded North Pacific Cod which, as you know, is very unique to the QSR space and confirms to the customer Wendy's quality position.

Later this year, we plan to introduce new premium chicken products and a signature premium hamburger to mark Wendy's 40th anniversary.

Overall we are beginning to fill our new product pipeline and I am confident about the work under way by our marketing and R&D teams.

We have installed a very disciplined product developing and testing process and we are excited about this area of our business.

As you already know, breakfast is a huge opportunity in our industry.

And it is the fastest growing day part.

Wendy's launched breakfast more than a year ago, but unfortunately the products did not resonate with customers.

They just weren't very good.

A few months ago we announced plans to retool breakfast and focus on three key markets, Pittsburgh, Kansas City and Phoenix.

And therefore, we further reduced the number of Company-owned Wendy's restaurants that served breakfast.

This reduction of the number of stores offering breakfast in the fourth quarter negatively impacted our Company same store sales by 7/10 of percent.

Therefore our Company same store sales would have been 4.3% without the impact of offering breakfast in fewer locations.

Going forward as we report our comps in the first second and third quarters, we believe the negative impact from not having breakfast in as many Company stores will be about 1.5 percentage points.

Our plan to restage breakfast will be centered on differentiating our Wendy's breakfast products and making sure they are high quality, great tasting and easy to execute.

Also by streamlining the breakfast operations, we expect to lower the break even for each store and drive profitability.

We expect to demonstrate an attractive return on the breakfast investment to the Wendy's system and then prepare for a national induction by 2011.

We are also focused on driving sales and profits with better operations.

This is really about improving Wendy's performance in key operating attributes that impact customer satisfaction like superior hospitality, faster speed of service, better order accuracy, and improved cleanliness.

As we stated previously, we are focused on improving Wendy's restaurant margin from approximately 12% in 2008 to 17% by the end of 2011.

Which will produce $100 million in incremental annualized EBITDA.

About half of the 500 basis points will be derived from labor in the area of efficiencies.

Such as reducing the overall number of crew managers available to managers based on the revenue that they deliver.

In the fourth quarter of 2008, we delivered about 100 basis points in restaurant margin improvement from labor efficiency and other restaurant operating expenses.

Now this was offset by soaring food costs but we have begun to see food costs decrease in the first quarter of 2009 from the highs reached late last year.

In addition to labor, about 140 to 180 basis points of our 500 point goal will come from more efficient management of repairs and maintenance, as well as tighter control on services, supplies and utilities.

And finally, the remainder of our restaurant margin improvement is going to come from food.

Including mixed shift to higher margin products, and by ensuring that we manage closer to our theoretical food costs.

During 2009, we expect to achieve about 160 to 180 basis points improvement compared to 2008.

Resulting in a run rate improvement by year end of approximately 250 basis points or half of our three-year target.

In addition to progress on improving margins, we are making meaningful improvements in key operational areas under the leadership of Wendy's President David Karam and Chief Operating Officer Steve Farrar for example we have increased the number of A and B level or very well operated stores from 32% of the system in the first quarter of 2008 to 51% in the fourth quarter.

These quality scores are generated from rigorous store audits performed by our QSE managers.

We also carefully track information from customers with our Questar customer feedback program.

In the most recent quarterly analysis customers told us that we had made significant progress over the past year in pickup window, speed of service, order accuracy and cleanliness.

I believe this data is a clear indication of our progress towards reclaiming operational excellence and our improving operations will help us generate repeat visits.

This is an important component of our ability to drive same store sales growth.

A final point about our Wendy's business.

We have worked diligently to form a positive and collaborative relationship with our franchisees.

Last September David Karam, Steve Farrar, Ken Caldwell and I all spoke at the Wendy's franchise convention shortly before the merger was completed.

We continued to meet regularly with franchisees to discuss our detailed plans and progress and we just recently completed a 7-city road show in North America to update them on our first 100 days.

And the franchise feedback was very positive.

We realize how important positive franchisee relations are to the revitalization of the Wendy's brand and we have made a commitment to build on our excellent start.

In summary on Wendy's, while it is early in our journey, our fourth quarter sales were encouraging and we are building momentum.

We have an outstanding management team in place and we have a clear game plan to deliver positive same store sales and margin growth in the first quarter of 2009 and beyond.

Now, let me talk about our Arby's business.

Arby's same store sales declined during the fourth quarter due to challenging economic conditions and competitive activity.

Our sandwich competitors continued to discount at unprecedented levels while many QSR chains move aggressively to dollar menus.

Last year when the economy began to soften leading to significant discounting by competitors, we made the strategic decision to stay focused on premium products in order to maintain check and restaurant margin at Arby's.

History has shown us that discounting your premium products usually results in long-term damage to the brand.

Because of this decision, during the fourth quarter, Arby's faced negative transactions and lost share to change focused on deep discounting.

To turn around sales and improve restaurant margin we are working aggressively on initiatives to increase transactions, improve restaurant operations, and introduce new menu items.

Let me give you the highlights of our new strategy at Arby's.

Arby's is positioned in the marketplace as the favorite place for people who crave unique alternatives to traditional fast foods.

Most of you know us for our signature hand carved roast beef sandwiches but we are also leaders in premium market fresh sandwiches and toasted subs.

Higher food equates to higher quality food equates to higher prices for that food, and therefore we have been able to enjoy a higher check average at Arby's compared to the industry average.

Our average check is about $7.50, compared to less than $5 for a typical QSR purchase.

Arby's higher average check has provided a challenge with the weakening economy as customers traded down to dollar menus and $5-foot long subs.

Rather than discount our premium products, Arby's marketing strategy is to increase frequency among loyal customers by leveraging our equity in our thinly sliced and lean roast beef.

