Papa John's Announces Fourth Quarter and Full-Year 2010 Results
Fourth Quarter EPS Increased 24.4% over Prior Year, Excluding BIBP; 2011 Earnings Guidance Reaffirmed
Highlights
-
Earnings per diluted share, excluding the impact of the
franchisee-owned BIBP cheese purchasing entity, of
$0.51 in fourth quarter 2010 vs.$0.41 in fourth quarter 2009 and$1.80 for full-year 2010 vs.$1.50 for full-year 2009 -
Earnings per diluted share, including the results of BIBP, of
$0.55 in fourth quarter 2010 vs.$0.49 in fourth quarter 2009 and$1.96 in full-year 2010 vs.$2.06 in full-year 2009 - Domestic system-wide comparable sales increased 0.7% for the fourth quarter and were even for the full year, representing the seventh consecutive year for even or positive domestic system-wide comparable sales
- International franchise system sales increased 21% for the fourth quarter and 17% for the full year
-
Record global restaurant sales in 2010, including
$1.9 billion for franchised restaurants and$500 million for company-owned restaurants (a combined increase of 3.0%) - Achieved 63 worldwide net unit openings during the quarter and 177 for the full year
-
Year-end BIBP deficit eliminated as part of multi-year
National Marketing Fund agreement with domestic franchisees; the company intends to eliminate pro forma reporting for BIBP impact beginning with Q1 2011
Papa John's
Consolidated revenues for 2010 were
"We are very pleased with our results in 2010 in a challenging economy
and changing pizza category," commented Papa John's Founder, Chairman
and co-Chief Executive Officer,
"The Papa John's brand continues to grow, with record global restaurant
sales, including
Non-GAAP Measures
Certain financial measures we present in this press release exclude the
impact of the consolidation of BIBP and the finalization of certain
income tax issues, which are not measures that are defined in accordance
with accounting principles generally accepted in
The company provides the following table to reconcile the financial
results we present in this press release excluding the impact of BIBP
and the finalization of certain income tax issues to our GAAP financial
measures for the fourth quarters and years ended
Fourth Quarter | Year Ended | |||||||||||||||
Dec. 26, | Dec. 27, | Dec. 26, | Dec. 27, | |||||||||||||
(In thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Pre-tax income, net of noncontrolling interests, as reported | $ | 20,336 | $ | 18,591 | $ | 78,796 | $ | 86,438 | ||||||||
Income from BIBP cheese purchasing entity (1) | (1,299 | ) | (1,560 | ) | (6,804 | ) | (22,543 | ) | ||||||||
Pre-tax income, net of noncontrolling interests, | ||||||||||||||||
excluding BIBP (1) | $ | 19,037 | $ | 17,031 | $ | 71,992 | $ | 63,895 | ||||||||
Net income, as reported | $ | 14,025 | $ | 13,698 | $ | 51,940 | $ | 57,453 | ||||||||
Income from BIBP cheese purchasing entity (1) | (843 | ) | (1,300 | ) | (4,339 | ) | (14,586 | ) | ||||||||
Gain from finalization of certain income tax issues (2) | - | (967 | ) | - | (967 | ) | ||||||||||
Net income, excluding BIBP (1) | $ | 13,182 | $ | 11,431 | $ | 47,601 | $ | 41,900 | ||||||||
Earnings per diluted share, as reported | $ | 0.55 | $ | 0.49 | $ | 1.96 | $ | 2.06 | ||||||||
Income from BIBP cheese purchasing entity (1) | (0.04 | ) | (0.05 | ) | (0.16 | ) | (0.52 | ) | ||||||||
Gain from finalization of certain income tax issues (2) | - | (0.03 | ) | - | (0.04 | ) | ||||||||||
Earnings per diluted share, excluding BIBP (1) | $ | 0.51 | $ | 0.41 | $ | 1.80 | $ | 1.50 | ||||||||
Cash flow from operations, as reported | $ | 89,096 | $ | 100,070 | ||||||||||||
Net cash flows from BIBP cheese purchasing entity (1) | (6,804 | ) | (22,543 | ) | ||||||||||||
Cash flow from operations, excluding BIBP | $ | 82,292 | $ | 77,527 | ||||||||||||
(1) The fourth quarter and full-year 2010 results exclude the reduction in BIBP's cost of sales of $14.2 million ($9.2 million after-tax or $0.36 per diluted share for the fourth quarter and $0.35 per diluted share for the year) associated with PJ Food Service's agreement to pay to BIBP for past cheese purchases an amount equal to its accumulated deficit. | ||||||||||||||||
(2) The finalization of tax issues was not significant in 2010. |
In this press release, we refer to global restaurant sales, representing
global franchised restaurant sales and global company-owned restaurant
sales. Management believes global restaurant sales information is useful
in analyzing our results because our franchisees pay royalties that are
based on a percentage of franchise sales, and franchise sales generate
commissary revenue in
Revenues Comparison
Fourth Quarter
Consolidated revenues were
-
Domestic company-owned restaurant sales increased
$3.5 million , or 2.8%, primarily due to a 2.1% increase in comparable sales. The increase in comparable sales was due to an increase in customer traffic, partially offset by a decline in our average ticket price as a result of increased levels of discounting, as compared to the prior year's fourth quarter. -
Franchise royalties revenue increased
$1.2 million primarily due to an increase in the royalty rate (the standard royalty rate for the majority of domestic franchise restaurants increased from 4.25% to 4.50% inSeptember 2009 , and increased to 4.75% in the first quarter of 2010). -
Domestic commissary sales increased
$8.8 million , or 8.2%, primarily due to an increase in sales volumes and an increase in commodities costs, substantially all of which were passed through in pricing to the restaurants. -
International revenues increased
$1.6 million primarily due to an increase in the number of our franchised international restaurants.
