XML 27 R12.htm IDEA: XBRL DOCUMENT
v3.19.1

Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | 12 Months Ended
--- | ---
Dec. 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 year ended December 30, 2018 was an increase in revenues of $4.0 million and a decrease in pre-tax income of $3.4 million. The adoption of Topic 606 did not impact the recognition and reporting of two of our largest sources of revenue: sales from Company-owned restaurants and 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 of new store equipment incentives as an offset against commissary revenues, 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 (less allowance for doubtful accounts of $2,271 in 2017) |  |  | 64,558 |  |  | 493 |  |  | 65,051
Accounts receivable - affiliates (no allowance for doubtful accounts in 2017) |  |  | 86 |  |  | — |  |  | 86
Notes receivable (no allowance for doubtful accounts in 2017) |  |  | 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 (less allowance for doubtful accounts of $1,047 in 2017) |  |  | 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) |  |  | (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 at December 30, 2018 is as follows:
|  | As Reported |  |  |  |  |  | Balance Sheet
|  | December 30, |  |  | Total |  |  | Without Adoption
(In thousands, except per share amounts) |  | 2018 |  |  | Adjustments |  |  | of Topic 606
Assets |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,468 |  | $ | (4,326) |  | $ | 15,142
Accounts receivable (less allowance for doubtful accounts of $2,117 in 2018) |  |  | 67,785 |  |  | (401) |  |  | 67,384
Accounts receivable - affiliates (no allowance for doubtful accounts in 2018) |  |  | 69 |  |  | — |  |  | 69
Notes receivable (no allowance for doubtful accounts in 2018) |  |  | 5,498 |  |  | — |  |  | 5,498
Income tax receivable |  |  | 16,073 |  |  | — |  |  | 16,073
Inventories |  |  | 27,203 |  |  | — |  |  | 27,203
Prepaid expenses |  |  | 29,935 |  |  | 4,771 |  |  | 34,706
Other current assets |  |  | 5,677 |  |  | — |  |  | 5,677
Assets held for sale |  |  | — |  |  | — |  |  | —
Total current assets |  |  | 171,708 |  |  | 44 |  |  | 171,752
Property and equipment, net |  |  | 226,894 |  |  | — |  |  | 226,894
Notes receivable, less current portion (less allowance for doubtful accounts of $3,369 in 2018) |  |  | 23,259 |  |  | — |  |  | 23,259
Goodwill |  |  | 84,516 |  |  | — |  |  | 84,516
Deferred income taxes, net |  |  | 756 |  |  | — |  |  | 756
Other assets |  |  | 63,814 |  |  | 907 |  |  | 64,721
Total assets |  | $ | 570,947 |  | $ | 951 |  | $ | 571,898
Liabilities and stockholders’ equity (deficit) |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 29,891 |  | $ | 1,585 |  | $ | 31,476
Income and other taxes payable |  |  | 6,590 |  |  | — |  |  | 6,590
Accrued expenses and other current liabilities |  |  | 105,712 |  |  | (18,210) |  |  | 87,502
Deferred revenue current |  |  | 2,443 |  |  | (2,443) |  |  | —
Current portion of long-term debt |  |  | 20,000 |  |  | — |  |  | 20,000
Total current liabilities |  |  | 164,636 |  |  | (19,068) |  |  | 145,568
Deferred revenue |  |  | 14,679 |  |  | (11,231) |  |  | 3,448
Long-term debt, less current portion, net |  |  | 601,126 |  |  | — |  |  | 601,126
Deferred income taxes, net |  |  | 7,852 |  |  | 7,255 |  |  | 15,107
Other long-term liabilities |  |  | 79,324 |  |  | — |  |  | 79,324
Total liabilities |  |  | 867,617 |  |  | (23,044) |  |  | 844,573
Redeemable noncontrolling interests |  |  | 5,464 |  |  | — |  |  | 5,464
Stockholders’ (deficit): |  |  |  |  |  |  |  |  |
Preferred stock ($0.01 par value per share; no shares issued) |  |  | — |  |  | — |  |  | —
Common stock ($0.01 par value per share; issued 44,301 at December 30, 2018) |  |  | 443 |  |  | — |  |  | 443