Our core Arby's customers, which we call medium Arby's customers or MACs represent 50% of our sales and visit our restaurants approximately 1.6 times per month.

If we increase MAC visit frequency from 1.6 to 1.7 times per month, that would produce a 3% improvement in same store sales.

This is good news because as you know, it is easier and less expensive to increase the frequency of an existing customer rather than to bring in a new one.

Medium Arby's customers told us that hey would visit more often if we offered more roast beef choices and provided better service.

So to achieve higher visit frequency, we returned to the heart of our menu with our new roast burger line of sandwiches, which feature oven roasted thinly sliced roast beef with classic burger toppings.

Our roast burger line of sandwiches represent a new choice in fast food and we are offering them in three varieties, All-American, bacon and blue cheese and bacon and cheddar.

They are priced at $3.59 which represents a good value for a unique, quality product that you can only get at Arby's.

We are launching roast burgers this week with heavy media support and significant public relations.

For example our PR Blitz includes Arby's as an official sponsor of CBS sports.com's NCAA basketball brackets on Facebook.

Most importantly, results from test markets were encouraging, and we are excited about this new platform for Arby's.

We expect to generate improvement in sales trends as we launch this new product line.

Later this year, we will extend our product line to other roasted meats.

Roast chicken, turkey and ham, as we reestablish Arby's quality leadership in the premium sandwich category.

In addition, we'll continue to talk to customers about other traffic and check drivers like swirl shakes, side kickers and curly fries, which are all QSR favorites.

While we are committed to our premium positioning, we must still acknowledge the economic hardships many customers currently face.

So recently we began testing several value-oriented promotions on new or selected items, including $1 every day deals, pick four for $5, and $1.99 roast beef patty melts.

We plan to offer the most compelling of these value promotions later in 2009.

Increasing frequency among MACs and regaining sales momentum at the Arby's brand is not simply a function of new products, we must also ensure that we offer our customers the very best service.

To accomplish this, we will improve operations through two new programs, Red Hat service and Promise Check.

Our Red Hat service program has recently been rolled out to the system.

The program is centered around significantly improving hospitality by hiring friendly people, making sure that we reward hospitality, and providing metrics to make sure we are measuring ourselves on a regular basis.

Promise Check is a new program where we solicit customer feedback to ensure that we are making the improvements necessary to meet their expectations.

Our goal, when developing Arby's promise check was simple.

Gather direct customer feedback in a timely and an actionable format.

While there is clearly a lot of work ahead of us at the Arby's brands, we are confident that the Arby's management team can begin to rebuild sales and restore restaurant margin to historical levels with our new marketing and operations strategies.

Now let me shift to a discussion about our merger integration, our leadership team and key profit drivers.

In order to realize the full potential of our Company and generate enhanced value for shareholders we had to first build a premiere team and ground them in a performance-based culture.

To that end several months ago we announced new management teams for both brands and corporate.

Our organizational structure allows each business to completely dedicate itself to brand delivery and operational improvements.

Let me briefly review our organization and leadership teams.

As CEO of both the corporation and the Wendy's brand, I'm dividing my time between Dublin, Ohio, where Wendy's will retain its headquarters, and Atlanta, Georgia where our corporate office and shared service center is based and where Arby's will retain its headquarters.

My direct reports at the Corporate level include CFO, Steve Hare; General Counsel Nils Okeson; Chief Administrative Officer, Sharron Barton; Chief Communications Officer John Barker; and Senior Vice President of strategic development, Darrell van Ligten.

At the brand level my team at Wendy's includes president David Karam, and Chief Marketing Officer Ken Caldwell, who both report to me.

Steve Farrar is a Chief Operating Officer and reports to David Karam.

These three individuals have extensive backgrounds in the Wendy's organization and more than 80 years of combined restaurant experience.

They are uniquely qualified to help lead Wendy's during the next phase of our development and I am very pleased with the progress this team has already made.

At Arby's Tom Garrett is President and Chief Executive Officer and reports to me.

Tom's team includes Chief Operating Officer Michael Lippert and Chief Marketing officer, Steve Davis.

Both Tom and Michael have extensive restaurant experience and a combined 45 years in the Arby's system.

Steve is a recent hire with prior experience in the QSR business at Pizza Hut and most recently as CMO of Heineken North America where he engineered a turn around of that brand.

As previously discussed, when the merger was announced last April, we identified two significant key profit drivers, a combination of which will deliver about $160 million in annualized incremental EBITDA by the end of 2011.

G&A savings in the form of efficiencies and synergies represent about $60 million of the total.

Our estimate was generated from a bottom up analysis of all the major functional areas of G&A and took into consideration forecasted costs at both Wendy's and Arby's.

By the end of 2008, we had already realized over $25 million of this $60 million target by reducing top level positions and other expenses.

And we have done so without sacrificing performance.

In 2009 we are consolidating some departments at our shared service center in Atlanta, which we estimate will yield an additional 10 million to $15 million in cost reductions towards our $60 million targets.

Later this year, we are planning to establish a new Wendy's purchasing cooperative, which we expect to generate cost savings for the entire Wendy's system.

And then in 2010 we will complete key IT projects, which will eliminate legacy systems and platforms and the related costs to maintain them.

Importantly, all of our accounting and financial systems will be consolidated on a single platform, enabling us to streamline our organization.

We expect these projects in aggregate to generate an additional 20 million to $25 million in savings, thus reaching our $60 million target.

Finally, as I said earlier, we are also confident about improving margins by 500 basis points at Wendy's company operated restaurants by the end of 2011 thereby generating $100 million in annual incremental EBITDA.