The increases noted above were partially offset by a
Full Year
Consolidated revenues were
-
Franchise royalties revenue increased
$7.3 million primarily due to an increase in the royalty rate as noted above. -
Domestic commissary sales increased
$36.8 million primarily due to an increase in sales volumes. -
International revenues increased
$6.5 million primarily due to an increase in the number of franchised international restaurants.
The increases noted above were partially offset by a
Operating Results and Cash Flow
Operating Results
Our pre-tax income, net of noncontrolling interests, for the fourth
quarter of 2010 was
An analysis of the changes in pre-tax income, net of noncontrolling
interests, for the fourth quarter and year ended
-
Domestic Company -owned Restaurant Segment. Domestic company-owned restaurants' operating income was$6.0 million for the fourth quarter of 2010 as compared to$6.9 million in the comparable 2009 period. For the year endedDecember 26, 2010 , operating income was$31.6 million compared to$34.9 million in the comparable 2009 period. The decrease in operating income of$900,000 in the fourth quarter 2010 was primarily due to a decline in operating margin from lower average ticket prices due to increased levels of discounting and higher commodities and advertising costs, partially offset by increased customer traffic. The decrease in full-year operating income of$3.3 million was due to a decline in operating margin from lower average ticket prices due to increased levels of discounting, partially offset by increased customer traffic and reductions in labor costs as a result of labor efficiencies from implemented initiatives. The fourth quarter and full year of 2009 included restaurant closure costs of approximately$600,000 and$700,000 , respectively. There were no significant closure costs in 2010.
Restaurant operating margin as externally reported was 18.7% for the fourth quarter of 2010, compared to 19.9% for the fourth quarter of 2009 and 20.2% for the full year 2010, compared to 21.8% for the full year 2009. Excluding the impact of the consolidation of BIBP, restaurant operating margin was 18.4% for the fourth quarter of 2010, compared to 19.6% in the fourth quarter of 2009, and was 19.9% for the full year 2010 compared to 20.7% for the full year 2009. The declines in operating margins were primarily due to increased levels of discounting.
