Wendy's 2008 Annual Report Download - page 143

The nature of the adjustments and the impact of each on the Company’s consolidated retained earnings as
of January 2, 2006 are presented below:
Pre-Tax
Adjustment
Income Tax
Effect
Retained
Earnings
Deferred gain from sale of businesses (a) .................... $5,780 $(2,087) $3,693
Hurricane insurance proceeds (b) ........................... 1,374 (495) 879
Self-insurance reserves (c) .................................. 965 (347) 618
$8,119 $(2,929) $5,190
(a) During the mid-1990’s the Company sold the assets and liabilities of certain non-strategic businesses, four
of which did not qualify for accounting as discontinued operations. At the time of the sale of each of these
four businesses, the gain was deferred either because of (1) uncertainties associated with realization of non-
cash proceeds, (2) contingent liabilities resulting from selling assets and liabilities of the entity or
associated with litigation or (3) possible losses or asset write-downs that might result related to additional
businesses anticipated to be sold. If the criteria in SAB 108 were applied, these deferred gains would have
been recognized in results of operations prior to 2003.
(b) The Company received insurance proceeds in 1993 in connection with hurricane damage to its then
corporate office building. The gain otherwise associated with the insurance proceeds was not initially
recognized due to contingencies with respect to on-going litigation with the landlord of the office
building. If the criteria in SAB 108 were applied, these proceeds should have been recorded as a gain prior
to 2003 once the litigation was settled.
(c) Prior to 2000 the Company self-insured certain of its medical programs. Reserves set up were ultimately
determined to be in excess of amounts required based on claims experience. If the criteria in SAB 108 were
applied, these liabilities should have been reversed prior to 2003 once the liabilities were determined to be
in excess of the reserves required.
As discussed in Note 14, the Company adopted FIN 48 on January 1, 2007. As a result of the adoption,
the Company previously recorded a reduction of retained earnings as of the beginning of 2007.
Preferred Stock
There were 100,000 shares authorized and no shares issued of preferred stock throughout the 2008, 2007
and 2006 fiscal years.
(16) Share-Based Compensation
The Company maintains several equity plans (the “Equity Plans”), including those assumed in the
Wendy’s Merger discussed below, which collectively provide or provided for the grant of stock options,
restricted shares of Wendy’s/Arby’s common stock, tandem stock appreciation rights and restricted share units
to certain officers, other key employees, non-employee directors and consultants, although the Company has
not granted any tandem stock appreciation rights or restricted share units. The Equity Plans also provide for
the grant of shares of Wendy’s/Arby’s common stock to non-employee directors. As of December 28, 2008
there were approximately 19,500 shares of Class A Common Stock available for future grants under the Equity
Plans, including shares available under the plans assumed in the Wendy’s Merger discussed below. The
Company has also granted certain Equity Interests to certain officers and key employees as described in Note 1
and below.
Effective with the Wendy’s Merger, Wendy’s/Arby’s also assumed the existing Wendy’s equity plans (the
“Wendy’s Plans”) which collectively provided for the grant of stock options, restricted shares, stock
appreciation rights or restricted stock units for certain employees and non-employee directors to acquire
135
Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)