The rationale behind this assumption was based on the operating history of the Wendy's brand itself, as well as the superior performance of franchise restaurants compared to Company operated restaurants.

Just a few years ago, as I'm sure many of you on the call remember, Wendy's Company operated restaurant margin was about 400 basis points higher than it is today.

In addition, Wendy's franchise restaurants have out performed Company operated restaurants margin by 600 basis points on about $100,000 less average unit volume.

We have a detailed plan in place to achieve the margin improvements, and our team is focused on this important goal.

In summary, we are right on track with our key profit drivers and I look forward to updating you on our progress in the future.

Now I would like to turn the call over to our Chief Financial Officer, Steve Hare.

Steve?

Thank you, Roland.

I would like to discuss today a brief review of our fourth quarter results in 2008.

The special items including goodwill impairment, our financing plans, and our financial outlook.

As a reminder and as John had mentioned earlier, the fourth quarter of 2008 includes results for both Wendy's and Arby's, while the fourth quarter of 2007 only includes pre merger Triarc results.

Additionally the full year 2008 results include nine months of Triarc results and one quarter of post merger results for Wendy's and Arby's.

That makes quarterly and annual comparisons not meaningful.

Now let me review our fourth quarter highlights.

As stated in the earnings release for the fourth quarter ended December 28, 2008, consolidated revenues were $896.5 million.

Cost of sales were $697.2 million or 87% of sales.

General and administrative expenses were 14% of total revenues or $125.6 million, which includes integration costs.

Operating loss was $433.8 million in the fourth quarter of 2008, but included pre-tax, special items of $468.7 million.

Adjusted EBITDA for the fourth quarter, which excludes integration costs as well as facilities relocation and corporate restructuring charges was $74.4 million.

Our net loss for the 2008 fourth quarter was $393.2 million, and that included after tax charges for special items of $417.9 million.

On a diluted per share basis, the net loss was $0.84 in the fourth quarter of 2008 on roughly $469 million diluted shares.

And on a pro forma adjusted basis, excluding these special items, net income per share was $0.05.

Let me now spend a few minutes discussing the special items that are included in these results.

The charges were primarily related to noncash items consisting of an impairment of the goodwill of Arby's Company operated store operations, an allowance for doubtful collectability related to a note we received in connection with the Company's sale Deerfield & Co.

in 2007, as well as losses on equity investments.

Now as you know, management is required by accounting standards to assess the impairment of goodwill and other long lived assets on at least an annual basis.

As a result of a deteriorating economy and adverse stock market conditions that affected business enterprise valuation, combined with recent negative trends in operating performance at Arby's, we determined that goodwill related to the Arby's Company-owned store operations was impaired.

The $460 million noncash charge represents 100% of the goodwill that was on the balance sheet for the Arby's Company operated stores.

We also recorded a $21 million write down of the fair value of the note received from the sale of our former asset management business.

The face value of this note is approximately $48 million.

And while we continue to collect interest on the note, the risk associated with repayment of the note principle caused us to record this noncash charge.

In addition, we have recorded $12 million of losses on various equity investments that are unrelated to our restaurant business.

Now that we have discussed the consolidated P&L items, I will review our brand's performance for the fourth quarter in some more detail.

First at Wendy's.

Same store sales at Company operated restaurants increased 3.6% in the fourth quarter of 2008, reflecting the favorable impact of the initiatives Roland has already discussed.

Same store sales at Wendy's franchise restaurants increased 3.8%.

And system wide, same store sales grew 3.7%.

There were six new company restaurant openings with a net increase of one Company restaurant, as well as a net increase of four franchise restaurants during the fourth quarter.

We ended the quarter with 6630 Wendy's restaurants in the system, including 1406 Company operated and 5224 franchise locations.

Wendy's four wall restaurant margin was 11.7% of sales.

Wendy's incurred higher food costs, which were offset by lower labor costs and lower other restaurant operating expenses.

For Arby's same store sales at Company operated restaurants decreased 10.6% in the fourth quarter.

With the majority of the decrease related to lower customer counts driven by significant competitive discounting.

Same store sales at franchise restaurants decreased 7.6% and system wide same store sales fell 8.5%.

There were five new Company restaurant openings with a net increase of 3 as well as a net increase of 18 franchise restaurants during the quarter.

We ended the quarter with 3756 Arby's restaurants in the system, including 1176 Company-owned, and 2580 franchise locations.

Arby's restaurant margin was 14.6% of sales compared to 20.5% in the fourth quarter last year.

In addition to deleveraging associated with the decline in same store sales, Arby's also incurred higher food and other restaurant operating costs.

Both in absolute dollars and as a percentage of sales.

We believe that the recent introduction of the roast burger product line and our new marketing and operation strategy will improve sales trends.

And as we rebuild sales, restaurant margins should also improve.

Now I'll make a few comments about our financial position.

We ended the fourth quarter with $231.4 million in cash, cash equivalents and investments, including restricted investments of $37 million.

Long-term debt was $1.1 billion, stockholder's equity increased to $2.4 billion, and reflected the impact of the Wendy's merger.

Capital expenditures for the fourth quarter were $50.7 million, which included spending for new restaurant development, remodels, and ongoing restaurant maintenance for both brands.

Looking ahead, to maintain financial covenant compliance in 2009 and to enhance our overall financial flexibility, we have begun a process with both of the Wendy's and Arby's lending groups to combine our revolver and term loan borrowings under a single credit agreement.

Such an agreement would utilize Wendy's and Arby's combined results and more moderately leverage balance sheet to determine future compliance.

The 2008 ratio of long term debt to adjusted EBITDA on a pro forma consolidated basis was below 3 times.

