(Mark One) | |
[X] | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 24, 2012 |
[ ] | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware
(State or other jurisdiction of
incorporation or organization)
|
61-1203323
(I.R.S. Employer Identification
number)
|
Yes [X] No [ ] |
Yes [X] No [ ] |
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [ ]
|
Yes [ ] No [X] |
Page No.
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2
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3
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Income – Three and Six Months Ended June 24, 2012 and June 26, 2011 |
4
|
|
|
||
Ended June 24, 2012 and June 26, 2011 |
5
|
|
6
|
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7
|
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17
|
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27
|
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28
|
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28
|
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28
|
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29
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●
|
Item 1 – Financial Statements
|
●
|
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
●
|
Item 4 – Controls and Procedures
|
●
|
Item 6 – Exhibits
|
Papa John’s International, Inc. and Subsidiaries
|
||||||||
(In thousands)
|
June 24, 2012
|
December 25, 2011
|
||||||
(As Restated)
|
(As Restated)
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 33,625 | $ | 18,942 | ||||
Accounts receivable, net
|
27,693 | 28,169 | ||||||
Notes receivable, net
|
4,447 | 4,221 | ||||||
Inventories
|
19,695 | 20,091 | ||||||
Deferred income taxes
|
6,240 | 7,636 | ||||||
Prepaid expenses
|
10,548 | 10,210 | ||||||
Other current assets
|
2,880 | 5,555 | ||||||
Total current assets
|
105,128 | 94,824 | ||||||
Property and equipment, net
|
186,567 | 181,910 | ||||||
Notes receivable, less current portion, net
|
10,572 | 11,502 | ||||||
Goodwill
|
78,342 | 75,085 | ||||||
Other assets
|
26,828 | 27,061 | ||||||
Total assets
|
$ | 407,437 | $ | 390,382 | ||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 32,379 | $ | 32,966 | ||||
Income and other taxes payable
|
4,044 | 3,969 | ||||||
Accrued expenses and other current liabilities
|
49,666 | 44,198 | ||||||
Total current liabilities
|
86,089 | 81,133 | ||||||
Deferred revenue
|
8,592 | 4,780 | ||||||
Long-term debt
|
50,000 | 51,489 | ||||||
Deferred income taxes
|
7,044 | 6,692 | ||||||
Other long-term liabilities
|
39,094 | 36,676 | ||||||
Total liabilities
|
190,819 | 180,770 | ||||||
Redeemable noncontrolling interests
|
4,458 | 3,965 | ||||||
Stockholders’ equity:
|
||||||||
Preferred stock
|
- | - | ||||||
Common stock
|
371 | 367 | ||||||
Additional paid-in capital
|
274,863 | 262,456 | ||||||
Accumulated other comprehensive income
|
1,609 | 1,849 | ||||||
Retained earnings
|
326,071 | 294,801 | ||||||
Treasury stock
|
(390,754 | ) | (353,826 | ) | ||||
Total stockholders’ equity
|
212,160 | 205,647 | ||||||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity
|
$ | 407,437 | $ | 390,382 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands, except per share amounts)
|
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
North America revenues:
|
||||||||||||||||
Domestic Company-owned restaurant sales
|
$ | 143,527 | $ | 127,641 | $ | 287,342 | $ | 266,312 | ||||||||
Franchise royalties
|
19,101 | 18,103 | 39,619 | 37,834 | ||||||||||||
Franchise and development fees
|
206 | 124 | 428 | 309 | ||||||||||||
Domestic commissary sales
|
126,593 | 121,027 | 264,203 | 248,699 | ||||||||||||
Other sales
|
11,771 | 12,370 | 24,029 | 25,817 | ||||||||||||
International revenues:
|
||||||||||||||||
Royalties and franchise and development fees
|
4,701 | 4,049 | 9,187 | 7,811 | ||||||||||||
Restaurant and commissary sales
|
12,680 | 10,220 | 25,047 | 19,219 | ||||||||||||
Total revenues
|
318,579 | 293,534 | 649,855 | 606,001 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Domestic Company-owned restaurant expenses:
|
||||||||||||||||
Cost of sales
|
32,881 | 30,162 | 65,337 | 62,262 | ||||||||||||
Salaries and benefits
|
39,839 | 34,367 | 78,652 | 72,016 | ||||||||||||
Advertising and related costs
|
13,278 | 11,898 | 25,977 | 24,687 | ||||||||||||
Occupancy costs
|
8,619 | 7,939 | 16,517 | 15,808 | ||||||||||||
Other operating expenses
|
20,830 | 18,492 | 41,248 | 38,407 | ||||||||||||
Total domestic Company-owned restaurant expenses
|
115,447 | 102,858 | 227,731 | 213,180 | ||||||||||||
Domestic commissary and other expenses:
|
||||||||||||||||
Cost of sales
|
104,412 | 103,529 | 217,250 | 209,972 | ||||||||||||
Salaries and benefits
|
9,218 | 8,651 | 18,221 | 17,662 | ||||||||||||
Other operating expenses
|
13,498 | 13,084 | 27,804 | 26,669 | ||||||||||||
