SEC Filing | Papa John's International, Inc.

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 24, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 0-21660 PAPA JOHN'S INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 61-1203323 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER DENTIFICATION INCORPORATION OR ORGANIZATION) NUMBER) 2002 PAPA JOHN'S BOULEVARD LOUISVILLE, KENTUCKY 40299-2334 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (502) 261-7272 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) - ------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No --- --- At November 2, 2000, there were outstanding 22,942,206 shares of the registrant's common stock, par value $.01 per share.

INDEX PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Financial Statements Condensed Consolidated Balance Sheets -- September 24, 2000 and December 26, 1999 2 Condensed Consolidated Statements of Income -- Three Months and Nine Months Ended September 24, 2000 and September 26, 1999 3 Condensed Consolidated Statements of Stockholders' Equity - Nine Months Ended September 24, 2000 and September 26, 1999 4 Condensed Consolidated Statements of Cash Flows -- Nine Months Ended September 24, 2000 and September 26, 1999 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 13 Item 7a. Quantitative and Qualitative Disclosures about Market Risk 14 1

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PAPA JOHN'S INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) SEPTEMBER 24, 2000 DECEMBER 26, 1999 - ------------------------------------------------------------------------------------------------------- (UNAUDITED) (NOTE) ASSETS Current assets: Cash and cash equivalents $ 21,698 $ 3,698 Accounts receivable 20,067 21,415 Inventories 11,257 10,637 Prepaid expenses and other current assets 6,298 7,378 Deferred income taxes 3,427 2,977 - ------------------------------------------------------------------------------------------------------ Total current assets 62,747 46,105 Investments 5,398 22,086 Net property and equipment 248,722 227,813 Notes receivable from franchisees 15,232 11,743 Intangibles 52,369 47,669 Other assets 16,402 16,635 - ------------------------------------------------------------------------------------------------------ Total assets $ 400,870 $ 372,051 ======================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,401 $ 24,947 Accrued expenses 37,565 38,516 Current portion of debt 1,229 5,308 - ------------------------------------------------------------------------------------------------------- Total current liabilities 60,195 68,771 Unearned franchise and development fees 6,912 6,222 Long-term debt, net of current portion 153,210 925 Deferred income taxes 3,890 2,109 Other long-term liabilities 2,520 1,891 Common equity put options 5,616 - Stockholders' equity: Preferred stock - - Common stock 306 305 Additional paid-in capital 191,112 189,920 Accumulated other comprehensive loss (639) (390) Retained earnings 170,470 134,492 Treasury stock (192,722) (32,194) - ------------------------------------------------------------------------------------------------------- Total stockholders' equity 168,527 292,133 - ------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 400,870 $ 372,051 ======================================================================================================= Note: The balance sheet at December 26, 1999 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. SEE ACCOMPANYING NOTES. 2

PAPA JOHN'S INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED (In thousands, except per share amounts) SEPT. 24, 2000 SEPT. 26, 1999 SEPT. 24, 2000 SEPT. 26, 1999 - ----------------------------------------------------------------------------------------------------------------- REVENUES: Restaurant sales $ 109,607 $ 96,538 $ 333,613 $ 289,216 Franchise royalties 12,485 10,261 37,283 29,783 Franchise and development fees 1,423 1,775 4,464 5,020 Commissary sales 88,306 81,002 270,193 227,090 Equipment and other sales 12,982 12,504 37,834 38,706 - ------------------------------------------------------------------------------------------------------------------ Total revenues 224,803 202,080 683,387 589,815 COSTS AND EXPENSES: Restaurant expenses: Cost of sales 26,668 26,449 82,268 74,031 Salaries and benefits 30,905 25,746 92,629 78,150 Advertising and related costs 9,081 7,972 30,913 25,245 Occupancy costs 6,094 5,127 17,107 14,377 Other operating expenses 15,988 12,994 46,531 38,865 - ------------------------------------------------------------------------------------------------------------------ 88,736 78,288 269,448 230,668 Commissary, equipment and other expenses: Cost of sales 75,503 72,066 229,705 202,839 Salaries and benefits 7,029 6,135 20,721 17,691 Other operating expenses 7,901 6,659 23,458 20,839 - ------------------------------------------------------------------------------------------------------------------ 90,433 84,860 273,884 241,369 General and administrative expenses 17,202 12,446 51,614 40,871 Advertising litigation expense - 1,322 1,017 1,322 Pre-opening and other general expenses (income) (477) (43) 463 2,552 Depreciation and amortization expense 8,727 6,252 25,389 17,529 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 204,621 183,125 621,815 534,311 - ------------------------------------------------------------------------------------------------------------------ Operating income 20,182 18,955 61,572 55,504 Other income (expense): Investment income 685 831 1,569 2,459 Interest expense (2,380) - (4,854) (151) - ------------------------------------------------------------------------------------------------------------------ Income before income taxes 18,487 19,786 58,287 57,812 Income tax expense 7,026 7,420 22,309 21,729 - ------------------------------------------------------------------------------------------------------------------ Net income $ 11,461 $ 12,366 $ 35,978 $ 36,083 ================================================================================================================== Basic earnings per share $ 0.48 $ 0.41 $ 1.42 $ 1.20 ================================================================================================================== Diluted earnings per share $ 0.48 $ 0.40 $ 1.41 $ 1.16 ================================================================================================================== Basic weighted average shares outstanding 23,866 30,335 25,331 30,156 ================================================================================================================== Diluted weighted average shares outstanding 24,005 31,228 25,550 31,131 ================================================================================================================== Note: Certain 1999 amounts have been reclassified to conform to the 2000 presentation. SEE ACCOMPANYING NOTES. 3