-
Domestic Commissary Segment. Domestic commissaries' operating
income decreased
$13.1 million and$15.2 million for the fourth quarter and full-year 2010 as follows (in thousands):
Fourth Quarter | Year Ended | ||||||||||||||||||||||
Dec. 26, | Dec. 27, | Increase | Dec. 26, | Dec. 27, | Increase | ||||||||||||||||||
2010 | 2009 | (decrease) | 2010 | 2009 | (decrease) | ||||||||||||||||||
Operating income before the increase in cost of sales - BIBP agreement |
$ | 7,761 | $ | 6,758 | $ | 1,003 | $ | 28,338 | $ | 29,393 | $ | (1,055 | ) | ||||||||||
Increase in cost of sales - BIBP agreement |
(14,150 | ) | - | (14,150 | ) | (14,150 | ) | - | (14,150 | ) | |||||||||||||
Total segment operating income (loss) |
$ | (6,389 | ) | $ | 6,758 | $ | (13,147 | ) | $ | 14,188 | $ | 29,393 | $ | (15,205 | ) |
Domestic commissaries' operating income, excluding the increase in cost
of sales of
-
Domestic Franchising Segment. Domestic franchising operating
income increased approximately
$1.1 million to $15.2 million for the fourth quarter of 2010, as compared to$14.1 million in the fourth quarter of 2009, and increased$7.2 million to$60.9 million for the year endedDecember 26, 2010 , as compared to$53.7 million in the corresponding 2009 period. The increases were primarily due to an increase in franchise royalties (the standard rate increased from 4.25% to 4.50% inSeptember 2009 , and increased to 4.75% in the first quarter of 2010). The impact of the royalty rate increase was partially offset by the impact of development incentive programs offered by the company in 2009 and 2010. Franchise and development fees were approximately$30,000 and$200,000 lower for the fourth quarter and year endingDecember 26, 2010 , respectively, than the prior year periods, despite an increase of 28 and 90 domestic unit openings during the fourth quarter and full year, respectively, in 2010 as compared to the prior year. Additionally, we incurred incentive costs of$440,000 in the fourth quarter of 2010 and$1.0 million for the year endedDecember 26, 2010 , compared to$215,000 and$440,000 in the comparable periods of the prior year. -
International Segment. The international segment reported
operating losses of approximately
$270,000 and$3.5 million for the fourth quarter and full year endedDecember 26, 2010 , respectively, compared to losses of$522,000 and$3.1 million , respectively, in the same periods in 2009. The improvement in the fourth-quarter 2010 results, as compared to the corresponding 2009 period, was primarily due to improved results for ourChina company-owned operations. The increase in operating losses for the full year was due to increased personnel and franchise support costs as well as from costs associated with the opening of our new commissary in theUnited Kingdom , partially offset by increased revenues due to growth in the number of international units. -
All Others Segment. Operating income for the "All others"
reporting segment decreased approximately
$1.1 million and$850,000 for the fourth quarter and year endedDecember 26, 2010 , as compared to the corresponding 2009 periods. The decrease for the fourth quarter was primarily due to declines in operating income at Preferred due to lower sales volumes, and increased costs in our online ordering business due to increased infrastructure and support attributable to the new online ordering system introduced inOctober 2010 . The decline for the full year was primarily due to the above-noted increase in online system support costs, partially offset by an improvement in operating results at Preferred, primarily due to cost reductions implemented in 2009 and 2010. -
Unallocated Corporate Segment. Unallocated corporate expenses
decreased approximately
$1.8 million and$6.5 million for the fourth quarter and year endedDecember 26, 2010 , respectively, as compared to the corresponding 2009 periods. The components of unallocated corporate expenses were as follows (in thousands):
Fourth Quarter | Year Ended | ||||||||||||||||||||||||
Dec. 26, | Dec. 27, | Increase | Dec. 26, | Dec. 27, | Increase | ||||||||||||||||||||
2010 | 2009 | (decrease) | 2010 | 2009 | (decrease) | ||||||||||||||||||||
General and administrative (a) | $ | 5,088 | $ | 4,189 | $ | 899 | $ | 25,823 | $ | 26,893 | $ | (1,070 | ) | ||||||||||||
Net interest | 1,033 | 1,065 | (32 | ) | 4,120 | 4,251 | (131 | ) | |||||||||||||||||
Depreciation | 2,179 | 2,233 | (54 | ) | 8,873 | 8,684 | 189 | ||||||||||||||||||
Franchise support initiatives (b) | 2,239 | 3,961 | (1,722 | ) | 6,489 | 9,556 | (3,067 | ) | |||||||||||||||||
Provision (credit) for uncollectible accounts and notes receivable (c) |
(775 | ) | (188 | ) | (587 | ) | (340 | ) | 1,172 | (1,512 | ) | ||||||||||||||
Other income (d) | (461 | ) | (194 | ) | (267 | ) | (1,699 | ) | (801 | ) | (898 | ) | |||||||||||||
Total unallocated corporate expenses |
$ | 9,303 | $ | 11,066 | $ | (1,763 | ) | $ | 43,266 | $ | 49,755 | $ | (6,489 | ) |
(a) Unallocated general and administrative (G&A) costs increased in the
fourth quarter of 2010 primarily due to an increase in short-term
incentive compensation expense. The decrease in G&A costs for the full
year was primarily due to lower costs of salaries and benefits,
resulting from fewer employees and the fact that the prior year included
(b) Franchise support initiatives primarily consist of discretionary contributions to the national marketing fund and other local advertising cooperatives.
(c) The reductions in the provisions for uncollectible accounts and notes receivable for both the fourth quarter and full year were primarily due to the collection of certain accounts that were previously reserved.
