Papa Johns 2005 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2005 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 91

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

62
5. Accounting for Variable Interest Entities (continued)
In addition, Papa John’s has extended loans to certain franchisees. Under FIN 46, Papa John’s is deemed
the primary beneficiary of three franchise entities as of December 25, 2005 and four franchise entities as
of December 26, 2004, even though we have no ownership interest in them. Effective at the beginning of
the second quarter of 2005, one of the franchisees, with 19 restaurants and annual revenues
approximating $12.0 million, sold its restaurants to a third party. The loan from Papa John’s was partially
repaid and the remainder was written off in connection with the sale. The portion of the loan written off
in connection with the second quarter sale was fully reserved as of the end of the first quarter.
Accordingly, the financial statements include the operating results of this entity for only the first quarter
of 2005. The sale of these restaurants and related loan write-off did not have any significant impact on
Papa John’s consolidated operating results.
The three remaining franchise entities consolidated at December 25, 2005 operate a total of 14
restaurants with annual revenues approximating $9.0 million. Our net loan balance receivable from these
three entities was $1.4 million at December 25, 2005, with no further funding commitments. The
consolidation of the franchise entities has had no significant impact on Papa John’s operating results and
is not expected to have a significant impact in future periods.
The following table summarizes the balance sheets for our consolidated VIEs as of December 25, 2005
and December 26, 2004:
(In thousands)
BIBP
Franchisees
Total
BIBP
Franchisees
Total
Assets:
Cash and cash equivalents -$ 174$ 174$ 1,666$ 115$ 1,781$
Accounts receivable - 30 30 - 59 59
Accounts receivable - Papa John's 5,484 - 5,484 6,484 - 6,484
Other assets 1,315 435 1,750 193 594 787
Net property and equipment - 1,195 1,195 - 3,794 3,794
Goodwill - 460 460 - 2,752 2,752
Deferred income taxes 7,153 - 7,153 8,817 - 8,817
Total assets
13,952
$
2,294
$
16,246
$
17,160
$
7,314
$
24,474
$
Liabilities and stockholders' equity (deficit):
Accounts payable and accrued
expenses 6,693$ 440$ 7,133$ 7,777$ 1,260$ 9,037$
Short-term debt - third party 6,100 - 6,100 14,075 1,634 15,709
Short-term debt - Papa John's 13,053 1,532 14,585 10,000 3,575 13,575
Total liabilities 25,846 1,972 27,818 31,852 6,469 38,321
Stockholders' equity (deficit) (11,894) 322 (11,572) (14,692) 845 (13,847)
Total liabilities and stockholders'
equity (deficit)
13,952
$
2,294
$
16,246
$
17,160
$
7,314
$
24,474
$
December 25, 2005 December 26, 2004