PAPA JOHN'S INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) ACCUMULATED ADDITIONAL OTHER TOTAL COMMON PAID-IN COMPREHENSIVE RETAINED TREASURY STOCKHOLDERS' (Dollars in thousands) STOCK CAPITAL INCOME (LOSS) EARNINGS STOCK EQUITY - ---------------------------------------------------------------------------------------------------------------------------------- Balance at December 27, 1998 $ 298 $ 166,209 $ 688 $ 87,456 $ (481) $ 254,170 Comprehensive income: Net income - - - 36,083 - 36,083 Unrealized gain on investments, net of tax of $88 - - 193 - - 193 Other, net - - (227) - - (227) ---------- Comprehensive income 36,049 Exercise of stock options 6 12,524 - - - 12,530 Tax benefit related to exercise of non-qualified stock options - 3,440 - - - 3,440 Deferred tax asset - pooling of interests business combination - 5,245 - - - 5,245 Other - 69 - (250) - (181) - --------------------------------------------------------------------------------------------------------------------------------- Balance at September 26, 1999 $ 304 $ 187,487 $ 654 $ 123,289 $ (481) $ 311,253 ================================================================================================================================= Balance at December 26, 1999 $ 305 $ 189,920 $ (390) $ 134,492 $ (32,194) $ 292,133 Comprehensive income: Net income - - - 35,978 - 35,978 Unrealized loss on investments, net of tax of $295 - - (481) - - (481) Other, net - - 232 - - 232 -------- Comprehensive income 35,729 Exercise of stock options 1 901 - - - 902 Tax benefit related to exercise of non-qualified stock options - 200 - - - 200 Acquisition of treasury stock (6,327,000 shares) - - - - (155,468) (155,468) Common equity put options - - - - (5,060) (5,060) Other - 91 - - - 91 - --------------------------------------------------------------------------------------------------------------------------------- Balance at September 24, 2000 $ 306 $ 191,112 $ (639) $ 170,470 $(192,722) $ 168,527 ================================================================================================================================= Note: Certain 1999 amounts have been reclassified to conform to the 2000 presentation. SEE ACCOMPANYING NOTES. 4

PAPA JOHN'S INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED (In thousands) SEPTEMBER 24, 2000 SEPTEMBER 26, 1999 - ------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net cash provided by operating activities $ 60,460 $ 66,805 INVESTING ACTIVITIES Purchase of property and equipment (40,559) (63,302) Purchase of investments - (22,165) Proceeds from sale or maturity of investments 15,070 29,703 Loans to franchisees (9,368) (5,236) Loan repayments from franchisees 6,372 2,752 Acquisitions (6,534) (2,397) Other 839 262 - ------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (34,180) (60,383) FINANCING ACTIVITIES Payments on debt (6,366) (9,815) Net proceeds from debt issuance and line of credit facility 152,500 2,510 Proceeds from exercise of stock options 902 12,530 Acquisition of treasury stock (155,468) - Other 470 68 - ------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (7,962) 5,293 Effect of exchange rate changes on cash and cash equivalents (318) - - ------------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 18,000 11,715 Cash and cash equivalents at beginning of period 3,698 33,814 - ------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 21,698 $ 45,529 ========================================================================================================================= Note: Certain 1999 amounts have been reclassified to conform to the 2000 presentation. SEE ACCOMPANYING NOTES. 5

PAPA JOHN'S INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 24, 2000 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 24, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John's International, Inc. (referred to as the "Company", "Papa John's" or in the first person notations of "we", "us" and "our") for the year ended December 26, 1999. 2. NEW ACCOUNTING PRONOUNCEMENT In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities", as amended by two subsequent statements. The new requirements are effective for the Company beginning in the first quarter of 2001. Due to Papa John's minimal use of derivatives, management believes that the adoption of SFAS 133 will not have a material effect on the Company's financial statements. 3. COMPREHENSIVE INCOME Comprehensive income is comprised of the following: THREE MONTHS ENDED NINE MONTHS ENDED (In thousands) SEPT. 24, 2000 SEPT. 26, 1999 SEPT. 24, 2000 SEPT. 26, 1999 - ----------------------------------------------------------------------------------------------------------------- Net income $ 11,461 $ 12,366 $ 35,978 $ 36,083 Unrealized gain (loss) on investments, net of tax 21 54 (481) 193 Other, net (130) (227) 232 (227) - ----------------------------------------------------------------------------------------------------------------- Comprehensive income $ 11,352 $ 12,193 $ 35,729 $ 36,049 ================================================================================================================== 4. COMMON EQUITY PUT OPTIONS At September 24, 2000, 250,000 common equity put options were outstanding, all of which were sold in the third quarter 2000. The options expire at various dates through March 2001 and have exercise prices between $21.99 and $22.92. The $5.6 million total exercise price of the options outstanding was classified in common equity put options at September 24, 2000, and the related offset was recorded in treasury stock, net of premiums received. 6

