[X]
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended June 24, 2012
|
[ ]
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
61-1203323
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification
|
|
incorporation or organization)
|
number)
|
Yes [X]
|
No [ ]
|
Yes [X]
|
No [ ]
|
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [ ]
|
Yes [ ]
|
No [X]
|
Page No.
|
||
2 | ||
3 | ||
4 | ||
5 | ||
6 | ||
13 | ||
23 | ||
23 | ||
24 | ||
24 | ||
25 |
Papa John’s International, Inc. and Subsidiaries
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(In thousands)
|
June 24, 2012
|
December 25, 2011
|
||||||
(Unaudited)
|
(Note)
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 33,625 | $ | 18,942 | ||||
Accounts receivable, net
|
27,693 | 28,169 | ||||||
Notes receivable, net
|
4,447 | 4,221 | ||||||
Inventories
|
19,695 | 20,091 | ||||||
Prepaid expenses
|
10,548 | 10,210 | ||||||
Other current assets
|
2,880 | 3,522 | ||||||
Deferred income taxes
|
6,240 | 7,636 | ||||||
Total current assets
|
105,128 | 92,791 | ||||||
Property and equipment, net
|
186,567 | 185,132 | ||||||
Notes receivable, less current portion, net
|
10,572 | 11,502 | ||||||
Goodwill
|
78,342 | 75,085 | ||||||
Other assets
|
26,828 | 25,872 | ||||||
Total assets
|
$ | 407,437 | $ | 390,382 | ||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 32,379 | $ | 32,966 | ||||
Income and other taxes payable
|
4,044 | 3,969 | ||||||
Accrued expenses and other current liabilities
|
49,666 | 44,198 | ||||||
Total current liabilities
|
86,089 | 81,133 | ||||||
Deferred revenue
|
8,592 | 4,780 | ||||||
Long-term debt
|
50,000 | 51,489 | ||||||
Other long-term liabilities
|
23,638 | 22,014 | ||||||
Long-term accrued income taxes
|
3,924 | 3,597 | ||||||
Deferred income taxes
|
9,648 | 9,147 | ||||||
Stockholders’ equity:
|
||||||||
Preferred stock
|
- | - | ||||||
Common stock
|
371 | 367 | ||||||
Additional paid-in capital
|
274,863 | 262,456 | ||||||
Accumulated other comprehensive income
|
1,609 | 1,849 | ||||||
Retained earnings
|
330,320 | 298,807 | ||||||
Treasury stock
|
(390,754 | ) | (353,826 | ) | ||||
Total stockholders' equity, net of noncontrolling interests
|
216,409 | 209,653 | ||||||
Noncontrolling interests in subsidiaries
|
9,137 | 8,569 | ||||||
Total stockholders’ equity
|
225,546 | 218,222 | ||||||
Total liabilities and stockholders’ equity
|
$ | 407,437 | $ | 390,382 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands, except per share amounts)
|
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
||||||||||||
North America revenues:
|
||||||||||||||||
Domestic Company-owned restaurant sales
|
$ | 143,527 | $ | 127,641 | $ | 287,342 | $ | 266,312 | ||||||||
Franchise royalties
|
19,101 | 18,103 | 39,619 | 37,834 | ||||||||||||
Franchise and development fees
|
206 | 124 | 428 | 309 | ||||||||||||
Domestic commissary sales
|
126,593 | 121,027 | 264,203 | 248,699 | ||||||||||||
Other sales
|
11,771 | 12,370 | 24,029 | 25,817 | ||||||||||||
International revenues:
|
||||||||||||||||
Royalties and franchise and development fees
|
4,701 | 4,049 | 9,187 | 7,811 | ||||||||||||
Restaurant and commissary sales
|
12,680 | 10,220 | 25,047 | 19,219 | ||||||||||||
Total revenues
|
318,579 | 293,534 | 649,855 | 606,001 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Domestic Company-owned restaurant expenses:
|
||||||||||||||||
Cost of sales
|
32,881 | 30,162 | 65,337 | 62,262 | ||||||||||||
Salaries and benefits
|
39,839 | 34,367 | 78,652 | 72,016 | ||||||||||||
Advertising and related costs
|
13,278 | 11,898 | 25,977 | 24,687 | ||||||||||||
Occupancy costs
|
8,619 | 7,939 | 16,517 | 15,808 | ||||||||||||
Other operating expenses
|
20,830 | 18,492 | 41,248 | 38,407 | ||||||||||||
Total domestic Company-owned restaurant expenses
|
115,447 | 102,858 | 227,731 | 213,180 | ||||||||||||
Domestic commissary and other expenses:
|
||||||||||||||||
Cost of sales
|
104,412 | 103,529 | 217,250 | 209,972 | ||||||||||||
Salaries and benefits
|
9,218 | 8,651 | 18,221 | 17,662 | ||||||||||||
Other operating expenses
|
13,498 | 13,084 | 27,804 | 26,669 | ||||||||||||
Total domestic commissary and other expenses
|
127,128 | 125,264 | 263,275 | 254,303 | ||||||||||||
International operating expenses
|
10,975 | 8,756 | 21,367 | 16,484 | ||||||||||||
General and administrative expenses
|
31,463 | 27,617 | 63,059 | 56,691 | ||||||||||||
Other general expenses
|
1,135 | 1,459 | 6,809 | 2,240 | ||||||||||||
Depreciation and amortization
|
8,104 | 8,425 | 16,031 | 16,737 | ||||||||||||
Total costs and expenses
|
294,252 | 274,379 | 598,272 | 559,635 | ||||||||||||
Operating income
|
24,327 | 19,155 | 51,583 | 46,366 | ||||||||||||
Investment income
|
195 | 205 | 365 | 382 | ||||||||||||
Interest expense
|
(282 | ) | (293 | ) | (570 | ) | (901 | ) | ||||||||
Income before income taxes
|
24,240 | 19,067 | 51,378 | 45,847 | ||||||||||||
Income tax expense
|
8,299 | 6,014 | 17,367 | 15,245 | ||||||||||||
Net income, including noncontrolling interests
|
15,941 | 13,053 | 34,011 | 30,602 | ||||||||||||
Less: income attributable to noncontrolling interests
|
(1,172 | ) | (929 | ) | (2,498 | ) | (2,051 | ) | ||||||||
Net income, net of noncontrolling interests
|
$ | 14,769 | $ | 12,124 | $ | 31,513 | $ | 28,551 | ||||||||
Basic earnings per common share
|
$ | 0.62 | $ | 0.48 | $ | 1.32 | $ | 1.12 | ||||||||
Earnings per common share - assuming dilution
|
$ | 0.61 | $ | 0.47 | $ | 1.30 | $ | 1.11 | ||||||||
Basic weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Diluted weighted average shares outstanding
|
24,112 | 25,685 | 24,270 | 25,713 | ||||||||||||
Comprehensive Income
|
$ | 15,490 | $ | 12,539 | $ | 33,771 | $ | 31,361 |
Papa John's International, Inc.
