Popeye's 2013 Annual Report Download - page 81

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Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2013, 2012, and 2011 — (Continued)
65
The following table summarizes the restricted share unit activity for the 52 week period ended December 29, 2013.
(share awards in thousands) Units
Weighted
Average
Grant
Date Fair
Value
Unvested restricted stock units:
Outstanding beginning of year 210 $12.44
Granted 18 34.42
Vested (32)11.98
Outstanding end of year 196 $14.53
No awards vested during 2012 and 2011. The weighted average grant date fair value of restricted share units granted
during 2012 and 2011 were $21.02 and $15.90, respectively.
Note 14 — 401(k) Savings Plan
The Company maintains a qualified retirement plan (“Plan”) under Section 401(k) of the Internal Revenue Code of
1986, as amended, for the benefit of employees meeting certain eligibility requirements as outlined in the Plan document.
All Company employees are subject to the same contribution and vesting schedules. Under the Plan, non-highly
compensated employees may contribute up to 75.0% of their eligible compensation to the Plan on a pre-tax basis up
to statutory limitations. Highly compensated employees are limited to 5.0% of their eligible compensation. The Company
may make both voluntary and matching contributions to the Plan. The Company expensed approximately $0.5 million,
$0.4 million, and $0.3 million,during 2013,2012, and 2011, respectively, for its contributions to the Plan.
Note 15 — Commitments and Contingencies
Supply Contracts. Supplies are generally provided to Popeyes franchised and company-operated restaurants,
pursuant to supply agreements negotiated by Supply Management Services, Inc. (“SMS”), a not-for-profit purchasing
cooperative of which the Company is a member. The Company,its franchisees and the owners of Cinnabon bakeries
hold membership interests in SMS in proportion to the number of restaurants they own. At December 29, 2013,the
Company held one of seven board seats. The operations of SMS are not included in the Consolidated Financial
Statements.
The principal raw material for a Popeyes restaurant operation is fresh chicken. Company-operated and franchised
restaurants purchase their chicken from suppliers who service PLKI and its franchisees from various plant locations.
These costs are significantly impacted by increases in the cost of fresh chicken, which can result from anumber of
factors, including increases in the cost of grain, disease, declining market supply of fast-food sized chickens and other
factors that affect availability.
In order to ensure favorable pricing for fresh chicken purchases and to maintain an adequate supply of fresh chicken
for the Popeyes system, SMS has entered into chicken purchasing contracts with chicken suppliers. The contracts,
which pertain to the vast majority of our system-wide purchases for Popeyes are “cost-plus” contracts that utilize prices
based upon the cost of feed grains plus certain agreed upon non-feed and processing costs. In order to stabilize pricing
for the Popeyes system, SMS has entered into commodity pricing agreements for the first quarter of 2014 for certain
commodities including corn and soy, which impact the price of poultry and other food cost.
The Company has entered into long-term beverage supply agreements with certain major beverage vendors. Pursuant
to the terms of these arrangements, marketing rebates are provided to the Company and its franchisees from the beverage
vendors based upon the dollar volume of purchases for company-operated restaurants and franchised restaurants,