Total domestic commissary and other expenses
|
127,128 | 125,264 | 263,275 | 254,303 | ||||||||||||
International operating expenses
|
10,975 | 8,756 | 21,367 | 16,484 | ||||||||||||
General and administrative expenses
|
31,463 | 27,617 | 63,059 | 56,691 | ||||||||||||
Other general expenses
|
1,135 | 1,459 | 6,809 | 2,240 | ||||||||||||
Depreciation and amortization
|
8,104 | 8,425 | 16,031 | 16,737 | ||||||||||||
Total costs and expenses
|
294,252 | 274,379 | 598,272 | 559,635 | ||||||||||||
Operating income
|
24,327 | 19,155 | 51,583 | 46,366 | ||||||||||||
Investment income
|
195 | 205 | 365 | 382 | ||||||||||||
Interest expense
|
(1,056 | ) | (383 | ) | (962 | ) | (1,718 | ) | ||||||||
Income before income taxes
|
23,466 | 18,977 | 50,986 | 45,030 | ||||||||||||
Income tax expense
|
8,005 | 5,980 | 17,218 | 14,935 | ||||||||||||
Net income, including redeemable noncontrolling interests
|
15,461 | 12,997 | 33,768 | 30,095 | ||||||||||||
Income attributable to redeemable noncontrolling interests
|
(1,172 | ) | (929 | ) | (2,498 | ) | (2,051 | ) | ||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 14,289 | $ | 12,068 | $ | 31,270 | $ | 28,044 | ||||||||
Basic earnings per common share
|
$ | 0.60 | $ | 0.47 | $ | 1.31 | $ | 1.10 | ||||||||
Earnings per common share - assuming dilution
|
$ | 0.59 | $ | 0.47 | $ | 1.29 | $ | 1.09 | ||||||||
Basic weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Diluted weighted average shares outstanding
|
24,112 | 25,685 | 24,270 | 25,713 | ||||||||||||
Comprehensive income, including redeemable noncontrolling interests
|
$ | 15,010 | $ | 12,483 | $ | 33,528 | $ | 30,854 | ||||||||
Comprehensive income, redeemable noncontrolling interests
|
(1,172 | ) | (929 | ) | (2,498 | ) | (2,051 | ) | ||||||||
Comprehensive income, net of redeemable noncontrolling interests
|
$ | 13,838 | $ | 11,554 | $ | 31,030 | $ | 28,803 |
Common
|
Accumulated
|
|||||||||||||||||||||||||||
Stock
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||
Shares
|
Common
|
Paid-In
|
Comprehensive
|
Retained
|
Treasury
|
Stockholders'
|
||||||||||||||||||||||
(In thousands)
|
Outstanding
|
Stock
|
Capital
|
Income (Loss)
|
Earnings
|
Stock
|
Equity
|
|||||||||||||||||||||
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||||||||
Balance at December 26, 2010
|
25,439 | $ | 361 | $ | 245,380 | $ | 849 | $ | 240,066 | $ | (291,048 | ) | $ | 195,608 | ||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income, net of redeemable
|
||||||||||||||||||||||||||||
noncontrolling interests (1)
|
- | - | - | - | 28,044 | - | 28,044 | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | 759 | - | - | 759 | |||||||||||||||||||||
Comprehensive income
|
28,803 | |||||||||||||||||||||||||||
Exercise of stock options
|
444 | 4 | 10,659 | - | - | - | 10,663 | |||||||||||||||||||||
Tax effect of equity awards
|
- | - | (1,295 | ) | - | - | - | (1,295 | ) | |||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||
common stock
|
(817 | ) | - | - | - | - | (26,162 | ) | (26,162 | ) | ||||||||||||||||||
Stock-based compensation expense
|
- | - | 3,903 | - | - | - | 3,903 | |||||||||||||||||||||
Issuance of restricted stock
|
76 | - | (1,884 | ) | - | - | 1,884 | - | ||||||||||||||||||||
Other
|
- | - | (58 | ) | - | - | 218 | 160 | ||||||||||||||||||||
Balance at June 26, 2011
|
25,142 | $ | 365 | $ | 256,705 | $ | 1,608 | $ | 268,110 | $ | (315,108 | ) | $ | 211,680 | ||||||||||||||
Balance at December 25, 2011
|
24,019 | $ | 367 | $ | 262,456 | $ | 1,849 | $ | 294,801 | $ | (353,826 | ) | $ | 205,647 | ||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income, net of redeemable
|
||||||||||||||||||||||||||||
noncontrolling interests (1)
|
- | - | - | - | 31,270 | - | 31,270 | |||||||||||||||||||||
Other comprehensive loss
|
- | - | - | (240 | ) | - | - | (240 | ) | |||||||||||||||||||
Comprehensive income
|
31,030 | |||||||||||||||||||||||||||
Exercise of stock options
|
361 | 4 | 10,396 | - | - | - | 10,400 | |||||||||||||||||||||
Tax effect of equity awards
|
- | - | 468 | - | - | - | 468 | |||||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||
common stock
|
(957 | ) | - | - | - | - | (38,728 | ) | (38,728 | ) | ||||||||||||||||||
Stock-based compensation expense
|
- | - | 3,218 | - | - | - | 3,218 | |||||||||||||||||||||
Issuance of restricted stock
|
34 | - | (1,541 | ) | - | - | 1,541 | - | ||||||||||||||||||||
Other
|
- | - | (134 | ) | - | - | 259 | 125 | ||||||||||||||||||||
Balance at June 24, 2012
|
23,457 | $ | 371 | $ | 274,863 | $ | 1,609 | $ | 326,071 | $ | (390,754 | ) | $ | 212,160 | ||||||||||||||
(1) Net income at June 24, 2012 and June 26, 2011 is net of $2,498 and $2,051, respectively, allocable to the redeemable noncontrolling interests for our
|
||||||||||||||||||||||||||||
joint venture arrangements.
