Papa Johns 2014 Annual Report Download - page 87

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74
10. Net Property and Equipment
Net property and equipment consists of the following (in thousands):
2014 2013
Land 32,880$ 33,000$
Buildings and improvements 86,892 86,763
Leasehold improvements 110,323 106,487
Equipment and other 320,480 280,381
Construction in progress 6,466 20,155
Total property and equipment 557,041 526,786
Accumulated depreciation and amortization (337,584) (314,689)
Net property and equipment 219,457$ 212,097$
11. Notes Receivable
Selected franchisees have borrowed funds from the Company, principally for use in the acquisition,
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. Loans outstanding were
approximately $18.9 million and $16.8 million on a consolidated basis as of December 28, 2014 and
December 29, 2013, respectively, net of allowance for doubtful accounts.
Notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each
restaurant and the ownership interests in the franchisee. The carrying amounts of the loans approximate
fair value. Interest income recorded on franchisee loans was approximately $658,000 in 2014, $527,000
in 2013 and $631,000 in 2012 and is reported in investment income in the accompanying consolidated
statements of income.
Based on our review of certain borrowers’ economic performance and underlying collateral value, we
established allowances of $3.1 million and $3.4 million as of December 28, 2014 and December 29, 2013,
respectively, for potentially uncollectible notes receivable. The following summarizes changes in our
notes receivable allowance for doubtful accounts (in thousands):
Balance as of December 30, 2012 5,028$
Recovered from costs and expenses (495)
Deductions, including notes written off (1,146)
Balance as of December 29, 2013 3,387
Recovered from costs and expenses (502)
Additions, net of notes written off 247
Balance as of December 28, 2014 3,132$