|
||||||||||||||||||||||||||||||||
Common
|
Accumulated
|
|||||||||||||||||||||||||||||||
Stock
|
Additional
|
Other
|
Noncontrolling
|
Total
|
||||||||||||||||||||||||||||
Shares
|
Common
|
Paid-In
|
Comprehensive
|
Retained
|
Treasury
|
Interests in
|
Stockholders'
|
|||||||||||||||||||||||||
(In thousands)
|
Outstanding
|
Stock
|
Capital
|
Income (Loss)
|
Earnings
|
Stock
|
Subsidiaries
|
Equity
|
||||||||||||||||||||||||
Balance at December 26, 2010
|
25,439 | $ | 361 | $ | 245,380 | $ | 849 | $ | 243,152 | $ | (291,048 | ) | $ | 8,506 | $ | 207,200 | ||||||||||||||||
Net income
|
- | - | - | - | 28,551 | - | 2,051 | 30,602 | ||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | 759 | - | - | - | 759 | ||||||||||||||||||||||||
Exercise of stock options
|
444 | 4 | 10,659 | - | - | - | - | 10,663 | ||||||||||||||||||||||||
Tax effect of equity awards
|
- | - | (1,295 | ) | - | - | - | - | (1,295 | ) | ||||||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||||||
common stock
|
(817 | ) | - | - | - | - | (26,162 | ) | - | (26,162 | ) | |||||||||||||||||||||
Distributions
|
- | - | - | - | - | - | (2,029 | ) | (2,029 | ) | ||||||||||||||||||||||
Stock-based compensation expense
|
- | - | 3,903 | - | - | - | - | 3,903 | ||||||||||||||||||||||||
Issuance of restricted stock
|
76 | - | (1,884 | ) | - | - | 1,884 | - | - | |||||||||||||||||||||||
Other
|
- | - | (58 | ) | - | - | 218 | - | 160 | |||||||||||||||||||||||
Balance at June 26, 2011
|
25,142 | $ | 365 | $ | 256,705 | $ | 1,608 | $ | 271,703 | $ | (315,108 | ) | $ | 8,528 | $ | 223,801 | ||||||||||||||||
Balance at December 25, 2011
|
24,019 | $ | 367 | $ | 262,456 | $ | 1,849 | $ | 298,807 | $ | (353,826 | ) | $ | 8,569 | $ | 218,222 | ||||||||||||||||
Net income
|
- | - | - | - | 31,513 | - | 2,498 | 34,011 | ||||||||||||||||||||||||
Other comprehensive loss
|
- | - | - | (240 | ) | - | - | - | (240 | ) | ||||||||||||||||||||||
Exercise of stock options
|
361 | 4 | 10,396 | - | - | - | - | 10,400 | ||||||||||||||||||||||||
Tax effect of equity awards
|
- | - | 468 | - | - | - | - | 468 | ||||||||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||||||
common stock
|
(957 | ) | - | - | - | - | (38,728 | ) | - | (38,728 | ) | |||||||||||||||||||||
Distributions
|
- | - | - | - | - | - | (1,930 | ) | (1,930 | ) | ||||||||||||||||||||||
Stock-based compensation expense
|
- | - | 3,218 | - | - | - | - | 3,218 | ||||||||||||||||||||||||
Issuance of restricted stock
|
34 | - | (1,541 | ) | - | - | 1,541 | - | - | |||||||||||||||||||||||
Other
|
- | - | (134 | ) | - | - | 259 | - | 125 | |||||||||||||||||||||||
Balance at June 24, 2012
|
23,457 | $ | 371 | $ | 274,863 | $ | 1,609 | $ | 330,320 | $ | (390,754 | ) | $ | 9,137 | $ | 225,546 |
Six Months Ended
|
||||||||
(In thousands)
|
June 24, 2012
|
June 26, 2011
|
||||||
Operating activities
|
||||||||
Net income, including noncontrolling interests
|
$ | 34,011 | $ | 30,602 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for uncollectible accounts and notes receivable
|
719 | (7 | ) | |||||
Depreciation and amortization
|
16,031 | 16,737 | ||||||
Deferred income taxes
|
1,946 | 4,332 | ||||||
Stock-based compensation expense
|
3,218 | 3,903 | ||||||
Excess tax benefit on equity awards
|
(1,471 | ) | (403 | ) | ||||
Other
|
2,480 | 316 | ||||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts receivable
|
(75 | ) | (1,167 | ) | ||||
Inventories
|
533 | 1,819 | ||||||
Prepaid expenses
|
(338 | ) | (268 | ) | ||||
Other current assets
|
755 | 22 | ||||||
Other assets and liabilities
|
429 | 816 | ||||||
Accounts payable
|
(587 | ) | (1,970 | ) | ||||
Income and other taxes payable
|
75 | 325 | ||||||
Accrued expenses and other current liabilities
|
3,297 | (1,611 | ) | |||||
Long-term accrued income taxes
|
327 | 403 | ||||||
Deferred revenue
|
3,812 | (924 | ) | |||||
Net cash provided by operating activities
|
65,162 | 52,925 | ||||||
Investing activities
|
||||||||
Purchase of property and equipment
|
(15,046 | ) | (12,422 | ) | ||||
Loans issued
|
(1,206 | ) | (1,684 | ) | ||||
Repayments of loans issued
|
1,730 | 3,920 | ||||||
Acquisitions, net of cash acquired
|
(5,908 | ) | - | |||||
Proceeds from divestitures of restaurants
|
948 | - | ||||||
Other
|
(4 | ) | 51 | |||||
Net cash used in investing activities
|
(19,486 | ) | (10,135 | ) | ||||
Financing activities
|
||||||||
Net repayments on line of credit facility
|
(1,489 | ) | (51,000 | ) | ||||
Excess tax benefit on equity awards
|
1,471 | 403 | ||||||
Tax payments for restricted stock
|
(822 | ) | (798 | ) | ||||
Proceeds from exercise of stock options
|
10,400 | 10,663 | ||||||
Acquisition of Company common stock
|
(38,728 | ) | (26,162 | ) | ||||
Distributions to noncontrolling interests
|
(1,930 | ) | (2,029 | ) | ||||
Other
|
125 | 42 | ||||||
Net cash used in financing activities
|
(30,973 | ) | (68,881 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(20 | ) | 82 | |||||
Change in cash and cash equivalents
|
14,683 | (26,009 | ) | |||||
Cash and cash equivalents at beginning of period
|
18,942 | 47,829 | ||||||
Cash and cash equivalents at end of period
|
$ | 33,625 | $ | 21,820 |
1.