In addition, the amended credit agreement would enhance the Company's ability to manage and deploy cash.

We expect to complete this amendment prior to filing our 2008 10-K.

Let me now comment on our financial outlook.

First we plan to open ten new Wendy's Company restaurants and five new Arby's Company restaurants in 2009, which represents a reduction from 2008 openings of 15 for Wendy's and 40 for Arby's.

We also have commitments from franchisees to open about 80 new Wendy's and 50 new Arby's in 2009.

We also expect to close some restaurants as their leases expire or the stores underperform.

We expect this to result in our year end restaurant count ending relatively flat with 2008.

We expect to spend about $140 million on capital expenditures in 2009, which is about $60 million less than Wendy's and Arby's spent on a combined basis in 2008.

We are certainly focused on preserving capital during this challenging economic climate.

From a commodity and food cost perspective at both Wendy's and Arby's, beef prices peaked in the fourth quarter and have since declined significantly.

We expect further decreases in beef and other commodities during the year.

Now Roland has already spoken about merger related G&A synergies and efficiencies.

In addition our management agreement with Trion for merger and acquisition consulting services will expire at the end of June representing approximately $6 million of savings this year.

We also expect to realize corporate cost savings in 2009, resulting from the past elimination of expense from the prior corporate restructuring of Triarc, these expected savings are considered in our mid teens EBITDA growth rate.

Finally we believe that the combination or our merger related key profit initiatives and our brand growth strategies will enable us to deliver an EBITDA growth rate in the mid teens through 2011.

And with that, I will turn the call back over to Roland for some concluding thoughts.

Roland?

Thank you, Steve.

We are pleased with the progress we have already made at Wendy's.

And we are confident about our ability to revitalize this great brand.

The merger integration process is on track and we are moving forward with our key profit growth initiatives.

While fourth quarter results at Arby's were disappointing, we are optimistic we can improve these sales trends with our new brand strategy focused on core roast beef customers.

Although the restaurant industry as a whole is experiencing significant competitive challenges the QSR segment continues to out pace both mid scale and casual dining.

Within the restaurant industry the hamburger segment is the largest segment of QSR with about 30% of sales and is growing about 2% annually.

Our opportunity is to grow with the categories and to expand our share within these two segments.

While we already have a very large presence in the United States, there are certainly many opportunities for growth in the US for both brands.

Particularly in the west and in the northeast.

This expansion will primarily come from franchise growth.

We are also developing a long-term strategy for international growth for both brands that will take some time to ramp up.

We are focusing on three key areas of the world.

Specifically Latin America, the Middle East and Asia Pacific.

We are also exploring the opportunity to develop Wendy's and Arby's dual branded restaurants.

Dual branding would enable us to offer high quality products from two great brands under one roof.

This gives us the opportunity to generate higher sales volumes and better return on investments.

We also believe this will make the Wendy's and Arby's brands more compelling for international franchise partners.

So in summary, we believe Wendy's/Arby's group represents a very compelling investment opportunity with EBITDA growth in the mid teens.

We look forward to updating you on our progress throughout the year and now I would like to turn it back over to John.

Thanks, Roland.

One thing before we go to questions.

I would like to mention photos of the products that Roland mentioned today during his comments and in the press release, they are on our website and we have actually embedded a link in today's news release that will take you directly to those specific sites so you can see them the roast burger and the fish and some of the other items.

We also have links to our television commercials on that site as well.

Now we would like to open it up for questions and I would like just to note that given the very large numbers of participants on today's call, along with I know, a lot of interest you have to ask questions today, we ask that you limit the number of questions if you could, so we can give everybody the opportunity.

You can queue back up for questions if you have several and we'll do our best to get through those today.

Operator if you would now open the phone lines for questions.

(Operator Instructions).

Our first question from the line of John Glass with Morgan Stanley.

I appreciate all the details from Wendy's and your margin targets there from 2009.

Could you maybe talk a little bit about your targets for Arby's in 2009 maybe what the margin assumption is there to get you to the mid teens this year?

And maybe your expectations for comps do you still expect even after the roast burger an other products to roll-out to pre main negative for the majority of the year or how do you see them trending throughout the year?

Good morning, John.

Thanks for your question.

As you know we are not projecting comp sales for either brand for the year at this point.

Although as I did say in my comments, we do believe comp sales will be positive certainly over the next couple of years.

That is the only way we are going to generate mid teens EBITDA growth.

As you also know I think from looking at the data, the margins at Arby's have declined over the last quarter.

Primarily based on deleverage and go some food cost items also.

We expect the margins at Arby's will also improve primarily based on improvement in the sales trends which will allow us to much more effectively manage our costs.

Okay so there is no commentary.

Is there a differential you expect to obtain through this product?

Or how has the product done through the test markets?

Is there any way to gauge how much comp lift should be accomplished through this new launch?

Great question.

Let me talk when I go back to the test market.

Obviously we have launched this just recently.

Because we were excited about the results of the test market.

And quite honestly, I'm excited about how great the product tastes.

That being said, I mean from a competitive standpoint, I don't think it would be appropriate to forecast what this is going to do either in mixed or comp sales.

But we have great expectations for this kind of repositioning Arby's from a strategy standpoint to go after and increase what we think is the most important kind of turn around concept, which is getting our medium Arby's customers in our restaurants a little bit more often.

As you know from my comments, they have told us that they will come more often, they love roast beef but they want a variety in roast beef sandwiches and they want a little bit better service when they get in the stores and that is exactly what we are focused on.

And just one more, you look across both brands how much benefit do you get in 2009 just from lower commodities?

