Published on May 5, 2009
Exhibit 99.1
For more information, contact:
David
Flanery
Chief
Financial Officer
502-261-4753
PAPA
JOHN’S REPORTS
FIRST
QUARTER EARNINGS
2009
Earnings Guidance Reaffirmed
Highlights
|
|
·
|
First quarter earnings per
diluted share of $0.64 in 2009 vs. $0.30 in
2008
|
|
|
·
|
Comparable first quarter
earnings per diluted share, excluding the consolidation of BIBP and
restaurant impairment and disposition losses, were $0.43 in 2009 vs. $0.50
in 2008, a decrease of 14.0%
|
|
|
·
|
Domestic system-wide comparable
sales increase of 0.3% for the
quarter
|
|
|
·
|
24 net Papa John’s worldwide
unit openings during the
quarter
|
|
|
·
|
Earnings guidance for 2009
reaffirmed at a range of $1.36 to $1.44 per diluted share, excluding the
impact of consolidating BIBP
|
Louisville, Kentucky (May 5, 2009) –
Papa John’s International, Inc. (NASDAQ: PZZA) today announced revenues of
$285.0 million for the first quarter of 2009, representing a decrease of 1.4%
from revenues of $289.0 million for the same period in 2008 primarily due to the
divestiture of 62 company-owned restaurants to franchisees during the fourth
quarter of 2008. Net income for the first quarter of 2009 was $17.8 million, or
$0.64 per diluted share (including after-tax income of $5.9 million, or $0.21
per diluted share, from the consolidation of the results of the franchisee-owned
cheese purchasing company, BIBP Commodities, Inc. (“BIBP”), a variable interest
entity), compared to 2008 first quarter net income of $8.6 million, or $0.30 per
diluted share (including a net loss of approximately $5.2 million, or $0.18 per
diluted share, from the consolidation of BIBP and a net charge of approximately
$700,000, or $0.02 per diluted share, related to restaurant impairment and
disposition losses).
New Accounting
Pronouncement
We
adopted the provisions of Statement of Financial Accounting Standards (SFAS) No.
160, Noncontrolling Interests
in Consolidated Financial Statements – an amendment to ARB No. 51 (SFAS
No. 160), in the
first quarter of 2009. SFAS No. 160 requires all entities to report
noncontrolling (minority) interests in subsidiaries as equity in the
consolidated financial statements, but separate from the equity of the parent
company. The statement also requires that consolidated net income be reported as
amounts attributable to the parent and the noncontrolling interest, rather than
expensing the income attributable to the minority interest holder.
The
provisions of SFAS No. 160 apply to our joint venture arrangements with
Colonel’s Limited, LLC (51 restaurants) and Star Papa, LP (76 restaurants). The
minority interest holders own 30% of Colonel’s Limited and 49% of Star Papa. The
accompanying financial statements, including the prior year presentation, have
been modified to comply with the requirements of this new accounting
standard.
Non-GAAP
Measures
Certain components of the financial
information we present in this press release that exclude the impact of the
consolidation of BIBP and restaurant impairment and disposition losses, are not
measures that are defined in accordance with accounting principles generally
accepted in the United States (“GAAP”). These non-GAAP measures should not be
construed as a substitute for or a better indicator of the company’s performance
than the company’s GAAP measures. Management believes the financial information
excluding the impact of the above-mentioned items is important for purposes of
comparison to prior periods and development of future projections and earnings
growth prospects. Management analyzes the company’s business performance
and trends excluding the impact of these items because they are not indicative
of the principal operating activities of the company. In addition, annual cash
bonuses, and certain long-term incentive programs for various levels of
management, are based on financial measures that exclude the impact of the
consolidation of BIBP. The presentation of the non-GAAP measures in this press
release is made alongside the most directly comparable GAAP
measures.