5. SEGMENT INFORMATION Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. We have identified three reportable segments: restaurants, commissaries and franchising. Segment information is as follows: THREE MONTHS ENDED NINE MONTHS ENDED (In thousands) SEPT. 24, 2000 SEPT. 26, 1999 SEPT. 24, 2000 SEPT. 26, 1999 - ---------------------------------------------------------------------------------------------------------------------- (NOTE) (NOTE) REVENUES FROM EXTERNAL CUSTOMERS: Restaurants $ 109,607 $ 96,538 $ 333,613 $ 289,216 Commissaries 88,306 81,002 270,193 227,090 Franchising 13,908 12,036 41,747 34,803 All others 12,982 12,504 37,834 38,706 - ----------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES FROM EXTERNAL CUSTOMERS $ 224,803 $ 202,080 $ 683,387 $ 589,815 ======================================================================================================================= INTERSEGMENT REVENUES: Commissaries $ 31,378 $ 30,490 $ 94,638 $ 87,350 Franchising 39 34 118 102 All others 3,949 3,644 12,146 10,519 - ------------------------------------------------------------------------------------------------------------------------ TOTAL INTERSEGMENT REVENUES $ 35,366 $ 34,168 $ 106,902 $ 97,971 ======================================================================================================================== INCOME BEFORE INCOME TAXES: Restaurants $ 3,338 $ 3,022 $ 10,677 $ 11,910 Commissaries 6,242 5,527 21,350 15,997 Franchising 11,832 10,350 35,573 30,005 All others 1,773 1,014 3,781 3,073 Unallocated corporate expenses (A) (4,715) (70) (13,075) (3,058) Elimination of intersegment (profits) losses 17 (57) (19) (115) - ------------------------------------------------------------------------------------------------------------------------ TOTAL INCOME BEFORE INCOME TAXES $ 18,487 $ 19,786 $ 58,287 $ 57,812 ======================================================================================================================== FIXED ASSETS: Restaurants $ 159,127 Commissaries 64,044 All others 6,902 Unallocated corporate assets 106,159 Accumulated depreciation and amortization (87,510) - ----------------------------------------------------------------- NET FIXED ASSETS $ 248,722 ================================================================= Note: Certain 1999 amounts have been reclassified to conform to the 2000 presentation. (A) Includes unallocated corporate expense associated with Perfect Pizza operations of $1.1 million and $3.4 million for the three and nine months ended September 24, 2000, respectively. Net interest expense (interest expense less investment income), which is included in unallocated corporate expense, was $1.7 million for the three months ended September 24, 2000 compared to net investment income of $831,000 for the three months ended September 26, 1999. For the nine months ended September 24, 2000, net interest expense was $3.3 million compared to net investment income of $2.3 million for the comparable 1999 period. 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESTAURANT PROGRESSION THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 24, SEPTEMBER 26, SEPTEMBER 24, SEPTEMBER 26, 2000 1999 2000 1999 - --------------------------------------------------------------------------------------------------------------- PAPA JOHN'S RESTAURANTS: U.S. COMPANY-OWNED: Beginning of period 605 519 573 514 Opened 13 9 29 19 Closed (1) - (2) (1) Sold to franchisees (2) - (7) (6) Acquired from franchisees 1 20 23 22 - --------------------------------------------------------------------------------------------------------------- End of period 616 548 616 548 - --------------------------------------------------------------------------------------------------------------- INTERNATIONAL COMPANY-OWNED: Beginning of period 1 - - - Opened - - 1 - Converted (A) 5 - 5 - - --------------------------------------------------------------------------------------------------------------- End of period 6 - 6 - - --------------------------------------------------------------------------------------------------------------- U.S. FRANCHISED: Beginning of period 1,784 1,523 1,681 1,365 Opened 56 88 185 248 Closed (10) (2) (19) (8) Sold to Company (1) (20) (23) (22) Acquired from Company 2 - 7 6 - --------------------------------------------------------------------------------------------------------------- End of period 1,831 1,589 1,831 1,589 - --------------------------------------------------------------------------------------------------------------- INTERNATIONAL FRANCHISED: Beginning of period 46 15 26 6 Opened 10 7 30 16 - --------------------------------------------------------------------------------------------------------------- End of period 56 22 56 22 - --------------------------------------------------------------------------------------------------------------- Total at end of period 2,509 2,159 2,509 2,159 =============================================================================================================== PERFECT PIZZA RESTAURANTS: COMPANY-OWNED: Beginning of period 12 - 12 - Closed - - (1) - Converted (A) (5) (5) Acquired from franchisees - - 1 - - --------------------------------------------------------------------------------------------------------------- End of period 7 - 7 - - --------------------------------------------------------------------------------------------------------------- FRANCHISED: Beginning of period 196 - 194 - Opened 2 - 5 - Closed (2) (2) Sold to Company - - (1) - - --------------------------------------------------------------------------------------------------------------- End of period 196 - 196 - - --------------------------------------------------------------------------------------------------------------- Total at end of period 203 - 203 - =============================================================================================================== (A) Represents Perfect Pizza restaurants converted to Papa John's restaurants during the period. 8

RESULTS OF OPERATIONS REVENUES. Total revenues increased 11.2% to $224.8 million for the three months ended September 24, 2000, from $202.1 million for the comparable period in 1999, and 15.9% to $683.4 million for the nine months ended September 24, 2000, from $589.8 million for the comparable period in 1999. Restaurant sales increased 13.5% to $109.6 million for the three months ended September 24, 2000, from $96.5 million for the comparable period in 1999, and 15.4% to $333.6 million for the nine months ended September 24, 2000, from $289.2 million for the comparable period in 1999. These increases were primarily due to increases of 13.2% and 14.1% in the number of equivalent Company-owned Papa John's restaurants open during the three and nine months ended September 24, 2000, respectively, compared to the corresponding period in the prior year. "Equivalent restaurants" represent the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis. Also, sales increased 2.2% for the three months ended September 24, 2000, over the comparable period in 1999, and 2.7% for the nine months ended September 24, 2000, over the comparable period in 1999, for Company-owned Papa John's restaurants open throughout both periods. Sales for the three and nine months ended September 24, 2000, for the Perfect Pizza Holdings Limited ("Perfect Pizza") restaurants acquired in November 1999, contributed 1.1% and 1.2%, respectively, to the overall increase. Franchise royalties increased 21.7% to $12.5 million for the three months ended September 24, 2000, from $10.3 million for the comparable period in 1999, and 25.2% to $37.3 million for the nine months ended September 24, 2000, from $29.8 million for the comparable period in 1999. These increases were primarily due to increases of 16.6% and 18.6% in the number of equivalent franchised domestic Papa John's restaurants open during the three and nine months ended September 24, 2000, compared to the corresponding periods in 1999. Comparable sales for Papa John's franchised restaurants for the three months ended September 24, 2000 were the same as compared to the corresponding 1999 period. For the nine month period ending September 24, 2000, franchised restaurant sales increased 2.0% over the comparable period in 1999. Perfect Pizza franchise royalties contributed 7.6% and 8.0% to the overall increase for the three and nine months ended September 24, 2000, respectively. Franchise and development fees decreased to $1.4 million for the three months ended September 24, 2000, from $1.8 million for the comparable period in 1999, and decreased to $4.5 million for the nine months ended September 24, 2000, from $5.0 million for the comparable period in 1999. These decreases were due to fewer franchised restaurant openings in the current year comparable periods. Commissary sales increased 9.0% to $88.3 million for the three months ended September 24, 2000, from $81.0 million for the comparable period in 1999, and 19.0% to $270.2 million for the nine months ended September 24, 2000, from $227.1 million for the comparable period in 1999. These increases were primarily the result of the Perfect Pizza commissary operations, which contributed 6.3% and 6.9%, respectively, to the overall increase, as well as an increase in the number of equivalent franchise restaurants, partially offset by lower cheese sales prices. Equipment and other sales were $13.0 million for the three months ended September 24, 2000, compared to $12.5 million in 1999, and $37.8 million for the nine months ended September 24, 2000, compared to $38.7 million for the comparable period in 1999. COSTS AND EXPENSES. Total restaurant expenses as a percentage of restaurant sales were 81.0% for the three months ended September 24, 2000 compared to 81.1% for the comparable period in 1999 and increased to 80.8% for the nine months ended September 24, 2000, from 79.8% for the comparable period in 1999. Restaurant cost of sales, which consists of food, beverage and paper costs, decreased as a percentage of restaurant sales to 24.3% for the three months ended September 24, 2000, from 27.4% for the comparable period in 1999, and decreased to 24.7% for the nine months ended September 24, 2000, from 25.6% for the comparable period in 1999. The decrease in the percentage cost for the three and nine months ended September 24, 2000 over the prior comparable periods is primarily due to a decrease in cheese costs, partially offset by an increase in certain other commodity costs. Restaurant salaries and benefits as a percentage of restaurant sales increased to 28.2% for the three months ended September 24, 2000, from 26.7% for the comparable period in 1999, and increased to 27.8% for the nine months ended September 24, 2000, from 27.0% for the comparable period in 1999. The increase for the three and nine months ended September 24, 2000 over the prior comparable periods reflects higher wage rates in response to increasing labor cost 9

