Wendy's 2009 Annual Report Download - page 96

and our ongoing assessment of the likelihood of full repayment of the principal amount of the DFR Notes,
Company management determined that the likelihood of collectability of the full principal amount of the DFR
Notes had significantly declined and the Company recorded an allowance for doubtful accounts on the DFR
Notes of $21,227 in the fourth quarter of 2008. The 2008 charge is included in “Other than temporary losses
on investments.” The Company believes such allowance continues to be necessary at January 3, 2010.
The DFR Notes, net of unamortized discount and the valuation allowance, of $25,696 and $25,344 at
January 3, 2010 and December 28, 2008, respectively, are included in non-current “Notes receivable.”
(4) Income (Loss) Per Share
Basic income per share for 2009 is computed by dividing net income by the weighted average number of
common shares outstanding. Prior to the Wendy’s Merger, the Company had Class B common stock which was
converted to Class A common stock and is now referred to as “Common Stock” as discussed in Note 2.
Basic income (loss) per share for 2008 and 2007 has been computed by dividing the allocated loss or
income for the Company’s Common Stock and the Company’s Class B Common Stock by the weighted average
number of shares of each class. Net income for 2007 was allocated between our Common Stock and Class B
Common Stock based on the actual dividend payment ratio. Net loss for 2008 was allocated equally among
each share of our Common Stock and Class B Common Stock up until the date of the Conversion; subsequent
to the Conversion, net loss was only allocated to our Common Stock since Class B Common Stock no longer
existed.
Diluted income per share for 2009 and 2007 has been computed by dividing income for our Common
Stock and, in 2007, our Class B Common Stock by the weighted average number of shares of each class
outstanding plus the potential common share effect of dilutive stock options and of restricted shares, computed
using the treasury stock method. Diluted loss per share for 2008 was the same as basic loss per share for each
share since the Company reported a net loss and, therefore, the effect of all potentially dilutive securities on the
net loss per share would have been antidilutive. The shares used to calculate diluted income per share exclude
any effect of the Company’s 5% convertible notes due 2023 (the “Convertible Notes”) which would have been
antidilutive since the after-tax interest on the Convertible Notes per share obtainable on conversion exceeded
the reported basic income from continuing operations per share. For 2009 and 2007, we excluded 17,194 and
2,722 potential common shares, respectively, from our diluted per share calculation as they would have had
anti-dilutive effects.
As of January 3, 2010, our potential common shares consisted of the following: (1) outstanding stock
options which can be exercised into 23,465 shares of our Common Stock, (2) 1,481 restricted shares of our
Common Stock and (3) $2,100 of Convertible Notes which are convertible into 160 shares of our Common
Stock.
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)