Additional paid-in capital |  |  | 192,984 |  |  | — |  |  | 192,984
Accumulated other comprehensive income (loss) |  |  | (3,143) |  |  | — |  |  | (3,143)
Retained earnings |  |  | 244,061 |  |  | 23,989 |  |  | 268,050
Treasury stock (12,929 shares at December 30, 2018, at cost) |  |  | (751,704) |  |  | — |  |  | (751,704)
Total stockholders’ (deficit) |  |  | (317,359) |  |  | 23,989 |  |  | (293,370)
Noncontrolling interests in subsidiaries |  |  | 15,225 |  |  | 6 |  |  | 15,231
Total stockholders’ (deficit) |  |  | (302,134) |  |  | 23,995 |  |  | (278,139)
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) |  | $ | 570,947 |  | $ | 951 |  | $ | 571,898
The impact for the year ended December 30, 2018 is as follows:
|  | As Reported |  |  |  |  |
|  | Year Ended |  |  |  |  | Statement of Operations
|  | December 30, |  | Total |  | Without Adoption of
(In thousands, except per share amounts) |  | 2018 |  | Adjustments |  | Topic 606
Revenues: |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant sales |  | $ | 692,380 |  | $ | 3,295 |  | $ | 695,675
North America franchise royalties and fees |  |  | 79,293 |  |  | 375 |  |  | 79,668
North America commissary |  |  | 609,866 |  |  | 3,353 |  |  | 613,219
International |  |  | 110,349 |  |  | 205 |  |  | 110,554
Other revenues |  |  | 81,428 |  |  | (11,238) |  |  | 70,190
Total revenues |  |  | 1,573,316 |  |  | (4,010) |  |  | 1,569,306
Costs and expenses: |  |  |  |  |  |  |  |  |
Operating costs (excluding depreciation and amortization shown separately below): |  |  |  |  |  |  |  |  |
Domestic Company-owned restaurant expenses |  |  | 576,799 |  |  | 47 |  |  | 576,846
North America commissary |  |  | 575,103 |  |  | — |  |  | 575,103
International expenses |  |  | 67,775 |  |  | — |  |  | 67,775
Other expenses |  |  | 84,016 |  |  | (10,847) |  |  | 73,169
General and administrative expenses |  |  | 192,551 |  |  | 3,428 |  |  | 195,979
Depreciation and amortization |  |  | 46,403 |  |  | — |  |  | 46,403
Total costs and expenses |  |  | 1,542,647 |  |  | (7,372) |  |  | 1,535,275
Refranchising and impairment gains/(losses), net |  |  | (289) |  |  | — |  |  | (289)
Operating income |  |  | 30,380 |  |  | 3,362 |  |  | 33,742
Investment income |  |  | 817 |  |  | — |  |  | 817
Interest expense |  |  | (25,306) |  |  | — |  |  | (25,306)
Income before income taxes |  |  | 5,891 |  |  | 3,362 |  |  | 9,253
Income tax expense |  |  | 2,646 |  |  | 781 |  |  | 3,427
Net income before attribution to noncontrolling interests |  |  | 3,245 |  |  | 2,581 |  |  | 5,826
Income attributable to noncontrolling interests |  |  | (1,599) |  |  | — |  |  | (1,599)
Net income attributable to the Company |  | $ | 1,646 |  | $ | 2,581 |  | $ | 4,227
Calculation of income for earnings per share: |  |  |  |  |  |  |  |  |
Net income attributable to the Company |  | $ | 1,646 |  | $ | 2,581 |  | $ | 4,227
Net income attributable to common shareholders |  | $ | 1,646 |  | $ | 2,581 |  | $ | 4,227
Basic earnings per common share |  | $ | 0.05 |  | $ | 0.08 |  | $ | 0.13
Diluted earnings per common share |  | $ | 0.05 |  | $ | 0.08 |  | $ | 0.13
Basic weighted average common shares outstanding |  |  | 32,083 |  |  | 32,083 |  |  | 32,083
Diluted weighted average common shares outstanding |  |  | 32,299 |  |  | 32,299 |  |  | 32,299
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 |  | $ | 2,443 |  | $ | 2,186 |  | $ | 1,960 |  | $ | 1,768 |  | $ | 1,488 |  | $ | 3,829 |  | $ | 13,674
An additional $3.5 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 December 30, 2018, the amount allocated to the Papa Rewards loyalty program is $18.0 million and is reflected in the 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 ASC 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