pressures. Occupancy costs were 5.6% and 5.1% for the three and nine months ended September 24, 2000, respectively, as compared to 5.3% and 5.0% for the comparable periods in 1999. Restaurant advertising and related costs as a percentage of restaurant sales were 8.3% for the three months ended September 24, 2000 and September 26, 1999, and increased to 9.3% for the nine months ended September 24, 2000, from 8.7% for the comparable period in 1999, as a result of increased marketing activities in response to the competitive environment and sales trends. Other restaurant operating expenses increased as a percentage of restaurant sales to 14.6% for the three months ended September 24, 2000, from 13.5% for the comparable period in 1999, and increased as a percentage of restaurant sales to 13.9% for the nine months ended September 24, 1999, from 13.4% for the comparable period in 1999. These increases were primarily due to an increase in recruitment incentives for staffing and sponsorship fees related to non-traditional restaurants. Other operating expenses includes an allocation of commissary operating expenses equal to 3% of Company-owned restaurant sales in order to assess a portion of the costs of dough production, food, equipment purchases and storage to Company-owned restaurants. Commissary, equipment and other expenses include cost of sales and operating expenses associated with sales of food, paper, equipment, information systems, and printing and promotional items to franchisees and other customers. These costs decreased as a percentage of combined commissary sales and equipment and other sales to 89.3% for the three months ended September 24, 2000, as compared to 90.8% for the same period in 1999, and decreased to 88.9% for the nine months ended September 24, 2000, from 90.8% for the same period in 1999. Cost of sales as a percentage of combined commissary sales and equipment and other sales decreased to 74.5% for the three months ended September 24, 2000, from 77.1% for the comparable period in 1999, and decreased to 74.6% for the nine months ended September 24, 2000, from 76.3% for the comparable period in 1999. These decreases were primarily due to certain commissaries reducing commodity costs, beginning in late 1999, by blending flour internally. Previously, the flour blending was outsourced. The commissaries also received a higher margin on cheese during the third quarter 2000 compared to 1999. Additionally, higher relative gross margins for the Perfect Pizza commissary operations contributed 0.5% to the overall cost of sales decrease for the three months ended September 24, 2000, and 0.4% for the nine months ended September 24, 2000 as compared to 1999. Salaries and benefits as a percentage of combined commissary sales and equipment and other sales were 6.9% and 6.7% for the three and nine months ended September 24, 2000, as compared to 6.6% and 6.7% for comparable periods in 1999. The increase for the three months was primarily due to lower sales prices charged by the commissaries due to declining cheese prices. Other operating expenses were 7.8% and 7.6% for the three and nine months ended September 24, 2000, respectively, compared to 7.1% and 7.8% for the same periods in 1999. The increase for the three months is due to higher delivery costs, which reflect increased fuel costs as well as lower sales prices charged by the commissaries due to declining cheese prices. The decrease for the nine months is due to general operating efficiencies and higher margins for the Perfect Pizza commissary operations, partially offset by increased delivery costs. General and administrative expenses as a percentage of total revenues were 7.7% and 6.2% for the three months ended September 24, 2000 and September 26, 1999, respectively, and 7.6% and 6.9% for the nine months ended September 24, 2000, and September 26, 1999, respectively. The increase reflects additional support services due to expanded operations as well as the addition of Perfect Pizza. Perfect Pizza contributed 0.3% to the increase for both the three and nine months ended September 24, 2000. Advertising litigation expense represents costs associated with the lawsuit filed against us by Pizza Hut, Inc. claiming that our "Better Ingredients. Better Pizza." slogan is false and deceptive advertising. Advertising litigation expense was $1.0 million for the nine months ended September 24, 2000, compared to $1.3 million for the three and nine months ended September 26, 1999. These costs consist primarily of legal costs. See "Part II. Other Information - Item 1. Legal Proceedings" for an update on the lawsuit. Pre-opening and other general expenses (income) was ($477,000) for the three months ended September 24, 2000, compared to ($43,000) for the comparable period in 1999, and $463,000 for the nine months ended September 24, 2000, compared to $2.6 million for the comparable period in 1999. The increase in income for the three months ended is primarily due to the recognition of a $672,000 gain on the divestiture of two restaurants and the dissolution of a joint venture 10