|
Six Months Ended
|
||||||||
(In thousands)
|
June 24, 2012
|
June 26, 2011
|
||||||
(As Restated)
|
(As Restated)
|
|||||||
Operating activities
|
||||||||
Net income, including redeemable noncontrolling interests
|
$ | 33,768 | $ | 30,095 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for uncollectible accounts and notes receivable
|
719 | (7 | ) | |||||
Depreciation and amortization
|
16,031 | 16,737 | ||||||
Deferred income taxes
|
1,797 | 4,022 | ||||||
Stock-based compensation expense
|
3,218 | 3,903 | ||||||
Excess tax benefit on equity awards
|
(1,471 | ) | (403 | ) | ||||
Other
|
2,872 | 1,133 | ||||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts receivable
|
(75 | ) | (1,167 | ) | ||||
Inventories
|
533 | 1,819 | ||||||
Prepaid expenses
|
(338 | ) | (268 | ) | ||||
Other current assets
|
755 | 22 | ||||||
Other assets and liabilities
|
756 | 1,219 | ||||||
Accounts payable
|
(587 | ) | (1,970 | ) | ||||
Income and other taxes payable
|
75 | 325 | ||||||
Accrued expenses and other current liabilities
|
3,297 | (1,611 | ) | |||||
Deferred revenue
|
3,812 | (924 | ) | |||||
Net cash provided by operating activities
|
65,162 | 52,925 | ||||||
Investing activities
|
||||||||
Purchases of property and equipment
|
(15,046 | ) | (12,422 | ) | ||||
Loans issued
|
(1,206 | ) | (1,684 | ) | ||||
Repayments of loans issued
|
1,730 | 3,920 | ||||||
Acquisitions, net of cash acquired
|
(5,908 | ) | - | |||||
Proceeds from divestitures of restaurants
|
948 | - | ||||||
Other
|
(4 | ) | 51 | |||||
Net cash used in investing activities
|
(19,486 | ) | (10,135 | ) | ||||
Financing activities
|
||||||||
Net repayments on line of credit facility
|
(1,489 | ) | (51,000 | ) | ||||
Excess tax benefit on equity awards
|
1,471 | 403 | ||||||
Tax payments for restricted stock issuances
|
(822 | ) | (798 | ) | ||||
Proceeds from exercise of stock options
|
10,400 | 10,663 | ||||||
Acquisition of Company common stock
|
(38,728 | ) | (26,162 | ) | ||||
Distributions to redeemable noncontrolling interest holders
|
(1,930 | ) | (2,029 | ) | ||||
Other
|
125 | 42 | ||||||
Net cash used in financing activities
|
(30,973 | ) | (68,881 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(20 | ) | 82 | |||||
Change in cash and cash equivalents
|
14,683 | (26,009 | ) | |||||
Cash and cash equivalents at beginning of period
|
18,942 | 47,829 | ||||||
Cash and cash equivalents at end of period
|
$ | 33,625 | $ | 21,820 | ||||
See accompanying notes.
|
1.
|
Restatement of Previously Issued Financial Statements
|
Three Months Ended
|
||||||||||||
June 24, 2012
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 282 | $ | 774 | $ | 1,056 | ||||||
Income before income taxes
|
24,240 | (774 | ) | 23,466 | ||||||||
Income tax expense
|
8,299 | (294 | ) | 8,005 | ||||||||
Net income, including noncontrolling interests
|
15,941 | (480 | ) | 15,461 | ||||||||
Net income, net of noncontrolling interests
|
14,769 | (480 | ) | 14,289 | ||||||||
Comprehensive income
|
15,490 | (480 | ) | 15,010 | ||||||||
Basic earnings per common share
|
0.62 | (0.02 | ) | 0.60 | ||||||||
Earnings per common share - assuming dilution
|
0.61 | (0.02 | ) | 0.59 |
As of and For The
|
||||||||||||||||
Six Months Ended
|
||||||||||||||||
June 24, 2012
|
||||||||||||||||
As
Previously
Reported
|
Reclassifications *
|
Adjustments
|
As Restated
|
|||||||||||||
Condensed Consolidated Balance Sheet
|
||||||||||||||||
Noncurrent deferred income tax liabilities
|
$ | 9,648 | $ | - | $ | (2,604 | ) | $ | 7,044 | |||||||
Long-term accrued income taxes
|
3,924 | (3,924 | ) | - | - | |||||||||||
Other long-term liabilities
|
23,638 | 3,924 | 11,532 | 39,094 | ||||||||||||
Redeemable noncontrolling interests
|
- | - | 4,458 | 4,458 | ||||||||||||
Retained earnings
|
330,320 | - | (4,249 | ) | 326,071 | |||||||||||
Noncontrolling interests in subsidiaries
|
9,137 | - | (9,137 | ) | - | |||||||||||
Total stockholders' equity
|
225,546 | - | (13,386 | ) | 212,160 | |||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||||||
Interest expense
|
$ | 570 | $ | - | $ | 392 | $ | 962 | ||||||||
Income before income taxes
|
51,378 | - | (392 | ) | 50,986 | |||||||||||
Income tax expense
|
17,367 | - | (149 | ) | 17,218 | |||||||||||
Net income, including noncontrolling interests
|
34,011 | - | (243 | ) | 33,768 | |||||||||||
Net income, net of noncontrolling interests
|
31,513 | - | (243 | ) | 31,270 | |||||||||||
Comprehensive income
|
33,771 | - | (243 | ) | 33,528 | |||||||||||
Basic earnings per common share
|
1.32 | - | (0.01 | ) | 1.31 | |||||||||||
Earnings per common share - assuming dilution
|
1.30 | - | (0.01 | ) | 1.29 | |||||||||||
Consolidated Statement of Cash Flows
|
||||||||||||||||
Net income, including noncontrolling interests
|
$ | 34,011 | $ | - | $ | (243 | ) | $ | 33,768 | |||||||
Deferred income taxes
|
1,946 | - | (149 | ) | 1,797 | |||||||||||
Other
|
2,480 | - | 392 | 2,872 | ||||||||||||
Net cash provided by operating activities
|
65,162 | - | - | 65,162 |
* |
Amounts have been reclassified from the originally filed presentation in order to conform to the presentation included in the Form 10-K for the fiscal year ended December 30, 2012, and are not associated with the restatement adjustments.
