SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark One) [X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1998 OR [ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-21660 A. Full title of the Plan: PAPA JOHN'S INTERNATIONAL, INC., 401(K) PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: PAPA JOHN'S INTERNATIONAL, INC. 11492 Bluegrass Parkway, Suite 175 Louisville, Kentucky 40299-2334 Telephone: (502) 266-5200 ________________________________________________________________________________
Financial Statements and Schedules Papa John's International, Inc. 401(k) Plan December 31, 1998 and 1997 and Year Ended December 31, 1998 with Report of Independent Auditors
Papa John's International, Inc. 401(k) Plan Financial Statements and Schedules December 31, 1998 and 1997 and Year Ended December 31, 1998 Contents Report of Independent Auditors............................................ 1 Financial Statements Statements of Net Assets Available for Benefits........................... 3 Statement of Changes in Net Assets Available for Benefits................. 5 Notes to Financial Statements............................................. 6 Schedules Schedule of Assets Held for Investment Purposes........................... 9 Schedule of Reportable Transactions....................................... 10
Report of Independent Auditors 401(k) Plan Committee Papa John's International, Inc. We have audited the accompanying statements of net assets available for benefits of the Papa John's International, Inc. 401(k) Plan as of December 31, 1998 and 1997, and the related statement of changes in net assets available for benefits for the year ended December 31, 1998. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in its net assets available for benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year then ended, are presented for purpose of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The Fund Information in the statements of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and the changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. June 3, 1999 Louisville, Kentucky /s/ Ernst & Young LLP --------------------- Ernst & Young LLP
Papa John's International, Inc. 401(k) Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998 Fund Information - ----------------------------------------------------------------------------------------------------------- Papa John's Davis AIM Templeton Aim Common New York Constellation Foreign Value Stock Venture Fund Fund Fund Fund - ----------------------------------------------------------------------------------------------------------- Assets Investments at fair value: Common Stock: Papa John's International, Inc. $100,560 $ - $ - $ - $ - Mutual funds: Davis New York Venture Fund - 179,736 - - - AIM Constellation Fund - - 1,089,075 - - Templeton Foreign Fund - - - 319,528 - AIM Value Fund - - - - 1,090,724 Quest for Value Opportunity Fund - - - - - American Balanced Fund - - - - - Bond Fund of America - - - - - AIM Money Market Fund - - - - - Participant loans - - - - - ------------------------------------------------------------------- Total investments 100,560 179,736 1,089,075 319,528 1,090,724 Contributions receivable from participants 9,580 14,272 41,394 11,973 37,227 ------------------------------------------------------------------- Net assets available for benefits $110,140 $194,008 $1,130,469 $331,501 $1,127,951 =================================================================== Fund Information - -------------------------------------------------------------------------------------------- Quest for Value American AIM Money Opportunity Balanced Bond Fund Market Fund Fund of America Fund - -------------------------------------------------------------------------------------------- Assets Investments at fair value: Common Stock: Papa John's International, Inc. $ - $ - $ - $ - Mutual funds: Davis New York Venture Fund $ - $ - $ - $ - AIM Constellation Fund $ - $ - $ - $ - Templeton Foreign Fund $ - $ - $ - $ - AIM Value Fund $ - $ - $ - $ - Quest for Value Opportunity Fund $663,055 $ - $ - $ - American Balanced Fund - 322,633 - - Bond Fund of America - - 240,613 - AIM Money Market Fund - - - 252,829 Participant loans - - - - ------------------------------------------------------ Total investments 663,055 322,633 240,613 252,829 Contributions receivable from participants 22,104 13,441 10,157 14,753 ------------------------------------------------------ Net assets available for benefits $ 685,159 $336,074 $250,770 $267,582 ====================================================== Participant Loans Total --------------------------- Assets Investments at fair value: Common Stock: Papa John's International, Inc. $ - $ 100,560 Mutual funds: Davis New York Venture Fund - 179,736 AIM Constellation Fund - 1,089,075 Templeton Foreign Fund - 319,528 AIM Value Fund - 1,090,724 Quest for Value Opportunity Fund - 663,055 American Balanced Fund - 322,633 Bond Fund of America - 240,613 AIM Money Market Fund - 252,829 Participant loans 100,172 100,172 ------------------------- Total investments 100,172 4,358,925 Contributions receivable from participants - 174,901 ------------------------- Net assets available for benefits $100,172 $4,533,826 ========================= See accompanying notes. 3