|
Basis of Presentation
|
2.
|
Significant Accounting Policies
|
Restaurants as
of June 24,
2012
|
Restaurants as
of June 26,
2011
|
Restaurant Locations
|
Papa John's
Ownership*
|
Noncontrolling
Interest
Ownership*
|
||||||
Star Papa, LP
|
76
|
75
|
Texas
|
51%
|
49%
|
|||||
Colonel's Limited, LLC
|
52
|
52
|
Maryland and Virginia
|
70%
|
30%
|
Three Months
|
Six Months
|
|||||||||||||||
June 24,
|
June 26,
|
June 24,
|
June 26,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Papa John's International, Inc.
|
$ | 1,854 | $ | 1,518 | $ | 3,897 | $ | 3,316 | ||||||||
Noncontrolling interests
|
1,172 | 929 | 2,498 | 2,051 | ||||||||||||
Total income before income taxes
|
$ | 3,026 | $ | 2,447 | $ | 6,395 | $ | 5,367 |
3.
|
Accumulated Other Comprehensive Income (Loss)
|
Foreign
Currency
|
Interest
Rate
Swaps (a)
|
Defined
Pension
Plan
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|||||||||||||
Three Months Ended
|
||||||||||||||||
Beginning balance - March 27, 2011
|
$ | 2,122 | $ | - | $ | - | $ | 2,122 | ||||||||
Current period other comprehensive income (loss)
|
(514 | ) | - | - | (514 | ) | ||||||||||
Ending balance - June 26, 2011
|
$ | 1,608 | $ | - | $ | - | $ | 1,608 | ||||||||
Beginning balance - March 25, 2012
|
$ | 2,163 | $ | (74 | ) | $ | (29 | ) | $ | 2,060 | ||||||
Current period other comprehensive income (loss)
|
(445 | ) | (6 | ) | - | (451 | ) | |||||||||
Ending balance - June 24, 2012
|
$ | 1,718 | $ | (80 | ) | $ | (29 | ) | $ | 1,609 | ||||||
Six Months Ended
|
||||||||||||||||
Beginning balance - December 26, 2010
|
$ | 1,008 | $ | (159 | ) | $ | - | $ | 849 | |||||||
Current period other comprehensive income (loss)
|
600 | 159 | - | 759 | ||||||||||||
Ending balance - June 26, 2011
|
$ | 1,608 | $ | - | $ | - | $ | 1,608 | ||||||||
Ending balance - December 25, 2011
|
$ | 1,872 | $ | 6 | $ | (29 | ) | $ | 1,849 | |||||||
Current period other comprehensive income (loss)
|
(154 | ) | (86 | ) | - | (240 | ) | |||||||||
Ending balance - June 24, 2012
|
$ | 1,718 | $ | (80 | ) | $ | (29 | ) | $ | 1,609 |
(a) |
Current period other comprehensive income (loss) is shown net of tax of $3 for the three months ended June 24, 2012 (none in the same period
|
|
of 2011) and $89 and $51 for the six months ended June 26, 2011 and June 24, 2012, respectively.
|
4.
|
Fair Value Measurements and Disclosures
|
|
·
|
Level 1: Quoted market prices in active markets for identical assets or liabilities.
|
|
·
|
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
|
|
·
|
Level 3: Unobservable inputs that are not corroborated by market data.
|
Carrying
|
Fair Value Measurements
|
|||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
June 24, 2012
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash surrender value of life insurance policies *
|
$ | 12,438 | $ | 12,438 | $ | - | $ | - | ||||||||
Financial liabilities:
|
||||||||||||||||
Interest rate swap
|
127 | - | 127 | - | ||||||||||||
December 25, 2011
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash surrender value of life insurance policies *
|
$ | 11,387 | $ | 11,387 | $ | - | $ | - | ||||||||
Interest rate swap
|
11 | - | 11 | - |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24,
|
June 26,
|
June 24,
|
June 26,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Basic earnings per common share:
|
||||||||||||||||
Net income
|
$ | 14,769 | $ | 12,124 | $ | 31,513 | $ | 28,551 | ||||||||
Weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Basic earnings per common share
|
$ | 0.62 | $ | 0.48 | $ | 1.32 | $ | 1.12 | ||||||||
Earnings per common share - assuming dilution:
|
||||||||||||||||
Net income
|
$ | 14,769 | $ | 12,124 | $ | 31,513 | $ | 28,551 | ||||||||
Weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Dilutive effect of outstanding compensation awards
|
379 | 221 | 377 | 239 | ||||||||||||
Diluted weighted average shares outstanding
|
24,112 | 25,685 | 24,270 | 25,713 | ||||||||||||
Earnings per common share - assuming dilution
|
$ | 0.61 | $ | 0.47 | $ | 1.30 | $ | 1.11 |
7.