|
Three Months Ended
|
||||||||||||
June 26, 2011
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 293 | $ | 90 | $ | 383 | ||||||
Income before income taxes
|
19,067 | (90 | ) | 18,977 | ||||||||
Income tax expense
|
6,014 | (34 | ) | 5,980 | ||||||||
Net income, including noncontrolling interests
|
13,053 | (56 | ) | 12,997 | ||||||||
Net income, net of noncontrolling interests
|
12,124 | (56 | ) | 12,068 | ||||||||
Comprehensive income
|
12,539 | (56 | ) | 12,483 | ||||||||
Basic earnings per common share
|
0.48 | (0.01 | ) | 0.47 | ||||||||
Earnings per common share - assuming dilution
|
0.47 | - | 0.47 |
As of and For The
|
||||||||||||
Six Months Ended
|
||||||||||||
June 26, 2011
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Balance Sheet
|
||||||||||||
Noncurrent deferred income tax liabilities
|
$ | 3,485 | $ | (2,202 | ) | $ | 1,283 | |||||
Other long-term liabilities
|
12,478 | 10,675 | 23,153 | |||||||||
Redeemable noncontrolling interests
|
- | 3,648 | 3,648 | |||||||||
Retained earnings
|
271,703 | (3,593 | ) | 268,110 | ||||||||
Noncontrolling interests in subsidiaries
|
8,528 | (8,528 | ) | - | ||||||||
Total stockholders' equity
|
223,801 | (12,121 | ) | 211,680 | ||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 901 | $ | 817 | $ | 1,718 | ||||||
Income before income taxes
|
45,847 | (817 | ) | 45,030 | ||||||||
Income tax expense
|
15,245 | (310 | ) | 14,935 | ||||||||
Net income, including noncontrolling interests
|
30,602 | (507 | ) | 30,095 | ||||||||
Net income, net of noncontrolling interests
|
28,551 | (507 | ) | 28,044 | ||||||||
Comprehensive income
|
31,361 | (507 | ) | 30,854 | ||||||||
Basic earnings per common share
|
1.12 | (0.02 | ) | 1.10 | ||||||||
Earnings per common share - assuming dilution
|
1.11 | (0.02 | ) | 1.09 | ||||||||
Consolidated Statement of Cash Flows
|
||||||||||||
Net income, including noncontrolling interests
|
$ | 30,602 | $ | (507 | ) | $ | 30,095 | |||||
Deferred income taxes
|
4,332 | (310 | ) | 4,022 | ||||||||
Other
|
316 | 817 | 1,133 | |||||||||
Net cash provided by operating activities
|
52,925 | - | 52,925 |
December 25, 2011
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Balance Sheet
|
||||||||||||
Noncurrent deferred income tax liabilities
|
$ | 9,147 | $ | (2,455 | ) | $ | 6,692 | |||||
Other long-term liabilities
|
25,611 | 11,065 | 36,676 | |||||||||
Redeemable noncontrolling interests
|
- | 3,965 | 3,965 | |||||||||
Retained earnings
|
298,807 | (4,006 | ) | 294,801 | ||||||||
Noncontrolling interests in subsidiaries
|
8,569 | (8,569 | ) | - | ||||||||
Total stockholders' equity
|
218,222 | (12,575 | ) | 205,647 |
December 26, 2010
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Consolidated Statement of Stockholders' Equity
|
||||||||||||
Retained earnings
|
$ | 243,152 | $ | (3,086 | ) | $ | 240,066 | |||||
Noncontrolling interests in subsidiaries
|
8,506 | (8,506 | ) | - | ||||||||
Total stockholders' equity
|
207,200 | (11,592 | ) | 195,608 |
2.
|
Basis of Presentation and Significant Accounting Policies
|
Restaurants as
of June 24, 2012
|
Restaurants as
of June 26, 2011
|
Restaurant Locations
|
Papa John's
Ownership*
|
Noncontrolling
Interest
Ownership*
|
|||||||||||||
Star Papa, LP
|
76 | 75 |
Texas
|
51 | % | 49 | % | ||||||||||
Colonel's Limited, LLC
|
52 | 52 |
Maryland and Virginia
|
70 | % | 30 | % | ||||||||||
Three Months
|
Six Months
|
|||||||||||||||
June 24,
|
June 26,
|
June 24,
|
June 26,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Papa John's International, Inc.
|
$ | 1,854 | $ | 1,518 | $ | 3,897 | $ | 3,316 | ||||||||
Noncontrolling interests
|
1,172 | 929 | 2,498 | 2,051 | ||||||||||||
Total income before income taxes
|
$ | 3,026 | $ | 2,447 | $ | 6,395 | $ | 5,367 |
3.
|
Accumulated Other Comprehensive Income (Loss)
|
Foreign
Currency
|
Interest
Rate
Swaps (a)
|
Defined
Pension
Plan
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|||||||||||||
Three Months Ended
|
||||||||||||||||
Beginning balance - March 27, 2011
|
$ | 2,122 | $ | - | $ | - | $ | 2,122 | ||||||||
Current period other comprehensive income (loss)
|
(514 | ) | - | - | (514 | ) | ||||||||||
Ending balance - June 26, 2011
|
$ | 1,608 | $ | - | $ | - | $ | 1,608 | ||||||||
Beginning balance - March 25, 2012
|
$ | 2,163 | $ | (74 | ) | $ | (29 | ) | $ | 2,060 | ||||||
Current period other comprehensive income (loss)
|
(445 | ) | (6 | ) | - | (451 | ) | |||||||||
Ending balance - June 24, 2012
|
$ | 1,718 | $ | (80 | ) | $ | (29 | ) | $ | 1,609 | ||||||
Six Months Ended
|
||||||||||||||||
Beginning balance - December 26, 2010
|
$ | 1,008 | $ | (159 | ) | $ | - | $ | 849 | |||||||
Current period other comprehensive income (loss)
|
600 | 159 | - | 759 | ||||||||||||
Ending balance - June 26, 2011
|
$ | 1,608 | $ | - | $ | - | $ | 1,608 | ||||||||
Beginning balance - December 25, 2011
|
$ | 1,872 | $ | 6 | $ | (29 | ) | $ | 1,849 | |||||||
Current period other comprehensive income (loss)
|
(154 | ) | (86 | ) | - | (240 | ) | |||||||||
Ending balance - June 24, 2012
|
$ | 1,718 | $ | (80 | ) | $ | (29 | ) | $ | 1,609 |
(a)
|
Current period other comprehensive income (loss) is shown net of tax of $3 for the three months ended June 24, 2012 (none in the same period of 2011) and $89 and $51 for the six months ended June 26, 2011 and June 24, 2012, respectively.
|
4.
|
Fair Value Measurements and Disclosures
|
●
|
Level 1: Quoted market prices in active markets for identical assets or liabilities.
|
●
|
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
|
●
|
Level 3: Unobservable inputs that are not corroborated by market data.
