Papa Johns 2003 Annual Report Download - page 52

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51
3. Accounting for Variable Interest Entities (continued)
The consolidation of BIBP could have a significant impact on Papa John’s operating income in future
periods due to the volatility of cheese prices. In future periods, we will recognize the operating losses
generated by BIBP if BIBP’s shareholders’ equity is in a net deficit position. Further, we will recognize
the subsequent operating income generated by BIBP up to the amount of any losses previously
recognized. Although we expect BIBP to achieve break-even financial results over time, in the short-
term, significant earnings fluctuations could occur.
BIBP has a $15.0 million line of credit with a commercial bank. The $15.0 million line of credit is not
guaranteed by Papa John’s. We have a commitment to lend up to $2.6 million to BIBP if the $15.0
million line of credit is fully utilized. BIBP did not have any outstanding borrowings under either credit
facility at December 28, 2003 or December 29, 2002, and had outstanding borrowings of $2.2 million
under the bank facility as of February 23, 2004.
The accompanying consolidated balance sheet at December 28, 2003 includes BIBP. The following are
summarized financial statements of BIBP:
Summarized Statements of Operations (in thousands):
2003
2002
2001
Sales to PJFS
126,722
$
147,685
$
154,058
$
Cost of sales
(140,094)
(128,718)
(163,824)
Administrative expense
(212)
(118)
(102)
Investment income (expense)
260
35
(160)
Income (loss) before income taxes
(13,324)
18,884
(10,028)
Income tax benefit (expense)
5,130
(7,270)
3,861
Net income (loss)
(8,194)
$
11,614
$
(6,167)
$
Summarized Balance Sheets (in thousands):
2003
2002
Cash and cash equivalents
4,246
$
16,442
$
Other current assets
4,702
4,454
Total assets
8,948
$
20,896
$
Current liabilities
6,520
$
10,239
$
Stockholders' equity
2,428
10,657
Total liabilities and stockholders' equity
8,948
$
20,896
$