XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | 9 Months Ended
--- | ---
Sep. 30, 2018
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" |
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | 3. Adoption of ASU 2014-09, “Revenue from Contracts with Customers” The Company adopted Topic 606 using the modified retrospective transition method effective January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented in accordance with Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605, Revenue Recognition. The cumulative effect adjustment of $21.5 million was recorded as a reduction to retained earnings as of January 1, 2018 to reflect the impact of adopting Topic 606. The impact of applying Topic 606 for the three and nine months ended September 30, 2018 was an increase in revenues of $1.5 million and $5.7 million respectively and a decrease in pre-tax income of $1.2 million and $3.1 million, respectively. The adoption of Topic 606 did not impact the recognition and reporting of our three largest sources of revenue: sales from Company-owned restaurants, commissary sales, or continuing royalties or other revenues from franchisees that are based on a percentage of the franchise sales. The items impacted by the adoption include the presentation and amount of our loyalty program costs, the timing of franchise and development fees revenue recognition, and the presentation of various domestic and international advertising funds as further described below. Cumulative adjustment from adoption As previously noted, an after-tax reduction of $21.5 million was recorded to retained earnings in the first quarter of 2018 to reflect the cumulative impact of adopting Topic 606. This consists of $10.8 million related to franchise fees, $8.0 million related to the customer loyalty program and $2.7 million related to marketing funds. The following chart presents the specific line items impacted by the cumulative adjustment.
|  |  |  |  |  |  |  | Adjusted
|  | As Reported |  |  |  |  |  | Balance Sheet
|  | December 31, |  |  | Total |  |  | at January 1,
(In thousands, except per share amounts) |  | 2017 |  |  | Adjustments |  |  | 2018
Assets |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22,345 |  | $ | 4,279 |  | $ | 26,624
Accounts receivable, net |  |  | 64,644 |  |  | 493 |  |  | 65,137
Notes receivable, net |  |  | 4,333 |  |  | — |  |  | 4,333
Income tax receivable |  |  | 3,903 |  |  | — |  |  | 3,903
Inventories |  |  | 30,620 |  |  | — |  |  | 30,620
Prepaid expenses |  |  | 28,522 |  |  | (4,959) |  |  | 23,563
Other current assets |  |  | 9,494 |  |  | — |  |  | 9,494
Assets held for sale |  |  | 6,133 |  |  | — |  |  | 6,133
Total current assets |  |  | 169,994 |  |  | (187) |  |  | 169,807
Property and equipment, net |  |  | 234,331 |  |  | — |  |  | 234,331
Notes receivable, less current portion, net |  |  | 15,568 |  |  | — |  |  | 15,568
Goodwill |  |  | 86,892 |  |  | — |  |  | 86,892
Deferred income taxes, net |  |  | 585 |  |  | — |  |  | 585
Other assets |  |  | 48,183 |  |  | (907) |  |  | 47,276
Total assets |  | $ | 555,553 |  | $ | (1,094) |  | $ | 554,459
Liabilities and stockholders’ equity (deficit) |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 32,006 |  | $ | (2,161) |  | $ | 29,845
Income and other taxes payable |  |  | 10,561 |  |  | — |  |  | 10,561
Accrued expenses and other current liabilities |  |  | 70,293 |  |  | 15,860 |  |  | 86,153
Deferred revenue current |  |  | — |  |  | 2,400 |  |  | 2,400
Current portion of long-term debt |  |  | 20,000 |  |  | — |  |  | 20,000
Total current liabilities |  |  | 132,860 |  |  | 16,099 |  |  | 148,959
Deferred revenue |  |  | 2,652 |  |  | 10,798 |  |  | 13,450