|
Carrying
|
Fair Value Measurements
|
|||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
June 24, 2012
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash surrender value of life insurance policies *
|
$ | 12,438 | $ | 12,438 | $ | - | $ | - | ||||||||
Financial liabilities:
|
||||||||||||||||
Interest rate swap
|
127 | - | 127 | - | ||||||||||||
December 25, 2011
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash surrender value of life insurance policies *
|
$ | 11,387 | $ | 11,387 | $ | - | $ | - | ||||||||
Interest rate swap
|
11 | - | 11 | - | ||||||||||||
* Represents life insurance policies held in our non-qualified deferred compensation plan.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24,
|
June 26,
|
June 24,
|
June 26,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
Basic earnings per common share:
|
||||||||||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 14,289 | $ | 12,068 | $ | 31,270 | $ | 28,044 | ||||||||
Weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Basic earnings per common share
|
$ | 0.60 | $ | 0.47 | $ | 1.31 | $ | 1.10 | ||||||||
Earnings per common share - assuming dilution:
|
||||||||||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 14,289 | $ | 12,068 | $ | 31,270 | $ | 28,044 | ||||||||
Weighted average shares outstanding
|
23,733 | 25,464 | 23,893 | 25,474 | ||||||||||||
Dilutive effect of outstanding equity awards
|
379 | 221 | 377 | 239 | ||||||||||||
Diluted weighted average shares outstanding
|
24,112 | 25,685 | 24,270 | 25,713 | ||||||||||||
Earnings per common share - assuming dilution
|
$ | 0.59 | $ | 0.47 | $ | 1.29 | $ | 1.09 |
7.
|
Acquisition and Divestiture of Restaurants
|
Property and equipment
|
$ | 1,602 | ||
Reacquired franchise right
|
245 | |||
Goodwill
|
3,830 | |||
Other, including cash
|
239 | |||
Total purchase price
|
$ | 5,916 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
|||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
Revenues from external customers:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 143,527 | $ | 127,641 | $ | 287,342 | $ | 266,312 | ||||||||
Domestic commissaries
|
126,593 | 121,027 | 264,203 | 248,699 | ||||||||||||
North America franchising
|
19,307 | 18,227 | 40,047 | 38,143 | ||||||||||||
International
|
17,381 | 14,269 | 34,234 | 27,030 | ||||||||||||
All others
|
11,771 | 12,370 | 24,029 | 25,817 | ||||||||||||
Total revenues from external customers
|
$ | 318,579 | $ | 293,534 | $ | 649,855 | $ | 606,001 | ||||||||
Intersegment revenues:
|
||||||||||||||||
Domestic commissaries
|
$ | 39,953 | $ | 35,872 | $ | 81,490 | $ | 73,972 | ||||||||
North America franchising
|
561 | 535 | 1,110 | 1,083 | ||||||||||||
International
|
56 | 58 | 110 | 105 | ||||||||||||
Variable interest entities
|
- | - | - | 25,117 | ||||||||||||
All others
|
2,664 | 2,571 | 5,685 | 5,126 | ||||||||||||
Total intersegment revenues
|
$ | 43,234 | $ | 39,036 | $ | 88,395 | $ | 105,403 | ||||||||
Income (loss) before income taxes:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 9,358 | $ | 7,421 | $ | 21,679 | $ | 18,304 | ||||||||
Domestic commissaries
|
7,978 | 4,321 | 19,144 | 13,875 | ||||||||||||
North America franchising
|
16,619 | 16,240 | 34,759 | 34,249 | ||||||||||||
International
|
320 | (250 | ) | 592 | (1,066 | ) | ||||||||||
All others
|
471 | (298 | ) | 866 | (676 | ) | ||||||||||
Unallocated corporate expenses
|
(10,799 | ) | (8,607 | ) | (25,583 | ) | (19,103 | ) | ||||||||
Elimination of intersegment profits
|
(481 | ) | 150 | (471 | ) | (553 | ) | |||||||||
Total income before income taxes
|
$ | 23,466 | $ | 18,977 | $ | 50,986 | $ | 45,030 | ||||||||
Property and equipment:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 179,140 | ||||||||||||||
Domestic commissaries
|
89,308 | |||||||||||||||
International
|
19,032 | |||||||||||||||
All others
|
42,668 | |||||||||||||||
Unallocated corporate assets
|
136,340 | |||||||||||||||
Accumulated depreciation and amortization
|
(279,921 | ) | ||||||||||||||
Net property and equipment
|
$ | 186,567 |
Three Months Ended
|
Six Months Ended | |||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
(In thousands, except per share amounts)
|
2012
|
2011
|
(decrease)
|
2012
|
2011
|
(decrease)
|
||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||
Income before income taxes, as reported
|
$ | 23,466 | $ | 18,977 | $ | 4,489 | $ | 50,986 | $ | 45,030 | $ | 5,956 | ||||||||||||
Incentive Contribution
|
(250 | ) | - | (250 | ) | 3,471 | - | 3,471 | ||||||||||||||||
Income before income taxes, excluding
Incentive Contribution
|
$ | 23,216 | $ | 18,977 | $ | 4,239 | $ | 54,457 | $ | 45,030 | $ | 9,427 | ||||||||||||
Net income, as reported
|
$ | 14,289 | $ | 12,068 | $ | 2,221 | $ | 31,270 | $ | 28,044 | $ | 3,226 | ||||||||||||
Incentive Contribution
|
(164 | ) | - | (164 | ) | 2,275 | - | 2,275 | ||||||||||||||||
Net income, excluding Incentive
|
||||||||||||||||||||||||
Contribution
|
$ | 14,125 | $ | 12,068 | $ | 2,057 | $ | 33,545 | $ | 28,044 | $ | 5,501 | ||||||||||||
Earnings per diluted share, as reported
|
$ | 0.59 | $ | 0.47 | $ | 0.12 | $ | 1.29 | $ | 1.09 | $ | 0.20 | ||||||||||||
Incentive Contribution
|
- | - | - | 0.09 | - | 0.09 | ||||||||||||||||||
Earnings per diluted share, excluding
Incentive Contribution
|
$ | 0.59 | $ | 0.47 | $ | 0.12 | $ | 1.38 | $ | 1.09 | $ | 0.29 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 24, 2012
|
June 26, 2011
|
June 24, 2012
|
June 26, 2011
|
|||||||||||||
North America Company-owned:
|
||||||||||||||||
Beginning of period
|
597 | 592 | 598 | 591 | ||||||||||||
Opened
|
- | 3 | - | 4 | ||||||||||||
Closed
|
(2 | ) | - | (3 | ) | - | ||||||||||
Acquired from franchisees
|
56 | - | 56 | - | ||||||||||||
Sold to franchisees
|
(8 | ) | - | (8 | ) | - | ||||||||||
End of period
|
643 | 595 | 643 | 595 | ||||||||||||
International Company-owned:
|
||||||||||||||||
Beginning of period
|
29 | 21 | 30 | 21 | ||||||||||||
Opened
|
4 | 2 | 4 | 2 | ||||||||||||
Closed
|
- | - | (1 | ) | - | |||||||||||
End of period
|
33 | 23 | 33 | 23 | ||||||||||||
North America franchised:
|
||||||||||||||||
Beginning of period
|
2,498 | 2,371 | 2,463 | 2,346 | ||||||||||||
Opened
|
35 | 35 | 82 | 67 | ||||||||||||
Closed
|
(10 | ) | (13 | ) | (22 | ) | (20 | ) | ||||||||
Acquired from Company
|
8 | - | 8 | - | ||||||||||||
Sold to Company
|
(56 | ) | - | (56 | ) | - | ||||||||||
End of period
|
2,475 | 2,393 | 2,475 | 2,393 | ||||||||||||
International franchised:
|
||||||||||||||||
Beginning of period
|
809 | 703 | 792 | 688 | ||||||||||||
Opened
|
28 | 26 | 51 | 49 | ||||||||||||
Closed
|
(15 | ) | (7 | ) | (21 | ) | (15 | ) | ||||||||
End of period
|
822 | 722 | 822 | 722 | ||||||||||||
Total restaurants - end of period
|
3,973 | 3,733 | 3,973 | 3,733 |
|
●
|
Domestic Company-owned restaurant sales increased $15.9 million, or 12.4%, and $21.0 million, or 7.9%, for the three and six months ended June 24, 2012, respectively, due to increases in comparable sales of 7.4% and 5.1% and the net acquisition of 50 restaurants in Denver and Minneapolis from a franchisee in the second quarter of 2012. “Comparable sales” represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods.