2
The
company has provided the following table to reconcile the financial results we
present in this press release excluding the impact of the above-mentioned items
to our GAAP financial measures for the first quarter ended March 29, 2009 and
March 30, 2008.
|
First
Quarter
|
||||||||
|
(In
thousands, except per share amounts)
|
2009
|
2008
|
||||||
|
Pre-tax
income, net of noncontrolling interests, as reported
|
$ | 28,141 | $ | 13,601 | ||||
|
(Gain)
loss from BIBP cheese purchasing entity
|
(9,025 | ) | 7,951 | |||||
|
Restaurant
impairment and disposition losses
|
- | 1,211 | ||||||
|
Pre-tax
income, net of noncontrolling interests, excluding noted
items
|
$ | 19,116 | $ | 22,763 | ||||
|
Net
income, as reported
|
$ | 17,839 | $ | 8,625 | ||||
|
(Gain)
loss from BIBP cheese purchasing entity
|
(5,866 | ) | 5,168 | |||||
|
Restaurant
impairment and disposition losses
|
- | 730 | ||||||
|
Net
income, excluding noted items
|
$ | 11,973 | $ | 14,523 | ||||
|
Earnings
per diluted share, as reported
|
$ | 0.64 | $ | 0.30 | ||||
|
(Gain)
loss from BIBP cheese purchasing entity
|
(0.21 | ) | 0.18 | |||||
|
Restaurant
impairment and disposition losses
|
- | 0.02 | ||||||
|
Earnings
per diluted share, excluding noted items
|
$ | 0.43 | $ | 0.50 | ||||
|
Cash
flow from operations, as reported
|
$ | 31,965 | $ | 20,340 | ||||
|
BIBP
cheese purchasing entity
|
(9,025 | ) | 7,951 | |||||
|
Cash
flow from operations, excluding BIBP
|
$ | 22,940 | $ | 28,291 | ||||
“We are pleased with the performance of
our system during the first quarter,” commented Papa John's Founder, Chairman
and Chief Executive Officer, John Schnatter. “The significant investments we
have made in our system, largely through our franchise support program, are
working, with both our franchise and corporate operators achieving success in a
very challenging economic and competitive environment.”
“We are also excited to welcome Jude
Thompson as our President and Chief Operating Officer,” Schnatter
continued. “Jude has been invaluable to me and the entire Papa John’s
system over the last five
months during my transition
back to the role of CEO. I look forward to the continued partnership
with Jude and the entire leadership team as we continue to move our brand
forward.”
3
Revenues
Comparison
Consolidated revenues were $285.0
million for the first quarter of 2009, a decrease of $4.0 million, or 1.4%, over
the corresponding 2008 period. The decrease in revenues was principally due to
the following:
|
|
·
|
Domestic
company-owned restaurant revenues decreased $7.2 million, reflecting the
divestiture of 62 company-owned restaurants to franchisees during the
fourth quarter of 2008.
|
|
|
·
|
Variable
interest entities restaurant sales increased $3.6 million due to the
consolidation of two additional franchise entities in the first quarter of
2009. We extended loans to these two entities in the fourth quarter of
2008 in conjunction with our sale of company-owned
restaurants.
|
Operating Results and Cash
Flow
Operating
Results
Our
pre-tax income, net of noncontrolling interests, for the first quarter of 2009
was $28.1 million, compared to $13.6 million for the corresponding period in
2008. Excluding the impact of the noted items in the previous table, first
quarter 2009 pre-tax income was $19.1 million, a decrease of $3.6 million or
16.0%, from the 2008 comparable results. An analysis of the changes in pre-tax
income for the first quarter 2009 (excluding the consolidation of BIBP) is
summarized as follows (analyzed on a segment basis -- see the Summary Financial
Data table that follows for the reconciliation of segment income to consolidated
income below):
|
|
·
|
Domestic Company-owned
Restaurant Segment. Domestic company-owned restaurants’ operating
income increased $2.6 million for the first quarter, comprised of the
following:
|
|
First
Quarter
|
||||||||||||
|
Mar.
29,
|
Mar.
30,
|
Increase
|
||||||||||
|
2009
|
2008
|
(Decrease)
|
||||||||||
|
Recurring
operations
|
$ | 10,391 | $ | 9,009 | $ | 1,382 | ||||||
|
Impairment
and disposition charges
|
- | (1,211 | ) | 1,211 | ||||||||
|
Total
segment operating income
|
$ | 10,391 | $ | 7,798 | $ | 2,593 | ||||||
The
increase of $1.4 million in domestic company-owned restaurants' income from
recurring operations was primarily due to an improvement in margin as a result
of pricing and product mix profitability, a decrease in discretionary local
advertising spending and lower salaries and benefits costs due to effective
labor management and the divestiture of 62 restaurants in late 2008 which
had a higher labor cost as a percentage of sales.
