Papa Johns 2006 Annual Report Download - page 77

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74
9. Debt and Credit Arrangements (continued)
The net fair value of the Swap was a liability balance of $11,000 ($7,000, net of tax) at December 31,
2006 and $583,000 ($367,000, net of tax) at December 25, 2005. The liabilities are included in other
long-term liabilities in the accompanying consolidated balance sheets (offset by corresponding amounts
in stockholders’ equity, representing the net unrealized losses included in accumulated other
comprehensive income (loss)).
The weighted average interest rate for our Revolving lines of credit, including the impact of the
previously mentioned swap agreements, was 5.7%, 6.4% and 6.2% in fiscal 2006, 2005 and 2004,
respectively. Interest paid during fiscal 2006, 2005 and 2004, including payments made under the above-
noted Swaps, was $3.3 million, $4.4 million and $5.8 million, respectively.
10. Net Property and Equipment
Net property and equipment consists of the following (in thousands):
2006 2005
Land 31,601$ 31,505$
Buildings and improvements 79,696 79,364
Leasehold improvements 76,606 70,315
Equipment and other 193,117 162,853
Construction in progress 5,377 1,469
386,397 345,506
Less accumulated depreciation and amortization (188,675) (167,059)
Net property and equipment 197,722$ 178,447$
11. Notes Receivable
Selected franchisees have borrowed funds from our subsidiary, Capital Delivery, Ltd., principally for use
in the construction and development of their restaurants. We have also entered into loan agreements with
certain franchisees that purchased restaurants from us or from other franchisees. In addition, as part of
the sale of Perfect Pizza (see Note 4), we have a loan outstanding from the purchaser of those operations.
Loans outstanding were approximately $12.1 million ($7.3 million to franchisees and $4.8 million to the
purchaser of Perfect Pizza) on a consolidated basis as of December 31, 2006, net of allowance for
doubtful accounts ($517,000 was eliminated upon consolidating franchisee VIEs) and $7.7 million as of
December 25, 2005, net of allowance for doubtful accounts ($13.1 million was eliminated upon
consolidating BIBP and $1.5 million upon consolidating franchisee VIEs). The outstanding franchisee
loan balance to affiliates as of December 25, 2005 was composed of a loan of $2.7 million to the
Marketing Fund (see Notes 2 and 16). There were no outstanding loans to the Marketing Fund at the end
of 2006.
Notes receivable bear interest at fixed or floating rates (with an average stated rate of 7.7% at December
31, 2006), and are generally secured by the fixtures, equipment, signage and, where applicable, land of
each restaurant and the ownership interests in the franchisee. The carrying amounts of the loans
approximate market value. Interest income recorded on franchisee and affiliate loans was approximately
$689,000 in 2006, $399,000 in 2005 and $456,000 in 2004 and is reported in investment income in the
accompanying consolidated statements of income.