Papa Johns 2005 Annual Report Download - page 61

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59
2. Significant Accounting Policies (continued)
New Accounting Pronouncement
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections – a
Replacement of APB Opinion No. 20 and FASB Statement No.3. This statement requires that an entity
apply the retrospective method in reporting a change in an accounting principle of the reporting entity.
The standard only allows for a change in accounting principle if it is required by a newly issued
accounting pronouncement or the entity can justify the use of an allowable alternative accounting
principle on the basis that it is preferable. This statement also requires that corrections for errors
discovered in prior period financial statements be reported as a prior period adjustment by restating the
prior period financial statements. Additional disclosures are required when a change in accounting
principle or reporting entity occurs, as well as when a correction for an error is reported. We do not
expect the adoption of SFAS No. 154 in fiscal 2006 to have a material impact on our financial
statements.
Prior Year Data
Certain prior year data has been reclassified to conform to the 2005 presentation.
3. Two-for-One Common Stock Split and Authorized Shares
The Company has authorized 5.0 million preferred shares and 50.0 million common shares (such
authorization was not impacted by the two-for-one common stock split described below). The Company’s
outstanding common shares, net of repurchased treasury stock, were 33.1 million at December 25, 2005
and 33.5 million at December 26, 2004. There were no preferred shares issued or outstanding at
December 25, 2005 and December 26, 2004.
In December 2005, our Board of Directors approved a two-for-one stock split of our outstanding shares
of common stock. The stock split was effected in the form of a stock dividend and entitled each
shareholder of record at the close of business on December 23, 2005 to receive one additional share for
every outstanding share of common stock held on the record date. The stock dividend was distributed on
January 13, 2006 with approximately 16.5 million shares of common stock distributed. All per share and
share amounts in the accompanying consolidated financial statements and notes to the financial
statements have been adjusted to reflect the stock split.
In conjunction with the stock split, we retired all shares held in treasury as of December 23, 2005.