Restaurant
operating margin on an external basis was 23.4% for the first quarter of 2009
compared to 18.9% for the comparable 2008 period. Excluding the
impact of the consolidation of BIBP, restaurant operating margin was 21.7% for
the first quarter of 2009, compared to 20.2% in the prior comparable
quarter.
4
We
recorded restaurant impairment and disposition charges of $1.2 million in the
first quarter of 2008, primarily related to the loss on the sale of 17
restaurants in one market (the sale was completed during the fourth quarter of
2008).
|
|
·
|
Domestic Commissary Segment.
Domestic commissaries’ operating income increased approximately
$1.0 million for the three months ended March 29, 2009, as compared to the
corresponding 2008 period, reflecting a decline in distribution costs from
lower fuel prices.
|
|
|
·
|
Domestic Franchising Segment.
Domestic franchise sales for the first quarter of 2009 increased
4.1% to $397.7 million from $381.9 million for the same period in 2008.
The increase for the first quarter was due to an increase in equivalent
units of 3.7%, primarily due to the purchase of 62 restaurants from the
Company during the fourth quarter of 2008, and an increase in comparable
sales of 0.3%. Domestic franchising operating income decreased
approximately $800,000 to $13.7 million for the three months ended March
29, 2009, from $14.5 million in the prior comparable period. The decrease
was primarily due to lower franchise and development fees as there were
eight fewer domestic franchise unit openings in the first quarter of 2009,
and the first quarter of 2008 included the collection of approximately
$500,000 in franchise renewal fees associated with the domestic franchise
renewal program. Additionally, the average fee per
unit opening was lower due to various incentive programs in place during
the current year quarter.
|
The company recently announced a
comprehensive 25th Anniversary development incentive program that provides for
no franchise fee, no royalty for 12 months and the opportunity for a $10,000
early opening award payment, if certain conditions are met related to new
domestic unit openings.
|
|
·
|
International Segment.
The international segment reported an operating loss of $800,000
for the three months ended March 29, 2009, compared to a loss of $1.7
million in the first quarter of the prior year. The improvement in the
operating results reflects leverage on the international organizational
structure from increased revenues due to growth in the number of units and
unit volumes.
|
|
·
|
All Others
Segment. The
operating income for the “All others” reporting segment was approximately
$400,000 in the first quarter of 2009, or a decrease of $2.1 million from
the corresponding 2008 period. The decrease occurred primarily in our
online ordering system business (a $1.4 million decline in operating
income) and our print and promotions subsidiary, Preferred Marketing
Solutions (a $600,000 decline in operating income). The decline
in the online ordering system business reflects a reduction in the online
fee percentage in accordance with our previously disclosed agreement with
the domestic franchise system to operate the business at a break-even
level beginning in 2009. The decline in profitability in the
print and promotions business is due to lower sales in 2009, as compared
to 2008, reflecting the general deterioration of the economic
environment.
|
5
|
|
·
|
Unallocated
Corporate Segment. Unallocated corporate expenses
increased approximately $3.8 million for the three months ended March 29,
2009, as compared to the corresponding quarter of the prior year. The
components of unallocated corporate expenses were as follows (in
thousands):
|
|
First
Quarter
|
||||||||||||
|
Mar.
29,
|
Mar.
30,
|
Increase
|
||||||||||
|
2009
|
2008
|
(decrease)
|
||||||||||
|
General
and administrative (a)
|
$ | 6,795 | $ | 6,149 | $ | 646 | ||||||
|
Net
interest
|
1,036 | 1,172 | (136 | ) | ||||||||
|
Depreciation
|
2,128 | 1,798 | 330 | |||||||||
|
Franchise
support initiatives (b)
|
2,247 | 75 | 2,172 | |||||||||
|
Provisions
for uncollectible accounts and notes
receivable (c)
|
1,063 | 259 | 804 | |||||||||
|
Other
income
|
(244 | ) | (234 | ) | (10 | ) | ||||||
|
Total
unallocated corporate expenses
|
$ | 13,025 | $ | 9,219 | $ | 3,806 | ||||||
|
(a)
|
The
increase in general and administrative expenses is primarily due to
increased professional fees and management transition
costs.
|
|
(b)
|
Primarily
consists of discretionary contributions to the national marketing fund and
other local advertising
cooperatives.
|
|
(c)
|
The
increase in the provisions for uncollectible accounts and notes receivable
was primarily due to our evaluation of the collectibility of
certain specific receivables, including amounts due from one
third-party customer.
|
The
effective income tax rate was 35.4% for the three-month period ended March 29,
2009, as compared to 35.2% for the corresponding 2008 period (35.7% and 35.2%
excluding BIBP for 2009 and 2008, respectively).