arrangement. The decrease in expense for the nine months ended is due to fewer restaurant relocations in 2000 and the recognition of a $1.3 million gain on the divestiture of seven restaurants and the dissolution of a joint venture arrangement compared to a $592,000 loss on the divestiture of five restaurants and one closure in the prior comparable period. Depreciation and amortization as a percentage of total revenues increased to 3.9% and 3.7% for the three and nine months ended September 24, 2000, respectively, from 3.1% and 3.0% for the comparable periods in 1999. These increases were primarily due to depreciation expense associated with the relocation of the Company's corporate headquarters to an owned facility and the continued growth of our commissary system in mid-to-late 1999, and an increase in amortization expense related to several acquisitions made in late 1999 and early 2000. The most significant of these was the acquisition of Perfect Pizza for $32.3 million, which resulted in $30.9 million of goodwill. Total goodwill amortization is $776,000 and $2.3 million for the three and nine months ended September 24, 2000, respectively, as compared to $275,000 and $806,000 for the comparable periods in 1999. Operating income for the three months ended September 24, 2000 increased 6.5% to $20.2 million compared to $19.0 million for the comparable period in 1999. Operating income for the nine months ended September 24, 2000 increased 10.9% to $61.6 million from $55.5 million for the comparable period in 1999. INVESTMENT INCOME. Investment income decreased to $685,000 for the three months ended September 24, 2000, from $831,000 for the comparable period in 1999, and decreased to $1.6 million for the nine months ended September 24, 2000, from $2.5 million for the comparable period in 1999. These decreases reflect a decrease in our average investment portfolio balance, partially offset by an increase in the average balance of franchise loans. A significant portion of our investment portfolio was liquidated to fund the repurchase of our common stock. INTEREST EXPENSE. Interest expense was $2.4 million for the three months ended September 24, 2000 (none in 1999), and increased to $4.9 million for the nine months ended September 24, 2000, from $151,000 for the comparable period in 1999, due to amounts borrowed to fund the repurchase of our common stock. INCOME TAX EXPENSE. Income tax expense reflects a combined federal, state and local effective tax rate of 38.0% and 38.3% for the three and nine months ended September 24, 2000, respectively, compared to 37.5% and 37.6% for the comparable periods in 1999. The effective tax rate in 2000 increased as a result of less tax-exempt investment income due to the liquidation of investments to fund the repurchase of common stock. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations decreased to $60.5 million for the nine months ended September 24, 2000, from $66.8 million for the comparable period in 1999 primarily due to an increase in working capital requirements and a decrease in tax benefits related to the exercise of non-qualified stock options. We require capital primarily for the development and acquisition of restaurants, the addition of new commissary and support services facilities and equipment, the enhancement of corporate systems and facilities, and the funding of franchisee loans. Additionally, we began a common stock repurchase program in December 1999. Common stock share repurchases of $155.5 million, capital expenditures of $40.6 million, acquisitions of $6.5 million, payments on debt of $6.4 million and net loans to franchisees of $3.0 million for the nine months ended September 24, 2000, were funded by advances on an unsecured revolving line of credit agreement, cash flow from operations and the liquidation of available investments, cash and cash equivalents. The Board of Directors has authorized the repurchase of up to $225.0 million of our common stock through December 31, 2000. During the first nine months of 2000, the Company repurchased 6.3 million shares for $155.5 million at an average price of $24.57 per share. A total of 7.6 million shares have been repurchased for $187.2 million at an average price of $24.66 per share since the repurchase program started in 1999. As of November 2, 2000, there had been no repurchases subsequent to September 24, 2000. The Company's debt at September 24, 2000 was $154.4 million compared to $6.2 million at December 26, 1999. The increase in debt is due to the common stock repurchase program. The debt balance decreased to $139.5 million at November 2, 2000 due to repayments from cash on hand at September 24, 2000. EBITDA, excluding advertising litigation expense, increased 9.0% to $28.9 million for the three months ended September 24, 2000, compared to $26.5 million for the same period in prior year and increased 18.3% to $88.0 million for the nine months ended September 24, 2000, compared to $74.4 million for the corresponding 1999 period. 11

Capital resources available at September 24, 2000, include $21.7 million of cash and cash equivalents and $5.4 million of investments. Effective October 30, 2000, a $150.0 million, three-year unsecured line of credit agreement expiring in March 2003 was increased to $200.0 million. During the third quarter 2000, we obtained a "bridge loan" from PNC Bank, which allowed us to borrow up to $20.0 million. The bridge loan was terminated with the line of credit increase to $200.0 million. At November 2, 2000, we had approximately $60.5 million remaining borrowing capacity under the expanded line of credit facility. FORWARD LOOKING STATEMENTS Certain information contained in this quarterly report, particularly information regarding future financial performance and plans and objectives of management, is forward looking. Certain factors could cause actual results to differ materially from those expressed in forward looking statements. These factors include, but are not limited to, our ability and the ability of our franchisees to obtain suitable locations and financing for new restaurant development; the hiring, training, and retention of management and other personnel; competition in the industry with respect to price, service, location and food quality; an increase in food cost due to seasonal fluctuations, weather or demand; changes in consumer tastes or demographic trends; litigation; changes in federal or state laws, such as increases in minimum wage; and risks inherent to international development, including operational or market risks associated with the planned conversion of Perfect Pizza restaurants to Papa John's in the United Kingdom. See "Part I. Item 1. - Business Section - Forward Looking Statements" of the Form 10-K for the fiscal year ended December 26, 1999 for additional factors. 12

PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On August 12, 1998, Pizza Hut, Inc. filed suit against us in the United States District Court for the Northern District of Texas, claiming that our "Better Ingredients. Better Pizza." slogan constituted false and deceptive advertising in violation of the Lanham Trademark Act. On November 18, 1999, the jury returned a verdict that our "Better Ingredients. Better Pizza." slogan was false and deceptive. On January 3, 2000, the court announced its judgment, awarding Pizza Hut $468,000 in damages and ordering us to cease all use of the "Better Ingredients. Better Pizza." slogan. Under the judge's order, we were to cease using the slogan in print and broadcast advertising, phase out printed promotional materials and other items containing the slogan and remove the slogan from restaurant signage, all according to deadlines specified by the court. We initially estimated that the pre-tax costs of complying with the court's order and certain related costs could have approximated $12.0 to $15.0 million, of which $6.1 million was recorded as pre-tax charges against 1999 earnings. For the nine months ended September 24, 2000, we incurred $1.0 million of pre-tax charges related to this issue. We filed an appeal of the verdict and the court's order and a motion for stay of the court's order pending outcome of the appeal. On January 21, 2000, the United States Court of Appeals for the Fifth Circuit granted a stay of the District Court judgment pending our appeal. Oral arguments related to the appeal were held on April 5, 2000. On September 19, 2000, the Fifth Circuit vacated the District Court's judgment in its entirety and remanded the case to the District Court for entry of judgment in favor of Papa John's. Pizza Hut has until December 18, 2000 to file a petition for writ of certiorari with the United States Supreme Court. We cannot predict, if the petition is filed, whether the Supreme Court will accept the case for hearing or, in the event it is accepted, what the outcome of any such hearing will be. We are also subject to claims and legal actions in the ordinary course of our business. We believe that all such claims and actions currently pending against us are either adequately covered by insurance or would not have a material adverse effect on us if decided in a manner unfavorable to us. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits Exhibit Number Description ------ ----------- 10.1 Second Amendment to Credit Agreement by and among Papa John's International, Inc. and The Guarantors Party Hereto and the Banks Party Hereto and Bank One, Indiana, NA, as Syndication Agent and PNC Bank, National Association, as Lead Arranger and Administrative Agent and dated as of October 30, 2000. 11 Calculation of Earnings per Share 27 Financial Data Schedule for the nine months ended September 24, 2000, which is submitted electronically to the Securities and Exchange Commission for information only and not deemed to be filed with the Commission. 99.1 Cautionary Statements. Exhibit 99.1 to our Annual Report on Form 10-K for the fiscal year ended December 26, 1999 (Commission File No. 0-21660) is incorporated herein by reference. b. Current Reports on Form 8-K. There were no reports filed on Form 8-K during the quarterly period ended September 24, 2000. 13

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's debt at September 24, 2000 is principally comprised of a $152.5 million outstanding principal balance on the $150.0 million unsecured revolving line of credit and $20.0 million bridge loan. The interest rate on the revolving line of credit is variable and is based on the London Interbank Offered Rate (LIBOR). An increase in interest rate of 100 basis points would increase interest expense approximately $1.5 million annually. The weighted average interest rate on the revolving line of credit was 7.25% as of September 24, 2000. We have entered into a $100.0 million interest rate collar, which is effective until March 2003. The collar establishes a 6.36% floor and a 9.50% ceiling on the LIBOR base rate on a no-fee basis. Substantially all of our business is transacted in U.S. dollars. Accordingly, foreign exchange rate fluctuations do not have a significant impact on the Company. Cheese, representing approximately 35-40% of our food cost, is subject to seasonal fluctuations, weather, demand and other factors that are beyond our control. We have entered into a purchasing arrangement with a third-party entity formed at the direction of the Franchise Advisory Council for the sole purpose of reducing cheese price volatility. Under this arrangement, we are able to purchase cheese at a fixed quarterly price, based in part on historical average cheese prices. Gains and losses incurred by the selling entity will be used as a factor in determining adjustments to the selling price over time. Ultimately, we will purchase cheese at a price approximating the actual average market price, but with less short-term volatility. 14

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PAPA JOHN'S INTERNATIONAL, INC. (Registrant) Date: November 7, 2000 /s/ E. Drucilla Milby -------------------- ----------------------------------------- E. Drucilla Milby, Senior Vice President, Chief Financial Officer and Treasurer 15

Exhibit 10.1 SECOND AMENDMENT to CREDIT AGREEMENT by and among PAPA JOHN'S INTERNATIONAL, INC. and THE GUARANTORS PARTY HERETO and THE BANKS PARTY HERETO and BANK ONE, INDIANA, NA, As Syndication Agent and PNC BANK, NATIONAL ASSOCIATION, As Lead Arranger and Administrative Agent and Dated as of October 30, 2000

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") dated as of October 30, 2000, is made to the Credit Agreement (as defined below) is made by and among PAPA JOHN'S INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), each of the Guarantors and the BANKS party to the Credit Agreement and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Banks (the "Administrative Agent") under the Credit Agreement, and BANK ONE, INDIANA, NA, in its capacity as the syndication agent for the Banks under the Credit Agreement. WHEREAS, reference is made to the Credit Agreement dated as of March 17, 2000 (the "Credit Agreement") made by and among the parties hereto as amended by that certain Second Amendment To Credit Agreement dated as of September 8, 2000; WHEREAS, the Borrower sent to the Banks that certain notice dated August 28, 2000 pursuant to Section 2.10 (the "Notice") of the Credit Agreement requesting that the Commitments under the Credit Agreement be increased to $200,000,000; WHEREAS, some of the Banks which are parties to the Credit Agreement immediately prior to the Effective Date of this Second Amendment (the "Existing Banks") are increasing their Commitments (each Existing Bank which is increasing its Commitment shall be referred to as an "Increasing Bank") in response to the Notice and Bank of America, N.A. (the "New Lender") is joining the Credit Agreement as a Bank with a Commitment as provided herein; and WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows: 1. ACKNOWLEDGMENT, AGREEMENT AND WAIVERS. The parties acknowledge and agree as follows notwithstanding any provisions in the Credit Agreement to the contrary: (1) APPROVAL OF AND JOINDER BY NEW LENDER. The Administrative Agent approves of the New Lender pursuant to Section 2.10 (i) of the Credit Agreement. Each of the parties hereto acknowledges and agrees that the New Lender is joining the Credit Agreement and the other Loan Documents and shall be a Bank under the Credit Agreement on and after the Effective Date with a Commitment as set forth on SCHEDULE 1.1(B) hereto. (2) INCREASES IN COMMITMENTS BY INCREASING BANKS. Each of the Increasing Banks is increasing its Commitment to the amount set forth on Schedule 1.1(B). It is acknowledged that the Commitments of some of the Increasing Banks are being increased by amounts which are not integral multiples of $1,000,000 (as provided for in Section 2.10(iii) of the Credit Agreement) and the parties hereto waive the requirement of Section 2.10(iii) to permit increases in the amounts set forth on SCHEDULE 1.1(B). 1