|
Acquisition and Divestiture of Restaurants
|
Property and equipment
|
$ | 1,602 | ||
Reacquired franchise right
|
245 | |||
Goodwill
|
3,830 | |||
Other, including cash
|
239 | |||
Total purchase price
|
$ | 5,916 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
|||||||||||||
Revenues from external customers:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 143,527 | $ | 127,641 | $ | 287,342 | $ | 266,312 | ||||||||
Domestic commissaries
|
126,593 | 121,027 | 264,203 | 248,699 | ||||||||||||
North America franchising
|
19,307 | 18,227 | 40,047 | 38,143 | ||||||||||||
International
|
17,381 | 14,269 | 34,234 | 27,030 | ||||||||||||
All others
|
11,771 | 12,370 | 24,029 | 25,817 | ||||||||||||
Total revenues from external customers
|
$ | 318,579 | $ | 293,534 | $ | 649,855 | $ | 606,001 | ||||||||
Intersegment revenues:
|
||||||||||||||||
Domestic commissaries
|
$ | 39,953 | $ | 35,872 | $ | 81,490 | $ | 73,972 | ||||||||
North America franchising
|
561 | 535 | 1,110 | 1,083 | ||||||||||||
International
|
56 | 58 | 110 | 105 | ||||||||||||
Variable interest entities
|
- | - | - | 25,117 | ||||||||||||
All others
|
2,664 | 2,571 | 5,685 | 5,126 | ||||||||||||
Total intersegment revenues
|
$ | 43,234 | $ | 39,036 | $ | 88,395 | $ | 105,403 | ||||||||
Income (loss) before income taxes:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 9,358 | $ | 7,421 | $ | 21,679 | $ | 18,304 | ||||||||
Domestic commissaries
|
7,978 | 4,321 | 19,144 | 13,875 | ||||||||||||
North America franchising
|
16,619 | 16,240 | 34,759 | 34,249 | ||||||||||||
International
|
320 | (250 | ) | 592 | (1,066 | ) | ||||||||||
All others
|
471 | (298 | ) | 866 | (676 | ) | ||||||||||
Unallocated corporate expenses
|
(10,025 | ) | (8,517 | ) | (25,191 | ) | (18,286 | ) | ||||||||
Elimination of intersegment profits
|
(481 | ) | 150 | (471 | ) | (553 | ) | |||||||||
Total income before income taxes
|
$ | 24,240 | $ | 19,067 | $ | 51,378 | $ | 45,847 | ||||||||
Property and equipment:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 179,140 | ||||||||||||||
Domestic commissaries
|
89,308 | |||||||||||||||
International
|
19,032 | |||||||||||||||
All others
|
42,668 | |||||||||||||||
Unallocated corporate assets
|
136,340 | |||||||||||||||
Accumulated depreciation and amortization
|
(279,921 | ) | ||||||||||||||
Net property and equipment
|
$ | 186,567 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
(In thousands, except per share amounts)
|
2012
|
2011
|
(decrease)
|
2012
|
2011
|
(decrease)
|
||||||||||||||||||
Income before income taxes, as reported
|
$ | 24,240 | $ | 19,067 | $ | 5,173 | $ | 51,378 | $ | 45,847 | $ | 5,531 | ||||||||||||
Incentive Contribution
|
(250 | ) | - | (250 | ) | 3,471 | - | 3,471 | ||||||||||||||||
Income before income taxes, excluding Incentive Contribution
|
$ | 23,990 | $ | 19,067 | $ | 4,923 | $ | 54,849 | $ | 45,847 | $ | 9,002 | ||||||||||||
Net income, as reported
|
$ | 14,769 | $ | 12,124 | $ | 2,645 | $ | 31,513 | $ | 28,551 | $ | 2,962 | ||||||||||||
Incentive Contribution
|
(164 | ) | - | (164 | ) | 2,275 | - | 2,275 | ||||||||||||||||
Net income, excluding Incentive Contribution
|
$ | 14,605 | $ | 12,124 | $ | 2,481 | $ | 33,788 | $ | 28,551 | $ | 5,237 | ||||||||||||
Earnings per diluted share, as reported
|
$ | 0.61 | $ | 0.47 | $ | 0.14 | $ | 1.30 | $ | 1.11 | $ | 0.19 | ||||||||||||
Incentive Contribution
|
- | - | - | 0.09 | - | 0.09 | ||||||||||||||||||
Earnings per diluted share, excluding Incentive Contribution
|
$ | 0.61 | $ | 0.47 | $ | 0.14 | $ | 1.39 | $ | 1.11 | $ | 0.28 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
|||||||||||||
North America Company-owned:
|
||||||||||||||||
Beginning of period
|
597 | 592 | 598 | 591 | ||||||||||||
Opened
|
- | 3 | - | 4 | ||||||||||||
Closed
|
(2 | ) | - | (3 | ) | - | ||||||||||
Acquired from franchisees
|
56 | - | 56 | - | ||||||||||||
Sold to franchisees
|
(8 | ) | - | (8 | ) | - | ||||||||||
End of period
|
643 | 595 | 643 | 595 | ||||||||||||
International Company-owned:
|
||||||||||||||||
Beginning of period
|
29 | 21 | 30 | 21 | ||||||||||||
Opened
|
4 | 2 | 4 | 2 | ||||||||||||
Closed
|
- | - | (1 | ) | - | |||||||||||
End of period
|
33 | 23 | 33 | 23 | ||||||||||||
North America franchised:
|
||||||||||||||||
Beginning of period
|
2,498 | 2,371 | 2,463 | 2,346 | ||||||||||||
Opened
|
35 | 35 | 82 | 67 | ||||||||||||
Closed
|
(10 | ) | (13 | ) | (22 | ) | (20 | ) | ||||||||
Acquired from Company
|
8 | - | 8 | - | ||||||||||||
Sold to Company
|
(56 | ) | - | (56 | ) | - | ||||||||||
End of period
|
2,475 | 2,393 | 2,475 | 2,393 | ||||||||||||
International franchised:
|
||||||||||||||||
Beginning of period
|
809 | 703 | 792 | 688 | ||||||||||||
Opened
|
28 | 26 | 51 | 49 | ||||||||||||
Closed
|
(15 | ) | (7 | ) | (21 | ) | (15 | ) | ||||||||
End of period
|
822 | 722 | 822 | 722 | ||||||||||||
Total restaurants - end of period
|
3,973 | 3,733 | 3,973 | 3,733 |
|
·
|
Domestic Company-owned restaurant sales increased $15.9 million, or 12.4%, and $21.0 million, or 7.9%, for the three and six months ended June 24, 2012, respectively, due to increases in comparable sales of 7.4% and 5.1% and the net acquisition of 50 restaurants in Denver and Minneapolis from a franchisee in the second quarter of 2012. “Comparable sales” represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods.
|
|
·
|
North America franchise royalty revenue increased approximately $1.0 million, or 5.5%, and $1.8 million, or 4.7%, for the three and six months ended June 24, 2012, respectively, primarily due to increases in comparable sales of 5.1% and 2.7% and increases in net franchise units over the prior year. Royalty revenue increases were slightly offset by reduced royalties attributable to the Company’s net acquisition of the 50 restaurants noted above.
|
|
·
|
Domestic commissary sales increased $5.6 million, or 4.6%, and $15.5 million, or 6.2%, for the three and six months ended June 24, 2012, respectively, primarily due to higher piece counts resulting in increases in the volume of restaurant sales.
|
|
·
|
International revenues increased $3.1 million, or 21.8%, and increased $7.2 million, or 26.7%, for the three and six months ended June 24, 2012, respectively, primarily due to increases in the number of restaurants and increases in comparable sales of 6.1% and 7.2% calculated on a constant dollar basis.