(d) The increase in other income for both the fourth quarter and full-year periods of 2010 was primarily due to sales of point-of-sale systems associated with additional domestic openings.
The company recorded reductions in its customary income tax expense of
Cash Flow
Net cash provided by operating activities was
Our net debt position, defined as total debt less cash and cash
equivalents, was
Form 10-K Filing
See the Management's Discussion and Analysis of Financial Condition and
Results of Operations section of our Annual Report on Form 10-K filed
with the
Domestic System-Wide Comparable Sales and Unit Count
Domestic system-wide comparable sales for the fourth quarter of 2010
increased 0.7% (comprised of a 2.1% increase at company-owned
restaurants and a 0.3% increase at franchised restaurants). Domestic
system-wide comparable sales for the year ended
During the fourth quarter of 2010, 50 domestic restaurants (one
company-owned and 49 franchised) were opened and 27 domestic franchised
restaurants were closed. For the full year of 2010, we opened 174
domestic restaurants (five company-owned and 169 franchised) and closed
84 restaurants (two company-owned and 82 franchised). The franchised
restaurant closings included 11 non-traditional units located in Six
Flags theme parks in connection with our decision not to renew our
sponsorship agreement. The remaining four Six Flags units will close in
the first quarter of 2011. Our total domestic development pipeline as of
At
International Update
Highlights:
-
International franchise system sales increased approximately 21% to
$80.6 million in the fourth quarter of 2010, from$66.5 million in the fourth quarter of 2009 and increased approximately 17% to$295.9 million for the year endedDecember 26, 2010 , from$251.8 million in the comparable period in 2009. The impact of foreign currency exchange rates was not material to the fourth quarter and year endedDecember 26, 2010 . -
During the fourth quarter of 2010, 55 international restaurants were
opened (two company-owned and 53 franchised) while 15 international
restaurants were closed (one company-owned and 14 franchised). For the
year ended
December 26, 2010 , 151 international restaurants were opened (eight company-owned and 143 franchised) while 64 international restaurants were closed (two company-owned and 62 franchised). In 2010, we closed all of the 25 franchised restaurants inSaudi Arabia . We expect to begin reopening restaurants in this country in 2011 under a new franchise ownership and management structure. -
During the fourth quarter of 2010, our franchisees in
Morocco ,Panama andthe Philippines opened their first Papa John's restaurants.
As of
As previously announced, the company realigned management responsibility
for
Multi-Year National Marketing Fund Agreement
As previously announced, we reached an agreement with franchisees for a
multi-year
Share Repurchase Activity
The company repurchased 143,000 shares of its common stock at an average
price of
Subsequent to year-end through
The company utilizes a written trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, to facilitate the repurchase of shares of our common stock under this share repurchase program. There can be no assurance that we will repurchase shares of our common stock either through our Rule 10b5-1 trading plan or otherwise. We may terminate the Rule 10b5-1 trading plan at any time.
There were 25.7 million diluted weighted average shares outstanding for
the fourth quarter of 2010, as compared to 27.7 million for the fourth
quarter of 2009, a 7.2% decrease. Approximately 25.5 million actual
shares of the company's common stock were outstanding as of
The company's share repurchase activity increased earnings per diluted
share, excluding the impact of the consolidation of BIBP, by
2011 Earnings Guidance Reaffirmed
The company reaffirmed its previously issued guidance for 2011,
including earnings per diluted share of a range of
Forward-Looking Statements
Certain matters discussed in this press release and other company communications constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such statements may relate to projections concerning revenue, earnings, margins, unit growth and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.
