Popeye's 2013 Annual Report Download - page 44

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28
Contractual Obligations
The following table summarizes our contractual obligations, due over the next five years and thereafter, as of
December 29, 2013 :
(in millions) 2014 2015 2016 2017 2018 There-
after Total
Long-term debt, excluding capital leases(1) . . . . . $0.3 $0.3 $0.3 $0.3 $63.4 $0.4 $65.0
Interest on long-term debt, excluding capital
leases(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.1 1.1 1.1 1.0 —5.4
Leases(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 7.1 6.7 6.5 5.9 91.4 124.9
Copeland formula agreement(3). . . . . . . . . . . . . . . 3.1 3.1 3.1 3.1 3.1 30.8 46.3
Information technology outsourcing(3) . . . . . . . . . 1.6 1.7 0.4 — — — 3.7
Business process services(3) . . . . . . . . . . . . . . . . . 1.8 0.6 — — — — 2.4
Total(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.2 $13.9 $11.6 $11.0 $73.4 $122.6 $247.7
(1) For variable rate debt, the Company estimated average outstanding balances for the respective periods and applied
interest rates in effect at December 29, 2013. See Note 9 to our Consolidated Financial Statements included in
this Form 10-K for information concerning the terms of our 2013 Credit Facility.
(2) Of the $125.0 million of minimum lease payments, $118.8 million of those payments relate to operating leases
and the remaining $6.1 million of payments relate to capital leases. See Note 10 to our Consolidated Financial
Statements included in this Form 10-K.
(3) See Note 15 to our Consolidated Financial Statements included in this Form 10-K.
(4) We have not included in the contractual obligations table approximately $1.4 million for uncertain tax positions
we have taken on atax return. These liabilities may increase or decrease over time as a result of tax examinations,
and given the status of the examinations, we cannot reliably estimate the amount or period of cash settlement, if
any, with the respective taxing authorities. These liabilities also include amounts that are temporary in nature
and for which we anticipate that over time there will be no net cash outflow.
Off-Balance Sheet Arrangements
The Company has no significant Off-Balance Sheet Arrangements.
Impact of Inflation
The impact of inflation on the cost of food, labor,fuel and energy costs, and other commodities has impacted our
operating expenses. To the extent permitted by the competitive environment in which we operate, increased costs are
partially recovered through menu price increases coupled with purchasing prices and productivity improvements.
Critical Accounting Policies and Estimates
Our significant accounting policies are presented in Note 2 to our Consolidated Financial Statements included in
this Form 10-K. Of our significant accounting policies, we believe the following involve ahigher degree of risk,
judgment and/or complexity.These policies involve estimations of the effect of matters that are inherently uncertain
and may significantly impact our quarterly or annual results of operations or financial condition. Changes in the estimates
and judgments could significantly affect our results of operations, financial condition and cash flows in future years.
Impairment of Long-Lived Assets. We evaluate property and equipment for impairment during the fourth quarter
of each year or when circumstances arise indicating that a particular asset may be impaired. For property and equipment
at company-operated restaurants, we perform our annual impairment evaluation on an individual restaurant basis. We
evaluate restaurants using a “two-year history of operating losses” as our primary indicator of potential impairment.
We evaluate recoverability based on the restaurant’s forecasted undiscounted cash flows for the expected remaining
useful life of the unit, which incorporate our best estimate of sales growth and margin improvement based upon our
plans for the restaurant and actual results at comparable restaurants. The carrying values of restaurant assets that are