(8) Income Taxes (Notes)

6 Months Ended

Jul. 03, 2011

Income Taxes [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three months ended July 3, 2011 and July 4, 2010 was 42.2% and 40.6%, respectively. Wendy’s Restaurants effective tax rate for the three months ended July 3, 2011 and July 4, 2010 was 40.8% and 37.2% , respectively. The Companies’ effective tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes, net of federal income tax benefit and (2) tax credits.

The Company’s effective tax rate for the six months ended July 3, 2011 and July 4, 2010 was 40.2% and 24.8%, respectively. Wendy’s Restaurants effective tax rate for the six months ended July 3, 2011 and July 4, 2010 was 39.1% and 21.8%, respectively. The Companies’ effective tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes, net of federal income tax benefit, (2) tax credits, and (3) a reduction in our state valuation allowances in 2010.

There were no significant changes to unrecognized tax benefits or related interest and penalties for either the Company or Wendy’s Restaurants for the six month periods ended July 3, 2011 and July 4, 2010.

Amounts payable for Federal and certain state income taxes are settled by Wendy’s Restaurants to The Wendy’s Company under a tax sharing agreement. During the six months ended July 3, 2011 and July 4, 2010, Wendy’s Restaurants made tax sharing payments to Wendy’s of $13,078 and $0, respectively.

As described in Note 2, Wendy’s Restaurants completed the sale of Arby’s on July 4, 2011. In the third quarter of 2011, as a result of the closing of the sale of Arby’s which then affects our state income tax apportionment factors, the Companies expect to record a deferred income tax expense of approximately $5,800.