Papa John's Announces Third Quarter Results

EPS Increased 37.5% over Prior Year Pro Forma Results on Strong Comparable Sales of 5.3% for North America and 4.7% for International

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Papa John's International, Inc. (NASDAQ: PZZA) today announced financial results for the third quarter and nine months ended September 25, 2011.

Highlights

  • Third quarter system-wide comparable sales increased 5.3% for North America and 4.7% for International
  • Third quarter earnings per diluted share of $0.44 in 2011 vs. $0.30 in 2010 ($0.32 in 2010 excluding the impact of franchisee-owned BIBP cheese purchasing entity, a 37.5% increase)
  • 47 worldwide net unit openings during the quarter
  • 2011 guidance increased for EPS, worldwide comparable sales, and worldwide net restaurant openings

"I congratulate our operators throughout the world on achieving one of the best overall quarters in company history," commented Papa John's Founder, Chairman and Chief Executive Officer, John Schnatter. "We've now surpassed 3,000 restaurants in North America and are closing in on 800 international units as we continue to grow the Papa John's brand throughout the world."

Revenues were $305.7 million for third quarter 2011, an 11.9% increase from revenues of $273.1 million for third quarter 2010. Net income was $11.1 million for third quarter 2011, compared to net income of $7.8 million for third quarter 2010 ($8.3 million excluding BIBP, an increase of $2.9 million, or 34.6%). Diluted earnings per share were $0.44 for third quarter 2011, compared to diluted earnings per share of $0.30 for third quarter 2010 ($0.32 per diluted share excluding BIBP, an increase of $0.12 per diluted share, or 37.5%). See "Non-GAAP Measures" for additional information regarding BIBP.

Revenues were $911.7 million for the nine months ended September 25, 2011, an 8.6% increase from revenues of $839.6 million for the same period in 2010. Net income was $39.7 million for the nine months ended September 25, 2011, compared to net income of $37.9 million for the same period in 2010 ($34.4 million excluding BIBP, an increase of $5.3 million, or 15.3%). Diluted earnings per share were $1.55 for the nine months ended September 25, 2011, compared to diluted earnings per share of $1.42 for the same period in 2010 ($1.29 per diluted share excluding BIBP, an increase of $0.26, or 20.2%).

Financial Highlights

Summary Financial Data:

    Three Months Ended   Nine Months Ended
    Sept. 25,   Sept. 26,   Sept. 25,   Sept. 26,
(In thousands, except per share amounts)   2011   2010   2011   2010
                 
Revenues   $

305,668

  $ 273,126   $ 911,669   $ 839,559
                 

Income before income taxes, net of noncontrolling interests

  $ 16,029   $ 11,868   $ 59,825   $ 58,460
                 
Net income   $ 11,123   $ 7,848   $ 39,674   $ 37,915
                 
Earnings per share - assuming dilution   $ 0.44   $ 0.30   $ 1.55   $ 1.42
                 
Diluted weighted average shares outstanding     25,146     26,081     25,528     26,743
                 
                 

Global Restaurant and Comparable Sales Information:

      Three Months Ended   Nine Months Ended
     

Sept. 25,

2011

 

Sept. 26,

2010

 

Sept. 25,

2011

 

Sept. 26,

2010

                   
  Global restaurant sales growth (a)   8.3 %   2.8 %   8.3 %   2.3 %
                   
 

Global restaurant sales growth, excluding the impact of foreign currency conversion (a)

  7.6 %   2.8 %   7.7 %   2.1 %
                   
  Comparable sales growth (decline) (b)                
  North America company-owned restaurants   6.3 %   (1.6 %)   5.0 %   (1.5 %)
  North America franchised restaurants   4.9 %   (0.3 %)   3.6 %   0.3 %
  System-wide North America restaurants   5.3 %   (0.6 %)   3.9 %   (0.2 %)
                   
  System-wide international restaurants   4.7 %   5.5 %   5.0 %   1.6 %
                   

(a)

Includes both company-owned and franchised restaurant sales.

                   

(b)

Represents the change in year-over-year sales for the same base of restaurants for the same calendar period. Comparable sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency conversion.

   

Management believes global restaurant and comparable sales growth information, as defined in the table above, is useful in analyzing our results since our franchisees pay royalties that are based on a percentage of franchise sales. Franchise sales generate commissary revenue in the United States and in certain international markets. Global restaurant and comparable sales growth information is also useful in analyzing industry trends and the strength of our brand. Franchise restaurant sales are not included in company revenues.

