Papa Johns 2001 Annual Report Download - page 48

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44
Options to purchase common stock with an exercise price greater than the average market price were not
included in the computation of the dilutive effect of common stock options because the effect would have
been antidilutive. The number of antidilutive options was 3.0 million in 2001, 3.7 million in 2000 and
986,000 in 1999.
Accounting Changes
In June 2001, the FASB issued Statement of Financial Accounting Standards No. 141 (SFAS 141),
Business Combinations. SFAS 141 requires all business combinations initiated after June 30, 2001, to be
accounted for using the purchase method of accounting. SFAS 141 also specifies criteria for the
recognition of identifiable intangible assets separately from goodwill. We will apply the provisions of
SFAS 141 to all future business combinations. No significant impact occurred with the adoption of SFAS
141 on July 1, 2001.
In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142 (SFAS 142),
Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. With
the adoption of SFAS 142, companies will no longer amortize goodwill and intangible assets with
indefinite useful lives. Instead, goodwill and intangible assets with indefinite useful lives will be subject
to an annual review for impairment. Other intangible assets will continue to be amortized over their useful
lives and reviewed for impairment.
As of December 30, 2001, our balance sheet included $48.3 million of goodwill, net of accumulated
amortization of $8.2 million. The adoption of SFAS 142 will result in a reduction of approximately $2.8
million in amortization expense beginning in 2002. Proforma earnings per common share, assuming
dilution, for 2001 will be reported as $2.15 effective with the adoption of SFAS 142. Management does
not expect the results of the impairment review, which is to be performed in accordance with the
provision of SFAS 141, to have a material impact on the Company’s consolidated financial statements.
In 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting
for the Impairment or Disposal of Long-Lived Assets, effective for the Company in fiscal year 2002.
SFAS 144 supersedes Statement of Financial Accounting Standards No. 121 (SFAS 121), Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the accounting
and reporting provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of
Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions. SFAS 144 requires one accounting model to be
used for long-lived assets to be disposed of by sale, whether previously held or used or newly acquired,
and it broadens the presentation of discontinued operations to include more disposal transactions. We do
not expect the adoption of SFAS 144 to have a significant impact on our results of operations or our
financial statement presentation.
Prior Year Data
Certain prior year data has been reclassified to conform to the 2001 presentation.