Papa Johns 2012 Annual Report Download - page 85

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79
16. Related Party Transactions
Certain of our officers and directors own equity interests in entities that franchise restaurants. Following
is a summary of full-year transactions and year-end balances with franchisees owned by related parties,
PJMF and Papa Card, Inc. (in thousands):
2012 2011 2010
Revenues from affiliates:
Commissary sales 23,145$ 22,132$ 19,137$
Other sales 2,394 2,352 1,961
Franchise royalties 3,771 3,579 3,192
Franchise and development fees - 15 -
Total 29,310$ 28,078$ 24,290$
Accounts receivable - affiliates 1,062$ 682$ 624$
We paid $1.1 million in 2012, $1.0 million in 2011 and $443,000 in 2010 for charter aircraft services
provided by an entity owned by our Founder, Chairman and Chief Executive Officer.
The Company offers customers the opportunity to earn points through the Papa Rewards® program. The
points can be redeemed at Papa John’s restaurants. For certain national promotions, PJMF reimburses
domestic restaurants for the costs associated with the redeemed points (i.e., primarily food costs). During
2012, Company-owned restaurants received $3.0 million from the PJMF under this reimbursement
program.
In connection with a new multi-year supplier agreement, the Company received a $5.0 million supplier
marketing payment in 2012. The Company is recognizing the supplier marketing payment evenly as
income over the five-year term of the agreement ($1.0 million per year). The Company then contributed
the supplier marketing payment to the PJMF, an unconsolidated, non-profit corporation, for the benefit of
domestic restaurants. The Company’s contribution to the PJMF was fully expensed in 2012. PJMF
elected to distribute the $5.0 million supplier marketing payment to the domestic system as advertising
credits in 2012. Our domestic Company-owned restaurants’ portion of the advertising credits resulted in
an increase in income before income taxes of approximately $1.0 million in 2012.
We contributed $6.0 million in 2010 to the PJMF as discretionary advertising contributions (none in 2011
and 2012).
See Note 5 for information related to our purchasing agreement with BIBP.