The risks, uncertainties and assumptions that are involved in our
forward-looking statements include, but are not limited to: changes in
pricing or other marketing or promotional strategies by competitors
which may adversely affect sales, including an increase in or
continuation of the aggressive pricing and promotional environment; new
product and concept developments by food industry competitors; the
ability of the company and its franchisees to meet planned growth
targets and operate new and existing restaurants profitably; general
economic conditions and resulting impact on consumer buying habits;
changes in consumer preferences; increases in or sustained high costs of
food ingredients and other commodities, paper, utilities, fuel, employee
compensation and benefits, insurance and similar costs (including the
impact of the recently passed federal health care legislation); the
ability of the company to pass along increases in or sustained high
costs to franchisees or consumers; the impact of current or future legal
claims and current or proposed legislation impacting our business; the
impact that product recalls, food quality or safety issues, and general
public health concerns could have on our restaurants; currency exchange
and interest rates; and increased risks associated with our
international operations, including economic and political conditions in
our international markets and difficulty in meeting planned sales
targets for our international operations. These and other risk factors
are discussed in detail in "Part I. Item 1A. - Risk Factors" of the
Annual Report on Form 10-K for the fiscal year ended
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Summary Financial Data Papa John's International, Inc. (Unaudited) |
||||||||||||||||
Fourth Quarter | Year Ended | |||||||||||||||
Dec. 26, | Dec. 27, | Dec. 26, | Dec. 27, | |||||||||||||
(In thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Revenues | $ | 286,838 | $ | 272,777 | $ | 1,126,397 | $ | 1,078,550 | ||||||||
Income before income taxes, net of noncontrolling interests* |
$ | 20,336 | $ | 18,591 | $ | 78,796 | $ | 86,438 | ||||||||
Net income | $ | 14,025 | $ | 13,698 | $ | 51,940 | $ | 57,453 | ||||||||
Earnings per share - assuming dilution | $ | 0.55 | $ | 0.49 | $ | 1.96 | $ | 2.06 | ||||||||
Weighted average shares outstanding - assuming dilution |
25,687 | 27,679 | 26,468 | 27,909 | ||||||||||||
EBITDA (1) | $ | 29,692 | $ | 27,901 | $ | 115,666 | $ | 122,908 | ||||||||
*The following is a summary of our income (loss) before income taxes, net of noncontrolling interests: | ||||||||||||||||
Fourth Quarter | Year Ended | |||||||||||||||
Dec. 26, | Dec. 27, | Dec. 26, | Dec. 27, | |||||||||||||
(in thousands) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Domestic company-owned restaurants | $ | 6,015 | $ | 6,912 | $ | 31,619 | $ | 34,894 | ||||||||
Domestic commissaries (a) | (6,389 | ) | 6,758 | 14,188 | 29,393 | |||||||||||
Domestic franchising | 15,177 | 14,057 | 60,908 | 53,690 | ||||||||||||
International | (270 | ) | (522 | ) | (3,450 | ) | (3,050 | ) | ||||||||
All others | 660 | 1,786 | 1,847 | 2,697 | ||||||||||||
Unallocated corporate expenses | (9,303 | ) | (11,066 | ) | (43,266 | ) | (49,755 | ) | ||||||||
Elimination of intersegment profit | (190 | ) | (52 | ) | (519 | ) | (218 | ) | ||||||||
Income before income taxes, excluding BIBP (a) | 5,700 | 17,873 | 61,327 | 67,651 | ||||||||||||
BIBP, a variable interest entity (2) (a) | 15,449 | 1,560 | 20,954 | 22,543 | ||||||||||||
Less: noncontrolling interests | (813 | ) | (842 | ) | (3,485 | ) | (3,756 | ) | ||||||||
Total income before income taxes, net of noncontrolling interests |
$ | 20,336 | $ | 18,591 | $ | 78,796 | $ | 86,438 | ||||||||
(a) PJFS agreed to pay to BIBP the amount equal to its accumulated deficit at December 26, 2010. Accordingly, BIBP recorded a decrease of $14.2 million in cost of sales and PJFS recorded a corresponding increase in cost of sales. This transaction did not have any impact on the company's 2010 consolidated income statement results since both PJFS and BIBP are fully consolidated. Income before income taxes, excluding BIBP was $19.9 million for the fourth quarter of 2010 and $75.5 million for the full year of 2010. |
Summary Financial Data (continued) Papa John's International, Inc. (Unaudited) |
||||||||||||||||
The following is a reconciliation of EBITDA to net income (in thousands): | ||||||||||||||||
Fourth Quarter | Year Ended | |||||||||||||||
Dec. 26, | Dec. 27, | Dec. 26, | Dec. 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
EBITDA (1) | $ | 29,692 | $ | 27,901 | $ | 115,666 | $ | 122,908 | ||||||||
Income tax expense | (6,311 | ) | (4,893 | ) | (26,856 | ) | (28,985 | ) | ||||||||
Net interest expense | (1,071 | ) | (1,207 | ) | (4,463 | ) | (5,024 | ) | ||||||||
Depreciation and amortization | (8,285 | ) | (8,103 | ) | (32,407 | ) | (31,446 | ) | ||||||||
Net income | $ | 14,025 | $ | 13,698 | $ | 51,940 | $ | 57,453 |
The company's free cash flow for the last two years is as follows (in thousands): | ||||||||
Year Ended | ||||||||
Dec. 26, | Dec. 27, | |||||||
2010 | 2009 | |||||||
Net cash provided by operating activities | $ | 89,096 | $ | 100,070 | ||||
Pre-tax income from BIBP cheese purchasing entity | (6,804 | ) | (22,543 | ) | ||||
Purchases of property and equipment | (31,125 | ) | (33,538 | ) | ||||
Free cash flow (3) | $ | 51,167 | $ | 43,989 | ||||
(1) Management considers EBITDA to be a meaningful indicator of
operating performance from operations before depreciation, amortization,
net interest and income taxes. EBITDA provides us with an understanding
of one aspect of earnings before the impact of investing and financing
transactions and income taxes. While EBITDA should not be construed as a
substitute for net income or a better indicator of liquidity than cash
flows from operating activities, which are determined in accordance with
accounting principles generally accepted in
(2) BIBP reported pre-tax income of approximately
BIBP reported pre-tax income of approximately
(3) Free cash flow is defined as net cash provided by operating activities (from the consolidated statements of cash flows) excluding the pre-tax income (loss) impact of BIBP, less the purchases of property and equipment. We view free cash flow as an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by GAAP and as a result our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP measures.