|
|
·
|
The above increases were partially offset by decreases in other sales of approximately $600,000, or 4.8%, and $1.8 million, or 6.9%, for the three and six months ended June 24, 2012, respectively, primarily due to a decline in sales at our print and promotions subsidiary, Preferred Marketing Solutions, partially offset by an increase in online sales.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
Domestic Company-owned restaurants (a)
|
$ | 9,358 | $ | 7,421 | $ | 1,937 | $ | 21,679 | $ | 18,304 | $ | 3,375 | ||||||||||||
Domestic commissaries
|
7,978 | 4,321 | 3,657 | 19,144 | 13,875 | 5,269 | ||||||||||||||||||
North America franchising
|
16,619 | 16,240 | 379 | 34,759 | 34,249 | 510 | ||||||||||||||||||
International
|
320 | (250 | ) | 570 | 592 | (1,066 | ) | 1,658 | ||||||||||||||||
All others
|
471 | (298 | ) | 769 | 866 | (676 | ) | 1,542 | ||||||||||||||||
Unallocated corporate expenses (b)
|
(10,025 | ) | (8,517 | ) | (1,508 | ) | (25,191 | ) | (18,286 | ) | (6,905 | ) | ||||||||||||
Elimination of intersegment loss (profit)
|
(481 | ) | 150 | (631 | ) | (471 | ) | (553 | ) | 82 | ||||||||||||||
Total income before income taxes
|
$ | 24,240 | $ | 19,067 | $ | 5,173 | $ | 51,378 | $ | 45,847 | $ | 5,531 |
|
(a)
|
Includes the benefit of a $1.0 million advertising credit from PJMF related to the Incentive Contribution in the six months ended June 24, 2012.
|
|
(b)
|
Includes the impact of the Incentive Contribution in 2012 ($250,000 increase for the three-month period and a $4.5 million reduction for the six-month period).
|
|
·
|
Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’ operating income increased $1.9 million in the second quarter of 2012, and $3.4 million for the six months ended June 24, 2012, including the $1.0 million advertising credit from PJMF. These increases were primarily due to the previously noted comparable sales increases and lower commodity costs for the quarter. Additionally, the six-month period benefited from various supplier incentives.
|
|
·
|
Domestic Commissary Segment. Domestic commissaries’ operating income increased approximately $3.7 million and $5.3 million for three and six months ended June 24, 2012, respectively, primarily due to higher piece counts resulting from increased sales volumes from the previously noted increase in net units and comparable sales, slightly offset by higher distribution costs primarily due to higher fuel prices for the six months ended June 24, 2012.
|
|
·
|
North America Franchising Segment. North America Franchising operating income increased $379,000 and $510,000 for the three and six months ended June 24, 2012, respectively. The increases were due to the previously mentioned royalty revenue increases, substantially offset by an increase in development incentive costs.
|
|
·
|
International Segment. The International Segment reported operating income of $320,000 and $592,000 for the three and six months ended June 24, 2012, respectively. The improvements in operating results of approximately $570,000 and $1.7 million for the three- and six-month periods, respectively, compared to the corresponding 2011 periods were primarily due to increased royalties due to growth in the number of units and the 6.1% and 7.2% increases in comparable sales in the three and six months ended June 24, 2012, respectively, and improved operating results in our United Kingdom commissary.
|
|
·
|
All Others Segment. The “All others” reporting segment reported income of approximately $471,000 and $866,000 for the three and six months ended June 24, 2012, respectively. The “All Others” reporting segment results increased approximately $769,000 and $1.5 million for the three- and six-month periods, respectively, as compared to the corresponding 2011 periods. These increases were primarily due to an improvement in our eCommerce operations due to higher online sales. These improved results were somewhat offset by reduced operating results of Preferred Marketing Solutions due to the previously noted reduction in sales.
|
|
·
|
Unallocated Corporate Segment. Unallocated corporate expenses increased approximately $1.5 million and $6.9 million for the three and six months ended June 24, 2012, respectively, compared to the corresponding 2011 periods. The components of unallocated corporate expenses were as follows (in thousands):
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(decrease)
|
2012
|
2011
|
(decrease)
|
|||||||||||||||||||
General and administrative (a)
|
$ | 8,039 | $ | 5,972 | $ | 2,067 | $ | 16,700 | $ | 13,357 | $ | 3,343 | ||||||||||||
Supplier marketing (income)
|
||||||||||||||||||||||||
payment (b)
|
(250 | ) | - | (250 | ) | 4,500 | - | 4,500 | ||||||||||||||||
Net interest
|
117 | 125 | (8 | ) | 239 | 559 | (320 | ) | ||||||||||||||||
Depreciation
|
1,819 | 2,240 | (421 | ) | 3,553 | 4,418 | (865 | ) | ||||||||||||||||
Other expense (income)
|
300 | 180 | 120 | 199 | (48 | ) | 247 | |||||||||||||||||
Total unallocated corporate
|
||||||||||||||||||||||||
expenses
|
$ | 10,025 | $ | 8,517 | $ | 1,508 | $ | 25,191 | $ | 18,286 | $ | 6,905 |
|
(a)
|
Unallocated general and administrative costs increased primarily due to an increase in short-term management incentive costs. The six-month period was also impacted by additional costs related to our operators’ conference and an increase in legal costs.
|
|
(b)
|
See “Non-GAAP Measures” above for further information.
|
Three Months Ended
|
||||||||||||||||
June 24, 2012
|
June 26, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,475 | 595 | 2,393 | ||||||||||||
Equivalent units
|
626 | 2,405 | 587 | 2,333 | ||||||||||||
Comparable sales base units
|
614 | 2,179 | 582 | 2,123 | ||||||||||||
Comparable sales base percentage
|
98.1 | % | 90.6 | % | 99.1 | % | 91.0 | % | ||||||||
Average weekly sales - comparable units
|
$ | 17,746 | $ | 14,758 | $ | 16,770 | $ | 14,109 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,421 | $ | 10,159 | $ | 10,698 | $ | 9,689 | ||||||||
Average weekly sales - all units
|
$ | 17,650 | $ | 14,326 | $ | 16,714 | $ | 13,711 |
Six Months Ended
|
||||||||||||||||
June 24, 2012
|
June 26, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,475 | 595 | 2,393 | ||||||||||||
Equivalent units
|
609 | 2,409 | 587 | 2,313 | ||||||||||||
Comparable sales base units
|
598 | 2,186 | 580 | 2,114 | ||||||||||||
Comparable sales base percentage
|
98.2 | % | 90.7 | % | 98.8 | % | 91.4 | % | ||||||||
Average weekly sales - comparable units
|
$ | 18,267 | $ | 15,082 | $ | 17,530 | $ | 14,765 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,060 | $ | 10,470 | $ | 11,163 | $ | 10,697 | ||||||||
Average weekly sales - all units
|
$ | 18,161 | $ | 14,655 | $ | 17,456 | $ | 14,413 |
|
·
|
Cost of sales was 0.7% and 0.6% lower for the three and six months ended June 24, 2012, as compared to the same periods in 2011. The three-month period benefited from lower commodity costs. The six-month period benefited from various supplier incentives.
