Papa Johns 2014 Annual Report Download - page 83

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70
6. Noncontrolling Interests (continued)
We recorded interest expense of $4,000 and $1.0 million in 2014 and 2012, respectively, and interest
income of $1.1 million in 2013 for the change in redemption value of the Colonel’s Limited, LLC
agreement. Changes in the carrying value following the removal of the redemption feature on August 24,
2014 are recorded in stockholders’ equity.
7. Acquisitions
We acquired restaurants from our domestic franchisees in 2014 and 2012 (none in 2013), which are
summarized as follows:
2014 2012
Number of restaurants acquired 13 56
Location of restaurants acquired Various
Denver and
Minneapolis
Purchase price (in thousands):
Cash payment (a) 4,773$ 5,200$
Cancellation of accounts and notes receivable 412 -
Total purchase price 5,185$ 5,200$
Fair value allocation of purchase price (in thousands):
Property and equipment 555$ 1,602$
Reacquired franchise right 844 245
Goodwill 3,661 3,830
Other, including cash 125 239
Total purchase price 5,185$ 5,916$
(a) 2012 cash payments made were net of $700,000 received from the sale of six restaurants located in
the Denver market to an existing franchisee.
The restaurant acquisitions described above were accounted for by the purchase method of accounting,
whereby operating results subsequent to the acquisition date are included in our consolidated financial
results. The excess of the purchase price over the aggregate fair value of net assets acquired was allocated
to goodwill for the Domestic Company-owned restaurants segment and is eligible for deduction over 15
years under U.S. tax regulations.
In July 2012, Papa John’s and a third party formed a limited liability company (PJ Minnesota, LLC) to
operate the previously acquired Minneapolis restaurants. The Company’s equity (80% ownership at that
time) in the operations was funded by the contribution of the acquired restaurants, while the third party’s
equity (20% ownership at that time) was funded through a $275,000 loan issued by Papa John’s and a
$25,000 cash contribution. There was no gain or loss on this transaction. We are required to fully
consolidate the financial results of this limited liability company. See Note 6 for additional information.