For more information about the company, please visit www.papajohns.com.
Papa John's International, Inc. and Subsidiaries | ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 26, 2010 |
December 27, 2009 |
December 26, 2010 |
December 27, 2009 |
|||||||||||||
(In thousands, except per share amounts) | (Unaudited) | (Unaudited) | ||||||||||||||
Revenues: | ||||||||||||||||
Domestic: | ||||||||||||||||
Company-owned restaurant sales | $ | 128,620 | $ | 125,124 | $ | 503,272 | $ | 503,818 | ||||||||
Franchise royalties | 17,136 | 15,959 | 68,358 | 61,012 | ||||||||||||
Franchise and development fees | 99 | 69 | 340 | 519 | ||||||||||||
Commissary sales | 116,046 | 107,236 | 454,506 | 417,689 | ||||||||||||
Other sales | 12,277 | 13,346 | 51,951 | 54,045 | ||||||||||||
International: | ||||||||||||||||
Royalties and franchise and development fees | 4,038 | 3,448 | 14,808 | 13,244 | ||||||||||||
Restaurant and commissary sales | 8,622 | 7,595 | 33,162 | 28,223 | ||||||||||||
Total revenues | 286,838 | 272,777 | 1,126,397 | 1,078,550 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Domestic Company-owned restaurant expenses: | ||||||||||||||||
Cost of sales | 29,459 | 27,079 | 111,010 | 100,863 | ||||||||||||
Salaries and benefits | 34,925 | 35,935 | 137,840 | 146,116 | ||||||||||||
Advertising and related costs | 13,357 | 11,660 | 47,174 | 45,593 | ||||||||||||
Occupancy costs | 8,079 | 7,876 | 32,343 | 31,685 | ||||||||||||
Other operating expenses | 18,779 | 17,682 | 72,997 | 69,946 | ||||||||||||
Total domestic Company-owned restaurant expenses | 104,599 | 100,232 | 401,364 | 394,203 | ||||||||||||
Domestic commissary and other expenses: | ||||||||||||||||
Cost of sales | 97,241 | 90,558 | 382,150 | 348,265 | ||||||||||||
Salaries and benefits | 8,230 | 7,778 | 34,063 | 33,839 | ||||||||||||
Other operating expenses | 11,347 | 10,455 | 46,890 | 43,595 | ||||||||||||
Total domestic commissary and other expenses | 116,818 | 108,791 | 463,103 | 425,699 | ||||||||||||
Loss (income) from the franchise cheese-purchasing program, net of noncontrolling interest |
(1,061 | ) | (1,343 | ) | (5,634 | ) | (18,079 | ) | ||||||||
International operating expenses | 7,596 | 6,519 | 29,429 | 24,356 | ||||||||||||
General and administrative expenses | 25,971 | 24,733 | 109,954 | 111,361 | ||||||||||||
Other general expenses | 2,410 | 5,102 | 9,030 | 14,346 | ||||||||||||
Depreciation and amortization | 8,285 | 8,103 | 32,407 | 31,446 | ||||||||||||
Total costs and expenses | 264,618 | 252,137 | 1,039,653 | 983,332 | ||||||||||||
Operating income | 22,220 | 20,640 | 86,744 | 95,218 | ||||||||||||
Net interest expense | (1,071 | ) | (1,207 | ) | (4,463 | ) | (5,024 | ) | ||||||||
Income before income taxes | 21,149 | 19,433 | 82,281 | 90,194 | ||||||||||||
Income tax expense | 6,311 | 4,893 | 26,856 | 28,985 | ||||||||||||
Net income, including noncontrolling interests | 14,838 | 14,540 | 55,425 | 61,209 | ||||||||||||
Less: income attributable to noncontrolling interests | (813 | ) | (842 | ) | (3,485 | ) | (3,756 | ) | ||||||||
Net income, net of noncontrolling interests | $ | 14,025 | $ | 13,698 | $ | 51,940 | $ | 57,453 | ||||||||
Basic earnings per common share | $ | 0.55 | $ | 0.50 | $ | 1.97 | $ | 2.07 | ||||||||
Earnings per common share - assuming dilution | $ | 0.55 | $ | 0.49 | $ | 1.96 | $ | 2.06 | ||||||||
Basic weighted average shares outstanding | 25,543 | 27,603 | 26,328 | 27,738 | ||||||||||||