|
|
●
|
North America franchise royalty revenue increased approximately $1.0 million, or 5.5%, and $1.8 million, or 4.7%, for the three and six months ended June 24, 2012, respectively, primarily due to increases in comparable sales of 5.1% and 2.7% and increases in net franchise units over the prior year. Royalty revenue increases were slightly offset by reduced royalties attributable to the Company’s net acquisition of the 50 restaurants noted above.
|
|
●
|
Domestic commissary sales increased $5.6 million, or 4.6%, and $15.5 million, or 6.2%, for the three and six months ended June 24, 2012, respectively, primarily due to higher piece counts resulting in increases in the volume of restaurant sales.
|
|
●
|
International revenues increased $3.1 million, or 21.8%, and increased $7.2 million, or 26.7%, for the three and six months ended June 24, 2012, respectively, primarily due to increases in the number of restaurants and increases in comparable sales of 6.1% and 7.2% calculated on a constant dollar basis.
|
|
●
|
The above increases were partially offset by decreases in other sales of approximately $600,000, or 4.8%, and $1.8 million, or 6.9%, for the three and six months ended June 24, 2012, respectively, primarily due to a decline in sales at our print and promotions subsidiary, Preferred Marketing Solutions, partially offset by an increase in online sales.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||
Domestic Company-owned restaurants (a)
|
$ | 9,358 | $ | 7,421 | $ | 1,937 | $ | 21,679 | $ | 18,304 | $ | 3,375 | ||||||||||||
Domestic commissaries
|
7,978 | 4,321 | 3,657 | 19,144 | 13,875 | 5,269 | ||||||||||||||||||
North America franchising
|
16,619 | 16,240 | 379 | 34,759 | 34,249 | 510 | ||||||||||||||||||
International
|
320 | (250 | ) | 570 | 592 | (1,066 | ) | 1,658 | ||||||||||||||||
All others
|
471 | (298 | ) | 769 | 866 | (676 | ) | 1,542 | ||||||||||||||||
Unallocated corporate expenses (b)
|
(10,799 | ) | (8,607 | ) | (2,192 | ) | (25,583 | ) | (19,103 | ) | (6,480 | ) | ||||||||||||
Elimination of intersegment loss (profit)
|
(481 | ) | 150 | (631 | ) | (471 | ) | (553 | ) | 82 | ||||||||||||||
Total income before income taxes
|
$ | 23,466 | $ | 18,977 | $ | 4,489 | $ | 50,986 | $ | 45,030 | $ | 5,956 |
|
(a)
|
Includes the benefit of a $1.0 million advertising credit from PJMF related to the Incentive Contribution in the six months ended June 24, 2012.
|
|
(b)
|
Includes the impact of the Incentive Contribution in 2012 ($250,000 increase for the three-month period and a $4.5 million reduction for the six-month period).
|
|
●
|
Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’ operating income increased $1.9 million in the second quarter of 2012, and $3.4 million for the six months ended June 24, 2012, including the $1.0 million advertising credit from PJMF. These increases were primarily due to the previously noted comparable sales increases and lower commodity costs for the quarter. Additionally, the six-month period benefited from various supplier incentives.
|
|
●
|
Domestic Commissary Segment. Domestic commissaries’ operating income increased approximately $3.7 million and $5.3 million for three and six months ended June 24, 2012, respectively, primarily due to higher piece counts resulting from increased sales volumes from the previously noted increase in net units and comparable sales, slightly offset by higher distribution costs primarily due to higher fuel prices for the six months ended June 24, 2012.
|
|
●
|
North America Franchising Segment. North America Franchising operating income increased $379,000 and $510,000 for the three and six months ended June 24, 2012, respectively. The increases were due to the previously mentioned royalty revenue increases, substantially offset by an increase in development incentive costs.
|
|
●
|
International Segment. The International Segment reported operating income of $320,000 and $592,000 for the three and six months ended June 24, 2012, respectively. The improvements in operating results of approximately $570,000 and $1.7 million for the three- and six-month periods, respectively, compared to the corresponding 2011 periods were primarily due to increased royalties due to growth in the number of units and the 6.1% and 7.2% increases in comparable sales in the three and six months ended June 24, 2012, respectively, and improved operating results in our United Kingdom commissary.
|
|
●
|
All Others Segment. The “All others” reporting segment reported income of approximately $471,000 and $866,000 for the three and six months ended June 24, 2012, respectively. The “All Others” reporting segment results increased approximately $769,000 and $1.5 million for the three- and six-month periods, respectively, as compared to the corresponding 2011 periods. These increases were primarily due to an improvement in our eCommerce operations due to higher online sales. These improved results were somewhat offset by reduced operating results of Preferred Marketing Solutions due to the previously noted reduction in sales.
|
|
●
|
Unallocated Corporate Segment. Unallocated corporate expenses increased approximately $2.2 million and $6.5 million for the three and six months ended June 24, 2012, respectively, compared to the corresponding 2011 periods. The components of unallocated corporate expenses were as follows (in thousands):
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(decrease)
|
2012
|
2011
|
(decrease)
|
|||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||
General and administrative (a)
|
$ | 8,039 | $ | 5,972 | $ | 2,067 | $ | 16,700 | $ | 13,357 | $ | 3,343 | ||||||||||||
Supplier marketing (income)
|
||||||||||||||||||||||||
payment (b)
|
(250 | ) | - | (250 | ) | 4,500 | - | 4,500 | ||||||||||||||||
Net interest (c)
|
891 | 215 | 676 | 631 | 1,376 | (745 | ) | |||||||||||||||||
Depreciation
|
1,819 | 2,240 | (421 | ) | 3,553 | 4,418 | (865 | ) | ||||||||||||||||
Other expense (income)
|
300 | 180 | 120 | 199 | (48 | ) | 247 | |||||||||||||||||
Total unallocated corporate
|
||||||||||||||||||||||||
expenses
|
$ | 10,799 | $ | 8,607 | $ | 2,192 | $ | 25,583 | $ | 19,103 | $ | 6,480 |
(a)
|
|
Unallocated general and administrative costs increased primarily due to an increase in short-term management incentive costs. The six-month period was also impacted by additional costs related to our operators’ conference and an increase in legal costs.
|
(b)
|
|
See “Non-GAAP Measures” above for further information. |
(c)
|
|
The increase in net interest expense for the three months ended June 24, 2012, as compared to the same period in the prior year was primarily due to an increase in the redemption value of a mandatorily redeemable noncontrolling interest in a joint venture. The decrease in net interest expense for the six months ended June 24, 2012, as compared to the same period in the prior year was due to a decrease in the redemption value of a mandatorily redeemable noncontrolling interest in a joint venture, a lower average outstanding debt balance and a lower effective interest rate. See “Note 1” and “Note 2” of “Notes to Condensed Consolidated Financial Statements” for additional information.
|
Three Months Ended
|
||||||||||||||||
June 24, 2012
|
June 26, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,475 | 595 | 2,393 | ||||||||||||
Equivalent units
|
626 | 2,405 | 587 | 2,333 | ||||||||||||
Comparable sales base units
|
614 | 2,179 | 582 | 2,123 | ||||||||||||
Comparable sales base percentage
|
98.1 | % | 90.6 | % | 99.1 | % | 91.0 | % | ||||||||
Average weekly sales - comparable units
|
$ | 17,746 | $ | 14,758 | $ | 16,770 | $ | 14,109 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,421 | $ | 10,159 | $ | 10,698 | $ | 9,689 | ||||||||
Average weekly sales - all units
|
$ | 17,650 | $ | 14,326 | $ | 16,714 | $ | 13,711 |
Six Months Ended
|
||||||||||||||||
June 24, 2012
|
June 26, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,475 | 595 | 2,393 | ||||||||||||
Equivalent units
|
609 | 2,409 | 587 | 2,313 | ||||||||||||
Comparable sales base units
|
598 | 2,186 | 580 | 2,114 | ||||||||||||
Comparable sales base percentage
|
98.2 | % | 90.7 | % | 98.8 | % | 91.4 | % | ||||||||
Average weekly sales - comparable units
|
$ | 18,267 | $ | 15,082 | $ | 17,530 | $ | 14,765 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,060 | $ | 10,470 | $ | 11,163 | $ | 10,697 | ||||||||
Average weekly sales - all units
|
$ | 18,161 | $ | 14,655 | $ | 17,456 | $ | 14,413 |
|
●
|
Cost of sales was 0.7% and 0.6% lower for the three and six months ended June 24, 2012, as compared to the same periods in 2011. The three-month period benefited from lower commodity costs. The six-month period benefited from various supplier incentives.
|
|
●
|
Salaries and benefits were 0.8% and 0.3% higher as a percentage of sales for the three and six months ended June 24, 2012, as compared to the same periods in 2011, primarily due to higher bonuses paid to general managers.
|
|
●
|
Advertising and related costs as a percentage of sales were 0.1% and 0.2% lower for the three and six months ended June 24, 2012. The six-month period included a $1.0 million advertising credit received from PJMF.
|
|
●
|
Occupancy costs and other operating costs, on a combined basis, as a percentage of sales, were 0.2% lower for both the three and six months ended June 24, 2012, primarily due to the benefit from increased sales.
|
|
●
|
Cost of sales was 2.1% and 1.1% lower as a percentage of revenues for the three and six months ended June 24, 2012, respectively, due to lower commodity costs, primarily cheese, which has a fixed-dollar markup.
|
|
●
|
Salaries and benefits were relatively flat in comparison to prior year (0.2% higher and 0.1% lower as a percentage of revenues for the three and six months ended June 24, 2012, respectively).