Long-term debt, less current portion, net |  |  | 446,565 |  |  | — |  |  | 446,565
Deferred income taxes, net |  |  | 12,546 |  |  | (6,464) |  |  | 6,082
Other long-term liabilities |  |  | 60,146 |  |  | — |  |  | 60,146
Total liabilities |  |  | 654,769 |  |  | 20,433 |  |  | 675,202
Redeemable noncontrolling interests |  |  | 6,738 |  |  | — |  |  | 6,738
Stockholders’ equity (deficit): |  |  |  |  |  |  |  |  |
Preferred stock ($0.01 par value per share; no shares issued) |  |  | — |  |  | — |  |  | —
Common stock ($0.01 par value per share; issued 44,221 at December 31, 2017 |  |  | 442 |  |  | — |  |  | 442
Additional paid-in capital |  |  | 184,785 |  |  | — |  |  | 184,785
Accumulated other comprehensive loss |  |  | (2,117) |  |  | — |  |  | (2,117)
Retained earnings |  |  | 292,251 |  |  | (21,527) |  |  | 270,724
Treasury stock (10,290 shares at December 31, 2017, at cost) |  |  | (597,072) |  |  | — |  |  | (597,072)
Total stockholders’ (deficit), net of noncontrolling interests |  |  | (121,711) |  |  | (21,527) |  |  | (143,238)
Noncontrolling interests in subsidiaries |  |  | 15,757 |  |  | — |  |  | 15,757
Total stockholders’ (deficit) |  |  | (105,954) |  |  | (21,527) |  |  | (127,481)
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) |  | $ | 555,553 |  | $ | (1,094) |  | $ | 554,459
The impact of adoption for the third quarter of 2018 is as follows:
|  | As Reported |  |  |  |  |  | Balance Sheet
|  | September 30, |  |  | Total |  |  | Without Adoption
(In thousands, except per share amounts) |  | 2018 |  |  | Adjustments |  |  | of Topic 606
Assets |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 24,880 |  | $ | (4,420) |  | $ | 20,460
Accounts receivable, net |  |  | 53,157 |  |  | (396) |  |  | 52,761
Notes receivable, net |  |  | 6,466 |  |  | — |  |  | 6,466
Income tax receivable |  |  | 11,051 |  |  | — |  |  | 11,051
Inventories |  |  | 29,311 |  |  | — |  |  | 29,311
Prepaid expenses |  |  | 20,106 |  |  | 5,435 |  |  | 25,541
Other current assets |  |  | 7,400 |  |  | — |  |  | 7,400
Assets held for sale |  |  | — |  |  | — |  |  | —
Total current assets |  |  | 152,371 |  |  | 619 |  |  | 152,990
Property and equipment, net |  |  | 224,510 |  |  | — |  |  | 224,510
Notes receivable, less current portion, net |  |  | 16,097 |  |  | — |  |  | 16,097
Goodwill |  |  | 84,830 |  |  | — |  |  | 84,830
Deferred income taxes, net |  |  | 700 |  |  | — |  |  | 700
Other assets |  |  | 72,654 |  |  | 907 |  |  | 73,561
Total assets |  | $ | 551,162 |  | $ | 1,526 |  | $ | 552,688
Liabilities and stockholders’ equity (deficit) |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 32,355 |  | $ | 799 |  | $ | 33,154
Income and other taxes payable |  |  | 8,964 |  |  | — |  |  | 8,964
Accrued expenses and other current liabilities |  |  | 100,081 |  |  | (16,743) |  |  | 83,338
Deferred revenue current |  |  | 2,389 |  |  | (2,389) |  |  | —
Current portion of long-term debt |  |  | 20,000 |  |  | — |  |  | 20,000
Total current liabilities |  |  | 163,789 |  |  | (18,333) |  |  | 145,456
Deferred revenue |  |  | 14,946 |  |  | (11,159) |  |  | 3,787
Long-term debt, less current portion, net |  |  | 555,755 |  |  | — |  |  | 555,755
Deferred income taxes, net |  |  | 7,812 |  |  | 6,958 |  |  | 14,770
Other long-term liabilities |  |  | 77,604 |  |  | — |  |  | 77,604
Total liabilities |  |  | 819,906 |  |  | (22,534) |  |  | 797,372
Redeemable noncontrolling interests |  |  | 5,979 |  |  | — |  |  | 5,979
Stockholders’ (deficit): |  |  |  |  |  |  |  |  |
Preferred stock ($0.01 par value per share; no shares issued) |  |  | — |  |  | — |  |  | —
Common stock ($0.01 par value per share; issued 44,299 at September 30, 2018) |  |  | 443 |  |  | — |  |  | 443