Diluted weighted average shares outstanding | 25,687 | 27,679 | 26,468 | 27,909 |
Papa John's International, Inc. and Subsidiaries | ||||||
Condensed Consolidated Balance Sheets | ||||||
December 26, | December 27, | |||||
2010 | 2009 | |||||
(Note) | (Note) | |||||
(In thousands) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 46,225 | $ | 25,457 | ||
Accounts receivable, net | 25,357 | 22,119 | ||||
Inventories | 17,402 | 15,576 | ||||
Prepaid expenses | 10,009 | 8,695 | ||||
Other current assets | 3,732 | 3,748 | ||||
Deferred income taxes | 9,647 | 8,408 | ||||
Total current assets | 112,372 | 84,003 | ||||
Investments | 1,604 | 1,382 | ||||
Net property and equipment | 186,594 | 187,971 | ||||
Notes receivable , net | 17,354 | 16,359 | ||||
Deferred income taxes | - | 6,804 | ||||
Goodwill | 74,697 | 75,066 | ||||
Other assets | 23,320 | 22,141 | ||||
Total assets | $ | 415,941 | $ | 393,726 | ||
Liabilities and stockholders' equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 31,569 | $ | 26,990 | ||
Income and other taxes payable | 6,140 | 5,854 | ||||
Accrued expenses | 52,978 | 54,241 | ||||
Total current liabilities | 90,687 | 87,085 | ||||
Unearned franchise and development fees | 6,596 | 5,668 | ||||
Long-term debt, net of current portion | 99,017 | 99,050 | ||||
Other long-term liabilities | 12,100 | 16,886 | ||||
Deferred income taxes | 341 | - | ||||
Total liabilities | 208,741 | 208,689 | ||||
Total stockholders' equity | 207,200 | 185,037 | ||||
Total liabilities and stockholders' equity | $ | 415,941 | $ | 393,726 | ||
Note: The Condensed Consolidated Balance Sheets at December 26, 2010 and December 27, 2009 have been derived from the audited consolidated financial statements at that date, but do not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. |
Papa John's International, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Cash Flows | ||||||||
Year Ended | ||||||||
(In thousands) | December 26, 2010 | December 27, 2009 | ||||||
Operating activities | ||||||||
Net income, net of noncontrolling interests | $ | 51,940 | $ | 57,453 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Restaurant impairment and disposition losses | 253 | 657 | ||||||
Provision for uncollectible accounts and notes receivable | 917 | 2,242 | ||||||
Depreciation and amortization | 32,407 | 31,446 | ||||||
Deferred income taxes | 4,553 | 7,469 | ||||||
Stock-based compensation expense | 6,066 | 5,817 | ||||||
Excess tax benefit related to exercise of non-qualified stock options | (359 | ) | (1,035 | ) | ||||
Other | 512 | 1,672 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (5,022 | ) | 155 | |||||
Inventories | (1,848 | ) | 1,096 | |||||
Prepaid expenses | (1,303 | ) | 595 | |||||
Other current assets | 16 | 2,009 | ||||||
Other assets and liabilities | (935 | ) | (3,507 | ) | ||||
Accounts payable | 4,579 | (1,776 | ) | |||||
Income and other taxes payable | 286 | (3,831 | ) | |||||
Accrued expenses | (3,894 | ) | (144 | ) | ||||
Unearned franchise and development fees | 928 | (248 | ) | |||||
Net cash provided by operating activities | 89,096 | 100,070 | ||||||
Investing activities | ||||||||
Purchases of property and equipment | (31,125 | ) | (33,538 | ) | ||||
Purchases of investments | (549 | ) | (1,187 | ) | ||||
Proceeds from sale or maturity of investments | 327 | 335 | ||||||
Loans issued | (2,637 | ) | (11,635 | ) | ||||
Loan repayments | 3,918 | 8,496 | ||||||