Cash
Flow
Cash flow from operations was $32.0
million for the first quarter of 2009 as compared to $20.3 million for the
comparable period in 2008. The consolidation of BIBP increased cash flow from
operations by approximately $9.0 million in the first quarter of 2009 and
decreased cash flow from operations by approximately $8.0 million in the first
quarter of 2008. Excluding the impact of the consolidation of BIBP, cash flow
from operations was $22.9 million in 2009, as compared to $28.3 million in the
corresponding period in 2008. The $5.4 million decrease, excluding
the consolidation of BIBP, was primarily due to a decrease in net income and a
decline in working capital, primarily the reduction in accrued
expenses.
6
Form 10-Q
Filing
See the Management’s Discussion and
Analysis of Financial Condition and Results of Operations section of our
quarterly report on Form 10-Q filed with the Securities and Exchange Commission
for additional information concerning our operating results and cash flow for
the three-month period ended March 29, 2009.
Domestic Comparable Sales
and Unit Count
Domestic system-wide comparable sales
for the first quarter of 2009 increased 0.3% (comprised of a 0.3% increase at
both company-owned and franchised restaurants). The timing of the Easter
holiday weekend was estimated to have had a beneficial 0.3% impact on the first
quarter 2009 results (and to have a similar negative impact on second quarter
results). The comparable sales percentage represents the change in
year-over-year sales for the same base of restaurants for the same calendar
period.
During
the first quarter of 2009, 17 domestic restaurants were opened (three
company-owned and 14 franchised) and 21 domestic restaurants were closed (four
company-owned and 17 franchised). Our total domestic development pipeline as of
March 29, 2009 included approximately 300 restaurants scheduled to open over the
next ten years.
At March
29, 2009, there were 3,404 domestic and international Papa John’s restaurants
(612 company-owned and 2,792 franchised) operating in all 50 states and 29
countries. As previously noted, the company-owned unit count includes 127
restaurants operated in majority-owned domestic joint venture arrangements, the
operating results of which are fully consolidated into the company’s
results.
International
Update
Highlights:
|
|
·
|
During
the first quarter of 2009, 34 international franchised restaurants were
opened while six international restaurants were closed (one company-owned
and five franchised).
|
|
|
·
|
International
franchise sales increased approximately 11% to $58.1 million in the first
quarter of 2009, from $52.4 million in the prior year comparable period.
The increase in the first quarter would have approximated 30% without the
negative impact of foreign currency exchange rate
fluctuations.
|
|
|
·
|
During
the quarter, we opened our first franchised restaurant in the Dominican
Republic.
|
7
As of
March 29, 2009, the company had a total of 616 restaurants operating
internationally (22 company-owned and 594 franchised), of which 206 were located
in Korea and China and 126 were located in the United Kingdom and Ireland. Our total international
development pipeline as of March 29, 2009 included approximately 1,200
restaurants scheduled to open over the next ten years.
Acquisition / Disposition
Activity
At the
end of April 2009, we completed the sale of ten company-owned restaurants in
Albuquerque, New Mexico. The sales price of $1.1 million consisted of a cash
payment of $600,000 and notes financed by Papa John’s to the purchasers, who are
current Papa John’s franchisees, for $500,000.
We have
executed an agreement to acquire 11 franchised Papa John’s restaurants in South
Florida at the end of May 2009, to
be managed in conjunction with the existing 13 company-owned restaurants in
South Florida. We currently have no plans for any additional significant
acquisitions or dispositions during the remainder of 2009.
Share Repurchase
Activity
The
company repurchased 275,000 shares of its common stock at an average price of
$18.05 per share, or a total of $5.0 million, during the first quarter of 2009.
A total of 359,000 shares of common stock were issued upon the exercise of stock
options in the first quarter of 2009. Under our current
authorization, the company has $57.3 million remaining available for the
repurchase of common stock.
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 27.7 million diluted weighted average shares outstanding for the first
quarter of 2009, as compared to 28.9 million for the same period in 2008, a 4.1%
decrease. Approximately 27.7 million actual shares of the company’s common stock
were outstanding as of March 29, 2009.
