Papa Johns 2010 Annual Report Download - page 79

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72
2. Significant Accounting Policies (continued)
Papa John’s had two joint venture arrangements as of December 26, 2010, December 27, 2009 and
December 28, 2008, which were as follows:
Noncontrolling
Restaurants as of Restaurant Papa John's Interest
December 26, 2010 * Locations Ownership * Ownership *
Star Papa, LP 75 Texas 51% 49%
Colonel's Limited, LLC 52 Maryland and Virginia 70% 30%
*The number of restaurants was the same for the 2010 and 2009 years presented in the accompanying
consolidated financial statements. There were 77 Star Papa, LP restaurants and 51 Colonel's Limited, LLC
restaurants as of December 28, 2008. The ownership percentages were the same for the 2010, 2009 and 2008
years presented in the accompanying consolidated financial statements.
The pre-tax income attributable to the joint ventures for the last three years is as follows:
(In thousands) 2010 2009 2008
Papa John's International, Inc. 5,658$ 6,171$ 3,717$
Noncontrolling interests 3,485 3,756 2,022
Total pre-tax income 9,143$ 9,927$ 5,739$
Year Ended
The noncontrolling interest holders’ equity in the joint venture arrangements totaled $8.5 million as of
December 26, 2010 and $8.2 million as of December 27, 2009.
Variable Interest Entities. In 2009, 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 are 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 consolidated 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 revenues of $37.7 million
and $8.3 million for the years ended December 27, 2009 and December 28, 2008, respectively, associated
with these entities. The operating results of these previously consolidated entities had no impact on Papa
John’s operating results or earnings per share for the years ended December 27, 2009 and December 28,
2008.