Revenues Highlights

Consolidated revenues increased $32.5 million, or 11.9%, for the third quarter of 2011 and increased $72.1 million, or 8.6%, for the nine months ended September 25, 2011, compared to the same periods in the prior year. The increases in revenues were primarily due to the following:

  • Domestic company-owned restaurant sales increased $8.4 million, or 7.0%, and $20.4 million, or 5.5%, for the three and nine months ended September 25, 2011, respectively, primarily due to increases in comparable sales of 6.3% and 5.0%, respectively.
  • North America franchise royalty revenues increased approximately $1.3 million, or 7.9%, and $3.7 million, or 7.0%, for the three and nine months ended September 25, 2011, respectively, due to increases in comparable sales of 4.9% and 3.6%, respectively, and increases in the number of franchise restaurants.
  • Domestic commissary sales increased $19.0 million, or 17.0%, and $41.1 million, or 12.1%, for the three and nine months ended September 25, 2011, respectively. The increases were primarily due to increases in the selling prices of certain commodities, most notably cheese, and increases in sales volumes.
  • International revenues increased $3.6 million, or 30.6%, and $8.4 million, or 24.5%, for the three and nine months ended September 25, 2011, respectively, primarily due to increases in the number of restaurants and increases in comparable sales of 4.7% and 5.0%, respectively, calculated on a constant dollar basis. Through the first three quarters of 2010, the International segment included revenues from company-owned restaurants located in the United Kingdom, which were sold in the third quarter of 2010.

Operating Highlights

Our income before income taxes, net of noncontrolling interests, for the third quarter of 2011 was $16.0 million, compared to $11.9 million for the corresponding quarter in 2010 ($12.5 million in 2010, excluding the impact of BIBP, an increase of $3.5 million, or 28.0%). For the nine months ended September 25, 2011, pre-tax income, net of noncontrolling interests, was $59.8 million, compared to $58.5 million for the same period in 2010 ($53.0 million in 2010 excluding the impact of BIBP, an increase of $6.9 million, or 13.0%).

Income before income taxes, net of noncontrolling interests, is summarized in the following table on a reporting segment basis:

                 
    Three Months Ended   Nine Months Ended
    Sept. 25,   Sept. 26,   Increase   Sept. 25,   Sept. 26,   Increase
    2011   2010   (Decrease)   2011   2010   (Decrease)
                         
Domestic company-owned restaurants   $ 4,273     $ 5,503     $ (1,230 )   $ 22,577     $ 25,604     $ (3,027 )
Domestic commissaries     7,237       5,393       1,844       21,112       20,577       535  
North America franchising     15,941       14,663       1,278       50,190       46,713       3,477  
International     249       (1,309 )     1,558       (817 )     (4,162 )     3,345  
All others     (66 )     60       (126 )     (742 )     1,187       (1,929 )
Unallocated corporate expenses     (11,085 )     (11,004 )     (81 )     (29,371 )     (33,963 )     4,592  

Elimination of intersegment losses (profits)

    297       (108 )     405       (256 )     (329 )     73  

Income attributable to noncontrolling interests

    (817 )     (672 )     (145 )     (2,868 )     (2,672 )     (196 )

Total income before income taxes and BIBP, net of noncontrolling interests

    16,029       12,526       3,503       59,825       52,955       6,870  
BIBP, a variable interest entity     -       (658 )     658       -       5,505       (5,505 )

Total income before income taxes, net of noncontrolling interests

  $ 16,029     $ 11,868     $ 4,161     $ 59,825     $ 58,460     $ 1,365  
                         

The increase in income before income taxes, net of noncontrolling interests, of $3.5 million, or 28.0%, for the three months ended September 25, 2011, excluding the impact of BIBP in 2010, was primarily due to the following:

  • Domestic commissaries and North America franchising operating income both increased due to strong comparable sales results and an increase in the number of restaurants.
  • International operating income improved due to increased royalties attributable to strong comparable sales and net unit growth in addition to improved commissary results in the United Kingdom.

These increases in the quarter were partially offset by the following:

  • Domestic company-owned restaurants operating income declined due to higher commodity prices, primarily cheese, partially offset by incremental profits from strong comparable sales results.
  • Unallocated corporate expenses increased slightly, due to increases in franchise incentives and initiatives and a charge of approximately $800,000 related to lease obligations associated with our former Perfect Pizza operations in the United Kingdom, which were partially offset by a significant decrease in interest expense due to lower debt levels and a lower effective interest rate on borrowings.

