This excerpt taken from the JEN 10-K filed Nov 25, 2005.
Certain limited partnership agreements:
In 1992, the Company entered into three additional Limited Partnership Agreements (the “Agreements”), which required the limited partners to invest $1,000 in each partnership. The Agreements called for the opening of 25 Jennifer Convertible stores in each partnership. Under the terms of the Agreements, the Company was to receive a fee of $10 per store, plus a royalty of 5% of the partnership’s sales. The Company has recorded the operating losses of the LPs in excess of the limited partners’ capital contributions in the consolidated statements of operations (see Note 1). As part of the Agreements, the Company received options to purchase the limited partners’ interest commencing January 1999 at a price of five times the partnership’s earnings before income taxes for the prior year, as set forth in the Agreements.
On December 31, 1996, the Private Company acquired the limited partners’ interests in these partnerships. As of April 30, 2005, pursuant to the Settlement Agreements more fully described in Note 3, the Company acquired such interests from the Private Company at no cost and the LPs became wholly owned subsidiaries.