Could you talk about where you actually have visibility, that is you've contracted something in '09 versus '08 and how much benefit that is versus how much is dependent on where the spot market is this year?

Well, first of all, commodities is a broad range of things.

Let me speak about one of the biggest drivers in commodities, which is beef for a second.

As I think you know from our comments, compared to the highs in 2008, yes that was a couple of years ago, our beef prices have reduced significantly in the first quarter, and as we look out to the remainder of the year, I think that we and expect beef commodity prices to continue to decline.

We are also seeing some softening in the prices of other commodities that we think will begin to take advantage of, I think probably starting late second quarter and into third quarter.

That all being said, to be kind of transparent from the standpoint of what we are expecting, and you remember the last time we spoke, we were forecasting commodities year over year, that is 2008 to 2009, to be up around 2 to 4%.

As we have seen some improvement in that, it is hard with what's going on in the economy to have an accurate forecast.

But we think that maybe that is a little overstated based on what we have seen in the fourth quarter.

Okay.

Thank you.

Our next question is from the line of Steven Kron with Goldman Sachs.

Please go ahead.

Hi, guys.

I guess a couple of questions first to follow-up to John's question.

In your Wendy's restaurant level margin improvement 160 to 180 basis points in '09, does that include food costs moderating and coming down?

No.

Okay.

So any further decline in commodity cost that would be upside to those margin targets?

That's correct, Steven.

My other question is I'm trying to reconcile the pro forma adjusted EBITDA number that you reported today for the full year of '08 of $367 million to the 2007 pro forma EBITDA that you presented on back in April of '08, when you guys first announced this acquisition.

The delta there being about $107 million excuse me year over year on a like for like basis.

I guess if I look at the margins that you guys outlined in this release at the restaurant level by brand, I could see maybe Arby's giving to the negative around $40 million of that delta.

But I know you also got a positive $25 million from synergies.

Seems like the margin at the Wendy's brand really didn't move all that much, so maybe neutral on a year over year basis.

I guess there is about a $65 million if those two metrics are similar that I can't reconcile.

I was hoping maybe you could give a little bit more color on that.

I think if you look at, what the information that's available out there, we have got the pro forma EBITDA that we have attached for the year.

You've also got the pro forma's for '07, as well as the year to date as John had mentioned.

I think if you take that and bridge it with the fourth quarter numbers, I think you'll have those.

The comparisons that you can make.

Obviously the big reduction has been around the Arby's brand, the same store sales decline, as well as the margin contraction that you have seen primarily because of the sales deleverage and that is really the biggest part of that gap.

But I think the bigger question, just as we probably have to go through that in a little more detail, and maybe I think when we get the 10-K out for you what you'll see is an updated look at the purchase accounting adjustments that were made and that will change some of the numbers that are available historically.

Yes.

The other thing I would say is that you know the same store sales at Wendy's really did not pick up until the fourth quarter.

So I'm not sure what was in your model, Steve, they were flattish to slightly up and then you had a big improvement in the fourth quarter.

You also had food costs that were a lot higher than I'm sure anybody had predicted back when we first had taken a look at the numbers.

Okay.

I'll follow-up with you guys off line on that.

Just the last question I had related to the debt and the effort to kind of combine under one facility.

In that effort, do you plan to delever at all in that process?

Is there any early read on the implications for interest expense?

No, not really.

What we are really trying to do at this point is really amend the existing agreement that we have for Arby's and pretty much preserve the basic financial covenants that are in the existing agreement.

But include the positive impact of a consolidated set of results as we determined covenant compliance going forward.

So we are improving the credit for the Arby's banks that are in the existing agreement.

And obviously part of that also, as you point out, will be a resetting of the interest rates to current market rates.

There will be an increase but we are just beginning that process so I can't quantify that yet.

Thanks very much.

Thank you, our next question is from the line of David Palmer with UBS.

Please go ahead.

Thanks, thanks guys.

This is a good call.

In the past, Wendy's, the former management has said they would drive labor costs lower while driving sales for restaurants higher and improving customer satisfaction and as you know, a lot of the folks on the Street have said seems to be almost an impossible combination of successes.

Could you, perhaps, kind of go into where you are cutting labor, if at all?

Fewer managers, fewer manager shifts, breakfast, lower overhead to the degree that might be in your restaurant margins please?

Any color would be helpful.

Thanks.

Sure, David, while that seems to be an anomaly on the face, depending on how you execute it, has a big impact on how it will be received in the stores and also by the consumers.

As you know from our comments this morning, we are actually pleased with the fact that in the fourth quarter we made some significant improvement on our labor as a percentage of sales.

And in the same fourth quarter we made significant improvement on our key attributes as it related to how our customers were actually relating to the experience.

So it can be done.

Now from a quantification standpoint, what we have done is we have looked at our labor guides, I don't want to get too technical here.

But we have a guide, as you can imagine, in each of our stores, that relates to how many labor hours you get both management and crew, depending on the number of dollars that you actually achieve in the store.

And this is done not only on a daily basis but less than an hourly basis to make sure that you have the right number of people in the store to service the customer correctly.

Once you have the positions filled for the revenue, extra people don't provide better service for customers, they just cost more money.

So as we have looked at our franchisees labor guides and our own labor guides, we have found a significant number of areas where we can be more efficient.

Some cases that means that the manager would be more productive, productivity means, not that they are working hard, but that they are actually on the schedule and they are filling a position that might have to be filled by an hourly crew person if they weren't.

And other efficiencies are in the area of the number of crew people that you need.

But probably the majority of it is in the kind of shoulder areas where you bring people in and send people home.

Because if you are more reactive to that, you can keep your labor hours down lower as you go forward.

So we think that we can make these labor improvements.