Acquisitions | - | (464 | ) | |||||
Proceeds from divestitures of restaurants | 1,397 | 830 | ||||||
Other | 12 | 756 | ||||||
Net cash used in investing activities | (28,657 | ) | (36,407 | ) | ||||
Financing activities | ||||||||
Net repayments from line of credit facility | - | (24,500 | ) | |||||
Net repayments from short-term debt - variable interest entities | - | (7,075 | ) | |||||
Excess tax benefit related to exercise of non-qualified stock options | 359 | 1,035 | ||||||
Proceeds from exercise of stock options | 6,410 | 9,830 | ||||||
Acquisition of Company common stock | (46,936 | ) | (28,477 | ) | ||||
Noncontrolling interests, net of contributions and distributions | 338 | (84 | ) | |||||
Other | 96 | (27 | ) | |||||
Net cash used in financing activities | (39,733 | ) | (49,298 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 62 | 176 | ||||||
Change in cash and cash equivalents | 20,768 | 14,541 | ||||||
Cash and cash equivalents at beginning of period | 25,457 | 10,916 | ||||||
Cash and cash equivalents at end of period | $ | 46,225 | $ | 25,457 |
Restaurant Progression | ||||||||||
Papa John's International, Inc. | ||||||||||
Fourth Quarter Ended December 26, 2010 | ||||||||||
Corporate | Franchised | |||||||||
Domestic | Int'l | Domestic | Int'l | Total | ||||||
Papa John's restaurants | ||||||||||
Beginning of period | 590 | 20 | 2,258 | 715 | 3,583 | |||||
Opened | 1 | 2 | 49 | 53 | 105 | |||||
Closed | - | (1) | (27) | (14) | (42) | |||||
Acquired | - | - | - | - | - | |||||
Sold | - | - | - | - | - | |||||
End of Period | 591 | 21 | 2,280 | 754 | 3,646 | |||||
Fourth Quarter Ended December 27, 2009 | ||||||||||
Corporate | Franchised | |||||||||
Domestic | Int'l | Domestic | Int'l | Total | ||||||
Papa John's restaurants | ||||||||||
Beginning of period | 590 | 23 | 2,212 | 633 | 3,458 | |||||
Opened | - | 3 | 21 | 40 | 64 | |||||
Closed | (2) | - | (40) | (11) | (53) | |||||
Acquired | - | - | - | - | - | |||||
Sold | - | - | - | - | - | |||||
End of Period | 588 | 26 | 2,193 | 662 | 3,469 | |||||
Note: Corporate domestic includes 127 majority-owned joint venture restaurants at both December 26, 2010 and December 27, 2009, which are fully consolidated. |
Restaurant Progression | ||||||||||
Papa John's International, Inc. | ||||||||||
Year Ended December 26, 2010 | ||||||||||
Corporate | Franchised | |||||||||
Domestic | Int'l | Domestic | Int'l | Total | ||||||
Papa John's restaurants | ||||||||||
Beginning of period | 588 | 26 | 2,193 | 662 | 3,469 | |||||
Opened | 5 | 8 | 169 | 143 | 325 | |||||
Closed | (2) | (2) | (82) | (62) | (148) | |||||
Acquired | - | 1 | - | 12 | 13 | |||||
Sold | - | (12) | - | (1) | (13) | |||||
End of Period | 591 | 21 | 2,280 | 754 | 3,646 | |||||
Year Ended December 27, 2009 | ||||||||||
Corporate | Franchised | |||||||||
Domestic | Int'l | Domestic | Int'l | Total | ||||||
Papa John's restaurants | ||||||||||
Beginning of period | 592 | 23 | 2,200 | 565 | 3,380 | |||||
Opened | 5 | 4 | 79 | 128 | 216 | |||||
Closed | (8) | (1) | (87) | (31) | (127) | |||||
Acquired | 11 | - | 12 | - | 23 | |||||
Sold | (12) | - | (11) | - | (23) | |||||
End of Period | 588 | 26 | 2,193 | 662 | 3,469 | |||||
Note: Corporate domestic includes 127 majority-owned joint venture restaurants at both December 26, 2010 and December 27, 2009, which are fully consolidated. |
Papa John's
Chief
Financial Officer
Source: Papa John's
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