Papa Johns 2009 Annual Report Download - page 95

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88
13. Income Taxes (continued)
A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows (in
thousands):
Balance at December 30, 2007 5,849$
Reductions for tax positions of prior years (464)
Reductions for lapse of statute of limitations (911)
Settlements (271)
Balance at December 28, 2008 4,203$
Additions for tax positions of prior years 150
Reductions for lapse of statute of limitations (758)
Balance at December 27, 2009 3,595$
The Company recognizes interest accrued and penalties related to unrecognized tax benefits as a part of
income tax expense. The Company’s 2009 and 2008 income tax expense includes interest benefits of
$19,000 and $380,000, respectively. The Company has accrued approximately $1.5 million for the
payment of interest and penalties at both December 27, 2009 and December 28, 2008.
14. Related Party Transactions
Certain of our officers and directors own equity interests in entities that generate and/or have rights to
develop franchised restaurants. Following is a summary of full-year transactions and year-end balances
with franchisees owned by related parties, the Marketing Fund and Papa Card, Inc. (in thousands):
2009
2008
2007
Revenues from affiliates:
Commissary sales 17,625$ 18,280$ 17,656$
Other sales 2,284 4,240 4,103
Franchise royalties 2,514 2,500 2,426
Franchise and development fees 50 50 65
Total 22,473$ 25,070$ 24,250$
Other income from affiliates 57$ -$ 61$
Accounts receivable - affiliates 648$ 854$ 864$
We paid $755,000 in 2009, $355,000 in 2008 and $251,000 in 2007 for charter aircraft services provided
by an entity owned by our Founder, Chairman and Chief Executive Officer. We believe the rates charged
to the Company were at the market rates that could have been obtained from independent third parties for
similar aircraft.
During 2009 and 2008 (none in 2007), we sold certain print and promotional materials to a company
partially owned by our Founder, Chairman and Chief Executive Officer. In addition, during 2009 (none
in 2008 and 2007), the Company sold certain print and promotional materials to a company of which one
of our Board of Directors is the President and Chief Executive Officer. The above transactions, which did
not have a significant impact on the Company’s sales or operating earnings, were at fair market value
rates.