|
|
●
|
Other operating expenses as a percentage of sales were 0.1% lower as a percentage of revenues for both the three and six months ended June 24, 2012, respectively, as compared to the same periods in 2011.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 24,
|
June 26,
|
Increase
|
June 24,
|
June 26,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
Supplier marketing (income) payment (a)
|
$ | (250 | ) | $ | - | $ | (250 | ) | $ | 4,500 | $ | - | $ | 4,500 | ||||||||||
Disposition and valuation-related losses
|
151 | 200 | (49 | ) | 116 | 385 | (269 | ) | ||||||||||||||||
Provision (credit) for uncollectible accounts
|
||||||||||||||||||||||||
and notes receivable
|
66 | (210 | ) | 276 | 169 | (128 | ) | 297 | ||||||||||||||||
Franchise and development incentives (b)
|
769 | 346 | 423 | 1,501 | 618 | 883 | ||||||||||||||||||
Other
|
399 | 1,123 | (724 | ) | 523 | 1,365 | (842 | ) | ||||||||||||||||
Total other general expenses
|
$ | 1,135 | $ | 1,459 | $ | (324 | ) | $ | 6,809 | $ | 2,240 | $ | 4,569 |
Actual Ratio for the
|
|||
Quarter Ended
|
|||
Permitted Ratio
|
June 24, 2012
|
||
Leverage Ratio
|
Not to exceed 2.5 to 1.0
|
0.5 to 1.0
|
|
Interest Coverage Ratio
|
Not less than 3.5 to 1.0
|
5.4 to 1.0
|
Six Months Ended
|
||||||||
June 24,
|
June 26,
|
|||||||
2012
|
2011
|
|||||||
Net cash provided by operating activities
|
$ | 65,162 | $ | 52,925 | ||||
Purchase of property and equipment
|
(15,046 | ) | (12,422 | ) | ||||
Free cash flow (a)
|
$ | 50,116 | $ | 40,503 |
|
(a)
|
We define free cash flow as net cash provided by operating activities (from the consolidated statements of cash flows) less the purchases of property and equipment. We believe free cash flow is an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. See “Non-GAAP Measures” above for discussion about this non-GAAP measure, its limitations and why we present free cash flow alongside the most directly comparable GAAP measure.
|
|
●
|
aggressive changes in pricing or other marketing or promotional strategies by competitors which may adversely affect sales; and new product and concept developments by food industry competitors;
|
|
●
|
changes in consumer preferences and adverse general economic and political conditions, including increasing tax rates, and their resulting impact on consumer buying habits;
|
|
●
|
the impact that product recalls, food quality or safety issues, and general public health concerns could have on our restaurants;
|
|
●
|
failure to maintain our brand strength and quality reputation;
|
|
●
|
the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, which could be impacted by challenges securing financing, finding suitable store locations or securing required domestic or foreign government permits and approvals;
|
|
●
|
increases in or sustained high costs of food ingredients and other commodities;
|
|
●
|
disruption of our supply chain due to sole or limited source of suppliers or weather, drought, disease or other disruption beyond our control;
|
|
●
|
increased risks associated with our international operations, including economic and political conditions in our international markets and difficulty in meeting planned sales targets and new store growth for our international operations;
|
|
●
|
increased employee compensation, benefits, insurance, regulatory compliance and similar costs, including increased costs resulting from federal health care legislation;
|
|
●
|
the credit performance of our franchise loan program;
|
|
●
|
the impact of the resolution of current or future claims and litigation, and current or proposed legislation impacting our business;
|
|
●
|
currency exchange and interest rates;
|
|
●
|
failure to effectively execute succession planning, and our reliance on the services of our Founder and CEO, who also serves as our brand spokesperson;
|
|
●
|
credit risk associated with parties to leases of restaurants and commissaries, including those Perfect Pizza locations formerly operated by us, for which we remain contractually liable; and
|
|
●
|
disruption of critical business or information technology systems, and risks associated with security breaches, including theft of company and customer information.
|
Total Number
|
Maximum Dollar
|
|||||||||||||||
Total
|
Average
|
of Shares
|
Value of Shares
|
|||||||||||||
Number
|
Price
|
Purchased as Part of
|
that May Yet Be
|
|||||||||||||
of Shares
|
Paid per
|
Publicly Announced
|
Purchased Under the
|
|||||||||||||
Fiscal Period
|
Purchased
|
Share
|
Plans or Programs
|
Plans or Programs
|
||||||||||||
12/26/2011 - 01/22/2012
|
60 | $ | 37.72 | 47,533 | $ | 119,292 | ||||||||||
01/23/2012 - 02/19/2012
|
- | - | * | 47,533 | $ | 119,292 | ||||||||||
02/20/2012 - 03/25/2012
|
312 | $ | 37.09 | 47,845 | $ | 107,719 | ||||||||||
03/26/2012 - 04/22/2012
|
248 | $ | 37.57 | 48,093 | $ | 98,391 | ||||||||||
04/23/2012 - 05/20/2012
|
22 | $ | 38.67 | 48,115 | $ | 97,561 | ||||||||||
05/21/2012 - 06/24/2012
|
315 | $ | 46.78 | 48,430 | $ | 82,810 | ||||||||||
* There were no share repurchases during this period.
|
Exhibit
|
|||
Number
|
Description
|
||
10.1*
|
Separation and Consulting Agreement and Release between Christopher J. Sternberg and Papa John’s International, Inc. Exhibit 10.1 to our report on Form 10-Q filed on July 31, 2012 is incorporated herein by reference.
|
||
10.2*
|
Papa John’s International, Inc. Severance Pay Plan. Exhibit 10.1 to our report on Form 10-Q filed on May 1, 2012 is incorporated herein by reference.
|
||
31.1
|
Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101
|
Financial statements from the quarterly report on Form 10-Q/A of Papa John’s International, Inc. for the quarter ended June 24, 2012, filed on April 16, 2013, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to condensed consolidated financial statements.
|
PAPA JOHN’S INTERNATIONAL, INC.
|
||
(Registrant) | ||
Date: April 16, 2013
|
/s/ Lance F. Tucker | |
Lance F. Tucker
|
||
Senior Vice President, Chief Financial Officer,
|
||
Chief Administrative Officer and Treasurer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q/A of Papa John’s International, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 16, 2013 | /s/ John H. Schnatter |
John H. Schnatter | |
Founder, Chairman and | |
Chief Executive Officer |
|
1.
|
I have reviewed this quarterly report on Form 10-Q/A of Papa John’s International, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 16, 2013 | /s/ Lance F. Tucker |
Lance F. Tucker | |
Senior Vice President, Chief Financial | |
Officer, Chief Administrative Officer | |
and Treasurer |
|
1.
|
The Report on Form 10-Q/A of the Company for the quarterly period ended June 24, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 16, 2013 | /s/ John H. Schnatter |
John H. Schnatter | |
Founder, Chairman and | |
Chief Executive Officer
|
|
1.
|
The Report on Form 10-Q/A of the Company for the quarterly period ended June 24, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 16, 2013 | /s/ Lance F. Tucker |
Lance F. Tucker | |
Senior Vice President, Chief Financial | |
Officer, Chief Administrative Officer and | |
Treasurer |