(3) SCHEDULE 1.1(B). SCHEDULE 1.1(B) to the Credit Agreement is hereby amended and restated to read as set forth on SCHEDULE 1.1(B) hereto. SCHEDULE 1.1(B) hereto reflects all of the Commitments of the Banks after giving effect to the increases and joinder described in clauses (1) and (2) immediately above. (4) REPAYMENT OF OUTSTANDING LOANS. On the Effective Date, the Borrower is repaying all Loans (the "Outstanding Loans") outstanding immediately prior to the Effective Date. (5) NEW LOANS. The Borrower is requesting new Loans with a Borrowing Date on the Effective Date. Each of the Banks, including the New Lender, shall participate in such new Loans according to its Ratable Share after giving effect to the joinder and changes in the Commitments described in clauses (1) and (2) above (the "Post-Amendment Ratable Share"). (6) LETTERS OF CREDIT. The Banks shall participate in all Letters of Credit outstanding on the Effective Date according to its Post-Amendment Ratable Share. (7) WAIVER OF 30-DAY NOTICE. The parties waive any requirement that the Borrower send notice pursuant to Section 2.10(ii) of the Credit Agreement to the Administrative Agent and the Banks of the increases in the Commitments provided for under this Second Amendment at least 30 Business Days before the effective date of such increase. (8) Amendment to Section 7.2.4 of Credit Agreement. Section 7.2.4 of the Credit Agreement is hereby amended to add the following new subsection immediately below subsection (vii) as follows: "(viii) Restricted Investments in franchisees in an amount not to exceed $25,000,000 in the aggregate." 2. REPRESENTATIONS AND WARRANTIES; EVENTS OF DEFAULT. The representations and warranties of Loan Parties contained in the Credit Agreement, after giving effect to the increases in the Commitments and the amendments, acknowledgments and waivers hereunder, are true and correct on and as of the date hereof with the same force and effect as though made by the Loan Parties on such date, except to the extent that any such representation or warranty expressly relates solely to a previous date. The Loan Parties are in compliance with all terms, conditions, provisions, and covenants contained in the Credit Agreement and there exist no Events of Default or Potential Defaults. 3. CONDITIONS TO EFFECTIVENESS. This Second Amendment shall become effective on the date (the "Effective Date") on which each of the following conditions is satisfied. It is acknowledged that the Effective Date is October 30, 2000. 2

A. REPRESENTATIONS AND WARRANTIES. Each of the Borrower's representations and warranties under Section 2 hereof shall be true and correct. B. EXECUTION BY PARTIES. This Second Amendment shall have been executed by the Banks, the Loan Parties and the other parties hereto. C. NEW NOTES; JOINDER AGREEMENT. The Borrower shall execute and deliver Notes in favor of each of the Increasing Banks and the New Lender in the amount of the Commitments of such persons set forth on SCHEDULE 1.1(B) hereto. The Borrower, the Administrative Agent and the New Lender shall have executed and delivered a Bank Joinder pursuant to which the New Lender joins the Credit Agreement with a Commitment as set forth on SCHEDULE 1.1(B) hereto. D. OPINION OF COUNSEL. Counsel for the Loan Parties shall be deliver to the Administrative Agent for the benefit of each Bank a written opinion, dated the Effective Date and in form and substance satisfactory to the Administrative Agent addressing the subject matter of the opinions delivered in connection with the closing of the Credit Agreement, as such matters related to this Second Amendment and the Credit Agreement as amended by this Second Amendment. E. SECRETARY'S CERTIFICATE. There shall be delivered to the Administrative Agent for the benefit of each Bank a certificate dated the Effective Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties, certifying as appropriate as to: (A) all action taken by each Loan Party in connection with this Second Amendment, the Joinder and the New Notes, with attached resolutions; (B) the names of the officer or officers authorized to sign this Second Amendment, the Joinder and the New Notes and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of each Loan Party for such purposes and the true signatures of such officers; and (C) a certification that the organizational documents of the Loan Parties delivered in connection with the closing of the Credit Agreement have not been modified since the Closing Date. 3

F. TERMINATION OF PNC BANK BRIDGE FACILITY. The Credit Agreement between the Borrower and the other Loan Parties and PNC Bank, National Association dated as of September 8, 2000 (referred to in the First Amendment as the "PNC Bank Bridge Facility") shall have been repaid and the outstanding obligations thereunder shall have been repaid and the Loan Parties and PNC Bank each acknowledge that upon such repayment of such obligations on the Effective Date hereof, the commitments under such agreement shall be terminated without further action by the parties. 4. REFERENCES TO CREDIT AGREEMENT, LOAN DOCUMENTS. Any reference to the Credit Agreement or other Loan Documents in any document, instrument, or agreement shall hereafter mean and include the Credit Agreement or such Loan Document, including such schedules and exhibits, as amended hereby. In the event of irreconcilable inconsistency between the terms or provisions hereof and the terms or provisions of the Credit Agreement or such Loan Document, including such schedules and exhibits, the terms and provisions hereof shall control. 5. FORCE AND EFFECT. The Borrower reconfirms, restates, and ratifies the Credit Agreement and all other documents executed in connection therewith except to the extent any such documents are expressly modified by this Second Amendment and Borrower confirms that all such documents have remained in full force and effect since the date of their execution. 6. GOVERNING LAW. This Second Amendment shall be deemed to be a contract under the laws of the Commonwealth of Kentucky and for all purposes shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Kentucky without regard to its conflict of laws principles. 7. COUNTERPARTS; EFFECTIVE DATE. This Second Amendment may be signed in any number of counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Second Amendment shall become effective when it has been executed by the Agent, the Loan Parties and the Required Banks and each of the other conditions set forth in Section 3 of this Second Amendment has been satisfied. [SIGNATURE PAGES TO FOLLOW] 4

