Papa Johns 2003 Annual Report Download - page 50

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2. Significant Accounting Policies (continued)
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 SFAS No. 144 superseded SFAS No. 121,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 APB 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 in 2002 did not have a significant impact on our results of operations or our
consolidated financial statement presentation. See Note 6 for additional information.
SFAS No. 146
In June 2002, the FASB issued SFAS No. 146, which is 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 are 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 was
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. The adoption of SFAS No.
146 in 2003 did not 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 compensation and the effect of the method on reported results in both interim and annual
financial statements. The Company adopted the required disclosures in fiscal 2002.
SFAS No. 150
We adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, (SFAS No. 150) during the third quarter of 2003. SFAS No. 150 requires parent
companies to record minority interest liabilities at estimated settlement value if the majority-owned
subsidiary has equity instruments that are redeemable at a fixed date and such redemption is certain to
occur. We have a majority interest in one subsidiary, which owns and operates 24 Papa John’s
restaurants, that meets these provisions. During the third quarter of 2003, we recorded an after-tax
cumulative effect adjustment of $413,000 ($660,000 pre-tax) or $0.02 per share, in our consolidated
statements of income, related to the adoption of SFAS No. 150. SFAS No. 150 is not expected to have a
significant impact on future earnings reported by the Company. See Note 12 for the amount of the
recorded minority interest liability.