The increase in income before income taxes, net of noncontrolling interests, of $6.9 million, or 13.0%, for the nine months ended September 25, 2011, excluding the impact of BIBP in 2010, was primarily due to the previously stated reasons, in addition to the following items:

  • "All others" operating results declined primarily due to lower online ordering fees and an increase in infrastructure and support costs at our "eCommerce" business.
  • Unallocated corporate expenses decreased due to reduced franchise incentives and initiatives, lower short- and long-term incentive compensation costs, and lower sponsorship fees, partially offset by an increase in travel costs.

Our effective income tax rates, excluding BIBP, were 29.1% and 32.1% for the three and nine months ended September 25, 2011, respectively, representing decreases of 3.2% and 1.2%, from the prior year rates. The lower effective rates were primarily due to the finalization of certain income tax issues which resulted in income tax benefits of $1.0 million and $1.6 million for the three- and nine-month periods, respectively. Our effective income tax rate may fluctuate from quarter to quarter for various reasons, including the settlement or resolution of specific federal and state issues.

See the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for additional information concerning our operating results, including segment and cash flow information, for the three- and nine-month periods ended September 25, 2011.

The company's free cash flow for the first nine months of 2011 and 2010 was as follows (in thousands):

       
      Nine Months Ended
      Sept. 25,   Sept. 26,
      2011   2010
           
  Net cash provided by operating activities   $ 84,348     $ 62,159  
  Pre-tax income from BIBP cheese purchasing entity     -       (5,505 )
  Purchase of property and equipment     (20,647 )     (23,608 )
  Free cash flow *   $ 63,701     $ 33,046  
           

*

The increase in free cash flow is due to higher net income, favorable changes in working capital, primarily due to timing of payments, and lower purchases of property and equipment.

   

Free cash flow is defined as net cash provided by operating activities (from the consolidated statements of cash flows) excluding the impact of BIBP, less the purchase of property and equipment. We view free cash flow as an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by accounting principles generally accepted in the United States ("GAAP") and as a result our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP measures.

Our net debt position, defined as total debt less cash and cash equivalents, was $26.3 million at September 25, 2011, compared to $52.8 million at December 26, 2010.

Global Restaurant Unit Data

At September 25, 2011, there were 3,780 Papa John's restaurants operating in all 50 states and in 32 countries, as follows:

                     
   

Company-

owned North

America

 

Franchised

North

America

 

Total North

America

  International   Systemwide

Third Quarter

                   
Beginning - June 26, 2011   595     2,393     2,988     745     3,733  
Opened   2     36     38     36     74  
Closed   -     (16 )   (16 )   (11 )   (27 )
Ending - September 25, 2011   597     2,413     3,010     770     3,780  
                     

Year-to-date

                   
Beginning - December 26, 2010   591     2,346     2,937     709     3,646  
Opened   6     103     109     87     196  
Closed   -     (36 )   (36 )   (26 )   (62 )
Ending - September 25, 2011   597     2,413     3,010     770     3,780  
                     
Restaurants at September 26, 2010   590     2,321     2,911     672     3,583  
                     
Restaurant unit growth   7     92     99     98     197  
                     
% increase   1.2 %   4.0 %   3.4 %   14.6 %   5.5 %
 

Our development pipeline as of September 25, 2011 included approximately 1,650 restaurants (410 units in North America and 1,240 units internationally), the majority of which are scheduled to open over the next six years.

Share Repurchase Activity

The company repurchased 798,000 shares of its common stock at an average price of $29.36 per share, or a total of $23.4 million, during the three months ended September 25, 2011 and repurchased 1.6 million shares at an average price of $30.70 per share, or a total of $49.6 million during the nine months ended September 25, 2011. Subsequent to quarter-end through October 26, 2011, the company repurchased 252,000 shares at a total cost of $7.7 million, or $30.74 per share average cost. Approximately $29.5 million remains available under the company's share repurchase program.

There were 25.1 million and 25.5 million diluted weighted average shares outstanding for the three- and nine-month periods, respectively, representing decreases of 3.6% and 4.5%, respectively, over the prior year comparable periods. Diluted earnings per share increased $0.01 and $0.07 for the three- and nine-month periods, respectively, due to the reductions in shares outstanding. Approximately 24.5 million actual shares of the company's common stock were outstanding as of September 25, 2011.