We are already seeing them.

Quite honestly our managers are reacting positive in the field.

As we show them how they can make improvements and more importantly, we give them the metrics and the tools to do it and maybe lastly and most importantly we reward them from a bonus perspective for doing it, we are seeing some real traction there.

And at the same time we are seeing traction from the standpoint of our customer's experience and we continue to be as you know the leader in speed of service at the pickup window and we made improvement in that in the fourth quarter and we expect to make improvement in that area as we go forward.

One other thing David, I hope you saw these.

But embedded in the presentations we did back in January both in Cowen and ICR were two very specific charts that took you through how this margin improvement would happen by year, as well as by major categories.

So you can click on that and take a look at those if you haven't seen them.

Is there a fraction that kind of says where you are in sort of your progress in closing the gap between you and ran economize ease, even this far?

Or is it brand new?

I don't think a fraction is what we have.

Just reiterating a little bit to make sure we are clear, we are expecting 160 to 180 basis point improvement this year and to achieve that, we are going to have to be at a run rate by the end of the year of about 250 basis points, which is about half of the improvement we expect to make, based on the comparisons to our franchisees.

So if I was forced to a fraction, I would say by the end of the year our run rate should be about 50% of the target that we are hoping to achieve.

Thank you.

Our next question is from the line of Jason West with Deutsche Bank.

I just wanted to clarify the comments around the value menu.

I believe you guys said that is now running at about 15% of sales in the Company restaurants.

If you could talk about where that was a year ago, and how customers have responded to the reduction in some of the items there, and how that's impacting your traffic and overall ticket?

Thanks.

Yes.

You are correct.

As I mentioned a few moments ago, we see our $0.99 value menu representing about 15% of revenue.

Recently.

And that is down from previous periods of a high of around 20% or so.

We have been able to do that by taking a number of items off the $0.99 menu and price them higher because we believe that consumers felt that they were a better value, even at a higher price.

As I mentioned, chile, and baked potato and chicken nuggets.

What we did do at the same time was introduce our Value Trio at $0.99 which, as you can imagine we were a little concerned that if we didn't do anything but launch that brand new program we might drive our percent of $0.99 revenue above what the historical levels have been.

Fortunately that did not happen.

The combination of taking menu items off of that $0.99 menu and adding value Trio has actually both kind of improved transactions and improved sales as you know.

We produced at the Company stores 3.6% comp sales increased in the fourth quarter.

And if you exclude the impact of breakfast where we closed a number of stores, it was actually over 4%, which we are very pleased with.

Our consumers seem to be resonating with the message from the Value Trio.

As you know from our advertising, we really have taken a position that we believe our competitors cannot compete on, which is not only do we have $0.99 we have great variety.

And we also have great quality.

So the combination of those three products along with the $0.99 has brought in a significant amount of customers and hasn't really negatively denigrated our check our check is actually up somewhat in the fourth quarter versus what it was previously.

We are pretty excited about how that is working with our customers and on our menu and we have expectations in 2009 that we are not only going to launch an exciting new products that we think will resonate with our customers at the high end, I mentioned that earlier today.

We have got a new chicken temptations product that we planned, and also a new signature Hamburger.

But we will come back to the consumers on a pretty regular basis and talk to them about the fact that Wendy's continues to have great value.

That will be the Value Trio, as well as additional value messages that we may introduce based on market or sorry, testing that we currently have in the marketplace.

Okay.

Thanks, guys.

Thank you.

Next question is from the line of Larry Miller with RBC Capital Markets.

Please go ahead.

Thanks very much.

Actually my question is even related to the 5% reduction you saw in the $0.99 menu.

I'm curious if you guys could parse out a little bit in more detail the Q4 margins?

Because if you went down 5% on the $0.99 menu you should have a nice boost in restaurant level margins at Wendy's and you talked about food costs being off so maybe you can talk about how much that was yet labor and operating expenses were down.

And then as an aside to that, what would be helpful is kind of getting the EBITDA the two brands in 2008, if you would?

Thanks.

Larry, we are not going to talk about individual components of the P&L margins for each brand.

But I will try to you know kind of maybe reiterate and hopefully help you understand kind of some of the question that you are asking us.

As you know, and as almost every restaurant Company experienced in the fourth quarter.

Food costs rose to record highs.

And so we were impacted by that ad Wendy's just like all our competitors were.

That be being said, we were able to maintain our margin at least as well as we did because we made significant progress in labor and other expenses which I mentioned were about 100 basis points.

So the combination of the fact that food costs commodities went way up, somewhat negated any benefit that we would have had from the standpoint of average check from the standpoint of what might have happened with our impact of our $0.99 menu.

Maybe I can ask it a different way.

Another way to kind of get at it.

How much on the annual basis would the 5% reduction of the value mix add to Wendy's restaurant level margins?

And let me ask another part to that too.

Which is then on the breakfast side, how much is a return to the breakfast business in 2011 supposed to add to that mid teens target as well?

Thanks.

Larry, let me elaborate just a little bit on the question on value.

The three items that Roland's talking about that are on the Value Trio, those as you can imagine necessarily have slightly higher food costs, right?

Some of the items they are no longer kind of in that mix now than what we are calling 15%.

Those simply would have absolutely lower costs.

I can take you through that sort of off line a bit but there is a whole mix on what items are literally on the $0.99 menu that are in the 15%.

So the flow through on the margin might not be as good as what you are thinking, okay?

You have to literally go by item by item and look at it.

One other comment.

If you go back to our previous discussions and some of the information we have provided we have tried to get fairly granular and John has mentioned this, we certainly can get you a copy of this as we went out and kind of introduced ourselves for the first time at the Cowen conference and then at the ICR conference.