|
|
·
|
Salaries and benefits were 0.8% and 0.3% higher as a percentage of sales for the three and six months ended June 24, 2012, as compared to the same periods in 2011, primarily due to higher bonuses paid to general managers.
|
|
·
|
Advertising and related costs as a percentage of sales were 0.1% and 0.2% lower for the three and six months ended June 24, 2012. The six-month period included a $1.0 million advertising credit received from PJMF.
|
|
·
|
Occupancy costs and other operating costs, on a combined basis, as a percentage of sales, were 0.2% lower for both the three and six months ended June 24, 2012, primarily due to the benefit from increased sales.
|
|
·
|
Cost of sales was 2.1% and 1.1% lower as a percentage of revenues for the three and six months ended June 24, 2012, respectively, due to lower commodity costs, primarily cheese, which has a fixed-dollar markup.
|
|
·
|
Salaries and benefits were relatively flat in comparison to prior year (0.2% higher and 0.1% lower as a percentage of revenues for the three and six months ended June 24, 2012, respectively).
|
|
·
|
Other operating expenses as a percentage of sales were 0.1% lower as a percentage of revenues for both the three and six months ended June 24, 2012, respectively, as compared to the same periods in 2011.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
Supplier marketing (income) payment (a)
|
$ | (250 | ) | $ | - | $ | (250 | ) | $ | 4,500 | $ | - | $ | 4,500 | ||||||||||
Disposition and valuation-related losses
|
151 | 200 | (49 | ) | 116 | 385 | (269 | ) | ||||||||||||||||
Provision (credit) for uncollectible accounts
|
||||||||||||||||||||||||
and notes receivable
|
66 | (210 | ) | 276 | 169 | (128 | ) | 297 | ||||||||||||||||
Franchise and development incentives (b)
|
769 | 346 | 423 | 1,501 | 618 | 883 | ||||||||||||||||||
Other
|
399 | 1,123 | (724 | ) | 523 | 1,365 | (842 | ) | ||||||||||||||||
Total other general expenses
|
$ | 1,135 | $ | 1,459 | $ | (324 | ) | $ | 6,809 | $ | 2,240 | $ | 4,569 |
Actual Ratio for the
|
|||
Quarter Ended
|
|||
Permitted Ratio
|
June 24, 2012
|
||
Leverage Ratio
|
Not to exceed 2.5 to 1.0
|
0.5 to 1.0
|
|
Interest Coverage Ratio
|
Not less than 3.5 to 1.0
|
5.4 to 1.0
|
Six Months Ended
|
||||||||
June 24,
|
June 26,
|
|||||||
2012
|
2011
|
|||||||
Net cash provided by operating activities
|
$ | 65,162 | $ | 52,925 | ||||
Purchase of property and equipment
|
(15,046 | ) | (12,422 | ) | ||||
Free cash flow (a)
|
$ | 50,116 | $ | 40,503 |
|
(a)
|
We define free cash flow as net cash provided by operating activities (from the consolidated statements of cash flows) less the purchases of property and equipment. We believe free cash flow is an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. See “Non-GAAP Measures” above for discussion about this non-GAAP measure, its limitations and why we present free cash flow alongside the most directly comparable GAAP measure.
|
Total Number
|
Maximum Dollar
|
||||||
Total
|
Average
|
of Shares
|
Value of Shares
|
||||
Number
|
Price
|
Purchased as Part of
|
that May Yet Be
|
||||
of Shares
|
Paid per
|
Publicly Announced
|
Purchased Under the
|
||||
Fiscal Period
|
Purchased
|
Share
|
Plans or Programs
|
Plans or Programs
|
|||
12/26/2011 - 01/22/2012
|
60
|
$37.72
|
47,533
|
$119,292
|
|||
01/23/2012 - 02/19/2012
|
-
|
-
|
*
|
47,533
|
$119,292
|
||
02/20/2012 - 03/25/2012
|
312
|
$37.09
|
47,845
|
$107,719
|
|||
03/26/2012 - 04/22/2012
|
248
|
$37.57
|
48,093
|
$98,391
|
|||
04/23/2012 - 05/20/2012
|
22
|
$38.67
|
48,115
|
$97,561
|
|||
05/21/2012 - 06/24/2012
|
315
|
$46.78
|
48,430
|
$82,810
|
|||
* There were no share repurchases during this period.
|
Exhibit
|
|
Number
|
Description
|
10.1*
|
Separation and Consulting Agreement and Release between Christopher J. Sternberg and Papa John’s International, Inc.
|
10.2*
|
Papa John’s International, Inc. Severance Pay Plan. Exhibit 10.1 to our report on Form 10-Q filed on May 1, 2012 is incorporated herein by reference.
|
31.1
|
Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
Financial statements from the quarterly report on Form 10-Q of Papa John’s International, Inc. for the quarter ended June 24, 2012, filed on July 31, 2012, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.
|
PAPA JOHN’S INTERNATIONAL, INC.
|
|
(Registrant)
|
|
Date: July 31, 2012
|
/s/ Lance F. Tucker
|
Lance F. Tucker
|
|
Senior Vice President, Chief Financial Officer,
|
|
Chief Administrative Officer and Treasurer
|
|
1.
|
Separation Date. Effective on the date of this Agreement , Sternberg is resigning as an officer of the Company and its subsidiaries and affiliates (including joint ventures), including all committee, officer, board of directors and other similar positions. Effective on the Separation Date, Sternberg is voluntarily terminating his employment pursuant to Section 9(a)(ii) of the Employment Agreement dated March 5, 2012.
|
|
2.
|
Transition Period. During the Transition Period, Sternberg will continue as an employee, but not as an officer of the Company, working remotely to assist with the transition of his duties at the Company. Sternberg will work and be available on a full-time basis for meetings and consultation as needed, and in exchange, will receive his regular base salary and benefits during the Transition Period. Sternberg acknowledges and agrees that he shall have no right to any other payment or benefits, including pursuant to his Employment Agreement dated March 5, 2012, other than as provided in this Agreement.
|
|
3.
