Papa Johns 2003 Annual Report Download - page 55

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54
6. Restaurant Closure, Impairment and Dispositions (continued)
During our review of potentially impaired restaurants, we considered several indicators, including
restaurant profitability, annual comparable sales, operating trends, and actual operating results at a
market level. In accordance with SFAS No. 144, we estimated the undiscounted cash flows over the
estimated lives of the assets for each of our restaurants that met certain impairment indicators and
compared those estimates to the carrying values of the underlying assets. The forecasted cash flows were
based on our assessment of the individual restaurant’s future profitability, which is based on the
restaurant’s historical financial performance, the maturing of the restaurant’s market, as well as our
future operating plans for the restaurant and its market. In estimating future cash flows, we used a
discount rate of 12%, which approximates the return we would expect on those types of investments.
Based on our analysis, we determined that 25 restaurants were impaired for a total of $2.5 million.
The following table summarizes restaurant closure, impairment and disposition gains (losses) during
2003, 2002 and 2001:
(in thousands)
2003
2002
2001
Number of restaurants sold
7
14
50
Cash proceeds received
910
$
130
$
6,732
$
Notes receivable from franchisees
46
525
4,485
Total consideration
956
655
11,217
Net book value
681
758
6,524
Gain (loss) on restaurants sold
275
(103)
4,693
Loss on domestic restaurant closures
(3,239)
(740)
(2,888)
Restaurant long-lived asset impairment
(2,505)
(208)
(556)
Total restaurant closure, impairment and disposition
gains (losses)
(5,469)
$
(1,051)
$
1,249
$
7. Debt and Credit Arrangements
Debt and credit arrangements consist of the following (in thousands):
2003
2002
Revolving line of credit
61,000
$
139,600
$
Other
250
485
61,250
140,085
Current portion of debt
(250)
(235)
Long-term debt
61,000
$
139,850
$