Wendy's 2010 Annual Report Download - page 40

Deerfield Opportunities Fund, LLC, which commenced on October 4, 2004 and in which our investment was
effectively redeemed on September 29, 2006, and DM Fund LLC, which commenced on March 1, 2005 and in
which Wendy’s/Arby’s investment was effectively redeemed on December 31, 2006, reported on a calendar year
ending on December 31 through their respective sale or redemption dates.
(2) Selected financial data reflects the changes related to the adoption of the following accounting standards:
(a) As of December 29, 2008, Wendy’s/Arby’s adopted new accounting guidance related to non-controlling
interests (formerly referred to as minority interests). This adoption resulted in the retrospective reclassification of
minority interests from its former presentation as a liability to “Stockholders’ equity.” The reclassifications were
$0.l million, $0.9 million, and $14.2 million for 2008, 2007 and 2006 respectively. Additionally, in accordance
with the new guidance, the loss from continuing operations in 2006 excludes the effect of income attributable to
non-controlling interests of $11.5 million. Income attributable to non-controlling interests in 2008 and 2007 was
not material.
(b) As of January 1, 2007, Wendy’s/Arby’s utilized a recognition threshold and measurement attribute for
financial statement recognition and measurement of potential tax benefits associated with tax positions taken or
expected to be taken in income tax returns. Wendy’s/Arby’s utilized a two-step process of evaluating a tax
position, whereby an entity first determines if it is more likely than not that a tax position will be sustained upon
examination, including resolution of any related appeals or litigation processes, based on the technical merits of
the position. A tax position that meets the more-likely-than-not recognition threshold is then measured for
purposes of financial statement recognition as the largest amount of benefit that is greater than 50 percent likely
of being realized upon being effectively settled. There was no effect on the 2007 or prior period statements of
operations. However, there was a net reduction of $2.3 million in stockholders’ equity as of January 1, 2007.
(3) For the purposes of calculating income per share amounts for 2007, net income was allocated between the shares
of Wendy’s/Arby’s Class A common stock and Wendy’s/Arby’s Class B common stock based on the actual
dividend payment ratio. For the purposes of calculating loss per share, the net loss for all years through 2008 was
allocated equally between Class A common stock and Class B common stock.
(4) The number of shares used in the calculation of diluted income per share in 2009 and 2007 consist of the
weighted average common shares outstanding for each class of common stock and potential shares of common
stock reflecting the effect of 483 dilutive stock options and nonvested restricted shares for 2009 and 129 for
Wendy’s/Arby’s Class A common stock and 759 for Wendy’s/Arby’s Class B common stock for 2007. The
number of shares used in the calculation of diluted income (loss) per share is the same as basic income (loss) per
share for 2010, 2008 and 2006 since all potentially dilutive securities would have had an antidilutive effect based
on the loss from continuing operations for these years.
(5) Reflects certain significant charges recorded during 2010 as follows: $69.4 million charged to operating profit for
impairment of long-lived assets other than goodwill; $43.0 million charged to loss from continuing operations
and net loss related to these charges; and $16.2 million charged to loss from continuing operations and net loss
related to costs incurred for the early extinguishment of debt, which was comprised of a premium payment
required to redeem the Wendy’s 6.25% senior notes, the write-off of the unaccreted discount of the Wendy’s
6.25% senior notes, and the write-off of deferred costs associated with the repayment of the Wendy’s/Arby’s
Restaurants prior senior secured term loan.
(6) Reflects significant charges recorded in 2009 of $82.1 million charged to operating profit for impairment of long-
lived assets other than goodwill and $50.9 million charged to income from continuing operations and net income
related to these charges.
(7) Reflects certain significant charges and credits recorded during 2008 as follows: $460.1 million charged to
operating loss consisting of a goodwill impairment for the Arby’s company-owned restaurant reporting unit;
$484.0 million charged to loss from continuing operations and net loss representing the aforementioned $460.1
million charged to operating loss and other than temporary losses on investments of $112.7 million partially
offset by $88.8 million of income tax benefit related to the above charges.
(8) Reflects certain significant charges and credits recorded during 2007 as follows: $45.2 million charged to
operating profit, consisting of facilities relocation and restructuring costs of $85.4 million less $40.2 million from
the gain on sale of Wendy’s/Arby’s interest in Deerfield; $16.6 million charged to income from continuing
operations and net income representing the aforementioned $45.2 million charged to operating profit offset by
34