The
company’s share repurchase activity increased earnings per diluted share,
excluding the impact of the consolidation of BIBP, by $0.01 for the first
quarter of 2009.
2009 Earnings Guidance
Reaffirmed
The
company reaffirms its previously announced 2009 earnings per diluted share
guidance in the range of $1.36 to $1.44 for the year. The projected earnings
guidance excludes any impact from the consolidation of the results of BIBP. The
projected earnings guidance includes $0.30 to $0.35 per diluted share
unfavorable impact of 2009 initiatives, including the impact of the franchise
support initiatives, management transition costs and certain additional
initiatives focused on enhancing quality and driving alternative ordering
channels. The comparable base earnings results for 2008 were $1.68 per diluted
share.
8
We
reiterate our expectations for full-year net worldwide unit growth of 100 to 140
units, with domestic net openings expected to exceed initial assumptions and
international net openings expected to fall short of initial assumptions. We
further reiterate our expectations for full-year domestic system-wide sales
ranging from flat to negative 2%. Our reaffirmation of the guidance reflects
continued concern over the uncertainty of the economic environment, including
consumer spending, commodity prices and fuel costs.
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 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; 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; the ability of the company to pass along such increases in or
sustained high costs to franchisees or consumers; and the impact of legal claims
and current proposed legislation impacting our business. 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 December 28,
2008. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of future events, new
information or otherwise.
9
Conference
Call
A conference call is scheduled for May
6, 2009 at 10:00 a.m. Eastern
Daylight Time to review first quarter earnings results. The call can be
accessed from the company’s web page at www.papajohns.com
in a listen-only mode, or dial 800-487-2662 (pass code 95822181) for
participation in the question and answer session. International participants may
dial 706-679-8452 (pass code 95822181).
The
conference call will be available for replay, including downloadable podcast,
beginning May 6, 2009, at approximately noon Eastern Daylight Time, through May
13, 2009, at midnight Eastern Daylight Time. The replay can be accessed from the
company’s web page at www.papajohns.com
or by dialing 800-642-1687 (pass code 95822181). International participants may
dial 706-645-9291 (pass code 95822181).
10
Summary
Financial Data
Papa
John's International, Inc.
(Unaudited)
|
Three
Months Ended
|
||||||||
|
Mar.
29,
|
Mar.
30,
|
|||||||
|
(In
thousands, except per share amounts)
|
2009
|
2008
|
||||||
|
Revenues
|
$ | 284,972 | $ | 289,005 | ||||
|
Income
before income taxes, net of noncontrolling interests*
|
$ | 28,141 | $ | 13,601 | ||||
|
Net
income
|
$ | 17,839 | $ | 8,625 | ||||
|
Earnings
per share - assuming dilution
|
$ | 0.64 | $ | 0.30 | ||||
|
Weighted
average shares outstanding - assuming dilution
|
27,707 | 28,885 | ||||||
|
EBITDA
(1)
|
$ | 37,380 | $ | 23,233 | ||||
*The
following is a summary of our income (loss) before income taxes, net of
noncontrolling interests (in thousands):
|
Three
Months Ended
|
||||||||
|
Mar.
29,
|
Mar.
30,
|
|||||||
|
2009
|
2008
|
|||||||
|
Domestic
company-owned restaurants
|
$ | 10,391 | $ | 7,798 | ||||
|
Domestic
commissaries
|
9,384 | 8,433 | ||||||
|
Domestic
franchising
|
13,682 | 14,472 | ||||||
|
International
|
(777 | ) | (1,739 | ) | ||||
|
All
others
|
401 | 2,525 | ||||||
|
Unallocated
corporate expenses
|
(13,025 | ) | (9,219 | ) | ||||
|
Elimination
of intersegment profit
|
(15 | ) | (174 | ) | ||||
|
Income
before income taxes, excluding VIEs
|
20,041 | 22,096 | ||||||
|
VIEs,
primarily BIBP (2)
|
9,025 | (7,951 | ) | |||||
|
Less:
noncontrolling interests
|
(925 | ) | (544 | ) | ||||
|
Total
income before income taxes, net of noncontrolling
interests
|
$ | 28,141 | $ | 13,601 | ||||
11
Summary
Financial Data (continued)
Papa
John's International, Inc.
(Unaudited)
The
following is a reconciliation of EBITDA to net income (in
thousands):
|
Three
Months Ended
|
||||||||
|
Mar.
