Papa Johns 2010 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2010 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 110

  • 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

32
The guidance 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 were measured at fair value on a recurring basis as of December
26, 2010 and December 27, 2009 are as follows:
Carrying
(In thousands) Value Level 1 Level 2 Level 3
December 26, 2010
Financial assets:
Investments 1,604$ 1,604$ -$ -$
Non-qualified deferred compensation plan 12,455 12,455 - -
Financial liabilities:
Interest rate swaps 313 - 313 -
December 27, 2009
Financial assets:
Investments 1,382$ 1,382$ -$ -$
Non-qualified deferred compensation plan 11,754 11,754 - -
Financial liabilities:
Interest rate swaps 4,044 - 4,044 -
Fair Value Measurements
Consolidation
Variable Interest Entities
The Financial Accounting Standards Board (“FASB”) amended the consolidation principles associated
with variable interest entities (“VIEs”) accounting by replacing the quantitative-based risks and rewards
calculation for determining which enterprise, if any, has a controlling financial interest in the VIE with a
qualitative approach. The qualitative approach is focused on identifying which company has both the
power to direct the activities of a VIE that most significantly impact the entity’s economic performance
and the obligation to absorb losses of the entity or the right to receive benefits from the entity.
Based on the amended consolidation principles, beginning in fiscal 2010, we were no longer required to
consolidate certain franchise entities to which we have extended loans. Accordingly, we did not
consolidate the financial results of certain franchise entities in the accompanying financial statements for
the year ended December 26, 2010 and have retrospectively applied the provisions to prior period
financial statements. The retrospective application resulted in the exclusion of $3.4 million of assets in
our accompanying consolidated balance sheet at December 27, 2009 (there was no impact on our
consolidated statements of stockholders’ equity from this new accounting pronouncement). Additionally,
our consolidated income statement has been adjusted to exclude $37.7 million and $8.3 million of
revenues for the years ended December 27, 2009 and December 28, 2008, associated with these entities.