Papa Johns 2002 Annual Report Download - page 26

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Accounting Changes
SFAS No. 142
In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards (SFAS) No.142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. With the adoption of SFAS No. 142, companies no longer amortize
goodwill and intangible assets with indefinite useful lives. Instead, goodwill and intangible assets with
indefinite useful lives are 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 29, 2002 and December 30, 2001, our consolidated balance sheets included $48.8
million and $48.3 million of goodwill, net of accumulated amortization of $7.9 million and $8.2 million,
respectively. The adoption of SFAS No. 142 resulted in a reduction of approximately $2.8 million in
amortization expense beginning in 2002. Proforma earnings per common share, assuming dilution, for
2001 under the provisions of SFAS No. 142 were $2.15. The impairment review performed by the
Company at the beginning of fiscal 2002 and as of December 29, 2002, in accordance with the provisions
of SFAS No. 142, had no impact on the consolidated financial statements. See “Note 5” of “Notes to
Consolidated Financial Statements” for additional information.
SFAS No. 144
In 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, effective for the Company in fiscal year 2002. SFAS No. 144 superseded SFAS No. 121,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 No. 144 required 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 broadened the presentation of discontinued operations to include more disposal
transactions. The adoption of SFAS No. 144 did not have a significant impact on our results of operations
or our consolidated financial statement presentation in 2002. See “Note 6” of “Notes to Consolidated
Financial Statements” for additional information.
SFAS No. 146
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, effective for the Company in fiscal 2003. SFAS No. 146 addresses the recognition,
measurement, and reporting of costs associated with exit or disposal activities, and nullifies Emerging
Issues Task Force Issue No. 94-3 (EITF 94-3), Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The
principal difference between SFAS No. 146 and EITF 94-3 relates to the recognition date of a liability for
costs associated with an exit or disposal activity. Under SFAS No. 146, companies will be required to
recognize a liability for a cost associated with an exit or disposal activity when the liability is incurred
instead of at the date of a company’s commitment to an exit plan as once permitted under EITF 94-3.
Costs addressed by SFAS No. 146 include: one-time termination benefits provided to employees that are
involuntarily terminated, costs to terminate a contract that is not a capital lease, costs to consolidate or
close facilities, and costs to relocate employees. We do not expect the adoption of SFAS No. 146 to have
a significant impact on our results of operations or our consolidated financial statement disclosures.
SFAS No. 148
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation –
Transition and Disclosure an amendment of FASB Statement No. 123, (SFAS No. 123), effective for the
Company in fiscal 2003. The only pertinent changes to the Company, as provided by SFAS No. 148, are
the required disclosures regarding the method used by a company in accounting for stock-based employee