Papa Johns 2001 Annual Report Download - page 56

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52
11. Related Party Transactions
Certain of our officers and directors own equity interests in entities that operate and/or have rights to
develop franchised restaurants. Certain of these affiliated entities have agreements to acquire area
development rights at reduced development fees and also pay reduced initial franchise fees when
restaurants are opened. Following is a summary of transactions and balances with affiliated entities (in
thousands):
2001 2000 1999
Revenues from affiliates:
Commissary sales 90,970$ 91,237$ 80,336$
Equipment and other sales 11,137 12,085 10,423
Franchise royalties 12,254 12,493 10,530
Franchise and development fees 255 955 1,574
Total 114,616$ 116,770$ 102,863$
Other income from affiliates 660$ 920$ 314$
Ac counts rece ivable -affilia te s 4,347$ 2,805$ 3,302$
Notes receivable-affiliates 661$ 6,813$ 3,590$
We paid $443,000 in 2001, $695,000 in 2000 and $1.3 million in 1999 for charter aircraft services
provided by entities owned by certain directors and officers, including the Chief Executive Officer (CEO)
of Papa John’s.
We advanced $379,000 in 2001, of which $194,000 relates to 2002, and $183,000 in both 2000 and 1999,
in premiums for split-dollar life insurance coverage on the CEO for the purpose of funding estate tax
obligations. Papa John’s and the officer share the cost of the premiums. The premiums advanced by us as
of December 30, 2001 total $1.9 million and will be repaid out of the cash value or proceeds of the
policies.
The Marketing Fund made payments to an advertising agency, who in turn, made payments to an
advertising agency who made payments to the CEO, for the use of his image and services in the
production and use of certain electronic and print advertisements. The CEO earned $60,000 in 2001,
$169,000 in 2000 and $189,000 in 1999 for these services.
The Company and two directors are parties to consulting agreements under which $219,000 in 2001,
$203,000 in 2000 and $120,000 in 1999 were paid to the directors.
During the fourth quarter of 1999, we acquired five restaurants for $1.6 million, which were immediately
sold to Capital Pizza, Inc. (Capital), for the same amount. In addition, we acquired one restaurant from
Capital for total consideration of $190,000, in which we forgave a note payable to us. Capital is owned in
part by certain of our officers.