29,
|
Mar.
30,
|
|||||||
|
2009
|
2008
|
|||||||
|
EBITDA
(1)
|
$ | 37,380 | $ | 23,233 | ||||
|
Income
tax expense
|
(10,302 | ) | (4,976 | ) | ||||
|
Net
interest
|
(1,284 | ) | (1,626 | ) | ||||
|
Depreciation
and amortization
|
(7,955 | ) | (8,006 | ) | ||||
|
Net
income
|
$ | 17,839 | $ | 8,625 | ||||
|
(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 the United States (“GAAP”), 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 and it excludes components that are significant in
understanding and assessing our results of operations and cash flows. In
addition, EBITDA is not a term defined by GAAP and as a result our measure
of EBITDA might not be comparable to similarly titled measures used by
other companies. The above EBITDA calculation includes the operating
results of BIBP Commodities, Inc., a variable interest
entity.
|
|
(2)
|
BIBP
generated operating income of approximately $9.0 million in the first
quarter of 2009, which was composed of income associated with cheese sold
to domestic company-owned and franchised restaurants of approximately $2.2
million and $7.1 million, respectively, partially offset by interest
expense on outstanding debt with a third-party bank and Papa John’s. For
the first quarter of 2008, BIBP reported an operating loss of $8.0
million, which was primarily composed of losses associated with cheese
sold to domestic company-owned and franchised restaurants of $1.9 million
and $5.6 million, respectively. The remainder of the loss was primarily
composed of interest expense on outstanding debt with a third-party bank
and Papa John’s.
|
* * * *
For more
information about the company, please visit www.papajohns.com.
12
|
Papa
John's International, Inc. and Subsidiaries
|
||||||||
|
Consolidated
Statements of Income
|
||||||||
|
Three
Months Ended
|
||||||||
|
March
29, 2009
|
March
30, 2008
|
|||||||
|
(In
thousands, except per share amounts)
|
(Unaudited)
|
(Unaudited)
|
||||||
|
Revenues:
|
||||||||
|
Domestic:
|
||||||||
|
Company-owned
restaurant sales
|
$ | 131,705 | $ | 138,855 | ||||
|
Variable
interest entities restaurant sales
|
5,671 | 2,040 | ||||||
|
Franchise
royalties
|
15,361 | 15,445 | ||||||
|
Franchise
and development fees
|
228 | 920 | ||||||
|
Commissary
sales
|
107,916 | 106,047 | ||||||
|
Other
sales
|
14,769 | 16,845 | ||||||
|
International:
|
||||||||
|
Royalties
and franchise and development fees
|
3,235 | 3,020 | ||||||
|
Restaurant
and commissary sales
|
6,087 | 5,833 | ||||||
|
Total
revenues
|
284,972 | 289,005 | ||||||
|
Costs
and expenses:
|
||||||||
|
Domestic
Company-owned restaurant expenses:
|
||||||||
|
Cost
of sales
|
25,901 | 31,572 | ||||||
|
Salaries
and benefits
|
38,203 | 41,560 | ||||||
|
Advertising
and related costs
|
11,273 | 12,697 | ||||||
|
Occupancy
costs
|
7,916 | 8,471 | ||||||
|
Other
operating expenses
|
17,628 | 18,307 | ||||||
|
Total
domestic Company-owned restaurant expenses
|
100,921 | 112,607 | ||||||
|
Variable
interest entities restaurant expenses
|
4,809 | 1,793 | ||||||
|
Domestic
commissary and other expenses:
|
||||||||
|
Cost
of sales
|
90,950 | 90,006 | ||||||
|
Salaries
and benefits
|
8,831 | 8,965 | ||||||
|
Other
operating expenses
|
