Popeye's 2013 Annual Report Download - page 67

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Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2013,2012, and 2011
Note 1 — Description of Business
Popeyes Louisiana Kitchen, Inc. (“Popeyes” or “the Company”) develops, operates and franchises quick-service
restaurants under the trade name Popeyes®Chicken & Biscuits and Popeyes®Louisiana Kitchen in 47 states, the District
of Columbia, three territories, and 28 foreign countries.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities. These estimates affect the disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during each reporting period. Actual results could differ from those estimates.
Fiscal Year. The Company has a 52/53-week fiscal year that ends on the last Sunday in December. The 2013 and
2011 fiscal years both consisted of 52 weeks. Fiscal year 2012 consisted of 53 weeks.
Cash and Cash Equivalents. The Company considers all money market investment instruments and certificates of
deposit with original maturities of three months or less to be cash equivalents. Under the terms of the Company’sbank
agreements, outstanding checks in excess of the cash balances in the Company’sprimary disbursement accounts create
abank overdraft liability.Bank overdrafts were insignificant for both fiscal years 2013 and 2012.
Supplemental Cash Flow Information.
(in millions) 2013 2012 2011
Interest paid $ 3.1 $2.9 $2.4
Corporate office lease tenant improvement allowances and incentives — — (3.0)
Property acquired under capital lease obligation — 1.0 —
Income taxes paid, net 16.2 12.5 10.6
Accounts Receivable, Net. At December 29, 2013 and December 30, 2012, accounts receivable, net were $8.8
million and $7.3 million, respectively. Accounts receivable consist primarily of amounts due from franchisees related
to royalties, and rents, and various miscellaneous items. The accounts receivable balance is stated net of an allowance
for doubtful accounts. The Company reserves a franchisee’s receivable balance based upon the age of the receivable
and consideration of other factors and events. During 2013,2012, and 2011, changes in the allowance for doubtful
accounts were as follows:
(in millions) 2013 2012 2011
Balance, beginning of year $ 0.2 $0.6 $1.2
Provisions for credit (recoveries) losses — (0.1)(0.3)
Write-offs (0.1)(0.3)(0.3)
Balance, end of year $ 0.1 $0.2 $0.6
Notes Receivable, Net. Notes receivable consist of notes from franchisees to finance certain past due franchise
revenues and rents. The notes receivable balance is stated net of an allowance for uncollectible amounts which is
evaluated each reporting period on anote-by-note basis. At December 29, 2013,notes receivable, net, were
approximately $0.7 million,of which $0.1 million were current. At December 30, 2012,all notes receivable were fully