Papa Johns 2014 Annual Report Download - page 82

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69
6. Noncontrolling Interests (continued)
The noncontrolling interest holders of two joint ventures have the option to require the Company to
purchase their interests. Since redemption of the noncontrolling interests is outside of the Company’s
control, the noncontrolling interests are presented in the caption “Redeemable noncontrolling interests” in
the consolidated balance sheets and include the following joint ventures:
The Star Papa, LP agreement contains a redemption feature that is not currently redeemable, but
it is probable to become redeemable in the future. Due to specific valuation provisions contained
in the agreement, this noncontrolling interest has been recorded at its carrying value.
The PJ Denver, LLC agreement contains a redemption feature that is currently redeemable and,
therefore, this noncontrolling interest has been recorded at its current redemption value. The
change in redemption value is recorded as an adjustment to “Redeemable noncontrolling
interests” and “Retained earnings” in the consolidated balance sheets.
We have a third joint venture, PJ Minnesota, LLC, that had a redemption feature until a contract
amendment removed the redemption feature in the fourth quarter of 2013. The noncontrolling interest was
reclassified from temporary equity to “Stockholders’ equity” in the consolidated balance sheet at
December 29, 2013, at carrying value.
The following summarizes changes in our redeemable noncontrolling interests in 2014 and 2013 (in
thousands):
Our fourth joint venture, Colonel’s Limited, LLC, had a mandatory redemption feature through August
24, 2014. Accordingly, the Company recorded this noncontrolling interest as a liability at its redemption
value in other long-term liabilities. The redemption value was adjusted at each reporting date and any
change was recorded in interest expense. In the third quarter of 2014, the mandatory redemption clause
was removed via a contract amendment to the operating agreement. Upon the removal of this redemption
feature, the noncontrolling interest for Colonel’s Limited, LLC was reclassified from other long-term
liabilities to stockholders’ equity at the recorded amount, which approximated fair value, with no impact
to income before income taxes. At December 28, 2014, the noncontrolling interest was recorded in
stockholders’ equity at a carrying value of $11.4 million and was recorded at a redemption value of $10.8
million in other long-term liabilities at December 29, 2013.