We talked about what we believe were the specific components of our 500 point margin improvement in each of the key P&L areas.

We talked about labor, we talked about what we call controllables, which is really repair and maintenance and other costs.

We also talked about food.

If you go look at those numbers in particular, I think you'll see that we are expecting food to help us over the next couple of years, as we get to 500 basis points improvement.

But not as much as the other two categories.

In fact it is a little less than 100 basis points and we think that that is the combination of mixed shift that I talked about earlier and also being more diligent from the standpoint of holding our management teams more accountable to achieving a food cost number closer to the theoretical that his generated by the POS at our stores.

Those are the two things we are really looking forward to from the standpoint of improvement and that mixed shift quite honestly is part of what you are talking about here.

I ask because I think it is an important part that have clearly, yet you had a really good change in the mix and didn't give up any same store sales.

So it was an interesting trend.

Can you comment about how much?

We liked it, too, thank you.

Can you comment about how much breakfast is part of that mid teens EBITDA margin growth in your plan?

And that is it for me.

Thanks.

Well, as you know, from a breakfast standpoint there is two components.

We have taken kind of a number of stores off line from the standpoint of having breakfast while we retooled it.

I mentioned why we needed to do that.

That has cost us about seven-tenths of a point in the fourth quarter and we think as we go forward it will cost us about 1.5 points.

While those sales were not profitable previously they were sales we have to comp over.

From the margins standpoint taking those out of the store also, helped us improve our margin because we are now producing a more effective program that is kind of a margin plus.

But the overall impact in our results in the fourth quarter from a margin standpoint wasn't that great.

It was minimal.

But on a go forward basis is it 10% of the EBITDA target?

Or something like that?

It's going to be modest, it's going to be small.

It's going to really depend on the rate of rollout of stores, right?

By the time we get national Roland talked about by 2011.

Just elaborate this on a little bit.

We are expecting to roll it out in 2011 as I said.

We talked about mid teens EBITDA growth through 2011 so obviously it is not a large component of that at this point.

It continues to be a big opportunity.

You know what our other competitors do from a volume standpoint.

So 150,000 to $200,000 is certainly not something that is out of question.

You can do the math on what percentage increase that is in sales.

The other added benefit, as you know, is that if done correctly, breakfast day part sales tend to be at a higher margin because we already have our fixed costs covered.

So that also should help us improve our margins if we do it the way we are moving forward on.

Okay.

So fair to say breakfast is incremental to that plan.

Thanks.

Thank you, our next question is from the line of John Ivankoe with JPMorgan.

Please go ahead.

Thanks.

It is actually Steve Rees in for John Ivankoe.

I was wondering if you could talk about the value strategy at Arby's going forward because it sounds like a lack of value increased emotions on the every day QSR competition is part of the problems of the comp decline.

I guess how do you sort of see an every day value menu fitting into the Arby's strategy.

I know you have some products in test but when might we see more of a value?

Yes, great.

Thanks, Steve.

Let me talk about the Arby's strategy in a little bit more detail.

We are pretty excited about this.

First of all let me go back to kind of how we developed it.

If you take a look at frequency among the big QSR competitors the frequency of our average customers is much less than our competitors.

As we have looked at that and asked them what drove that in their purchase decision, our core customers, we call them MACs obviously said it is because we need variety of roast beef offerings although we love your roast beef sandwich it is kind of the same thing it's been for 44 years.

We also need you to improve your overall service.

So we went after the process of doing both of those things.

And that is what really drove our roast burger line and what will drive the work that we are doing right now to kind of extend or expand our roasted meat heritage into chicken, turkey and ham.

Now we'd have to have our head in a hole in the ground if we weren't looking at what was happening in the marketplace and obviously kind of seeing how well we were able to perform at Wendy's by offering a more compelling value strategy, we began to look at that very significantly months ago at Arby's.

But we made the strategic decision that we weren't going to take our core premium product that has got us basically through 44 years of success, and just discount it, because the history books are full of brands that if they do that, they generally denigrate their brand for a long, long time and in some cases they can never recover because your consumer stops believing that it really is a premium product.

We needed to go out and actually develop a new line of products that we could test from the standpoint of offering a more compelling value positioning for our customers.

And those types of things are in tests now.

Like a dollar menu with different kind of reengineered products that aren't our premium product.

You know kind of your smaller or junior or whatever the case is it offers what works from a standpoint and we think it also works from the standpoint of consumers if they want to come in and participate from that value type of positioning.

This is no different than what many of us have read about and I think has been called the barbell strategy right?

We are going to continue to be known as a premium brand serving great premium products.

In this economic environment we are testing a number of value opportunities we think we can pick up some of those value customers that we have lost based on the significant discounting of our competitors.

So we have got this dollar kind of menu that we are testing.

We have got four for five that we think kind of has some merit.

We have also got $1.99 kind of melts that we are also testing and we will put on our menu and extend or expand the one that obviously does the best in our tests.

Okay.

If the roast burger doesn't allow traffic improvement here in the near term is it safe to say we could see more of a value message by the second half?

It is hard to speculate about that to be honest with you.

I can tell you that we aren't planning for that to happen because we are excited about the test results.

And we think that this is exactly down the fairway of what our core customers have told us that they wanted.

Okay.

Perfect.

Thank you very much.

Operator, this is John.

We'll take two more questions.

Our next question is from the line of Paul Westra with Cowen and Co.

Please go ahead.

Okay.

Thanks.

Just a follow-up, not to beat a dead horse but on the $0.99 mix question what is the mix currently with the chile, baked potato and nuggets?

You added that fact is the apples to apples comparison about the same?

