Papa Johns 2000 Annual Report Download - page 58

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53
7. Franchisee Loan Program
We have a program under which selected franchisees may borrow funds principally for use in the
construction and development of their restaurants. Loans outstanding to franchisees were approximately
$16.7 million, net of allowance for doubtful collection (see Note 4, Special Charge), as of December 31,
2000, and $11.7 million as of December 26, 1999. The outstanding franchise loan balance as of December
31, 2000, includes a loan of $3.4 million to the Marketing Fund (see Note 2). As of December 31, 2000,
commitments to lend up to an additional $6.0 million to our franchisees have been made. Such loans bear
interest at fixed or floating rates (ranging from 7.0% to 12.0% at December 31, 2000), and are generally
secured by the fixtures, equipment, signage and, where applicable, land of each restaurant and the
ownership interests in the franchisee. Interest earned on franchisee loans was approximately $1.5 million
in 2000, $762,000 in 1999 and $986,000 in 1998, and is reported in investment income in the accompanying
consolidated statements of income.
Approximately $6.8 million of the loans outstanding, including interest, as of December 31, 2000 and $3.6
million as of December 26, 1999 were to franchisees in which we or certain of our directors or officers
had an ownership interest (see Note 12).
8. Accrued Expenses
Accrued expenses consist of the following (in thousands):
2000 1999
Income taxes 8,189$ 9,205$
Other taxes 7,746 5,498
Accrued salaries and benefits 5,319 4,466
Insurance 3,903 4,451
Special charge 3,721 -
Rent 1,951 1,649
Accrued purchases 1,811 1,784
Deferred proceeds on sale of restaurants 1,588 -
Marketing 1,499 1,136
Accrued interest 981 85
Restaurant relocations 679 157
Utilities 516 597
Facility costs 382 1,418
Advertising litigation 191 4,083
Other 6,790 3,987
Total 45,266$ 38,516$
9. Investments
Investments at December 31, 2000 total $5.7 million based on the fair value of the securities. The
investments are classified as trading securities at December 31, 2000 since we have the intention and
ability to sell the securities in early 2001. Investments were classified as available -for-sale as of
December 26, 1999. The carrying value of the investments at December 26, 1999, $22.1 million, was
comprised of amortized cost of $21.7 million, gross unrealized gains of $964,000 and gross unrealized
losses of $535,000.