[SIGNATURE PAGE 1 OF 4 TO SECOND AMENDMENT] IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Second Amendment as of the day and year above written. PAPA JOHN'S INTERNATIONAL, INC. By: /s/ J. David Flanery Title: Vice President & Controller GUARANTORS: PAPA JOHN'S USA, INC. By: /s/ J. David Flanery Title: Vice President & Controller PAPA JOHN'S SUPPORT SERVICES, INC. By: /s/ Charles W. Schnatter Title: Secretary CAPITAL DELIVERY, INC. By: /s/ J. David Flanery Title: Vice President 5

[SIGNATURE PAGE 2 OF 4TO SECOND AMENDMENT] RISK SERVICES CORP. By: /s/ J. David Flanery Title: Treasurer PJ FOOD SERVICE, INC. By: /s/ Charles W. Schnatter Title: Sr. Vice President PJFS OF MISSISSIPPI, INC. By: /s/ J. David Flanery Title: Vice President - Finance 6

[SIGNATURE PAGE 3 OF 4 TO SECOND AMENDMENT] PNC BANK, NATIONAL ASSOCIATION, individually and as Administrative Agent By: /s/ Ralph M. Bowman Title: Vice President BANK ONE, INDIANA, NA, individually and as Syndication Agent By: /s/ Thelma Ferguson Title: First Vice President BANK OF AMERICA, N.A. By: /s/ Richard G. Parkhurst, Jr. Title: Managing Director BANK OF LOUISVILLE By: /s/ S. Gordon Dabney, Jr. Title: Sr. Vice President FIFTH THIRD BANK, KENTUCKY, INC. By: /s/ Edward B. Martin Title: Vice President FIRSTAR BANK, N.A. By: /s/ Toby B. Rau Title: Vice President 7

[SIGNATURE PAGE 4 OF 4 TO SECOND AMENDMENT] NATIONAL CITY BANK OF KENTUCKY By: /s/ Hugh C. Wright, Jr. Title: Vice President SUNTRUST BANK By: /s/ Sean McLaren Title: Assistant Vice President 8

SCHEDULE 1.1(B) COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES Page 1 of 3 PART 1 - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES TO BANKS AMOUNT OF COMMITMENT BANK FOR LOANS RATABLE SHARE ---- ---------- ------------- Name: PNC Bank, National Association Address: Citizens Plaza 500 West Jefferson St., 2nd Floor Louisville, KY 40202-2823 Attention: Paula Fryland Telephone 502-581-2244 Telecopy: 502-581-2780 $49,250,000 24.625000% Name: Bank One, Indiana, NA Address: Mail Stop Kyl - 2206 416 West Jefferson, St. Louisville, KY 40202 Attention: Thelma Ferguson Telephone 502-566-2821 Telecopy: 502-566-2367 $49,250,000 24.625000% Name: National City Bank of Kentucky Address: 101 S. Fifth St., 37th Floor Louisville, KY 40202 Attention: Hugh Wright Telephone 502-581-5355 Telecopy: 502-581-4424 $41,500,000 20.750000% Name: Fifth Third Bank, Kentucky, Inc. Address: Fifth Third Center 401 South 4th Avenue Louisville, KY 40202-3411 Attention: Ed Martin Telephone 502-562-5536 Telecopy: 502-562-5540 $15,000,000 7.500000% 9

Name: Firstar Bank Address: One Financial Square Louisville, KY 40201-3322 Attention: Mark Wheeler Telephone 502-562-6336 Telecopy: 502-562-6460 $15,000,000 7.500000% Name: SunTrust Bank Address: 303 Peachtree St., N.E., 2nd Floor Atlanta, GA 30308 Attention: Sean McLaren Telephone 404-588-7687 Telecopy: 404-724-3716 $15,000,000 7.500000% Name: Bank of America, N.A. Address: 100 N. Tryon Street, (NC1-007-17-14) Charlotte, NC 28255 Attention: Richard Parkhurst Telephone 704-386-1828 Telecopy: 704-386-3271 $10,000,000 5.000000% Name: Bank of Louisville Address: Bank of Louisville Building 500 West Broadway, 6th Floor Louisville, KY 40202 Attention: John Z. Barr Telephone 502-562-6823 Telecopy: 502-562-6990 $5,000,000 2.500000% Total $200,000,000 100.000000% ========== 10

SCHEDULE 1.1(B) COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES Page 3 of 3 Part 2 - Addresses for Notices to Borrower and Guarantors: ADMINISTRATIVE AGENT Name: PNC Bank, National Association Address: Citizens Plaza 500 West Jefferson Street, 2nd Floor Louisville, KY 40202-2823 Attention: Paula Fryland Telephone: 502-581-2244 Telecopy: 502-581-2780 BORROWER AND GUARANTORS: Name: Papa John's International, Inc. Address: 2002 Papa John's Boulevard Louisville, KY 40299 Attention: J. David Flanery Telephone: 502-261-4753 Telecopy: 502-261-4190 11

Exhibit 11 EXHIBIT 11 - CALCULATION OF EARNINGS PER SHARE THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 24, SEPTEMBER 26, SEPTEMBER 24, SEPTEMBER 26, (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2000 1999 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------- BASIC EARNINGS PER SHARE: Net Income $11,461 $12,366 $35,978 $36,083 Weighted average shares outstanding 23,866 30,335 25,331 30,156 ------- ------- ------- ------- Basic earnings per share $ 0.48 $ 0.41 $ 1.42 $ 1.20 ======= ======= ======= ======= DILUTED EARNINGS PER SHARE: Net Income $11,461 $12,366 $35,978 $36,083 Weighted average shares outstanding 23,866 30,335 25,331 30,156 Dilutive effect of outstanding common stock options 139 893 219 975 ------- ------- ------- ------- Diluted weighted average shares outstanding 24,005 31,228 25,550 31,131 ------- ------- ------- ------- Diluted earnings per share $ 0.48 $ 0.40 $ 1.41 $ 1.16 ======= ======= ======= =======

5 9-MOS DEC-31-2000 DEC-27-1999 SEP-24-2000 21,698 5,398 20,676 609 11,257 62,747 336,232 87,510 400,870 60,195 153,210 0 0 306 168,221 400,870 641,640 683,387 311,973 543,332 78,483 0 4,854 58,287 22,309 35,978 0 0 0 35,978 1.42 1.41