Hi, Paul.

I don't know the answer to that question.

We can get you that off line.

Kind of today or tomorrow.

The mix hasn't really changed.

If your question is we took it up to $1.19 and $1.39 people stopped buying it, no that is typically not what happened.

Fortunately with the baked potato and the chile as you know, like other items on our then mu.

You can't get them anywhere else.

The people that want them tend to come in and get them.

Our belief quite honestly was that we were providing them to them at that price was somewhat of a surprise.

They come in not necessarily because it was $0.99 but because they wanted that particular product, they are happy to pay $0.99 for it.

But we think they are also equally happy to pay $1.19 or $1.39.

One modeling question.

Can you give more color on the CapEx number of $140 million.

Is that a normalized rate assuming no big initiative on an annual basis going forward?

Then a quick question on depreciation is that $195 million you posted, is that a good normalized annual number for modeling?

Paul this is Steve.

I think in terms of the CapEx number we have targeted for 2009, I think that is a good baseline number for us for the next year or two.

With the exception of it's got probably a lower than what we would like number for new unit development of Company stores.

Again depending on how the economy shapes up here at some point I would like to see us ramp up the number of new units which would cause that CapEx to go up some.

But I don't think dramatically and I think it's probably some time out there.

So I think for now I think that $1.40 certainly includes all our normal needs in the categories of remodel and sort of ongoing Company maintenance.

From a depreciation standpoint, the number that you have got what you'll probably need is take a look at the 10-K when it comes out.

Because with the purchase price adjustments I think that depreciation number will come down a little bit.

Okay.

Thank you.

All right.

Operator we'll take one last question, and we'll have closing comments from Roland.

Our last question is from the line of Justin Maurer with Lord Abbett & Co.

Please go ahead.

Morning guys.

Morning.

Roland, again back to the burger launch at Arby's and your comment about the medium user.

Was there something, was there a product gap that you guys felt you could exploit relative to the sandwich line?

Like you said you have got those sandwich guys discounting that end of it, you want to infuse some newness I guess for the base business.

Is that where the customer was telling you to go?

Yes.

They were telling us that they loved our roast beef.

It was something they could get nowhere else.

But just like any other business they wanted more variety and as we talked to them about what that variety could be, we came up with this line of three sandwiches that it's hard to talk about it until you have it.

I'm very biased but it is a fantastic product.

In fact, we have been eating them like crazy for the last week or so since they have been out on the marketplace and you'll see our advertising and what it does from the standpoint of comparing to competitors is that it's a great tasting sandwich that isn't greasy, and isn't frozen and some of the stuff that our competitors are forced to do.

So we are pretty excited about it.

All right.

Then Steve just a couple other of below the line comments.

You asked about the debt and the interest rates.

I thought you had said the rates you thought would go up, maybe I didn't hear that right.

But I would think with the increased balance sheet, if you will, that that actually should provide an opportunity, let alone the fact that underlying rates would be lower.

Is that fair?

Yes.

The Arby's credit agreement was put in back whether we bought RTM in 2005.

So the rates on those facilities in this environment have increased.

So we expect, as part of the amendment process, that the underlying borrowing rate of the Arby's credit agreement, which is LIBOR plus 225, today, we think that's going to go up.

But again, I can't quantify that for you.

But that's on our term loan outstanding, which is less than $400 million now.

Again, for the trade-off of what we think is very helpful financial flexibility going forward, really being able to use the strength of our moderately leveraged balance sheet, with the consolidated strength of the Wendy's operations, plus the Arby's operations, we think it's absolutely the right thing for us to do at this point point in time.

Okay.

Lastly on the equity, I think you said 12 million or $14 million, correct me if I'm wrong, on the charge on the quarter on the equity investments, what's your guys plan there I guess now with the separation from the former parent?

Will that go away mid-year as the services agreement comes off?

Or you know, how do you guys think about that going forward?

There is a separate agreement other than the Trion agreement we referenced here was the M%A services agreement that helped us obviously with the Wendy's merger primarily.

It is separate from that.

We have an equities account that we originally funded was $75 million.

And that is managed by the Trion funds.

That agreement goes to the end of 2010.

So that will stay in place.

But that's where some of these, it is managed externally and with the stock market like any other equity investments as they go down, we are forced to record those losses once we think they are other than temporary.

So that's not something that we can, you may have seen that we have withdrawn some funds in 2008.

So we have reduced the amount that is in and actively invested in the stock market.

But fundamentally, that will stay in place until the end of 2010.

Okay.

What, at that point does it get redeemed?

Or what is the?

Well, at that point, the agreement to keep the funds in would be terminated at that point.

So I would expect we would just take that investment, turn it to cash and put it back into the operating Company.

Great.

Thanks, guys.

Thank you all for participating.

In just a minute or so I would like to kind of summarize what I hope you take away from our call and our questions today.

First, we have started the revitalization of Wendy's.

We are excited about what we produced in the fourth quarter with great comp sales performance.

Two, we think we have a solid plan to improve Arby's and turn around our sales trend.

Three, as I discussed with you, we think our profit initiatives are on track from both the G&A standpoint and a margin improvement standpoint at Wendy's.

Four as Steve talked about we do expect to amend our credit agreement.

And five we expect to produce EBITDA growth in the mid teens.

Look forward to following up with many of you one-on-one and talking to you in the future.

Thank you.

If you have follow-up questions later today reach out to me or Kay Sharpton who is with us here on the call.

The numbers are listed on the bottom of today's earnings release.

Thanks a lot.

Ladies and gentlemen, this concludes the Arby's and Wendy's fourth quarter 2008 earnings conference call.

Thank you for your participation.

You may now disconnect.