10,672 | 11,532 | ||||||
|
Total
domestic commissary and other expenses
|
110,453 | 110,503 | ||||||
|
(Income)
loss from the franchise cheese-purchasing
|
||||||||
|
program,
net of minority interest
|
(7,103 | ) | 5,558 | |||||
|
International
operating expenses
|
5,357 | 5,340 | ||||||
|
General
and administrative expenses
|
27,763 | 27,214 | ||||||
|
Other
general expenses
|
4,467 | 2,213 | ||||||
|
Depreciation
and amortization
|
7,955 | 8,006 | ||||||
|
Total
costs and expenses
|
254,622 | 273,234 | ||||||
|
Operating
income
|
30,350 | 15,771 | ||||||
|
Net
interest
|
(1,284 | ) | (1,626 | ) | ||||
|
Income
before income taxes
|
29,066 | 14,145 | ||||||
|
Income
tax expense
|
10,302 | 4,976 | ||||||
|
Net
income, including noncontrolling interests
|
18,764 | 9,169 | ||||||
|
Less:
income attributable to noncontrolling interests
|
$ | (925 | ) | $ | (544 | ) | ||
|
Net
income, net of noncontrolling interests
|
$ | 17,839 | $ | 8,625 | ||||
|
Basic
earnings per common share
|
$ | 0.65 | $ | 0.30 | ||||
|
Earnings
per common share - assuming dilution
|
$ | 0.64 | $ | 0.30 | ||||
|
Basic
weighted average shares outstanding
|
27,640 | 28,700 | ||||||
|
Diluted
weighted average shares outstanding
|
27,707 | 28,885 | ||||||
13
|
Papa
John's International, Inc. and Subsidiaries
|
||||||||
|
Condensed
Consolidated Balance Sheets
|
||||||||
|
March
29,
|
December
28,
|
|||||||
|
2009
|
2008
|
|||||||
|
(Unaudited)
|
(Note)
|
|||||||
|
(In
thousands)
|
||||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 18,141 | $ | 10,987 | ||||
|
Accounts
receivable
|
22,988 | 23,775 | ||||||
|
Inventories
|
15,001 | 16,872 | ||||||
|
Prepaid
expenses
|
9,655 | 9,797 | ||||||
|
Other
current assets
|
5,327 | 5,275 | ||||||
|
Assets
held for sale
|
1,428 | 1,540 | ||||||
|
Deferred
income taxes
|
7,811 | 7,102 | ||||||
|
Total
current assets
|
80,351 | 75,348 | ||||||
|
Investments
|
627 | 530 | ||||||
|
Net
property and equipment
|
189,605 | 189,992 | ||||||
|
Notes
receivable
|
10,340 | 7,594 | ||||||
|
Deferred
income taxes
|
14,509 | 17,518 | ||||||
|
Goodwill
|
73,282 | 76,914 | ||||||
|
Other
assets
|
19,147 | 18,572 | ||||||
|
Total
assets
|
$ | 387,861 | $ | 386,468 | ||||
|
Liabilities
and stockholders' equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 27,308 | $ | 29,148 | ||||
|
Income
and other taxes
|
17,465 | 9,685 | ||||||
|
Accrued
expenses
|
48,842 | 54,220 | ||||||
|
Current
portion of debt
|
8,450 | 7,075 | ||||||
|
Total
current liabilities
|
102,065 | 100,128 | ||||||
|
Unearned
franchise and development fees
|
5,639 | 5,916 | ||||||
|
Long-term
debt, net of current portion
|
103,075 | 123,579 | ||||||
|
Other
long-term liabilities
|
19,300 | 18,607 | ||||||
|
Total
liabilities
|
230,079 | 248,230 | ||||||
|
Total
stockholders' equity
|
157,782 | 138,238 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 387,861 | $ | 386,468 | ||||
|
Note:
|
The
balance sheet at December 28, 2008 has been derived from the audited
consolidated financial statements at that date, but does not include all
information and footnotes required by accounting principles generally
accepted in the United States for a complete set of financial
statements.