Additional paid-in capital |  |  | 190,135 |  |  | — |  |  | 190,135
Accumulated other comprehensive income (loss) |  |  | 3,605 |  |  | — |  |  | 3,605
Retained earnings |  |  | 267,580 |  |  | 24,018 |  |  | 291,598
Treasury stock (12,933 shares at September 30, 2018, at cost) |  |  | (751,895) |  |  | — |  |  | (751,895)
Total stockholders’ (deficit), net of noncontrolling interests |  |  | (290,132) |  |  | 24,018 |  |  | (266,114)
Noncontrolling interests in subsidiaries |  |  | 15,409 |  |  | 42 |  |  | 15,451
Total stockholders’ (deficit) |  |  | (274,723) |  |  | 24,060 |  |  | (250,663)
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) |  | $ | 551,162 |  | $ | 1,526 |  | $ | 552,688
|  | As Reported |  |  |  |  |
|  | Three Months Ended |  |  |  |  | Statement of Operations
|  | September 30, |  | Total |  | Without Adoption of
(In thousands, except per share amounts) |  | 2018 |  | Adjustments |  | Topic 606
Revenues: |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant sales |  | $ | 158,285 |  | $ | 1,185 |  | $ | 159,470
North America franchise royalties and fees |  |  | 12,806 |  |  | 91 |  |  | 12,897
North America commissary |  |  | 146,240 |  |  | — |  |  | 146,240
International |  |  | 25,653 |  |  | (112) |  |  | 25,541
Other revenues |  |  | 21,023 |  |  | (2,650) |  |  | 18,373
Total revenues |  |  | 364,007 |  |  | (1,486) |  |  | 362,521
Costs and expenses: |  |  |  |  |  |  |  |  |
Operating costs (excluding depreciation and amortization shown separately below): |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant expenses |  |  | 135,836 |  |  | (126) |  |  | 135,710
North America commissary |  |  | 137,928 |  |  | — |  |  | 137,928
International expenses |  |  | 15,184 |  |  | — |  |  | 15,184
Other expenses |  |  | 22,002 |  |  | (2,282) |  |  | 19,720
General and administrative expenses |  |  | 55,462 |  |  | (317) |  |  | 55,145
Depreciation and amortization |  |  | 11,585 |  |  | — |  |  | 11,585
Total costs and expenses |  |  | 377,997 |  |  | (2,725) |  |  | 375,272
Refranchising loss, net |  |  | — |  |  | — |  |  | —
Operating (loss) income |  |  | (13,990) |  |  | 1,239 |  |  | (12,751)
Net Interest expense |  |  | (5,963) |  |  | — |  |  | (5,963)
(Loss) Income before income taxes |  |  | (19,953) |  |  | 1,239 |  |  | (18,714)
Income tax (benefit) expense |  |  | (7,359) |  |  | 277 |  |  | (7,082)
Net (loss) income before attribution to noncontrolling interests |  |  | (12,594) |  |  | 962 |  |  | (11,632)
Income attributable to noncontrolling interests |  |  | (439) |  |  | — |  |  | (439)
Net (loss) income attributable to the Company |  | $ | (13,033) |  | $ | 962 |  | $ | (12,071)
Calculation of (loss) income for (loss) earnings per share: |  |  |  |  |  |  |  |  |
Net (loss) income attributable to the Company |  | $ | (13,033) |  | $ | 962 |  | $ | (12,071)
Net income attributable to participating securities |  |  | — |  |  | — |  |  | —
Net (loss) income attributable to common shareholders |  | $ | (13,033) |  | $ | 962 |  | $ | (12,071)
Basic (loss) earnings per common share |  | $ | (0.41) |  | $ | 0.03 |  | $ | (0.38)
Diluted (loss) earnings per common share |  | $ | (0.41) |  | $ | 0.03 |  | $ | (0.38)
Basic weighted average common shares outstanding |  |  | 31,573 |  |  | 31,573 |  |  | 31,573
Diluted weighted average common shares outstanding |  |  | 31,573 |  |  | 31,573 |  |  | 31,573
|  | As Reported |  |  |  |  |
|  | Nine Months Ended |  |  |  |  | Statement of Operations
|  | September 30, |  | Total |  | Without Adoption of
(In thousands, except per share amounts) |  | 2018 |  | Adjustments |  | Topic 606
Revenues: |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant sales |  | $ | 529,906 |  | $ | 2,261 |  | $ | 532,167