|
Cooperation. Sternberg agrees to make himself reasonably available to the Company relating to his prior services as an officer and employee of the Company including, but not limited to, assisting the Company and any of its affiliates and acting as a witness in connection with any pending or threatened litigation or other legal proceeding with respect to which the Company or such affiliates reasonably determines his participation to be necessary, and responding to questions and inquiries with respect to such prior services in connection with any such proceedings. The Company agrees to reimburse Sternberg for any and all reasonable expenses incurred by Sternberg as a result of such participation.
|
|
4.
|
Additional Consideration. In connection with the execution of this Agreement, in consideration of the role that Sternberg has and will continue to undertake in the transition of his duties and responsibilities, and as specific consideration for the release and waiver contained in Paragraph 17 below, the Company shall provide Sternberg the following consideration, to which he is not otherwise entitled:
|
|
a.
|
A payment of $10,000 at the end of the Consulting Period, as defined in paragraph 5 below.
|
|
b.
|
Should Sternberg elect COBRA continuation coverage of any health or dental benefits provided by the Company, the Company shall pay Sternberg’s COBRA premiums for six months following the Separation Date. Any COBRA premiums paid by the Company in excess of 3 months will be taxable to Sternberg.
|
|
c.
|
Papa John’s shall pay Sternberg for ten (10) days of vacation, to be included in Sternberg’s final paycheck.
|
|
d.
|
All other benefits cease effective on the Separation Date; provided, however, any amounts held in trust in the Papa John’s 401(k) Plan and Deferred Compensation Plan for the benefit of Sternberg shall continue to be held in trust for Sternberg within the parameters of the existing plan. In addition, any stock options or other equity awards held by Sternberg that are vested as of the Separation Date shall remain exercisable pursuant to the terms of the equity plan under which such options or equity awards were issued.
|
|
5.
|
Consulting Period. The Company hereby engages Sternberg as an independent contractor, and not as an Employee, to render consulting services to the Company as provided herein, and Sternberg hereby accepts such engagement. The engagement will begin at the close of business on June 3, 2012 and continue through July 3, 2012 (the “Consulting Period”), unless terminated earlier as provided herein. Company shall have the right to extend the Consulting Period for an additional four weeks, at the Company’s sole discretion, at the end of the initial Consulting Period.
|
|
6.
|
Consulting Services. During the Consulting Period, Sternberg shall consult with and advise the Company on business and legal issues as the Company may reasonably request, for approximately, but for no more than two days per week.
|
|
7.
|
Compensation; Expense Reimbursement. The Company will pay to Sternberg $2,600.00 per week during the Consulting Period (“Consulting Payments”) in consideration of consulting services rendered under this Agreement, to be paid on a weekly basis by delivery to Sternberg of a check in such amount payable to the order of Sternberg. The Company shall reimburse Sternberg for ordinary and necessary expenses incurred by him in providing services under this Agreement, with Sternberg requesting reimbursement of such expenses in accordance with the Company’s current expense reimbursement policy.
|
|
8.
|
Benefits. As an independent contractor, Sternberg shall receive no employee benefits from the Company during the Consulting Period or thereafter.
|
|
9.
|
Authority of Sternberg. As of the date of execution of this Agreement and during the Consulting Period, the parties agree that Sternberg will have no authority to bind or act on behalf of the Company or any of its affiliates, without the prior written consent of the Company.
|
|
10.
|
Confidentiality; Non-Disclosure; Non-Disparagement. Sternberg acknowledges that he has in-depth knowledge of the Company’s intellectual property, business practices and trade secrets, and that Sternberg performed many business-related duties unrelated to the practice of law on behalf of the Company. Sternberg acknowledges that the information, observations and data relating to the business of the Company are property of the Company, regardless of how, when or in what capacity Sternberg obtains such information, observations or data. Sternberg agrees that he will not use for his own purposes or disclose to any third party any such information, observations or data to which he gains access or creates in connection with providing services under this Agreement without the prior written consent of the Company. Sternberg agrees to deliver to the Company at the end of the Consulting Period, or at any other time the Company may request, all memoranda, notes, plans, records and other documentation (and copies thereof) relating to the business of the Company to which Sternberg gained access or created in providing services under this Agreement. Sternberg agrees not to disparage or make derogatory comments, verbal or written, regarding the Company, its officers, directors or employees.
|
|
11.
|
Non-Competition. Sternberg acknowledges that he has in-depth knowledge of the Company’s intellectual property, business practices and trade secrets, and that Sternberg performed many business-related duties unrelated to the practice of law on behalf of the Company. Sternberg covenants and agrees that during the Transition Period and the Consulting Period, and for a period of three years thereafter (the "Restricted Period"), Sternberg shall not, engage in any of the following activities:
|
|
12.
|
Reasonableness of Scope and Duration. The parties hereto agree that the covenants and agreements contained in Section 11 are, taken as a whole, reasonable in their geographical scope and duration, and no party shall raise any issue of the reasonableness of the scope or duration of any such covenants in any proceeding to enforce any such covenants or agreements.
|
|
13.
|
Inventions and Patents. Sternberg agrees that all inventions, innovations or improvements in the Company’s method of conducting its businesses conceived by or made by him during the term of this Agreement belong to the Company. Sternberg will promptly disclose such inventions, innovations or improvements to the Company and perform all actions reasonably requested by the Company to establish and confirm ownership.
|
|
14.
|
Termination. Unless Sternberg elects to terminate earlier, this Agreement shall terminate upon the earlier of: (a) a material breach of the terms and provisions of the Agreement by Sternberg; (b) the inability of Sternberg to perform the services under the Agreement due to death, disability or other reason; (c) or the conclusion of the Consulting Period.
|
|
15.
|
Extension or Renewal of Consulting Agreement. The parties may elect to extend or renew the terms of this Agreement by mutual written agreement. Any such extension or renewal shall extend the term of the Consulting Period.
|
|
16.
|
Taxable Income. Sternberg agrees that he will treat all payments received by him during the Consulting Period as ordinary income and will file all tax returns and reports required to be filed by him on the basis that Sternberg is an independent contractor as defined in applicable Treasury Regulations. Sternberg agrees to indemnify the Company for the amount of any taxes paid by the Company as a result of Sternberg not paying taxes owed by him with respect to Consulting Payments made under this Agreement.
|
|
17.
