Papa Johns 2008 Annual Report Download - page 40

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33
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 requires
companies to determine fair value based on the price that would be received to sell the asset or paid to
transfer the liability to a market participant. SFAS No. 157 emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. We adopted the provisions of SFAS No. 157 in two
phases: (1) phase one was effective for financial assets and liabilities in our first quarter of 2008 and (2)
phase two is effective for non-financial assets and liabilities for fiscal years beginning after November
15, 2008, or our first quarter of fiscal 2009. The adoption of phase one during the first quarter of 2008
did not have a significant impact on our financial statements.
SFAS No. 157 requires that assets and liabilities carried at fair value be classified and disclosed in one of
the following categories:
• Level 1: Quoted market prices in active markets for identical assets or liabilities.
• Level 2: Observable market based inputs or unobservable inputs that are corroborated by market
data.
• Level 3: Unobservable inputs that are not corroborated by market data.
Our financial assets and liabilities that are measured at fair value on a recurring basis as of December 28,
2008 are as follows:
Carrying
(In thousands) Value Level 1 Level 2 Level 3
Financial assets:
Investments 530$ 530$ -$ -$
Non-qualified deferred compensation plan 8,887 8,887 - -
Financial liabilities:
Interest rate swaps 6,173 - 6,173 -
Fair Value Measurements
The adoption for non-financial assets and liabilities in fiscal 2009 is not expected to significantly impact
our estimates of value related to long-lived and intangible assets such as our annual fair value evaluation
of our United Kingdom subsidiary, Papa John’s UK (“PJUK”) and domestic Company-owned
restaurants.
In December 2007, the FASB issued SFAS No. 141 - revised 2007 (SFAS No. 141R), Business
Combinations. SFAS No. 141R establishes principles and requirements for how an acquirer in a business
combination recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and determines what information to disclose
to enable financial statement users to evaluate the nature and financial effects of the business
combination. SFAS No. 141R applies to business combinations for which the acquisition date is on or
after December 15, 2008 or our first quarter of fiscal 2009. Early adoption is prohibited. The adoption of
this statement is not expected to have a significant impact on Papa John’s consolidated financial
statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements – an amendment to ARB No. 51. SFAS No. 160 requires all entities to report noncontrolling
(minority) interests in subsidiaries as equity in the consolidated financial statements, but separate from
the equity of the parent company. The statement further requires that consolidated net income be reported
at amounts attributable to the parent and the noncontrolling interest, rather than expensing the income