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 | ||
4
|
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5
|
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6
|
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7
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18
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29
|
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29
|
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30
|
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30
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31
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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)
|
September 23,
2012
|
December 25,
2011
|
||||||
(As Restated)
|
(As Restated)
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 25,353 | $ | 18,942 | ||||
Accounts receivable, net
|
33,072 | 28,169 | ||||||
Notes receivable, net
|
4,245 | 4,221 | ||||||
Inventories
|
21,419 | 20,091 | ||||||
Deferred income taxes
|
8,409 | 7,636 | ||||||
Prepaid expenses
|
7,444 | 10,210 | ||||||
Other current assets
|
5,728 | 5,555 | ||||||
Total current assets
|
105,670 | 94,824 | ||||||
Property and equipment, net
|
185,596 | 181,910 | ||||||
Notes receivable, less current portion, net
|
12,757 | 11,502 | ||||||
Goodwill
|
78,971 | 75,085 | ||||||
Other assets
|
29,485 | 27,061 | ||||||
Total assets
|
$ | 412,479 | $ | 390,382 | ||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 34,072 | $ | 32,966 | ||||
Income and other taxes payable
|
10,217 | 3,969 | ||||||
Accrued expenses and other current liabilities
|
53,026 | 44,198 | ||||||
Total current liabilities
|
97,315 | 81,133 | ||||||
Deferred revenue
|
8,019 | 4,780 | ||||||
Long-term debt
|
50,000 | 51,489 | ||||||
Deferred income taxes
|
7,830 | 6,692 | ||||||
Other long-term liabilities
|
40,488 | 36,676 | ||||||
Total liabilities
|
203,652 | 180,770 | ||||||
Redeemable noncontrolling interests
|
4,820 | 3,965 | ||||||
Stockholders’ equity:
|
||||||||
Preferred stock
|
- | - | ||||||
Common stock
|
371 | 367 | ||||||
Additional paid-in capital
|
277,811 | 262,456 | ||||||
Accumulated other comprehensive income
|
2,856 | 1,849 | ||||||
Retained earnings
|
339,102 | 294,801 | ||||||
Treasury stock
|
(416,133 | ) | (353,826 | ) | ||||
Total stockholders’ equity
|
204,007 | 205,647 | ||||||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity
|
$ | 412,479 | $ | 390,382 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
(In thousands, except per share amounts)
|
Sept. 23, 2012
|
Sept. 25, 2011
|
Sept. 23, 2012
|
Sept. 25, 2011
|
||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
North America revenues:
|
||||||||||||||||
Domestic Company-owned restaurant sales
|
$ | 143,299 | $ | 128,787 | $ | 430,641 | $ | 395,099 | ||||||||
Franchise royalties
|
18,777 | 17,967 | 58,396 | 55,801 | ||||||||||||
Franchise and development fees
|
160 | 155 | 588 | 464 | ||||||||||||
Domestic commissary sales
|
132,666 | 130,870 | 396,869 | 379,569 | ||||||||||||
Other sales
|
12,581 | 12,368 | 36,610 | 38,185 | ||||||||||||
International revenues:
|
||||||||||||||||
Royalties and franchise and development fees
|
4,582 | 4,054 | 13,769 | 11,865 | ||||||||||||
Restaurant and commissary sales
|
13,449 | 11,467 | 38,496 | 30,686 | ||||||||||||
Total revenues
|
325,514 | 305,668 | 975,369 | 911,669 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Domestic Company-owned restaurant expenses:
|
||||||||||||||||
Cost of sales
|
34,054 | 32,229 | 99,391 | 94,491 | ||||||||||||
Salaries and benefits
|
39,587 | 35,012 | 118,239 | 107,028 | ||||||||||||
Advertising and related costs
|
13,920 | 11,790 | 39,897 | 36,477 | ||||||||||||
Occupancy costs
|
9,185 | 8,496 | 25,702 | 24,304 | ||||||||||||
Other operating expenses
|
21,490 | 18,858 | 62,738 | 57,265 | ||||||||||||
Total domestic Company-owned restaurant expenses
|
118,236 | 106,385 | 345,967 | 319,565 | ||||||||||||
Domestic commissary and other expenses:
|
||||||||||||||||
Cost of sales
|
111,114 | 110,387 | 328,364 | 320,359 | ||||||||||||
Salaries and benefits
|
9,654 | 8,840 | 27,875 | 26,502 | ||||||||||||
Other operating expenses
|
14,082 | 13,381 | 41,886 | 40,050 | ||||||||||||
Total domestic commissary and other expenses
|
134,850 | 132,608 | 398,125 | 386,911 | ||||||||||||
International operating expenses
|
11,394 | 9,634 | 32,761 | 26,118 | ||||||||||||
General and administrative expenses
|
30,426 | 27,332 | 93,485 | 84,023 | ||||||||||||
Other general expenses
|
1,211 | 4,777 | 8,020 | 7,017 | ||||||||||||
Depreciation and amortization
|
8,192 | 7,974 | 24,223 | 24,711 | ||||||||||||
Total costs and expenses
|
304,309 | 288,710 | 902,581 | 848,345 | ||||||||||||
Operating income
|
21,205 | 16,958 | 72,788 | 63,324 | ||||||||||||
Investment income
|
136 | 170 | 501 | 552 | ||||||||||||
Interest expense
|
(478 | ) | (804 | ) | (1,440 | ) | (2,522 | ) | ||||||||
Income before income taxes
|
20,863 | 16,324 | 71,849 | 61,354 | ||||||||||||
Income tax expense
|
7,038 | 4,707 | 24,256 | 19,642 | ||||||||||||
Net income, including redeemable noncontrolling interests
|
13,825 | 11,617 | 47,593 | 41,712 | ||||||||||||
Income attributable to redeemable noncontrolling interests
|
(794 | ) | (817 | ) | (3,292 | ) | (2,868 | ) | ||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 13,031 | $ | 10,800 | $ | 44,301 | $ | 38,844 | ||||||||
Basic earnings per common share
|
$ | 0.56 | $ | 0.43 | $ | 1.87 | $ | 1.54 | ||||||||
Earnings per common share - assuming dilution
|
$ | 0.55 | $ | 0.43 | $ | 1.84 | $ | 1.52 | ||||||||
Basic weighted average shares outstanding
|
23,268 | 24,964 | 23,685 | 25,302 | ||||||||||||
Diluted weighted average shares outstanding
|
23,721 | 25,146 | 24,107 | 25,528 | ||||||||||||
Comprehensive income, including redeemable noncontrolling interests
|
$ | 15,072 | $ | 11,364 | $ | 48,600 | $ | 42,218 | ||||||||
Comprehensive income, redeemable noncontrolling interests
|
(794 | ) | (817 | ) | (3,292 | ) | (2,868 | ) | ||||||||
Comprehensive income, net of redeemable noncontrolling interests
|
$ | 14,278 | $ | 10,547 | $ | 45,308 | $ | 39,350 | ||||||||
See accompanying notes.
|
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)
|
- | - | - | - | 38,844 | - | 38,844 | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | 506 | - | - | 506 | |||||||||||||||||||||
Comprehensive income
|
39,350 | |||||||||||||||||||||||||||
Exercise of stock options
|
459 | 5 | 10,976 | - | - | - | 10,981 | |||||||||||||||||||||
Tax effect of equity awards
|
- | - | (1,449 | ) | - | - | - | (1,449 | ) | |||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||
common stock
|
(1,615 | ) | - | - | - | - | (49,579 | ) | (49,579 | ) | ||||||||||||||||||
Stock-based compensation expense
|
- | - | 5,266 | - | - | - | 5,266 | |||||||||||||||||||||
Issuance of restricted stock
|
92 | - | (2,253 | ) | - | - | 2,253 | - | ||||||||||||||||||||
Other
|
- | - | (66 | ) | - | - | 282 | 216 | ||||||||||||||||||||
Balance at September 25, 2011
|
24,375 | $ | 366 | $ | 257,854 | $ | 1,355 | $ | 278,910 | $ | (338,092 | ) | $ | 200,393 | ||||||||||||||
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)
|
- | - | - | - | 44,301 | - | 44,301 | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | 1,007 | - | - | 1,007 | |||||||||||||||||||||
Comprehensive income
|
45,308 | |||||||||||||||||||||||||||
Exercise of stock options
|
399 | 4 | 11,395 | - | - | - | 11,399 | |||||||||||||||||||||
Tax effect of equity awards
|
- | - | 695 | - | - | - | 695 | |||||||||||||||||||||
Acquisition of Company
|
||||||||||||||||||||||||||||
common stock
|
(1,472 | ) | - | - | - | - | (64,146 | ) | (64,146 | ) | ||||||||||||||||||
Stock-based compensation expense
|
- | - | 4,932 | - | - | - | 4,932 | |||||||||||||||||||||
Issuance of restricted stock
|
65 | - | (1,568 | ) | - | - | 1,568 | - | ||||||||||||||||||||
Other
|
- | - | (99 | ) | - | - | 271 | 172 | ||||||||||||||||||||
Balance at September 23, 2012
|
23,011 | $ | 371 | $ | 277,811 | $ | 2,856 | $ | 339,102 | $ | (416,133 | ) | $ | 204,007 |
(1) | Net income at September 23, 2012 and September 25, 2011 is net of $3,292 and $2,868, respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements. |
Nine Months Ended
|
||||||||
(In thousands)
|
Sept. 23, 2012
|
Sept. 25, 2011
|
||||||
(As Restated)
|
(As Restated)
|
|||||||
Operating activities
|
||||||||
Net income, including redeemable noncontrolling interests
|
$ | 47,593 | $ | 41,712 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for uncollectible accounts and notes receivable
|
1,250 | 882 | ||||||
Depreciation and amortization
|
24,223 | 24,711 | ||||||
Deferred income taxes
|
424 | 4,710 | ||||||
Stock-based compensation expense
|
4,932 | 5,266 | ||||||
Excess tax benefit on equity awards
|
(1,717 | ) | (576 | ) | ||||
Other
|
4,375 | 2,611 | ||||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts receivable
|
(6,018 | ) | (3,071 | ) | ||||
Inventories
|
(1,188 | ) | 201 | |||||
Prepaid expenses
|
2,766 | 3,506 | ||||||
Other current assets
|
372 | 596 | ||||||
Other assets and liabilities
|
(840 | ) | 1,055 | |||||
Accounts payable
|
1,106 | 3,896 | ||||||
Income and other taxes payable
|
6,248 | 3,023 | ||||||
Accrued expenses and other current liabilities
|
7,258 | (228 | ) | |||||
Deferred revenue
|
3,989 | (1,078 | ) | |||||
Net cash provided by operating activities
|
94,773 | 87,216 | ||||||
Investing activities
|
||||||||
Purchases of property and equipment
|
(26,425 | ) | (20,647 | ) | ||||
Loans issued
|
(3,951 | ) | (2,598 | ) | ||||
Repayments of loans issued
|
2,620 | 4,542 | ||||||
Acquisitions, net of cash acquired
|
(6,175 | ) | - | |||||
Proceeds from divestitures of restaurants
|
1,068 | - | ||||||
Other
|
4 | 62 | ||||||
Net cash used in investing activities
|
(32,859 | ) | (18,641 | ) | ||||
Financing activities
|
||||||||
Net repayments on line of credit facility
|
(1,489 | ) | (49,000 | ) | ||||
Excess tax benefit on equity awards
|
1,717 | 576 | ||||||
Tax payments for restricted stock issuances
|
(846 | ) | (1,041 | ) | ||||
Proceeds from exercise of stock options
|
11,399 | 10,981 | ||||||
Acquisition of Company common stock
|
(64,146 | ) | (49,579 | ) | ||||
Distributions to redeemable noncontrolling interest holders
|
(2,431 | ) | (3,129 | ) | ||||
Other
|
174 | 97 | ||||||
Net cash used in financing activities
|
(55,622 | ) | (91,095 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
119 | 67 | ||||||
Change in cash and cash equivalents
|
6,411 | (22,453 | ) | |||||
Cash and cash equivalents at beginning of period
|
18,942 | 47,829 | ||||||
Cash and cash equivalents at end of period
|
$ | 25,353 | $ | 25,376 | ||||
See accompanying notes.
|
1.
|
Restatement of Previously Issued Financial Statements
|
Three Months Ended
|
||||||||||||
September 23, 2012
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 284 | 194 | $ | 478 | |||||||
Income before income taxes
|
21,057 | (194 | ) | 20,863 | ||||||||
Income tax expense
|
7,112 | (74 | ) | 7,038 | ||||||||
Net income, including noncontrolling interests
|
13,945 | (120 | ) | 13,825 | ||||||||
Net income, net of noncontrolling interests
|
13,151 | (120 | ) | 13,031 | ||||||||
Comprehensive income
|
15,192 | (120 | ) | 15,072 | ||||||||
Basic earnings per common share
|
0.57 | (0.01 | ) | 0.56 | ||||||||
Earnings per common share - assuming dilution
|
0.55 | - | 0.55 |
As of and For The
|
||||||||||||||||
Nine Months Ended
|
||||||||||||||||
September 23, 2012
|
||||||||||||||||
As
Previously
Reported
|
Reclassifications *
|
Adjustments
|
As Restated
|
|||||||||||||
Condensed Consolidated Balance Sheet
|
||||||||||||||||
Noncurrent deferred income tax liabilities
|
$ | 10,508 | $ | - | $ | (2,678 | ) | $ | 7,830 | |||||||
Long-term accrued income taxes
|
4,220 | (4,220 | ) | - | - | |||||||||||
Other long-term liabilities
|
24,611 | 4,220 | 11,657 | 40,488 | ||||||||||||
Redeemable noncontrolling interests
|
- | - | 4,820 | 4,820 | ||||||||||||
Retained earnings
|
343,471 | - | (4,369 | ) | 339,102 | |||||||||||
Noncontrolling interests in subsidiaries
|
9,430 | - | (9,430 | ) | - | |||||||||||
Total stockholders' equity
|
217,806 | - | (13,799 | ) | 204,007 | |||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||||||
Interest expense
|
$ | 854 | $ | - | $ | 586 | $ | 1,440 | ||||||||
Income before income taxes
|
72,435 | - | (586 | ) | 71,849 | |||||||||||
Income tax expense
|
24,479 | - | (223 | ) | 24,256 | |||||||||||
Net income, including noncontrolling interests
|
47,956 | - | (363 | ) | 47,593 | |||||||||||
Net income, net of noncontrolling interests
|
44,664 | - | (363 | ) | 44,301 | |||||||||||
Comprehensive income
|
48,963 | - | (363 | ) | 48,600 | |||||||||||
Basic earnings per common share
|
1.89 | - | (0.02 | ) | 1.87 | |||||||||||
Earnings per common share - assuming dilution
|
1.85 | - | (0.01 | ) | 1.84 | |||||||||||
Consolidated Statement of Cash Flows
|
||||||||||||||||
Net income, including noncontrolling interests
|
$ | 47,956 | $ | - | $ | (363 | ) | $ | 47,593 | |||||||
Deferred income taxes
|
647 | - | (223 | ) | 424 | |||||||||||
Other
|
3,789 | - | 586 | 4,375 | ||||||||||||
Net cash provided by operating activities
|
94,773 | - | - | 94,773 | ||||||||||||
Three Months Ended
|
||||||||||||
September 25, 2011
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 282 | $ | 522 | $ | 804 | ||||||
Income before income taxes
|
16,846 | (522 | ) | 16,324 | ||||||||
Income tax expense
|
4,906 | (199 | ) | 4,707 | ||||||||
Net income, including noncontrolling interests
|
11,940 | (323 | ) | 11,617 | ||||||||
Net income, net of noncontrolling interests
|
11,123 | (323 | ) | 10,800 | ||||||||
Comprehensive income
|
11,687 | (323 | ) | 11,364 | ||||||||
Basic earnings per common share
|
0.45 | (0.02 | ) | 0.43 | ||||||||
Earnings per common share - assuming dilution
|
0.44 | (0.01 | ) | 0.43 |
As of and For The
|
||||||||||||
Nine Months Ended
|
||||||||||||
September 25, 2011
|
||||||||||||
As
Previously
Reported
|
Adjustments
|
As Restated
|
||||||||||
Condensed Consolidated Balance Sheet
|
||||||||||||
Noncurrent deferred income tax liabilities
|
$ | 7,110 | $ | (2,400 | ) | $ | 4,710 | |||||
Other long-term liabilities
|
11,542 | 11,003 | 22,545 | |||||||||
Redeemable noncontrolling interests
|
- | 3,558 | 3,558 | |||||||||
Retained earnings
|
282,826 | (3,916 | ) | 278,910 | ||||||||
Noncontrolling interests in subsidiaries
|
8,245 | (8,245 | ) | - | ||||||||
Total stockholders' equity
|
212,554 | (12,161 | ) | 200,393 | ||||||||
Condensed Consolidated Statement of Comprehensive Income
|
||||||||||||
Interest expense
|
$ | 1,183 | $ | 1,339 | $ | 2,522 | ||||||
Income before income taxes
|
62,693 | (1,339 | ) | 61,354 | ||||||||
Income tax expense
|
20,151 | (509 | ) | 19,642 | ||||||||
Net income, including noncontrolling interests
|
42,542 | (830 | ) | 41,712 | ||||||||
Net income, net of noncontrolling interests
|
39,674 | (830 | ) | 38,844 | ||||||||
Comprehensive income
|
43,048 | (830 | ) | 42,218 | ||||||||
Basic earnings per common share
|
1.57 | (0.03 | ) | 1.54 | ||||||||
Earnings per common share - assuming dilution
|
1.55 | (0.03 | ) | 1.52 | ||||||||
Consolidated Statement of Cash Flows
|
||||||||||||
Net income, including noncontrolling interests
|
$ | 42,542 | $ | (830 | ) | $ | 41,712 | |||||
Deferred income taxes
|
5,219 | (509 | ) | 4,710 | ||||||||
Other
|
1,272 | 1,339 | 2,611 | |||||||||
Net cash provided by operating activities
|
87,216 | - | 87,216 |
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 Sept. 23, 2012
|
Restaurants as
of Sept. 25, 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
|
Nine Months
|
|||||||||||||||
Sept. 23,
|
Sept. 25,
|
Sept. 23,
|
Sept. 25,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Papa John's International, Inc.
|
$ | 1,259 | $ | 1,377 | $ | 5,157 | $ | 4,693 | ||||||||
Noncontrolling interests
|
794 | 817 | 3,292 | 2,868 | ||||||||||||
Total income before income taxes
|
$ | 2,053 | $ | 2,194 | $ | 8,449 | $ | 7,561 |
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 - June 26, 2011
|
$ | 1,608 | $ | - | $ | - | $ | 1,608 | ||||||||
Current period other comprehensive income (loss)
|
(160 | ) | (93 | ) | - | (253 | ) | |||||||||
Ending balance - September 25, 2011
|
$ | 1,448 | $ | (93 | ) | $ | - | $ | 1,355 | |||||||
Beginning balance - June 24, 2012
|
$ | 1,718 | $ | (80 | ) | $ | (29 | ) | $ | 1,609 | ||||||
Current period other comprehensive income (loss)
|
1,256 | (9 | ) | - | 1,247 | |||||||||||
Ending balance - September 23, 2012
|
$ | 2,974 | $ | (89 | ) | $ | (29 | ) | $ | 2,856 | ||||||
Nine Months Ended
|
||||||||||||||||
Beginning balance - December 26, 2010
|
$ | 1,008 | $ | (159 | ) | $ | - | $ | 849 | |||||||
Current period other comprehensive income (loss)
|
440 | 66 | - | 506 | ||||||||||||
Ending balance - September 25, 2011
|
$ | 1,448 | $ | (93 | ) | $ | - | $ | 1,355 | |||||||
Beginning balance - December 25, 2011
|
$ | 1,872 | $ | 6 | $ | (29 | ) | $ | 1,849 | |||||||
Current period other comprehensive income (loss)
|
1,102 | (95 | ) | - | 1,007 | |||||||||||
Ending balance - September 23, 2012
|
$ | 2,974 | $ | (89 | ) | $ | (29 | ) | $ | 2,856 |
(a) | Current period other comprehensive income (loss) is shown net of tax of ($54) and ($6) for the three months ended September 25, 2011 and September 23, 2012, respectively, and $35 and ($56) for the nine months ended September 25, 2011 and September 23, 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
|
|||||||||||||
September 23, 2012
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash surrender value of life insurance policies *
|
$ | 13,088 | $ | 13,088 | $ | - | $ | - | ||||||||
Financial liabilities:
|
||||||||||||||||
Interest rate swap
|
142 | - | 142 | - | ||||||||||||
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
|
Nine Months Ended
|
|||||||||||||||
Sept. 23,
|
Sept. 25,
|
Sept. 23,
|
Sept. 25,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
Basic earnings per common share:
|
||||||||||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 13,031 | $ | 10,800 | $ | 44,301 | $ | 38,844 | ||||||||
Weighted average shares outstanding
|
23,268 | 24,964 | 23,685 | 25,302 | ||||||||||||
Basic earnings per common share
|
$ | 0.56 | $ | 0.43 | $ | 1.87 | $ | 1.54 | ||||||||
Earnings per common share - assuming dilution:
|
||||||||||||||||
Net income, net of redeemable noncontrolling interests
|
$ | 13,031 | $ | 10,800 | $ | 44,301 | $ | 38,844 | ||||||||
Weighted average shares outstanding
|
23,268 | 24,964 | 23,685 | 25,302 | ||||||||||||
Dilutive effect of outstanding compensation awards
|
453 | 182 | 422 | 226 | ||||||||||||
Diluted weighted average shares outstanding
|
23,721 | 25,146 | 24,107 | 25,528 | ||||||||||||
Earnings per common share - assuming dilution
|
$ | 0.55 | $ | 0.43 | $ | 1.84 | $ | 1.52 |
Property and equipment
|
$ | 1,602 | ||
Reacquired franchise right
|
245 | |||
Goodwill
|
3,830 | |||
Other, including cash
|
239 | |||
Total purchase price
|
$ | 5,916 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
Sept. 23, 2012
|
Sept. 25, 2011
|
Sept. 23, 2012
|
Sept. 25, 2011
|
|||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||
Revenues from external customers:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 143,299 | $ | 128,787 | $ | 430,641 | $ | 395,099 | ||||||||
Domestic commissaries
|
132,666 | 130,870 | 396,869 | 379,569 | ||||||||||||
North America franchising
|
18,937 | 18,122 | 58,984 | 56,265 | ||||||||||||
International
|
18,031 | 15,521 | 52,265 | 42,551 | ||||||||||||
All others
|
12,581 | 12,368 | 36,610 | 38,185 | ||||||||||||
Total revenues from external customers
|
$ | 325,514 | $ | 305,668 | $ | 975,369 | $ | 911,669 | ||||||||
Intersegment revenues:
|
||||||||||||||||
Domestic commissaries
|
$ | 42,313 | $ | 38,702 | $ | 123,802 | $ | 112,674 | ||||||||
North America franchising
|
546 | 542 | 1,656 | 1,625 | ||||||||||||
International
|
60 | 58 | 171 | 163 | ||||||||||||
Variable interest entities
|
- | - | - | 25,117 | ||||||||||||
All others
|
2,758 | 2,793 | 8,443 | 7,919 | ||||||||||||
Total intersegment revenues
|
$ | 45,677 | $ | 42,095 | $ | 134,072 | $ | 147,498 | ||||||||
Income (loss) before income taxes:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 5,549 | $ | 4,273 | $ | 27,228 | $ | 22,577 | ||||||||
Domestic commissaries
|
6,846 | 7,237 | 25,990 | 21,112 | ||||||||||||
North America franchising
|
16,070 | 15,941 | 50,829 | 50,190 | ||||||||||||
International
|
625 | 249 | 1,217 | (817 | ) | |||||||||||
All others
|
732 | (66 | ) | 1,598 | (742 | ) | ||||||||||
Unallocated corporate expenses
|
(9,201 | ) | (11,607 | ) | (34,784 | ) | (30,710 | ) | ||||||||
Elimination of intersegment profits
|
242 | 297 | (229 | ) | (256 | ) | ||||||||||
Total income before income taxes
|
$ | 20,863 | $ | 16,324 | $ | 71,849 | $ | 61,354 | ||||||||
Property and equipment:
|
||||||||||||||||
Domestic Company-owned restaurants
|
$ | 180,973 | ||||||||||||||
Domestic commissaries
|
92,192 | |||||||||||||||
International
|
20,702 | |||||||||||||||
All others
|
36,199 | |||||||||||||||
Unallocated corporate assets
|
139,153 | |||||||||||||||
Accumulated depreciation and amortization
|
(283,623 | ) | ||||||||||||||
Net property and equipment
|
$ | 185,596 |
Three Months Ended
|
Nine Months Ended | |||||||||||||||||||||||
Sept. 23,
|
Sept. 25,
|
Increase
|
Sept. 23,
|
Sept. 25,
|
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
|
$ | 20,863 | $ | 16,324 | $ | 4,539 | $ | 71,849 | $ | 61,354 | $ | 10,495 | ||||||||||||
Incentive Contribution
|
(250 | ) | - | (250 | ) | 3,221 | - | 3,221 | ||||||||||||||||
Income before income taxes, excluding Incentive Contribution
|
$ | 20,613 | $ | 16,324 | $ | 4,289 | $ | 75,070 | $ | 61,354 | $ | 13,716 | ||||||||||||
Net income, as reported
|
$ | 13,031 | $ | 10,800 | $ | 2,231 | $ | 44,301 | $ | 38,844 | $ | 5,457 | ||||||||||||
Incentive Contribution
|
(159 | ) | - | (159 | ) | 2,116 | - | 2,116 | ||||||||||||||||
Net income, excluding Incentive Contribution
|
$ | 12,872 | $ | 10,800 | $ | 2,072 | $ | 46,417 | $ | 38,844 | $ | 7,573 | ||||||||||||
Earnings per diluted share, as reported
|
$ | 0.55 | $ | 0.43 | $ | 0.12 | $ | 1.84 | $ | 1.52 | $ | 0.32 | ||||||||||||
Incentive Contribution
|
- | - | - | 0.09 | - | 0.09 | ||||||||||||||||||
Earnings per diluted share, excluding Incentive Contribution
|
$ | 0.55 | $ | 0.43 | $ | 0.12 | $ | 1.93 | $ | 1.52 | $ | 0.41 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
Sept. 23, 2012
|
Sept. 25, 2011
|
Sept. 23, 2012
|
Sept. 25, 2011
|
|||||||||||||
North America Company-owned:
|
||||||||||||||||
Beginning of period
|
643 | 595 | 598 | 591 | ||||||||||||
Opened
|
2 | 2 | 2 | 6 | ||||||||||||
Closed
|
- | - | (3 | ) | - | |||||||||||
Acquired from franchisees
|
1 | - | 57 | - | ||||||||||||
Sold to franchisees
|
(3 | ) | - | (11 | ) | - | ||||||||||
End of period
|
643 | 597 | 643 | 597 | ||||||||||||
International Company-owned:
|
||||||||||||||||
Beginning of period
|
33 | 23 | 30 | 21 | ||||||||||||
Opened
|
5 | 3 | 9 | 5 | ||||||||||||
Closed
|
(1 | ) | - | (2 | ) | - | ||||||||||
End of period
|
37 | 26 | 37 | 26 | ||||||||||||
North America franchised:
|
||||||||||||||||
Beginning of period
|
2,475 | 2,393 | 2,463 | 2,346 | ||||||||||||
Opened
|
45 | 36 | 127 | 103 | ||||||||||||
Closed
|
(9 | ) | (16 | ) | (31 | ) | (36 | ) | ||||||||
Acquired from Company
|
3 | - | 11 | - | ||||||||||||
Sold to Company
|
(1 | ) | - | (57 | ) | - | ||||||||||
End of period
|
2,513 | 2,413 | 2,513 | 2,413 | ||||||||||||
International franchised:
|
||||||||||||||||
Beginning of period
|
822 | 722 | 792 | 688 | ||||||||||||
Opened
|
23 | 33 | 74 | 82 | ||||||||||||
Closed
|
(9 | ) | (11 | ) | (30 | ) | (26 | ) | ||||||||
End of period
|
836 | 744 | 836 | 744 | ||||||||||||
Total restaurants - end of period
|
4,029 | 3,780 | 4,029 | 3,780 |
|
●
|
Domestic Company-owned restaurant sales increased $14.5 million, or 11.3%, and $35.5 million, or 9.0%, for the three and nine months ended September 23, 2012, respectively, due to increases in comparable sales of 5.0% and 5.1% and the net acquisition of 50 restaurants in the Denver and Minneapolis markets 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 $800,000, or 4.5%, and $2.6 million, or 4.7%, for the three and nine months ended September 23, 2012, respectively, primarily due to increases in comparable sales of 1.7% and 2.4% 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 $1.8 million, or 1.4%, and $17.3 million, or 4.6%, for the three and nine months ended September 23, 2012, respectively, primarily due to higher commissary product volumes resulting from increases in the volume of restaurant sales, partially offset by lower revenues due to lower commodity costs.
|
|
●
|
International revenues increased $2.5 million, or 16.2%, and increased $9.7 million, or 22.8%, for the three and nine months ended September 23, 2012, respectively, primarily due to increases in the number of Company-owned and franchised restaurants and increases in comparable sales of 6.9% and 7.1%, calculated on a constant dollar basis.
|
|
●
|
Other sales increased approximately $200,000, or 1.7%, for the three months ended September 23, 2012, and decreased $1.6 million, or 4.1%, for the nine months ended September 23, 2012. The decrease for the nine-month period was 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
|
Nine Months Ended
|
|||||||||||||||||||||||
Sept. 23,
|
Sept. 25,
|
Increase
|
Sept. 23,
|
Sept. 25,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||
Domestic Company-owned restaurants (a)
|
$ | 5,549 | $ | 4,273 | $ | 1,276 | $ | 27,228 | $ | 22,577 | $ | 4,651 | ||||||||||||
Domestic commissaries
|
6,846 | 7,237 | (391 | ) | 25,990 | 21,112 | 4,878 | |||||||||||||||||
North America franchising
|
16,070 | 15,941 | 129 | 50,829 | 50,190 | 639 | ||||||||||||||||||
International
|
625 | 249 | 376 | 1,217 | (817 | ) | 2,034 | |||||||||||||||||
All others
|
732 | (66 | ) | 798 | 1,598 | (742 | ) | 2,340 | ||||||||||||||||
Unallocated corporate expenses (b)
|
(9,201 | ) | (11,607 | ) | 2,406 | (34,784 | ) | (30,710 | ) | (4,074 | ) | |||||||||||||
Elimination of intersegment loss (profit)
|
242 | 297 | (55 | ) | (229 | ) | (256 | ) | 27 | |||||||||||||||
Total income before income taxes
|
$ | 20,863 | $ | 16,324 | $ | 4,539 | $ | 71,849 | $ | 61,354 | $ | 10,495 |
|
(a)
|
Includes the benefit of a $1.0 million advertising credit from PJMF related to the Incentive Contribution for the nine months ended September 23, 2012. See “Non-GAAP Measures” above for further information about the Incentive Contribution.
|
|
(b)
|
Includes the impact of the Incentive Contribution in 2012 ($250,000 increase for the three-month period and a $4.3 million reduction for the nine-month period).
|
|
●
|
Domestic Company-owned Restaurant Segment. Domestic Company-owned restaurants’ income increased $1.3 million in the third quarter of 2012, and $4.7 million for the nine months ended September 23, 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, including cheese, partially offset by higher local advertising, including additional costs for newly acquired markets. Additionally, the nine-month period benefited from various supplier incentives.
|
|
●
|
Domestic Commissary Segment. Domestic commissaries’ income decreased approximately $400,000 and increased approximately $4.9 million for three and nine months ended September 23, 2012, respectively. The decrease for the three-month period was primarily due to lower margins resulting from lower prices charged to restaurants and higher distribution costs, slightly offset by increased profits from higher restaurant sales. The increase for the nine-month period was primarily due to higher commissary product volumes resulting from increased sales volumes from the previously noted increase in net units and comparable sales, slightly offset by higher distribution costs.
|
|
●
|
North America Franchising Segment. North America Franchising income increased approximately $100,000 and $600,000 for the three and nine months ended September 23, 2012, respectively. The increases were due to the previously mentioned royalty revenue increases, partially offset by both an increase in development incentive costs and a reduction in royalties attributable to the Company’s net acquisition of the 50 Denver and Minneapolis restaurants.
|
|
●
|
International Segment. The International Segment reported income of approximately $600,000 and $1.2 million for the three and nine months ended September 23, 2012, respectively. The improvements in operating results of approximately $400,000 and $2.0 million for the three- and nine-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 6.9% and 7.1% increases in comparable sales in the three and nine months ended September 23, 2012, respectively, and improved operating results at our United Kingdom commissary.
|
|
●
|
All Others Segment. The “All others” reporting segment reported income of approximately $700,000 and $1.6 million for the three and nine months ended September 23, 2012, respectively. The “All Others” reporting segment results increased approximately $800,000 and $2.3 million for the three- and nine-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 decreased approximately $2.4 million and increased approximately $4.1 million for the three and nine months ended September 23, 2012, respectively, compared to the corresponding 2011 periods. The components of unallocated corporate expenses were as follows (in thousands):
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||||||||||
Sept. 23,
|
Sept. 25,
|
Increase
|
Sept. 23,
|
Sept. 25,
|
Increase
|
||||||||||||||||||||
2012
|
2011
|
(decrease)
|
2012
|
2011
|
(decrease)
|
||||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||||||||||||||
General and administrative (a)
|
$ | 7,589 | $ | 5,629 | $ | 1,960 | $ | 24,289 | $ | 18,987 | $ | 5,302 | |||||||||||||
Supplier marketing (income)
|
|||||||||||||||||||||||||
payment (b)
|
(250 | ) | - | (250 | ) | 4,250 | - | 4,250 | |||||||||||||||||
Net interest (c)
|
348 | 638 | (290 | ) | 978 | 2,014 | (1,036 | ) | |||||||||||||||||
Depreciation
|
1,829 | 1,818 | 11 | 5,382 | 6,236 | (854 | ) | ||||||||||||||||||
Franchise incentives and initiatives (d)
|
- | 2,754 | (2,754 | ) | - | 2,754 | (2,754 | ) | |||||||||||||||||
Perfect Pizza lease obligation (e)
|
- | 782 | (782 | ) | 197 | 782 | (585 | ) | |||||||||||||||||
Other income
|
(315 | ) | (14 | ) | (301 | ) | (312 | ) | (63 | ) | (249 | ) | |||||||||||||
Total unallocated corporate
|
|||||||||||||||||||||||||
expenses
|
$ | 9,201 | $ | 11,607 | $ | (2,406 | ) | $ | 34,784 | $ | 30,710 | $ | 4,074 |
|
(a)
|
Unallocated general and administrative costs increased for the three- and nine-month periods primarily due to an increase in legal and insurance costs. The nine-month period was also impacted by higher short-term management incentive costs and higher costs related to our operators’ conference.
|
|
(b)
|
See “Non-GAAP Measures” above for further information about the Incentive Contribution.
|
|
(c)
|
The decrease in net interest expense was primarily due to a change in redemption value of a mandatorily redeemable noncontrolling interest in a joint venture. See “Note 1” and “Note 2” of “Notes to Condensed Consolidated Financial Statements” for additional information.
|
|
(d)
|
In 2011, we offered incentives to domestic franchisees for meeting certain sales targets, including comparable sales, transactions and online sales.
|
|
(e)
|
The Perfect Pizza lease obligation relates to rents, taxes and insurance associated with the former Perfect Pizza operations in the United Kingdom. See the notes to condensed consolidated financial statements for additional information.
|
Three Months Ended
|
||||||||||||||||
September 23, 2012
|
September 25, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,513 | 597 | 2,413 | ||||||||||||
Equivalent units
|
638 | 2,391 | 591 | 2,328 | ||||||||||||
Comparable sales base units
|
631 | 2,187 | 582 | 2,150 | ||||||||||||
Comparable sales base percentage
|
98.9 | % | 91.5 | % | 98.5 | % | 92.4 | % | ||||||||
Average weekly sales - comparable units
|
$ | 17,329 | $ | 14,353 | $ | 16,850 | $ | 14,154 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,519 | $ | 9,980 | $ | 11,144 | $ | 10,422 | ||||||||
Average weekly sales - all units
|
$ | 17,274 | $ | 13,980 | $ | 16,763 | $ | 13,869 | ||||||||
Nine Months Ended
|
||||||||||||||||
September 23, 2012
|
September 25, 2011
|
|||||||||||||||
Company
|
Franchised
|
Company
|
Franchised
|
|||||||||||||
Total domestic units (end of period)
|
643 | 2,513 | 597 | 2,413 | ||||||||||||
Equivalent units
|
618 | 2,403 | 588 | 2,318 | ||||||||||||
Comparable sales base units
|
609 | 2,186 | 581 | 2,126 | ||||||||||||
Comparable sales base percentage
|
98.5 | % | 91.0 | % | 98.8 | % | 91.7 | % | ||||||||
Average weekly sales - comparable units
|
$ | 17,943 | $ | 14,839 | $ | 17,303 | $ | 14,559 | ||||||||
Average weekly sales - total non-comparable units
|
$ | 12,179 | $ | 10,316 | $ | 11,155 | $ | 10,612 | ||||||||
Average weekly sales - all units
|
$ | 17,856 | $ | 14,431 | $ | 17,224 | $ | 14,231 |
|
●
|
Cost of sales was 1.3% and 0.8% lower for the three and nine months ended September 23, 2012, as compared to the same periods in 2011 due to lower commodity costs, primarily cheese. Additionally, the nine-month period benefited from various supplier incentives.
|
|
●
|
Salaries and benefits were 0.4% higher as a percentage of sales for both the three and nine months ended September 23, 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 0.6% higher for the three months ended September 23, 2012. The nine-month period was flat and included a $1.0 million advertising credit received from PJMF. The higher costs, excluding the advertising credit from PJMF, were due to increased local advertising, including additional costs for newly acquired markets.
|
|
●
|
Occupancy costs and other operating costs, on a combined basis, as a percentage of sales, were 0.2% higher and 0.1% lower for the three and nine months ended September 23, 2012, respectively.
|
|
●
|
Cost of sales was 0.6% and 0.9% lower as a percentage of revenues for the three and nine months ended September 23, 2012, respectively, due to lower commodity costs, primarily cheese, which has a fixed-dollar markup and due to the benefit of increased online sales.
|
|
●
|
Salaries and benefits were 0.4% and 0.1% higher as a percentage of revenues for the three and nine months ended September 23, 2012, respectively. The increases were due to the previously mentioned higher commissary product volumes.
|
|
●
|
Other operating expenses as a percentage of sales were 0.4% and 0.1% higher as a percentage of revenues for the three and nine months ended September 23, 2012, respectively, as compared to the same periods in 2011 due primarily to higher distribution costs.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
Sept. 23,
|
Sept. 25,
|
Increase
|
Sept. 23,
|
Sept. 25,
|
Increase
|
|||||||||||||||||||
2012
|
2011
|
(Decrease)
|
2012
|
2011
|
(Decrease)
|
|||||||||||||||||||
Supplier marketing (income) payment (a)
|
$ | (250 | ) | $ | - | $ | (250 | ) | $ | 4,250 | $ | - | $ | 4,250 | ||||||||||
Disposition and valuation-related losses
|
344 | 120 | 224 | 460 | 506 | (46 | ) | |||||||||||||||||
Provision for uncollectible accounts
|
||||||||||||||||||||||||
and notes receivable
|
297 | 583 | (286 | ) | 466 | 455 | 11 | |||||||||||||||||
Franchise and development incentives (b)
|
929 | 3,307 | (2,378 | ) | 2,403 | 3,927 | (1,524 | ) | ||||||||||||||||
Perfect Pizza lease obligation (c)
|
- | 782 | (782 | ) | 197 | 782 | (585 | ) | ||||||||||||||||
Other
|
(109 | ) | (15 | ) | (94 | ) | 244 | 1,347 | (1,103 | ) | ||||||||||||||
Total other general expenses
|
$ | 1,211 | $ | 4,777 | $ | (3,566 | ) | $ | 8,020 | $ | 7,017 | $ | 1,003 |
(a)
|
See “Non-GAAP Measures” above for further information about the Incentive Contribution.
|
(b)
|
Includes incentives provided to domestic franchisees for opening restaurants. The 2011 amounts include approximately $2.8 million of incentives offered to domestic franchisees for meeting certain sales targets, including driving comparable sales, transactions and online sales.
|
(c)
|
The Perfect Pizza lease obligation relates to rents, taxes and insurance associated with the former Perfect Pizza operations in the United Kingdom. See the notes to condensed consolidated financial statements for additional information.
|
Actual Ratio for the
|
|||
Quarter Ended
|
|||
Permitted Ratio
|
September 23, 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
|
5.5 to 1.0
|
Nine Months Ended
|
||||||||
Sept. 23,
|
Sept. 25,
|
|||||||
2012
|
2011
|
|||||||
Net cash provided by operating activities
|
$ | 94,773 | $ | 87,216 | ||||
Purchase of property and equipment
|
(26,425 | ) | (20,647 | ) | ||||
Free cash flow (a)
|
$ | 68,348 | $ | 66,569 |
|
(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.
|
2013
|
2012
|
2011
|
||||||||||
Projected
|
Projected
|
Actual
|
||||||||||
Block Price
|
Block Price
|
Block Price
|
||||||||||
Quarter 1
|
$ | 1.884 | * | $ | 1.522 | $ | 1.695 | |||||
Quarter 2
|
1.842 | * | 1.539 | 1.736 | ||||||||
Quarter 3
|
1.828 | * | 1.750 | 2.006 | ||||||||
Quarter 4
|
1.811 | * | 2.018 | * | 1.760 | |||||||
Full Year
|
$ | 1.841 | * | $ | 1.713 | * | $ | 1.799 | ||||
*amounts are estimates based on futures prices
|
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 | ||||||||||
06/25/2012 - 07/22/2012
|
264 | $ | 47.12 | 48,694 | $ | 70,390 | ||||||||||
07/23/2012 - 08/19/2012
|
111 | $ | 51.25 | 48,805 | $ | 64,710 | ||||||||||
08/20/2012 - 09/23/2012
|
140 | $ | 52.05 | 48,945 | $ | 57,392 | ||||||||||
* There were no share repurchases during this period.
|
Exhibit
|
||
Number
|
Description
|
|
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 September 23, 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 September 23, 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 September 23, 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
|