Papa Johns 2009 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2009 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 118

  • 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
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

74
2. Significant Accounting Policies (continued)
Additionally, the adoption for non-financial assets and liabilities in fiscal 2009 did not have a significant
impact on our estimated value related to long-lived and intangible assets, such as our annual fair value
evaluation of our United Kingdom subsidiary, PJUK, and domestic Company-owned restaurants.
Derivative Financial Instruments
We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. At inception and on an ongoing basis, we assess whether each
derivative that qualifies for hedge accounting continues to be highly effective in offsetting changes in
the cash flows of the hedged item. If the derivative meets the hedge criteria as defined by certain
accounting standards, depending on the nature of the hedge, changes in the fair value of the derivative
are either offset against the change in fair value of assets, liabilities or firm commitments through
earnings or recognized in accumulated other comprehensive income (loss) until the hedged item is
recognized in earnings. The ineffective portion of a derivative’s change in fair value, if any, is
immediately recognized in earnings.
We recognized a gain of $2.2 million ($1.4 million after tax) in accumulated other comprehensive
income (loss) in 2009 and losses of $4.1 million ($2.7 million after tax) in 2008 and $2.0 million ($1.3
million after tax) in 2007 for the net change in fair value of our derivatives associated with our debt
agreements. The ineffective portion of our hedge was $40,000 in 2009 (none in 2008 and 2007). Fair
value is based on quoted market prices. See Note 7 for additional information on our debt and credit
arrangements.
Earnings per Share
The calculations of basic earnings per common share and earnings per common share – assuming dilution
for the years ended December 27, 2009, December 28, 2008 and December 30, 2007 are as follows (in
thousands, except per share data):
2009 2008 2007
Basic earnings per common share:
Net income, net of noncontrolling interests
57,453
$
36,796
$
32,735
$
Weighted average shares outstanding 27,738 28,124 29,666
Basic earnings per common share 2.07$ 1.31$ 1.10$
Earnings per common share - assuming dilution:
Net income, net of noncontrolling interests
57,453
$
36,796
$
32,735
$
Weighted average shares outstanding 27,738 28,124 29,666
Dilutive effect of outstanding compensation awards 171 140 351
Diluted weighted average shares outstanding 27,909 28,264 30,017
Earnings per common share - assuming dilution 2.06$ 1.30$ 1.09$