Papa John's International, Inc. 401(k) Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1997 Fund Information - ------------------------------------------------------------------------------------------------------- AIM Templeton AIM Quest for Value Constellation Foreign Value Opportunity Fund Fund Fund Fund - ------------------------------------------------------------------------------------------------------- Assets Investments at fair value: Mutual funds: AIM Constellation Fund $590,366 $ - $ - $ - Templeton Foreign Fund - 251,053 - - AIM Value Fund - - 527,428 - Quest for Value Opportunity Fund - - - 391,215 American Balanced Fund - - - - Bond Fund of America - - - - AIM Money Market Fund - - - - Participant loans - - - - ----------------------------------------------------------------- Total investments 590,366 251,053 527,428 391,215 Contributions receivable from participants 25,514 10,220 19,746 14,384 ----------------------------------------------------------------- Total assets 615,880 261,273 547,174 405,599 Liabilities Excess contributions refundable to participants 5,093 4,691 4,467 939 ------------------------------------------------------------------- Net assets available for benefits $ 610,787 $ 256,582 $542,707 $ 404,660 =================================================================== Fund Information - ---------------------------------------------------------------------------------------- American AIM Money Balanced Bond Fund Market Participant Fund of America Fund Loans Total - ------------------------------------------------------------------------------------------------------------------------ Assets Investments at fair value: Mutual funds: AIM Constellation Fund $ - $ - $ - $ - $ 590,366 Templeton Foreign Fund - - - - 251,053 AIM Value Fund - - - - 527,428 Quest for Value Opportunity Fund - - - - 391,215 American Balanced Fund 207,704 - - - 207,704 Bond Fund of America - 166,076 - - 166,076 AIM Money Market Fund - - 126,068 - 126,068 Participant loans - - - 88,113 88,113 ------------------------------------------------------------------------------------ Total investments 207,704 166,076 126,068 88,113 2,348,023 Contributions receivable from participants 7,908 5,844 7,125 - 90,741 ------------------------------------------------------------------------------------ Total assets 215,612 171,920 133,193 88,113 2,438,764 Liabilities Excess contributions refundable to participants 2,137 1,321 2,728 - 21,376 ------------------------------------------------------------------------------------ Net assets available for benefits $ 213,475 $ 170,599 $130,465 $ 88,113 $2,417,388 ==================================================================================== See accompanying notes. 4
Papa John's International, Inc. 401(k) Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information Year Ended December 31, 1998 Fund Information --------------------------------------------------------------------------- Papa John's Davis AIM Templeton AIM Common New York Constellation Foreign Value Stock Venture Fund Fund Fund Fund --------------------------------------------------------------------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ 20,635 $ 8,404 $ 122,989 $(46,092) $ 170,050 Interest and dividends 7 3,867 26,350 31,743 66,889 --------------------------------------------------------------------------- Net investment income 20,642 12,271 149,339 (14,349) 236,939 Contributions from participants 147,789 127,859 468,342 149,233 400,735 --------------------------------------------------------------------------- Total additions 168,431 140,130 617,681 134,884 637,674 Deductions from net assets attributed to: Benefits paid to participants 84,371 3,583 84,306 22,376 58,170 Investment management fee (12) 22 543 220 388 --------------------------------------------------------------------------- Total deductions 84,359 3,605 84,849 22,596 58,558 --------------------------------------------------------------------------- Net increase prior to interfund transfers 84,072 136,525 532,832 112,288 579,116 Interfund transfers 26,068 57,483 (13,150) (37,369) 6,128 --------------------------------------------------------------------------- Net increase in net assets available for benefits 110,140 194,008 519,682 74,919 585,244 Net assets available for benefits at beginning of year - - 610,787 256,582 542,707 --------------------------------------------------------------------------- Net assets available for benefits at end of year $110,140 $194,008 $1,130,469 $331,501 $1,127,951 =========================================================================== Fund Information ------------------------------------------------------ Quest for Value American AIM Money Opportunity Balanced Bond Fund Market Fund Fund of America Fund ------------------------------------------------------ Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ (1,039) $ (760) $ (5,737) $ - Interest and dividends 36,746 27,986 13,201 7,750 ------------------------------------------------------ Net investment income 35,707 27,226 7,464 7,750 Contributions from participants 254,183 155,587 109,742 164,818 ------------------------------------------------------ Total additions 289,890 182,813 117,206 172,568 Deductions from net assets attributed to: Benefits paid to participants 38,643 13,760 18,519 19,683 Investment management fee 283 161 167 368 ------------------------------------------------------ Total deductions 38,926 13,921 18,686 20,051 ------------------------------------------------------ Net increase prior to interfund transfers 250,964 168,892 98,520 152,517 Interfund transfers 29,535 (46,293) (18,349) (15,400) ------------------------------------------------------ Net increase in net assets available for benefits 280,499 122,599 80,171 137,117 Net assets available for benefits at beginning of year 404,660 213,475 170,599 130,465 ------------------------------------------------------ Net assets available for benefits at end of year $685,159 $336,074 $250,770 $267,582 ====================================================== Participant Loans Total ------------------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ - $ 268,450 Interest and dividends 5,455 219,994 ------------------------ Net investment income 5,455 488,444 Contributions from participants - 1,978,288 ------------------------ Total additions 5,455 2,466,732 Deductions from net assets attributed to: Benefits paid to participants 4,743 348,154 Investment management fee - 2,140 ------------------------ Total deductions 4,743 350,294 ------------------------ Net increase prior to interfund transfers 712 2,116,438 Interfund transfers 11,347 - ------------------------ Net increase in net assets available for benefits 12,059 2,116,438 Net assets available for benefits at beginning of year 88,113 2,417,388 ------------------------ Net assets available for benefits at end of year $100,172 $4,533,826 ======================== See accompanying notes.
Papa John's International, Inc. 401(k) Plan Notes to Financial Statements December 31, 1998 and 1997 1. Description of Plan Papa John's International, Inc. (the "Company") established the Papa John's International, Inc. 401(k) Plan (the "Plan") on October 1, 1995. The Plan is a defined contribution plan available to all employees of the Company, and its subsidiaries, who have attained the age of twenty-one, completed one year of service and who work at least 1,000 hours annually. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Participants may voluntarily elect to contribute up to 15% of their annual eligible wages to their account within the Plan. The Company may, at its discretion, make matching or profit sharing contributions to the Plan. No such Company contributions were made during 1998 or 1997. The contributions are allocated among eight alternative mutual funds and Company common stock at the direction of the participant. Each fund's investment income or loss, less any investment management fees, is allocated to participant accounts based on their proportionate interest in the fund. The value of participant accounts will fluctuate with the market value of the securities in which the fund is invested. The contributions and the earnings on those contributions are immediately vested to the participant and are payable upon retirement, death or disability, termination of employment, or earlier for hardship reasons. Participants may also borrow from their account through participant loans. The Summary Plan Description provides for a more complete description of the Plan's provisions. Certain Plan administrative expenses are paid by the Company. 2. Significant Accounting Policies Investments Mutual funds are stated at fair value as determined by quoted market prices. Papa John's International, Inc. common stock is stated at fair value as determined by the last reported sales price on the last business day of the plan year. Participant loans are stated at an 6
2. Significant Accounting Policies (continued) estimated fair value based on their outstanding balances. Contributions from Participants Contributions from participants are recorded when the Company makes payroll deductions. Contributions receivable from participants represent amounts collected from participants that have not yet been deposited into the participants' individual accounts. Excess Contributions Refundable to Participants The Plan is subject to certain contribution limits for highly-compensated participants as defined by the Internal Revenue Code (the "IRC"). Calculations performed subsequent to the Plan year-end indicated that excess contributions refundable to participants amounted to $21,376 as of December 31, 1997. There were no excess contributions refundable to participants as of December 31, 1998. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. 3. Investments During the year ended December 31, 1998, the Plan's investments (including investments bought, sold, as well as held during the year) appreciated in fair value as follows: Investments at fair value as determined by quoted market price: Papa John's International, Inc. common stock $ 20,635 Mutual funds 247,815 ---------- $ 268,450 =========== 4. Tax Status The Company amended the Plan effective January 1, 1998. The Plan is in the process of applying for a determination letter from the Internal Revenue Service stating that the Plan, as amended, is qualified under Section 401(a) of the Internal Revenue Code (the "Code"). However, the Plan Administrator believes that the Plan is qualified and, therefore, the related trust is exempt from taxation. 7
