Papa Johns 2013 Annual Report Download - page 36

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฀
28
Deferred฀Income฀Tax฀Accounts฀and฀Tax฀Reserves฀
฀
Papa฀John’s฀is฀subject฀to฀income฀taxes฀in฀the฀United฀States฀and฀several฀foreign฀jurisdictions.฀Significant฀
judgment฀ is฀ required฀ in฀ determining฀ Papa฀ John’s฀ provision฀ for฀ income฀ taxes฀ and฀ the฀ related฀ assets฀ and฀
liabilities.฀The฀provision฀for฀income฀taxes฀includes฀income฀taxes฀paid,฀currently฀payable฀or฀receivable฀and฀
those฀deferred.฀
฀
Deferred฀tax฀assets฀and฀liabilities฀are฀determined฀based฀on฀differences฀between฀financial฀reporting฀and฀tax฀
basis฀of฀assets฀and฀liabilities,฀and฀are฀measured฀using฀enacted฀tax฀rates฀and฀laws฀that฀are฀expected฀to฀be฀in฀
effect฀ when฀ the฀ differences฀ reverse.฀ Deferred฀ tax฀ assets฀ are฀ also฀ recognized฀ for฀ the฀ estimated฀ future฀
effects฀of฀tax฀loss฀carryforwards.฀The฀effect฀on฀deferred฀taxes฀of฀changes฀in฀tax฀rates฀is฀recognized฀in฀the฀
period฀in฀ which฀the฀new฀ tax฀rate฀is฀enacted.฀Valuation฀allowances฀ are฀established฀when฀necessary฀on฀a฀
jurisdictional฀basis฀to฀reduce฀deferred฀tax฀assets฀to฀the฀amounts฀we฀expect฀to฀realize.฀As฀of฀December฀29,฀
2013,฀we฀had฀a฀net฀deferred฀income฀tax฀liability฀of฀approximately฀$6.7฀million.฀
฀
Tax฀authorities฀periodically฀audit฀the฀Company.฀We฀record฀reserves฀and฀related฀interest฀and฀penalties฀for฀
identified฀exposures฀as฀income฀tax฀expense.฀We฀evaluate฀these฀issues฀and฀adjust฀for฀events,฀such฀as฀statute฀
of฀limitations฀expirations,฀court฀rulings฀or฀audit฀settlements,฀which฀may฀impact฀our฀ultimate฀payment฀for฀
such฀exposures.฀We฀recognized฀a฀decrease฀of฀$909,000฀and฀$711,000฀in฀income฀tax฀expense฀associated฀
with฀the฀finalization฀of฀certain฀income฀tax฀issues฀in฀2013฀and฀2011,฀respectively.฀In฀2012,฀we฀recognized฀
additional฀ income฀ tax฀ expense฀ of฀ approximately฀ $305,000.฀ See฀ “Note฀ 15”฀ of฀ “Notes฀ to฀ Consolidated฀
Financial฀Statements”฀for฀additional฀information.฀
฀
Fiscal฀Year฀
฀
The฀Company฀follows฀a฀fiscal฀year฀ending฀on฀the฀last฀Sunday฀of฀ December,฀generally฀consisting฀of฀52฀
weeks฀ made฀ up฀ of฀ four฀ 13-week฀ quarters.฀ The฀ 13-week฀ quarters฀ consist฀ of฀ two฀ four-week฀ periods฀
followed฀by฀one฀five-week฀period.฀Our฀2013฀and฀2011฀fiscal฀years฀consisted฀of฀52฀weeks฀while฀our฀2012฀
fiscal฀year฀consisted฀of฀53฀weeks,฀including฀a฀six-week฀period฀in฀the฀fourth฀quarter.฀The฀additional฀week฀
in฀ 2012฀ resulted฀ in฀ additional฀ revenues฀ of฀ approximately฀ $21.5฀ million฀ and฀ additional฀ income฀ before฀
income฀taxes฀of฀$4.1฀million,฀or฀$0.05฀per฀diluted฀common฀share.฀฀
฀
Two-for-One฀Stock฀Split฀
฀
The฀ Company฀ completed฀ a฀ two-for-one฀ stock฀ split฀ of฀ the฀ Company’s฀ outstanding฀ shares฀ of฀ stock฀ in฀
December฀2013฀effected฀in฀the฀form฀of฀a฀stock฀dividend.฀Shareholders฀of฀record฀on฀December฀12,฀2013฀
received฀ one฀ additional฀ share฀ for฀ each฀ outstanding฀ share฀ of฀ stock฀ held฀ on฀ the฀ record฀ date.฀ The฀ stock฀
dividend฀ was฀ distributed฀ effective฀ December฀ 27,฀ 2013.฀ All฀ share฀ and฀ per-share฀ amounts฀ have฀ been฀
adjusted฀to฀reflect฀the฀stock฀split.฀
฀
฀ ฀