2011 Guidance Update

The following is an update to our 2011 guidance based on our solid year-to-date results:

           
      Updated Guidance   Previous Guidance
           
  Diluted earnings per share   $2.08 to $2.15   $2.02 to $2.12
           
  North America comparable sales   +3% to +4%   +2% to +3%
           
  International comparable sales   +3% to +5%   +2% to +4%
           
  Worldwide net restaurant openings   +210 to +235   +190 to +220
           

Conference Call

A conference call is scheduled for November 2, 2011 at 10:00 a.m. Eastern Daylight Time to review our third quarter earnings results. The call can be accessed from the company's web page at www.papajohns.com in a listen-only mode, or dial 877-312-8816 (U.S. and Canada) or 253-237-1189 (international). The conference call will be available for replay, including by downloadable podcast, through November 7, 2011. The replay can be accessed from the company's web site at www.papajohns.com or by dialing 800-642-1687 (U.S. and Canada) or 706-645-9291 (international). The Conference ID is 70010273.

Non-GAAP Measures

Certain financial measures we present in this press release exclude the impact of the consolidation of BIBP, which is not a measure that is defined in accordance with GAAP. These non-GAAP measures should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP measures. Management believes presenting the 2010 financial information excluding the impact of BIBP is important for purposes of comparison to current year results. As previously announced, we terminated our cheese purchasing arrangement with BIBP in February 2011 and BIBP operated at breakeven during the first two months of 2011. The presentation of the non-GAAP measures in this press release is made alongside the most directly comparable GAAP measures.

The company has provided the following table to reconcile the pro forma financial results we present in this press release excluding the impact in 2010 of BIBP to our GAAP financial measures for the three- and nine-month periods ended September 25, 2011 and September 26, 2010:

         
    Three Months Ended   Nine Months Ended
    Sept. 25,   Sept. 26,   Sept. 25,   Sept. 26,
(In thousands, except per share amounts)   2011   2010   2011   2010
                 

Pre-tax income, net of noncontrolling interests, as reported

  $ 16,029   $ 11,868   $ 59,825   $ 58,460  
Pre-tax loss (income) from BIBP cheese purchasing entity     -     658     -     (5,505 )

Pre-tax income, net of noncontrolling interests, excluding BIBP

  $ 16,029   $ 12,526   $ 59,825   $ 52,955  
                 
Net income, as reported   $ 11,123   $ 7,848   $ 39,674   $ 37,915  
Net loss (income) from BIBP cheese purchasing entity     -     417     -     (3,496 )
Net income, excluding BIBP   $ 11,123   $ 8,265   $ 39,674   $ 34,419  
                 
Earnings per diluted share, as reported   $ 0.44   $ 0.30   $ 1.55   $ 1.42  
Loss (earnings) from BIBP cheese purchasing entity     -     0.02     -     (0.13 )
Earnings per diluted share, excluding BIBP   $ 0.44   $ 0.32   $ 1.55   $ 1.29  
                 
Cash flow from operations, as reported           $ 84,348   $ 62,159  
Cash flow from BIBP cheese purchasing entity             -     (5,505 )
Cash flow from operations, excluding BIBP           $ 84,348   $ 56,654  
                 

See the free cash flow discussion for more information about our use of free cash flow, which is a non-GAAP measure.

Forward-Looking Statements

Certain matters discussed in this press release and other company communications constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such statements may relate to projections concerning business performance, revenue, earnings, contingent liabilities, commodity costs, margins, unit growth and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.

The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to: changes in pricing or other marketing or promotional strategies by competitors which may adversely affect sales, including an increase in or continuation of the current aggressive pricing and promotional environment; new product and concept developments by food industry competitors; the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably; general economic and political conditions and resulting impact on consumer buying habits; changes in consumer preferences; increases in or sustained high costs of food ingredients and other commodities, paper, utilities, fuel, employee compensation and benefits, insurance and similar costs (including the impact of federal health care legislation); the ability of the company to pass along increases in or sustained high costs to franchisees or consumers; the impact of current or future legal claims and current or proposed legislation impacting our business; the impact that product recalls, food quality or safety issues, and general public health concerns could have on our restaurants; currency exchange and interest rates; 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 increased risks associated with our international operations, including economic and political conditions in our international markets and difficulty in meeting planned sales targets for our international operations. These and other risk factors are discussed in detail in "Part I. Item 1A. - Risk Factors" of the Annual Report on Form 10-K for the fiscal year ended December 26, 2010 and "Part II. Item 1A. -- Risk Factors" of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2011. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

For more information about the company, please visit www.papajohns.com.

