Update to Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Update to Significant Accounting Policies

Schedule of Impact of Corrections to Fiscal Year 2018

The immaterial impacts of this error correction in fiscal year 2018 are as follows:

Condensed Consolidated Balance Sheet (unaudited)
	December 30, 2018
(In thousands)	As Reported		Change		As Restated
Cash and cash equivalents	$	19,468	$	13,790	$	33,258
Accounts receivable, net		67,854		10,264		78,118
Income tax receivable		16,073		73		16,146
Prepaid expenses		29,935		441		30,376
Other current assets		5,677		1		5,678
Total current assets		171,708		24,569		196,277
Deferred income taxes, net		756		381		1,137
Total assets		570,947		24,950		595,897
Accounts payable		29,891		(2,785)		27,106
Accrued expenses and other current liabilities		105,712		23,455		129,167
Deferred revenue current		2,443		155		2,598
Current portion of long-term debt		20,000		9		20,009
Total current liabilities		164,636		20,834		185,470
Deferred revenue		14,679		5,995		20,674
Total liabilities		867,617		26,829		894,446
Retained earnings		244,061		(1,879)		242,182
Total stockholders' equity (deficit)		(302,134)		(1,879)		(304,013)
Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders' equity (deficit)		570,947		24,950		595,897

Condensed Consolidated Statements of Operations:
	Three Months Ended April 1, 2018
(In thousands, except per share amounts)	As Reported		Change		As Restated
Other revenues	$	20,494	$	22,753	$	43,247
Total revenues		427,369		22,753		450,122
Domestic Company-owned restaurant expenses		157,319		255		157,574
Other expenses		20,958		21,409		42,367
General and administrative expenses		39,729		267		39,996
Total costs and expenses		400,256		21,931		422,187
Operating income		27,317		822		28,139
Net interest expense		(4,955)		(120)		(5,075)
(Loss) income before income taxes		22,362		702		23,064
Income tax expense		4,982		(4)		4,978
Net (loss) income before attribution to noncontrolling interests		17,380		706		18,086
Net (loss) income attributable to the Company		16,737		706		17,443
Net (loss) income attributable to common shareholders		16,662		706		17,368
Basic (loss) earnings per common share		0.50		0.02		0.52
Diluted (loss) earnings per common share		0.50		0.02		0.52

Condensed Consolidated Statement of Cash Flows
	Three Months Ended April 1, 2018
(In thousands, except per share amounts)	As Reported		Change		As Restated
Operating activities
Net income before attribution to noncontrolling interests	$	17,380	$	706	$	18,086
Accounts receivable		86		2,589		2,675
Income tax receivable		3,903		(4)		3,899
Prepaid expenses		(217)		772		555
Other current assets		5,097		(6,361)		(1,264)
Other assets and liabilities		(514)		989		475
Accounts payable		1,209		1,354		2,563
Income and other taxes payable		(466)		-		(466)
Accrued expenses and other current liabilities		(3,103)		(656)		(3,759)
Deferred revenue		220		(3,694)		(3,474)
Net cash provided by operating activities		41,036		(4,305)		36,731
Financing activities
Net proceeds (repayments) of revolving credit facilities		127,000		13,308		140,308
Net cash used in financing activities		(27,122)		13,308		(13,814)
Change in cash and cash equivalents		9,590		9,003		18,593
Cash and cash equivalents at beginning of period		22,345		5,546		27,891
Cash and cash equivalents at end of period		31,935		14,549		46,484

Schedule of Income Before Income Taxes Attributable to Joint Ventures

The income before income taxes attributable to these joint ventures for the three months ended March 31, 2019 and April 1, 2018 was as follows (in thousands):

	Three Months Ended
	March 31,		April 1,
	2019		2018
Papa John’s International, Inc.	$	464	$	1,295
Noncontrolling interests		133		643
Total income before income taxes	$	597	$	1,938

Schedule of Joint Ventures in Which There are Noncontrolling Interests

The following summarizes the redemption feature, location and related accounting within the Condensed Consolidated Balance Sheets for these joint venture arrangements:

Type of Joint Venture Arrangement	Location within the Balance Sheets	Recorded Value
Joint venture with no redemption feature	Permanent equity	Carrying value
Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable	Temporary equity	Carrying value

Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our financial assets that were measured at fair value on a recurring basis as of March 31, 2019 and December 30, 2018 are as follows (in thousands):

	Carrying		Fair Value Measurements
	Value		Level 1		Level 2		Level 3
March 31, 2019
Financial assets:
Cash surrender value of life insurance policies (a)	$	31,080	$	31,080	$	—	$	—
Interest rate swaps (b)		396		—		396		—
December 30, 2018
Financial assets:
Cash surrender value of life insurance policies (a)	$	27,751	$	27,751	$	—	$	—
Interest rate swaps (b)		4,905		—		4,905		—

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

(b) The fair value of our interest rate swaps is based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”).