5. Plan Termination Although it has not expressed any intent to do so, the Company has the right to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants are completely vested with respect to the balance of their account. 6. Year 2000 Issue (unaudited) The Company has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Company is taking a two phase approach. The first phase addresses internal systems that must be modified or replaced to function properly. Both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Company anticipates substantially completing this phase of the project by September 1999. The Company will pay for the costs related to the year 2000 project which are believed to be immaterial to its financial position. For the second phase of the project, the Company is querying its significant vendors with respect to year 2000 issues. Based on the responses received from approximately 75% of the vendors, the Company is not aware of any vendors with a year 2000 issue that would materially impact the operations of the Plan. However, the Company has no means of ensuring that vendors will be year 2000 ready. The inability of vendors to complete their year 2000 resolution process in a timely fashion could materially impact the Plan, although the actual impact of non-compliance by vendors is not determinable. 8
Schedules
Papa John's International, Inc. 401(k) Plan EIN: 61-1203323, Plan Number: 001 Line 27a-Schedule of Assets Held for Investment Purposes December 31, 1998 Description of Investment, Including Shares Held or Rate Identity of Issue or Borrower of Interest Cost Current Value - ----------------------------------------------------------------------------------------------------- Common Stock: Papa John's International, Inc. * 2,279 shares $ 79,793 $ 100,560 Mutual funds: Davis New York Venture Fund 7,187 shares $ 170,955 $ 179,736 AIM Constellation Fund 35,684 shares 981,039 1,089,075 Templeton Foreign Fund 38,084 shares 385,498 319,528 AIM Value Fund 27,139 shares 921,899 1,090,724 Quest for Value Opportunity Fund 18,444 shares 636,585 663,055 American Balanced Fund 20,472 shares 322,527 322,633 Bond Fund of America 17,679 shares 242,484 240,613 AIM Money Market Fund 252,829 shares 252,829 252,829 -------------------------- Total Mutual Funds $3,913,816 $4,158,193 Participant Loans 8.75% - 10.5% per annum - 100,172 ---------- Total Investments $4,358,925 ========== * Represents party in interest to the Plan. 9
Papa John's International, Inc. 401(k) Plan EIN: 61-1203323, Plan Number: 001 Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998 Current Value of Asset on Purchase Transaction Net Gain Description of Assets Price Selling Price Cost of Assets Date (Loss) - ---------------------------------------------------------------------------------------------------------------------------------- Category (iii) - series of transactions in excess of 5 percent of plan assets - ----------------------------------------------------------------------------- Davis New York Venture Fund $173,685 $ -- $173,685 $173,685 $ -- -- 6,200 6,578 6,200 (378) AIM Constellation Fund 485,633 -- 485,633 485,633 -- -- 136,099 126,942 136,099 9,157 Templeton Foreign Fund 159,339 -- 159,339 159,339 -- -- 76,465 76,308 76,465 157 AIM Value Fund 438,812 -- 438,812 438,812 -- -- 112,303 98,818 112,303 13,485 Quest for Value Opportunity Fund 307,541 -- 307,541 307,541 -- -- 71,300 65,797 71,300 5,503 American Balanced Fund 162,144 -- 162,144 162,144 -- -- 74,387 71,959 74,387 2,428 Bond Fund of America 110,741 -- 110,741 110,741 -- -- 43,628 44,279 43,628 (651) AIM Money Market Fund 166,265 -- 166,265 166,265 -- -- 47,215 47,215 47,215 -- There were no category (i), (ii), or (iv) transactions during 1998. 14
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator has duly caused this annual report to be signed by the undersigned hereunto duly authorized. PAPA JOHN'S INTERNATIONAL, INC., 401(K) PLAN Date: June 25, 1999 By: /s/ E. Drucilla Milby ------------- --------------------------------- E. Drucilla Milby President, Chief Executive Officer and Treasurer 10
EXHIBIT 23 - ---------- CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-48999) pertaining to the Papa John's International Inc., 401(k) Plan of our report dated June 3, 1999, with respect to the financial statements and schedules of Papa John's International, Inc. 401(k) Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP --------------------- Ernst & Young LLP Louisville, Kentucky June 21, 1999