North America franchise royalties and fees |  |  | 61,524 |  |  | 211 |  |  | 61,735
North America commissary |  |  | 461,408 |  |  | — |  |  | 461,408
International |  |  | 84,836 |  |  | 212 |  |  | 85,048
Other revenues |  |  | 61,661 |  |  | (8,420) |  |  | 53,241
Total revenues |  |  | 1,199,335 |  |  | (5,736) |  |  | 1,193,599
Costs and expenses: |  |  |  |  |  |  |  |  |
Operating costs (excluding depreciation and amortization shown separately below): |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant expenses |  |  | 440,936 |  |  | (464) |  |  | 440,472
North America commissary |  |  | 432,909 |  |  | — |  |  | 432,909
International expenses |  |  | 52,462 |  |  | — |  |  | 52,462
Other expenses |  |  | 63,658 |  |  | (8,592) |  |  | 55,066
General and administrative expenses |  |  | 133,903 |  |  | 221 |  |  | 134,124
Depreciation and amortization |  |  | 34,855 |  |  | — |  |  | 34,855
Total costs and expenses |  |  | 1,158,723 |  |  | (8,835) |  |  | 1,149,888
Refranchising loss, net |  |  | (1,918) |  |  | — |  |  | (1,918)
Operating (loss) income |  |  | 38,694 |  |  | 3,099 |  |  | 41,793
Net Interest (benefit) expense |  |  | (16,580) |  |  | — |  |  | (16,580)
Income before income taxes |  |  | 22,114 |  |  | 3,099 |  |  | 25,213
Income tax (benefit) expense |  |  | 4,663 |  |  | 695 |  |  | 5,358
Net (loss) income before attribution to noncontrolling interests |  |  | 17,451 |  |  | 2,404 |  |  | 19,855
Income attributable to noncontrolling interests |  |  | (1,956) |  |  | — |  |  | (1,956)
Net (loss) income attributable to the Company |  | $ | 15,495 |  | $ | 2,404 |  | $ | 17,899
Calculation of income for earnings per share: |  |  |  |  |  |  |  |  |
Net income attributable to the Company |  | $ | 15,495 |  | $ | 2,404 |  | $ | 17,899
Net income attributable to participating securities |  |  | (147) |  |  | — |  |  | (147)
Net income attributable to common shareholders |  | $ | 15,348 |  | $ | 2,404 |  | $ | 17,752
Basic (loss) earnings per common share |  | $ | 0.48 |  | $ | 0.07 |  | $ | 0.55
Diluted (loss) earnings per common share |  | $ | 0.47 |  | $ | 0.07 |  | $ | 0.55
Basic weighted average common shares outstanding |  |  | 32,265 |  |  | 32,265 |  |  | 32,265
Diluted weighted average common shares outstanding |  |  | 32,489 |  |  | 32,489 |  |  | 32,489
Transaction Price Allocated to the Remaining Performance Obligations The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period.
|  |  | Performance Obligations by Period
|  | Less than 1 Year |  | 1-2 Years |  | 2-3 Years |  | 3-4 Years |  | 4-5 Years |  | Thereafter |  | Total
Franchise Fees |  | $ | 2,389 |  | $ | 2,181 |  | $ | 1,952 |  | $ | 1,748 |  | $ | 1,465 |  | $ | 3,813 |  | $ | 13,548
An additional $3.8 million of area development fees related to unopened stores and unearned royalties are included in deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings and franchisees’ revenues. As of September 30, 2018, the amount allocated to the Papa Rewards loyalty program is $17.0 million and is reflected in the Condensed Consolidated Balance Sheet as part of the contract liability included in accrued expenses and other current liabilities. This will be recognized as revenue as the points are redeemed, which is expected to occur within the next year. The Company applies the practical expedient in ASU paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

X
- References No definition available. + Details
Name: | us-gaap_NewAccountingPronouncementsAndChangesInAccountingPrinciplesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
Name: | us-gaap_NewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration