Papa John‘s International, Inc.
Aug 3, 2004

Papa John's Reports Second Quarter Earnings and Revenues; July Comparable Sales Results Announced; 2004 Earnings Guidance Reaffirmed - before FIN 46 - and Assumptions Updated

LOUISVILLE, Ky.--(BUSINESS WIRE)--Aug. 3, 2004--Papa John's International, Inc. (Nasdaq: PZZA):

Highlights

Papa John's International, Inc. (Nasdaq: PZZA) today announced revenues of $230.0 million for the second quarter of 2004, representing an increase of 1.6% from revenues of $226.5 million for the same period in 2003. The net loss for the second quarter of 2004 was $2.6 million compared to last year's net income of $10.9 million, and diluted loss per share was $0.15 for the second quarter of 2004 as compared to net income per share of $0.60 for the same period in 2003. The second quarter 2004 results included a net loss of $11.5 million, or $0.66 per share, from the consolidation of the results of the franchisee-owned cheese purchasing company, BIBP Commodities, Inc. (BIBP), a variable interest entity.

Revenues were $466.9 million for the six months ended June 27, 2004, representing an increase of 1.8% from revenues of $458.8 million for the same period in 2003. Net income for the six months ended June 27, 2004 was $5.9 million compared to last year's net income of $21.8 million, and diluted earnings per share was $0.33 for the six-month period in 2004 as compared to $1.21 for the same period in 2003. The six month 2004 results included a net loss of $12.5 million, or $0.70 per share, from the consolidation of BIBP.

Revenues Comparison



The primary factors impacting the year-over-year increases in revenues for the three and six-month periods ended June 27, 2004 were: (1) the consolidation of 33 franchised restaurants beginning in the second quarter of 2004 resulting from the implementation of Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, An Interpretation of Accounting Research Bulletin No. 51 (FIN 46); (2) the first quarter sales of promotional items associated with our March 2004 NCAA national promotion; and (3) the favorable impact of higher commodity prices, primarily cheese, on commissary sales was substantially offset by lower sales volumes.

Operating Results

Our pre-tax loss for the second quarter of 2004 was $4.1 million compared to pre-tax income of $17.4 million for the corresponding period in 2003. The decline in pre-tax income of $21.5 million is principally due to the $18.3 million pre-tax loss incurred by BIBP, a decline in operating results in our domestic commissary operations of $2.1 million primarily attributable to lower sales volumes and an increase in G&A expenses of $1.1 million primarily attributable to: a $375,000 increase in bonuses paid to corporate and restaurant management who met pre-established targets for their operating units, a $500,000 increase in compensation expense related to stock options awarded in late 2003 that vest over a 12-month period throughout 2004 and a $540,000 increase in administrative costs associated with our international operations to support our new franchisees. Additional analysis of year-over-year results is presented in the attached supplemental information.

Our pre-tax income for the six months ended June 27, 2004 was $9.5 million compared to $34.9 million for the corresponding period in 2003. The decline in pre-tax income of $25.4 million is principally due to the $20.0 million pre-tax loss incurred by BIBP, a decline in operating results in our domestic commissary operations of $2.2 million primarily attributable to lower sales volumes and an increase in G&A expenses of $3.0 million primarily attributable to: a $930,000 increase in bonuses paid to corporate and restaurant management who met pre-established targets for their operating units, a $1.0 million increase in compensation expense related to stock options awarded in late 2003 that vest over a 12-month period throughout 2004, a $600,000 increase in administrative costs associated with our international operations to support our new franchisees and $380,000 of consulting fees associated with our initiatives to identify opportunities for improving restaurant operating margins.

The attached Summary Financial Data schedule includes pre-tax income results by reporting segment that isolate the impact of BIBP on the total operating results of the company.



Comparable Sales and Unit Count

As previously announced, domestic system-wide comparable sales for the second quarter decreased 1.9% (composed of a 0.3% increase at company-owned restaurants and a 2.6% decrease at franchise restaurants). For the six months ended June 27, 2004, system-wide domestic comparable sales decreased 0.7% (composed of a 0.8% increase at company-owned restaurants and a 1.2% decrease at franchise restaurants). The company today announced that July domestic system-wide comparable sales increased approximately 3.3% (3.7% increase at company-owned restaurants and 3.2% increase at franchised restaurants). The July 2004 promotion was supported by national television whereas the July 2003 promotion was not. Total July international system-wide sales increased 1.6% on a constant U.S. dollar basis.

During the second quarter, a total of 28 Papa John's restaurants were opened (one company-owned and 25 franchised Papa John's and two franchised Perfect Pizza restaurants), and 69 restaurants closed (three company-owned and 61 franchised Papa John's restaurants and five franchised Perfect Pizza restaurants). At June 27, 2004, there were 2,771 Papa John's restaurants (567 company-owned and 2,204 franchised) operating in 49 states and 16 international markets. The company is also a franchisor of 124 Perfect Pizza restaurants in the United Kingdom.

Earnings Guidance for 2004 Reaffirmed

Although slightly negative domestic system-wide comparable sales for the first six months of 2004 were below our expectations, we believe our recent marketing initiatives will improve sales trends throughout the remainder of 2004 (as supported by improving results for June and July). Accordingly, we reaffirm our existing guidance of flat to 2% increase in full-year 2004 comparable sales. In addition, during 2004 we have undertaken procurement and administrative costs savings initiatives that we expect to substantially offset the restaurant level impact on Company-owned units of the recent and projected cost increases in cheese and other commodities.

Additionally, the company has repurchased 1.6 million shares of common stock for a total purchase price of $50.7 million, or $32.13 per share, during the first six months of 2004, and the board of directors has authorized the purchase of an additional $22.6 million of common stock during the remainder of the year. The actual and anticipated repurchase of common stock is expected to provide approximately $0.08 of earnings per share accretion for 2004. After considering these and other factors expected to impact financial results during the second half of 2004, the company reaffirms its previously announced earnings per share guidance of $2.20 to $2.28, excluding the earnings impact from the consolidation of BIBP. However, given the expected impact of unfavorable domestic unit count on franchise royalties and commissary operating results, the company deems it more likely that earnings will be near the low end of the range. Significant assumptions considered in deriving updated 2004 guidance are presented in the attached supplemental information.



Based on actual results to date and current CME milk futures market prices for the remainder of the year, the consolidation of BIBP is expected to reduce full-year 2004 pre-tax income approximately $19.5 million (including the $20.0 million impact in the first six months of 2004) or $0.70 per share. Accordingly, 2004 earnings guidance including the expected impact from the consolidation of BIBP is projected to be near the low end of the $1.50 to $1.58 per share range. The inherent volatility in the cheese spot market and milk futures market can lead to similar volatility in projecting the impact of the consolidation of BIBP on the company's financial results. Accordingly, we will update these projections on a quarterly basis.

Joint Venture with Blue and Silver Ventures, Ltd.

Also today, the company announced the formation of a joint venture arrangement with Blue and Silver Ventures, Ltd., an entity of Dallas Cowboys owner Jerry Jones, for the operation and marketing of 71 Papa John's restaurants in the Dallas, Austin and Waco markets in Texas. Other information regarding the joint venture is included in a separate release.

Forward-Looking Statements

Except for historical information, this announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect management's expectations based upon currently available information and data; however, actual results are subject to future events and uncertainties, which could cause actual results to materially differ from those projected in these statements. Certain factors that can cause actual results to materially differ include: the uncertainties associated with litigation; increased advertising, promotions and discounting by competitors which may adversely affect sales; new product and concept developments by food industry competitors; the ability of the company and its franchisees to open new restaurants and operate new and existing restaurants profitably; increases in food, labor, utilities, employee benefits and similar costs; and economic, political and public health conditions in the countries in which the company or its franchisees operate. These factors might be especially harmful to the financial viability of franchisees in under-penetrated or emerging markets, leading to greater unit closings than anticipated. Further information regarding factors that could affect the company's financial and other results is included in the company's Forms 10Q and 10K, filed with the Securities and Exchange Commission.

Conference Call



A conference call is scheduled for Wednesday, August 4, 2004 at 10:00 AM EDT to review second quarter results. The call can be accessed from the company's web page at www.papajohns.com in a listen-only mode, or dial 800-511-7629 for participation in the question and answer session. International participants may dial 706-634-5839.

The conference call will be available for replay beginning Wednesday, August 4, 2004 at approximately Noon through Friday, August 6, 2004, at Midnight EDT. The replay can be accessed from the company's web page at www.papajohns.com or by dialing 800-642-1687 (passcode 5445056). International participants may dial 706-645-9291 (passcode 5445056).


                        Summary Financial Data
                    Papa John's International, Inc.

                               Three Months Ended   Six Months Ended
                               ------------------  ------------------

(In thousands, except per      June 27,  June 29,  June 27,  June 29,
 share amounts)                  2004      2003      2004      2003
                               --------  --------  --------  --------

Revenues                       $230,037  $226,469  $466,946  $458,751
                               ========  ========  ========  ========
Income (loss) before income
 taxes                         $ (4,117) $ 17,365  $  9,461  $ 34,942
                               ========  ========  ========  ========

Net income (loss)              $ (2,573) $ 10,854  $  5,913  $ 21,839
                               ========  ========  ========  ========

Diluted earnings (loss) per
 share                         $  (0.15) $   0.60  $   0.33  $   1.21
                               ========  ========  ========  ========
Diluted weighted-average
 shares outstanding              17,402    17,999    17,855    18,011
                               ========  ========  ========  ========

EBITDA (A)                     $  4,456  $ 26,669  $ 26,851  $ 53,810
                               ========  ========  ========  ========

The following is a summary of our income (loss) before income taxes
 by reporting segment:

Domestic company-owned
 restaurants                   $  2,180  $     69  $  4,115  $    960
Domestic commissaries (B)         3,594     5,671     9,139    11,306
Domestic franchising             10,846    11,879    22,683    24,097
International                       (49)      340       167         4
VIEs, primarily BIBP            (18,360)        -   (20,005)        -
All others                         (153)     (782)      454        61
Unallocated corporate
 expenses (C)                    (2,094)      264    (7,001)   (1,338)
Elimination of intersegment
 profits                            (81)      (76)      (91)     (148)
                               --------  --------  --------  --------
Income (loss) before income
 taxes                         $ (4,117) $ 17,365  $  9,461  $ 34,942
                               ========  ========  ========  ========

The following is a reconciliation of EBITDA to net income (loss):

EBITDA (A)                     $  4,456  $ 26,669  $ 26,851  $ 53,810
Income tax (expense) benefit      1,544    (6,511)   (3,548)  (13,103)
Interest expense                   (899)   (1,659)   (2,296)   (3,567)
Investment income                   143       162       284       416
Depreciation and amortization    (7,817)   (7,807)  (15,378)  (15,717)
                               --------  --------  --------  --------
Net income (loss)              $ (2,573) $ 10,854  $  5,913  $ 21,839
                               ========  ========  ========  ========


(A) EBITDA represents operating performance before depreciation,
    amortization, net interest and income taxes. While EBITDA should
    not be construed as a substitute for operating income or a better
    indicator of liquidity than cash flows from operating activities,
    which are determined in accordance with accounting principles
    generally accepted in the United States, it is included herein to
    provide additional information with respect to the ability of the
    company to meet its future debt service, capital expenditure and
    working capital requirements. EBITDA is not necessarily a measure
    of the company's ability to fund its cash needs.

(B) The 2004 results for the domestic commissaries segment are
    favorably impacted by a reduction in the corporate expense
    allocations approximating $650,000 and $1.3 million, respectively,
    for the second quarter and six months ended June 27, 2004, as
    compared to the same periods in 2003.

(C) The increase in 2004 unallocated corporate expenses from 2003 is
    primarily due to: (1) increases of $1.1 million and $3.0 million,
    respectively, in G&A expenses for the three and six months ended
    June 27, 2004, primarily attributable to stock options awarded in
    2003 and incentive compensation awarded in 2004; (2) the
    above-noted reduction in the corporate allocations to domestic
    commissaries approximating $650,000 and $1.3 million,
    respectively; and (3) increases in the provision for uncollectible
    accounts receivable of $185,000 and $600,000, respectively.

Supplemental Information

Second Quarter Operating Results

Variable Interest Entities

As disclosed in previous releases, as required by FIN 46, the company's 2004 operating results include BIBP's operating results. The consolidation of BIBP had a significant impact on the first six months of operating results and is expected to have a significant ongoing impact on the company's future operating results and income statement presentation as described below.

Consolidation accounting requires the net impact from the consolidation of BIBP to be reflected in two separate components of the company's statement of operations. The first component is the portion of BIBP operating income or loss attributable to the amount of cheese purchased by company-owned restaurants during the period. This portion of BIBP operating income (loss) is reflected as a reduction (increase) in the "Domestic company-owned restaurant expenses - cost of sales" line item. This approach effectively reports cost of sales for company-owned restaurants as if the purchasing arrangement with BIBP did not exist and such restaurants were purchasing cheese at the spot market prices (i.e., the impact of BIBP is eliminated in consolidation).

The remainder of the net impact from the consolidation of BIBP is reflected in the caption "Loss (income) from the franchise cheese purchasing program, net of minority interest." This line item represents BIBP's income or loss from purchasing cheese at the spot market price and selling to franchised restaurants at a fixed quarterly price, net of any income or loss attributable to the minority interest BIBP shareholders. The amount of income or loss attributable to the BIBP shareholders depends on its cumulative shareholders' equity balance and the change in such balance during the reporting period.

In addition, Papa John's has extended loans to certain franchisees. Under the FIN 46 rules, Papa John's is deemed to be the primary beneficiary of four of these franchisees, even though we have no ownership interest in them. Beginning in the second quarter of 2004, FIN 46 requires Papa John's to recognize the operating income (losses) generated by these four franchise entities (representing 33 Papa John's restaurants). For the second quarter of 2004, the consolidation of these four franchise entities had no significant net impact (less than $25,000) on Papa John's operating results, generating revenues of $5.0 million, operating expenses of $4.7 million and other expenses (including G&A, depreciation and interest) totaling $300,000.



Review of Operating Results

During the second quarter of 2004, domestic corporate restaurant sales were $102.3 million, compared to $103.4 million for the same period in 2003. The 1.1% decrease is primarily due to a 2.6% decrease in equivalent units, as the company closed 22 underperforming restaurants in the fourth quarter of 2003, partially offset by a 0.3% increase in comparables sales for the 2004 quarter. Domestic franchise sales for the quarter decreased 2.0% to $318.3 million from $324.6 million for the same period in 2003, primarily resulting from a 2.6% decrease in comparable sales for the 2004 quarter and a 0.4% decrease in the number of equivalent franchise units.

The second quarter comparable sales base for domestic corporate restaurants consisted of 548 units, or 97.3% of total equivalent units, and the domestic franchise base consisted of 1,890 units or 95.4% of total equivalent units. Average weekly sales for restaurants included in the corporate comparable base were $14,054, while other corporate units averaged $10,976 for an overall average of $13,972. Average weekly sales for the restaurants included in the franchise comparable base were $12,482, while other franchise units averaged $9,702 for an overall average of $12,353.

Domestic franchise royalties were $12.1 million in the second quarter of 2004, a 2.9% decrease from $12.5 million for the comparable period in 2003, primarily due to the previously mentioned decrease in franchised sales. Domestic franchise and development fees were $474,000 in the quarter, including approximately $109,000 recognized upon development cancellation or franchise renewal and transfer, compared to $208,000 for the same period in 2003. There were 18 domestic franchise restaurant openings in the second quarter of 2004 compared to 10 in 2003.

The restaurant operating margin at domestic company-owned units was 13.5% in the second quarter of 2004 compared to 17.6% for the same period in 2003, consisting of the following differences:



Domestic commissary sales decreased slightly to $89.6 million for the second quarter of 2004 from $90.0 million for the comparable period in 2003, as the impact of higher cheese price increases was more than offset by lower volumes resulting from decreased restaurant transactions. Other sales increased to $12.9 million for the second quarter of 2004 from $12.2 million for the comparable period in 2003, primarily as a result of an increase in revenues associated with insurance-related services provided to franchisees.

Domestic commissary and other margin was 6.9% in the second quarter of 2004 compared to 9.0% for the same period in 2003. Cost of sales was 71.6% of revenues in 2004 compared to 68.8% in 2003 primarily due to higher cheese costs incurred by our commissaries (cheese has a fixed-dollar, as opposed to fixed-percentage, mark-up) and increased sales of lower margin products, such as promotional items (principally DVDs). Salaries and benefits as a percentage of sales were substantially the same as the corresponding period in 2003. Other operating expenses decreased to 14.6% of sales in 2004 from 15.3% in 2003, primarily as a result of a $1.2 million decrease in claims loss reserves related to the franchise insurance program recorded in the second quarter of 2004 as compared to 2003.

An updated actuarial valuation completed for the company's franchise insurance program during the second quarter of 2004 indicated that an increase in claims loss reserves of approximately $1.2 million was required in excess of expected claims losses. However, an even larger increase in claims loss reserves ($2.4 million over expected levels) was required in the second quarter of 2003. We believe claims loss reserves are at adequate levels as of the end of second quarter; however the estimated insurance claims losses could be significantly affected should the frequency or ultimate cost of claims significantly differ from the trends used to estimate the recorded insurance reserves.

The loss from the franchise cheese purchasing program, net of minority interest, was $14.0 million during the second quarter of 2004. This represents the portion of the total $18.3 million BIBP operating loss related to the proportion of BIBP cheese sales to franchisees (77%).

International revenues, which include the Papa John's United Kingdom operations, were $7.6 million compared to $8.2 million for the same period in 2003, reflecting a decrease in restaurant revenues due to the operation of only one company-owned restaurant during the second quarter of 2004 as compared to an average of six restaurants for the comparable period in 2003. International operating margin increased to 17.2% in 2004 from 15.5% in 2003 primarily due to the disposition of company-owned restaurants, which had a lower operating margin than our commissary operation.

General and administrative expenses were $17.6 million or 7.6% of revenues in the second quarter of 2004 compared to $16.5 million or 7.3% of revenues in the same period in 2003. The $1.1 million increase in general and administrative expenses was previously discussed in the operating results section of the press release.



During the second quarter of 2003, we recorded a $375,000 provision for uncollectible notes receivable and $407,000 for restaurant closure and impairment. Our provisions for these items were insignificant for the second quarter of 2004 based on our evaluation of the franchise loan and company-owned restaurant portfolios.

Other general expenses (income) reflected net expense of $434,000 in the second quarter of 2004 compared to net income of $1.3 million for the comparable period in 2003. The 2004 amount is primarily comprised of a $445,000 provision for uncollectible accounts receivable and $315,000 related to the disposition or valuation losses for other assets, partially offset by a gain of $550,000 related to the sale of unused property. The 2003 amount includes $42,000 of pre-opening costs, $192,000 of restaurant relocation costs and $213,000 related to disposition or valuation losses for other assets. These costs were more than offset by $2 million of income derived from the settlement of a litigation matter.

Depreciation and amortization was $7.8 million (3.4% of revenues) for the second quarter of 2004 which is essentially the same as the corresponding period in 2003.

Net interest expense was $756,000 in the second quarter of 2004 as compared to $1.5 million in 2003. The primary reason for the reduction in the second quarter is due to a $625,000 benefit we recorded, under the provisions of Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS #150), associated with a change in a joint venture operating agreement eliminating a mandatory purchase requirement and related liability. No such favorable adjustments are expected in future quarters. The company's effective income tax rate was 37.5% in both 2004 and 2003.

Six Month Operating Results

For the six months ended June 27, 2004, domestic corporate restaurant sales were $208.4 million, compared to $209.6 million for the same period in 2003. The slight decrease is primarily due to a 2.5% decrease in equivalent units for the first six months of 2004, as the company closed 22 under-performing restaurants in the fourth quarter of 2003, partially offset by a 0.8% increase in comparable sales. Domestic franchise sales for the first six months of 2004 were essentially the same as 2003 at $653.3 million.



The comparable sales base for domestic corporate restaurants for the six months ended June 27, 2004, consisted of 548 units, or 97.2% of total equivalent units, and the domestic franchise base consisted of 1,908 units or 96.0% of total equivalent units. Average weekly sales for restaurants included in the corporate comparable base were $14,339, while other corporate units averaged $10,660 for an overall average of $14,237. Average weekly sales for the restaurants included in the franchise comparable base were $12,727, while other franchise units averaged $10,472 for an overall average of $12,636.

Domestic franchise royalties of $25.0 million for the six months ended June 27, 2004 were essentially the same as royalties for the corresponding period in 2003, in line with the above-noted consistent franchise sales. Domestic franchise and development fees were $1.0 million for the six months ended June 27, 2004, compared to $539,000 for the same period in 2003 as there were 38 domestic franchise unit openings in 2004 compared to 25 in 2003.

The restaurant operating margin at domestic company-owned units was 14.9% for the six months ended June 27, 2004 compared to 17.7% for the same period in 2003. The decrease in the operating margin is primarily due to the consolidation of BIBP, which increased cost of sales 2.6% for the first six months of 2004. Other year-over-year changes in the components of restaurant operating margin for the six-month periods are substantially consistent with the second quarter changes.

Domestic commissary sales were essentially flat for the six months ended June 27, 2004 with the comparable period in 2003, as the impact of higher cheese price increases was substantially offset by lower volumes. Other sales increased to $27.6 million for the six months ended June 27, 2004 from $23.8 million for the comparable period in 2003, primarily as a result of an increase in revenues associated with insurance-related services provided to franchisees and the first quarter promotional item sales associated with our March 2004 NCAA national promotion.

Domestic commissary and other margin was 7.6% for the six months ended June 27, 2004 compared to 9.6% for the same period in 2003, primarily for the same reasons as those noted for the second quarter margin decrease and due to lower margin promotional items sold in the first quarter related to the March 2004 NCAA national promotion.

The loss from the franchise cheese purchasing program, net of minority interest, was $14.3 million during the first six months of 2004.



International revenues, which include the Papa John's United Kingdom operations, decreased 1.7% to $15.6 million for the six months ended June 27, 2004 compared to $15.9 million for the same period in 2003, as revenues from increased unit openings and the impact of a more favorable dollar/pound exchange rate were more than offset by a decrease in corporate restaurant revenues due to the operation of only one company-owned restaurant during the first six months of 2004 as compared to an average of six restaurants for the comparable period in 2003. International operating margin for the six months ended June 27, 2004 increased to 17.1% from 14.7% in 2003 primarily due to the disposition of company-owned restaurants, which had a lower operating margin than our commissary operation.

General and administrative expenses were $36.1 million or 7.7% of revenues for the six months ended June 27, 2004 as compared to $33.1 million or 7.2% of revenues in the same period in 2003. The $3.0 million increase in general and administrative expenses was previously discussed in the operating results section of the press release.

A provision for uncollectible notes receivable of $236,000 was recorded for the six months ended June 27, 2004 as compared to $801,000 for the same period in 2003. A provision for restaurant closure, impairment and disposition losses of $167,000 was recorded for the six months ended June 27, 2004 as compared to $482,000 for the same period in 2003. These provisions were based on our evaluation of our franchise loan and company-owned restaurant portfolios.

Other general expenses (income) reflected net expense of $1.4 million for the six months ended June 27, 2004, as compared to net income of $771,000 for the comparable period in 2003. The 2004 amount includes $130,000 of restaurant relocation costs, $736,000 of disposition and valuation related costs of other assets and a $898,000 provision for uncollectible accounts receivable, partially offset by the previously mentioned $550,000 gain on the sale of unused property. The 2003 amount includes $110,000 of pre-opening costs, $242,000 of restaurant relocation costs and $449,000 related to disposition or valuation losses for other assets, which was more than offset by the previously mentioned $2.0 million legal settlement.

Depreciation and amortization was $15.4 million (3.3% of revenues) for the six months ended June 27, 2004 as compared to $15.7 million (3.4% of revenues) for the same period in 2003.

Net interest expense was $2.0 million for the six months ended June 27, 2004 as compared to $3.2 million in 2003, primarily due to the previously mentioned $625,000 benefit recorded pursuant to SFAS #150 and lower average debt outstanding during the first six months of 2004 as compared to 2003. The company's effective income tax rate was 37.5% in both 2004 and 2003.



Cheese Costs

The cost of cheese has historically represented approximately 35% to 40% of our restaurant cost of sales. In January 2000, Papa John's Franchise Advisory Council initiated a program through the formation of BIBP that allows the cost of cheese to Papa John's restaurants to be established on a quarterly basis. The consolidation of BIBP, as a result of the adoption of FIN 46, results in the company-owned restaurant cost of sales reflecting the actual spot market price of cheese paid by BIBP.

The following table presents the actual average block market price for cheese and the BIBP block price by quarter for 2003 and as projected through the end of 2004 (based on the July 30, 2004 Chicago Mercantile Exchange (CME) milk futures market prices):

                      2003                        2004
             ----------------------- ---------------------------------
                BIBP       Actual           BIBP            Actual
             Block Price Block Price    Block Price      Block Price
             ----------------------- ---------------------------------

Quarter 1    $    1.159  $    1.115  $    1.220       $    1.426
Quarter 2         1.122       1.134       1.326            2.012
Quarter 3         1.242       1.536       1.556            1.578  est.
Quarter 4         1.217       1.474       1.542  est.      1.499  est.
             ----------------------- ---------------------------------
Full Year    $    1.185  $    1.315  $    1.411  est. $    1.629  est.
             ======================= =================================

Based on the above-noted CME milk futures market prices, and the actual second and third quarter and projected fourth quarter 2004 and first and second quarter 2005 cheese costs to restaurants as determined by the BIBP pricing formula, the consolidation of BIBP is projected to increase (decrease) the company's operating income as follows (in thousands):


Quarter 3 - 2004        $     (964)
Quarter 4 - 2004             1,438
Quarter 1 - 2005             4,102
Quarter 2 - 2005             4,427
                         ----------
                        $    9,003
                        ===========

Share Repurchase Activity

The company repurchased 851,000 shares of common stock at an average price of $30.76 per share during the second quarter of 2004, and 1.6 million shares of common stock at an average price of $32.13 during the first six months of 2004. The company's board of directors has authorized the repurchase of up to an aggregate $425 million of common stock through December 26, 2004. Through June 27, 2004, $402.4 million had been repurchased (representing 15.1 million shares at an average price of $26.57 per share) since the program began in 1999. Approximately 16.9 million actual shares were outstanding as of June 27, 2004. Subsequent to June 27, 2004 to date, the company repurchased 146,000 shares of common stock for $4.3 million (an average price of $29.20 per share).

As of July 25, 2004, Papa John's had 2,776 restaurants (567 company-owned and 2,209 franchised) operating in 49 states and 16 international markets. Papa John's also owns or operates an additional franchised 123 Perfect Pizza restaurants in the United Kingdom. For more information about the company, please visit www.papajohns.com.

         Update of Significant Operating Assumptions for 2004
                    Papa John's International, Inc.


                                     Actual Results
                      Original       for Six Months        Revised
                      Full Year          Ended            Full Year
                    2004 Guidance    June 27, 2004      2004 Guidance
                   ---------------- ----------------- ----------------
Domestic Unit
 Openings          120 to 140 units      41 units     100 to 120 units

International
 Unit Openings       50 to 60 units      21 units       50 to 60 units

Domestic Unit
 Closings            60 to 80 units      65 units     110 to 130 units

International
 Unit Closings       10 to 20 units      27 units       35 to 45 units

Domestic
 Comparable
 Sales            0% to 2% increase 0.7% decrease    0% to 2% increase

Total
 International
 Restaurant
 Sales
 Increases
 (Constant
 U.S. $)        10% to 15% increase 3.5% increase    3% to 5% increase

Corporate
 Restaurant
 Operating
 Margin (A)        17.75% to 18.25%         14.9%     16.25% to 16.75%

Commissary and
 Other
 Operating
 Margin              8.25% to 8.75%          7.6%         7.8% to 8.2%

G&A Expenses
 as a
 Percentage of
 Revenues              8.0% to 8.2%          7.7%         7.6% to 7.8%

Other General
 Expenses (B)   $3.5 to 4.5 million  $1.4 million  $3.0 to 4.0 million

Net Interest
 Expense (C)    $4.0 to 5.0 million  $2.0 million  $4.0 to 5.0 million

Capital
 Expenditures     $25 to 30 million $10.3 million    $25 to 30 million

Weighted
 Average
 Diluted
 Shares O/S    18.0 to 18.5 million  17.9 million 17.2 to 17.4 million

(A) Original full-year 2004 guidance for corporate restaurant
    operating margin excluded any impact from the consolidation of
    BIBP. Actual results for six months ended June 27, 2004 and
    revised full-year 2004 guidance include the actual and anticipated
    impact of BIBP consolidation. Excluding the impact of the
    consolidation of BIBP, corporate restaurant operating margin for
    the first six months would have been 17.5% and revised full year
    2004 guidance would be 17.5% to 18.0%.

(B) The reduction in revised full-year 2004 guidance results from the
    second quarter gain of $550,000 on the sale of unused property.

(C) Although outstanding debt balances are expected to be higher than
    initially anticipated due to the consolidation of BIBP and the
    assumed increase in share repurchase activity throughout the
    remainder of 2004, revised full-year 2004 guidance for net
    interest expense is unchanged as a result of continued low
    interest rates and the $625,000 benefit recorded pursuant to SFAS
    #150.


           Papa John's International, Inc. and Subsidiaries
                 Consolidated Statements of Operations


                         Three Months Ended       Six Months Ended
                       ---------------------- -----------------------
                        June 27,    June 29,    June 27,    June 29,
                          2004        2003        2004        2003
                       ----------------------  ----------------------
(In thousands, except  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 per share amounts)
Revenues:
  Domestic:
    Company-owned
     restaurant sales  $  102,271  $  103,372  $  208,444  $  209,614
    Variable interest
     entities
     restaurant sales       5,045           -       5,045           -
    Franchise
     royalties             12,120      12,480      25,031      24,997
    Franchise and
     development fees         474         208       1,008         539
    Commissary sales       89,615      90,048     184,151     183,916
    Other sales            12,897      12,207      27,621      23,764
  International:
    Royalties and
     franchise and
     development fees       1,570       1,614       3,334       3,098
    Restaurant and
     commissary sales       6,045       6,540      12,312      12,823
                       ----------------------  ----------------------
Total revenues            230,037     226,469     466,946     458,751

Costs and expenses:
  Domestic Company-
   owned restaurant
   expenses:
    Cost of sales          26,688      22,567      52,547      46,063
    Salaries and
     benefits              32,638      33,383      66,157      67,577
    Advertising and
     related costs          9,282       9,411      18,729      19,173
    Occupancy costs         6,400       6,500      12,801      12,594
    Other operating
     expenses              13,444      13,282      27,087      27,201
                       ----------------------  ----------------------
  Total domestic
   Company-owned
   restaurant expenses     88,452      85,143     177,321     172,608

  Variable interest
   entities restaurant
   expenses                 4,681           -       4,681           -

  Domestic commissary
   and other expenses:
    Cost of sales          73,446      70,335     152,243     144,700
    Salaries and
     benefits               7,020       7,072      14,199      14,402
    Other operating
     expenses              14,963      15,694      29,200      28,715
                       ----------------------  ----------------------
  Total domestic
   commissary and
   other expenses          95,429      93,101     195,642     187,817

Loss from the
 franchise cheese
 purchasing program,
 net of minority
 interest                  13,972           -      14,344           -

International
 operating expenses         5,006       5,527      10,208      10,943

General and
 administrative
 expenses                  17,575      16,509      36,109      33,061
Provision for
 uncollectible notes
 receivable                     4         375         236         801
Restaurant closure,
 impairment and
 disposition losses            28         407         167         482
Other general expenses
 (income)                     434      (1,262)      1,387        (771)
Depreciation and
 amortization               7,817       7,807      15,378      15,717
                       ----------------------  ----------------------
Total costs and
 expenses                 233,398     207,607     455,473     420,658
                       ----------------------  ----------------------

Operating income
 (loss)                    (3,361)     18,862      11,473      38,093
Investment income             143         162         284         416
Interest expense             (899)     (1,659)     (2,296)     (3,567)
                       ----------------------  ----------------------
Income (loss) before
 income taxes              (4,117)     17,365       9,461      34,942
Income tax expense
 (benefit)                 (1,544)      6,511       3,548      13,103
                       ----------------------  ----------------------

Net income (loss)      $   (2,573) $   10,854  $    5,913  $   21,839
                       ======================  ======================
Basic earnings (loss)
 per common share      $    (0.15) $     0.61  $     0.34  $     1.22
                       ======================  ======================
Earnings (loss) per
 common share -
 assuming dilution     $    (0.15) $     0.60  $     0.33  $     1.21
                       ======================  ======================
Basic weighted-average
 shares outstanding        17,402      17,905      17,617      17,912
                       ======================  ======================
Diluted weighted-
 average shares
 outstanding               17,402      17,999      17,855      18,011
                       ======================  ======================


           Papa John's International, Inc. and Subsidiaries
                Condensed Consolidated Balance Sheets

                                               June 27,   December 28,
                                                 2004        2003
                                             (Unaudited)    (Note)
                                             -----------  -----------
(In thousands)

Assets
Current assets:
  Cash and cash equivalents                  $     7,456  $     7,071
  Accounts receivable                             22,331       19,717
  Inventories                                     17,497       17,030
  Prepaid expenses and other current assets       13,562       11,590
  Deferred income taxes                            7,359        7,050
                                             -----------  -----------
Total current assets                              68,205       62,458

Investments                                        7,692        7,522
Net property and equipment                       200,994      203,818
Notes receivable from franchisees and
 affiliates                                        6,949       11,580
Goodwill                                          51,312       48,577
Other assets                                      16,350       13,259
                                             -----------  -----------
Total assets                                 $   351,502  $   347,214
                                             ===========  ===========


Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                           $    24,907  $    28,309
  Income and other taxes                           6,629       12,070
  Accrued expenses                                42,052       40,288
  Current portion of debt                         11,234          250
                                             -----------  -----------
Total current liabilities                         84,822       80,917

Unearned franchise and development fees            7,734        5,911
Long-term debt, net of current portion            93,523       61,000
Deferred income taxes                              8,172        7,881
Other long-term liabilities                       28,594       32,233
                                             -----------  -----------
Total liabilities                                222,845      187,942

Total stockholders' equity                       128,657      159,272
                                             -----------  -----------
Total liabilities and stockholders' equity   $   351,502  $   347,214
                                             ===========  ===========

Note: The balance sheet at December 28, 2003 has been derived from the
      audited consolidated financial statements at that date but does
      not include all information and footnotes required by generally
      accepted accounting principles for a complete set of financial
      statements.


Restaurant Progression
Papa John's International, Inc.

                             Second Quarter Ended June 27, 2004
                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Papa John's restaurants
Beginning of period         568         2     2,017       222   2,809
Opened                        1         -        18         7      26
Converted                     -         -         -         -       -
Closed                       (3)        -       (51)      (10)    (64)
Acquired                      -         -         -         1       1
Sold                          -        (1)        -         -      (1)
                       -----------------------------------------------
End of Period               566         1     1,984       220   2,771
                       ===============================================

                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Perfect Pizza
 restaurants
Beginning of period           -         -         -       127     127
Opened                        -         -         -         2       2
Converted                     -         -         -         -       -
Closed                        -         -         -        (5)     (5)
Acquired                      -         -         -         -       -
Sold                          -         -         -         -       -
                       -----------------------------------------------
End of Period                 -         -         -       124     124
                       ===============================================


                               Second Quarter Ended June 29, 2003
                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Papa John's restaurants
Beginning of period         585         7     2,006       202   2,800
Opened                        2         -        10         9      21
Converted                     -         -         -         -       -
Closed                       (2)       (1)      (12)       (9)    (24)
Acquired                      -         1         -         2       3
Sold                          -        (2)        -        (1)     (3)
                       -----------------------------------------------
End of Period               585         5     2,004       203   2,797
                       ===============================================


                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Perfect Pizza
 restaurants
Beginning of period           -         -         -       142     142
Opened                        -         -         -         1       1
Converted                     -         -         -         -       -
Closed                        -         -         -        (2)     (2)
Acquired                      -         -         -         -       -
Sold                          -         -         -         -       -
                       -----------------------------------------------
End of Period                 -         -         -       141     141
                       ===============================================


Restaurant Progression
Papa John's  International, Inc.

                               Six Months Ended June 27, 2004
                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Papa John's restaurants
Beginning of period         568         2     2,006       214   2,790
Opened                        3         -        38        19      60
Converted                     -         -         -         -       -
Closed                       (5)        -       (60)      (14)    (79)
Acquired                      -         -         -         1       1
Sold                          -        (1)        -         -      (1)
                       -----------------------------------------------
End of Period               566         1     1,984       220   2,771
                       ===============================================


                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Perfect Pizza
 restaurants
Beginning of period           -         -         -       135     135
Opened                        -         -         -         2       2
Converted                     -         -         -         -       -
Closed                        -         -         -       (13)    (13)
Acquired                      -         -         -         -       -
Sold                          -         -         -         -       -
                       -----------------------------------------------
End of Period                 -         -         -       124     124
                       ===============================================


                               Six Months Ended June 29, 2003
                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Papa John's restaurants
Beginning of period         585         9     2,000       198   2,792
Opened                        5         -        25        17      47
Converted                     -         -         -         -       -
Closed                       (5)       (1)      (21)      (15)    (42)
Acquired                      -         1         -         4       5
Sold                          -        (4)        -        (1)     (5)
                       -----------------------------------------------
End of Period               585         5     2,004       203   2,797
                       ===============================================


                       -----------------------------------------------
                             Corporate          Franchised
                         Domestic    Int'l   Domestic    Int'l  Total
                       -----------------------------------------------
Perfect Pizza
 restaurants
Beginning of period           -         -         -       144     144
Opened                        -         -         -         1       1
Converted                     -         -         -         -       -
Closed                        -         -         -        (4)     (4)
Acquired                      -         -         -         -       -
Sold                          -         -         -         -       -
                       -----------------------------------------------
End of Period                 -         -         -       141     141
                       ===============================================




CONTACT: Papa John's International Inc., Louisville
David Flanery, 502-261-4753

SOURCE: Papa John's International Inc.