|
Mutual Release. Sternberg, for himself and his heirs, executors, administrators, personal representatives, successors and assigns, does hereby release and forever discharge the Company, its successors, assigns, agents, representatives, employees, officers, directors, trustees, shareholders, insurers, reinsurers and any affiliated corporations or entities of any type or nature, from any and all causes of action, actions, claims, demands, suits, dues, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, executions, damages, sums of money, attorneys’ fees, and/or judgments of any kind, whether known or unknown, arising in law or equity, arising at any time prior to and through the date of the execution of this Agreement (hereinafter “Claims”), which might have been asserted against the Company, its successors, assigns, agents, representatives, employees, officers, directors, trustees, shareholders, insurers, reinsurers and any affiliated corporations or entities, by Sternberg, or by his heirs, executors, administrators, personal representatives, successors or assigns. This release includes but is not limited to any and all Claims relating to Sternberg’s employment by the Company or the separation of his employment from the Company, including wages, compensation of any kind, vacation pay, profit sharing plans, stock option plans, retirement plans or any benefit plans of any type or nature. This release further includes but is not limited to any and all Claims arising under any of the following: the Age Discrimination in Employment Act of 1967, as amended; the Older Workers Benefit Protection Act; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Civil Rights Act of 1870; the Family and Medical Leave Act of 1993, as amended; the Americans with Disabilities Act of 1990, as amended; the Fair Labor Standards Act of 1938, as amended by the Equal Pay Act of 1963; the Employees Retirement Income Security Act of 1974; the U.S. Patriot Act; the Sarbanes-Oxley Act; the Dodd-Frank Act; any other federal, state, or local civil rights, disability, discrimination, retaliation, or labor law, or any theory of contract, arbitral, or tort law; and/or his Consulting Period, except for any Claims arising under this Agreement. The Company, for itself and its successors, assigns, agents, representatives, employees, officers, directors, trustees, and shareholders, insurers, reinsurers and any affiliated corporations or entities of any type or nature, does hereby release and forever discharge Sternberg, his heirs, personal representatives, successors and assigns, from any and all causes of action, claims, demands, suits, damages, sums of money, attorneys’ fees, and/or judgments arising at any time prior to and through the date of the execution of this Agreement (hereinafter “Company’s Claims”), which might have been asserted against Sternberg, his heirs, personal representatives, successors and assigns, except for any claims arising under this Agreement; provided, however, that the Company does not release or discharge any claims which may arise under Sternberg’s November 4, 2005 Confidentiality and Non-Competition Agreement, his November 18, 2011 Confidentiality, Non-Disparagement and Dispute Resolution Agreement, Paragraphs 6, 7, 8, 11, 12, and 13 of his March 5, 2012 Employment Agreement and any claims for which indemnification would not be available to Sternberg under Delaware law.
|
|
18.
|
Revocation Period. The parties acknowledge that this Agreement may be revoked within seven (7) days from the execution hereof and that the Agreement shall not become effective or enforceable until after the revocation period has ended without revocation. Sternberg understands that, if he elects to exercise this revocation right, this Agreement shall be voided in its entirety at the election of the Company, and the Company shall be relieved of all obligations to make any payments under this Agreement, and provide any other benefits herein. Sternberg may, if he wishes, elect to sign this Agreement prior to the expiration of the twenty one-day consideration period, and Sternberg agrees that if he elects to do so, his election is made freely and voluntarily and after having an opportunity to consult counsel. Sternberg agrees that any revocation shall be submitted to the Company in writing to the attention of the Executive Vice President.
|
|
19.
|
Miscellaneous.
|
|
a.
|
Entire Agreement. This Agreement contains the entire agreement between the parties with respect to Sternberg’s separation, transition period and consulting arrangement and shall not be amended, modified or waived without the express written consent of the parties hereto. No course of dealings between the parties shall be deemed to affect or to modify, amend or discharge any provision or term of this Agreement.
|
|
b.
|
Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of the same or any other provision by such other party.
|
|
c.
|
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its affiliates, successors and assigns.
|
|
d.
|
Governing Law; Jurisdiction and Venue. This Agreement shall be governed by, and construed and enforced in accordance with the laws of Kentucky.
|
|
e.
|
Scope and Survival. Sections 10, 11, 12, 13, 16, 17, 18 and 19 of this Agreement shall remain in full force and effect after termination of the Agreement.
|
|
f.
|
Dispute Resolution. The parties agree any dispute arising between the parties shall be resolved through confidential mediation or confidential binding arbitration through the American Arbitration Association in Louisville, Kentucky. Any resolution reached via mediation or award of an arbitrator shall be final and binding on the parties. The only exception to this mediation/arbitration requirement shall be that, in the event of an actual, threatened or anticipatory breach of the confidentiality, non-disparagement or non-competition provisions of this Agreement, the Company shall be entitled to seek injunctive relief from a court of competent jurisdiction in Kentucky to prevent or obtain immediate relief related to such breach, and in such event Sternberg hereby irrevocably consents and submits to personal jurisdiction and venue in and by the state courts within Jefferson County, Kentucky or in the United States District Court for the District of Kentucky and waives all defenses of personal jurisdiction, venue and forum non conveniens.
|
|
g.
|
Severability. The covenants and agreements contained in this Agreement shall be construed as separate covenants and agreements, and if any provision of this Agreement or its application to any person or circumstance is found to be invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected, and the Agreement shall be valid, legal and enforceable to the fullest extent permitted by law.
|
|
h.
|
Return of Property. Sternberg agrees that on or before conclusion of the Consulting Period, he will return any and all property of Papa John’s, including but not limited to his key card, office keys and corporate credit card to the company, except that the parties agree that Sternberg may keep his Dell lap top and Blackberry, subject to the removal of all Company information and personal information related to John H. Schnatter and his family members at the conclusion of the Consulting Period.
|
/s/ Christopher J. Sternberg
|
|
Christopher J. Sternberg
|
|
Christopher J. Sternberg
|
|
Printed Name
|
|
Date: May 13, 2012
|
Papa John’s International, Inc.
|
|
By: /s/ Tony Thompson
|
|
Title: EVP, Global Operations
|
|
Date: 5-14-12
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Papa John’s International, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 31, 2012
|
/s/ John H. Schnatter
|
John H. Schnatter
|
|
Founder, Chairman and
|
|
Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Papa John’s International, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 31, 2012
|
/s/ Lance F. Tucker
|
Lance F. Tucker
|
|
Senior Vice President, Chief Financial Officer,
Chief Administrative Officer and Treasurer
|
|
1.
|
The Report on Form 10-Q of the Company for the quarterly period ended June 24, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: July 31, 2012
|
/s/ John H. Schnatter
|
John H. Schnatter
|
|
Founder, Chairman and
|
|
Chief Executive Officer
|
|
1.
|
The Report on Form 10-Q of the Company for the quarterly period ended June 24, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: July 31, 2012
|
/s/ Lance F. Tucker
|
Lance F. Tucker
|
|
Senior Vice President, Chief Financial Officer,
Chief Administrative Officer and Treasurer
|