|
14
|
Papa
John's International, Inc. and Subsidiaries
|
||||||||
|
Consolidated
Statements of Cash Flows
|
||||||||
|
Three
Months Ended
|
||||||||
|
(In
thousands)
|
March
29, 2009
|
March
30, 2008
|
||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||
|
Operating
activities
|
||||||||
|
Net
income, net of noncontrolling interests
|
$ | 17,839 | $ | 8,625 | ||||
|
Adjustments
to reconcile net income to net cash provided by
|
||||||||
|
operating
activities:
|
||||||||
|
Restaurant
impairment and disposition losses
|
- | 1,211 | ||||||
|
Provision
for uncollectible accounts and notes receivable
|
1,497 | 715 | ||||||
|
Depreciation
and amortization
|
7,955 | 8,006 | ||||||
|
Deferred
income taxes
|
2,230 | (4,217 | ) | |||||
|
Stock-based
compensation expense
|
921 | 1,247 | ||||||
|
Excess
tax benefit related to exercise of non-qualified stock
options
|
- | (55 | ) | |||||
|
Other
|
362 | 184 | ||||||
|
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||
|
Accounts
receivable
|
(115 | ) | (1,044 | ) | ||||
|
Inventories
|
2,042 | 2,353 | ||||||
|
Prepaid
expenses
|
164 | 1,101 | ||||||
|
Other
current assets
|
462 | (88 | ) | |||||
|
Other
assets and liabilities
|
(162 | ) | (257 | ) | ||||
|
Accounts
payable
|
(3,246 | ) | (3,315 | ) | ||||
|
Income
and other taxes
|
7,780 | 8,877 | ||||||
|
Accrued
expenses
|
(5,487 | ) | (2,506 | ) | ||||
|
Unearned
franchise and development fees
|
(277 | ) | (497 | ) | ||||
|
Net
cash provided by operating activities
|
31,965 | 20,340 | ||||||
|
Investing
activities
|
||||||||
|
Purchase
of property and equipment
|
(5,064 | ) | (8,710 | ) | ||||
|
Purchase
of investments
|
(97 | ) | - | |||||
|
Proceeds
from sale or maturity of investments
|
- | 312 | ||||||
|
Loans
issued
|
(3,988 | ) | (549 | ) | ||||
|
Loan
repayments
|
507 | 642 | ||||||
|
Acquisitions
|
- | (100 | ) | |||||
|
Proceeds
from divestitures of restaurants
|
200 | - | ||||||
|
Other
|
- | 135 | ||||||
|
Net
cash used in investing activities
|
(8,442 | ) | (8,270 | ) | ||||
|
Financing
activities
|
||||||||
|
Net
repayments from line of credit facility
|
(20,500 | ) | (15,580 | ) | ||||
|
Net
proceeds from short-term debt - variable interest entities
|
1,375 | 6,600 | ||||||
|
Excess
tax benefit related to exercise of non-qualified stock
options
|
- | 55 | ||||||
|
Proceeds
from exercise of stock options
|
6,125 | 459 | ||||||
|
Acquisition
of Company common stock
|
(4,958 | ) | (2,272 | ) | ||||
|
Noncontrolling
interests, net of distributions
|
625 | (56 | ) | |||||
|
Other
|
(114 | ) | (75 | ) | ||||
|
Net
cash used in financing activities
|
(17,447 | ) | (10,869 | ) | ||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(9 | ) | 118 | |||||
|
Change
in cash and cash equivalents
|
6,067 | 1,319 | ||||||
|
Cash
recorded from consolidation of VIEs
|
1,087 | - | ||||||
|
Cash
and cash equivalents at beginning of period
|
10,987 | 8,877 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 18,141 | $ | 10,196 | ||||
15
|
Restaurant
Progression
|
||||||||||||||||||||
|
Papa
John's International, Inc.
|
||||||||||||||||||||
|
First
Quarter Ended March 29, 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
|
3 | - | 14 | 34 | 51 | |||||||||||||||
|
Closed
|
(4 | ) | (1 | ) | (17 | ) | (5 | ) | (27 | ) | ||||||||||
|
Acquired
|
- | - | 1 | - | 1 | |||||||||||||||
|
Sold
|
(1 | ) | - | - | - | (1 | ) | |||||||||||||
|
End
of Period
|
590 | 22 | 2,198 | 594 | 3,404 | |||||||||||||||
|
First
Quarter Ended March 30, 2008
|
||||||||||||||||||||
|
Corporate
|
Franchised
|
|||||||||||||||||||
|
Domestic
|
Int'l
|
Domestic
|
Int'l
|
Total
|
||||||||||||||||
|
Papa
John's restaurants
|
||||||||||||||||||||
|
Beginning
of period
|
648 | 14 | 2,112 | 434 | 3,208 | |||||||||||||||
|
Opened
|
4 | 3 | 22 | 19 | 48 | |||||||||||||||
|
Closed
|
(5 | ) | (11 | ) | (2 | ) | (18 | ) | ||||||||||||
|
Acquired
|
1 | - | - | - | 1 | |||||||||||||||
|
Sold
|
- | - | (1 | ) | - | (1 | ) | |||||||||||||
|
End
of Period
|
648 | 17 | 2,122 | 451 | 3,238 | |||||||||||||||
16