Papa Johns 2008 Annual Report Download - page 80

Download and view the complete annual report

Please find page 80 of the 2008 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

73
2. Significant Accounting Policies (continued)
Stock-Based Compensation
In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which is a revision of
SFAS No. 123 "Accounting and Disclosure of Stock-Based Compensation". As required, we adopted the
provisions of SFAS No. 123(R) effective at the beginning of our fiscal 2006, using the modified-
prospective method. Under the modified-prospective method, compensation cost recognized in 2006,
2007 and 2008 includes (a) compensation cost for all share-based payments granted prior to, but not yet
vested as of December 25, 2005, based on the grant date fair value estimated in accordance with the
original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted
subsequent to December 25, 2005, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). Upon adoption of SFAS No. 123(R), we elected to continue using the
Black-Scholes option-pricing model.
SFAS No. 157, Fair Value Measurements
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 will adopt 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.