       
  Papa John's International, Inc. and Subsidiaries
  Consolidated Statements of Income
                   
                   
      Three Months Ended   Nine Months Ended
      September 25, 2011   September 26, 2010   September 25, 2011   September 26, 2010
  (In thousands, except per share amounts)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
  Revenues:                
  North America:                
  Domestic Company-owned restaurant sales   $ 128,787     $ 120,414     $ 395,099     $ 374,652  
  Franchise royalties     17,967       16,653       55,801       52,138  
  Franchise and development fees     155       149       464       460  
  Domestic commissary sales     130,870       111,884       379,569       338,460  
  Other sales     12,368       12,138       38,185       39,674  
  International:                
  Royalties and franchise and development fees     4,054       3,316       11,865       9,635  
  Restaurant and commissary sales     11,467       8,572       30,686       24,540  
  Total revenues     305,668       273,126       911,669       839,559  
                   
  Costs and expenses:                
  Domestic Company-owned restaurant expenses:                
  Cost of sales     32,229       27,245       94,491       81,551  
  Salaries and benefits     35,012       33,320       107,028       102,915  
  Advertising and related costs     11,790       11,264       36,477       33,817  
  Occupancy costs     8,496       8,494       24,304       24,264  
  Other operating expenses     18,858       18,184       57,265       54,218  
  Total domestic Company-owned restaurant expenses     106,385       98,507       319,565       296,765  
                   
  Domestic commissary and other expenses:                
  Cost of sales     110,387       94,422       320,359       284,909  
  Salaries and benefits     8,840       8,533       26,502       25,833  
  Other operating expenses     13,381       12,002       40,050       35,543  
  Total domestic commissary and other expenses     132,608       114,957       386,911       346,285  
                   
 

Loss (income) from the franchise cheese-purchasing program, net of noncontrolling interest

    -       409       -       (4,573 )
  International operating expenses     9,634       7,627       26,118       21,833  
  General and administrative expenses     27,332       27,133       84,023       83,983  
  Other general expenses     4,777       2,643       7,017       6,620  
  Depreciation and amortization     7,974       8,067       24,711       24,122  
  Total costs and expenses     288,710       259,343       848,345       775,035  
                   
  Operating income     16,958       13,783       63,324       64,524  
  Net interest expense     (112 )     (1,243 )     (631 )     (3,392 )
  Income before income taxes     16,846       12,540       62,693       61,132  
  Income tax expense     4,906       4,020       20,151       20,545  
  Net income, including noncontrolling interests     11,940       8,520       42,542       40,587  
  Less: income attributable to noncontrolling interests     (817 )     (672 )     (2,868 )     (2,672 )
  Net income, net of noncontrolling interests   $ 11,123     $ 7,848     $ 39,674     $ 37,915  
                   
  Basic earnings per common share   $ 0.45     $ 0.30     $ 1.57     $ 1.43  
  Earnings per common share - assuming dilution   $ 0.44     $ 0.30     $ 1.55     $ 1.42  
                   
  Basic weighted average shares outstanding     24,964       25,951       25,302       26,586  
  Diluted weighted average shares outstanding     25,146       26,081       25,528       26,743  
                   

Note:

Beginning in the first quarter of 2011, we realigned financial reporting for the franchised restaurants operating in Hawaii, Alaska, and Canada from our International business segment to North America Franchising. Certain prior year amounts have been reclassified for consistent presentation with the current year results.

   

 

           
  Papa John's International, Inc. and Subsidiaries
  Condensed Consolidated Balance Sheets
           
           
      September 25,   December 26,
      2011   2010
      (Unaudited)   (Note)
  (In thousands)        
           
  Assets        
  Current assets:        
  Cash and cash equivalents   $ 23,695   $ 46,225
  Accounts receivable, net     27,492     25,357
  Inventories     17,201     17,402
  Prepaid expenses     6,503     10,009
  Other current assets     3,839     3,732
  Deferred income taxes     10,343     9,647
  Total current assets     89,073     112,372
           
  Investments     1,681     1,604
  Net property and equipment     183,184     186,594
  Notes receivable, net     15,516     17,354
  Goodwill     74,871     74,697
  Other assets     21,930     23,320
  Total assets   $ 386,255   $ 415,941
           
           
  Liabilities and stockholders' equity        
  Current liabilities:        
  Accounts payable   $ 35,465   $ 31,569
  Income and other taxes payable     9,218     6,140
  Accrued expenses     53,864     52,978
  Total current liabilities     98,547     90,687
           
  Unearned franchise and development fees     6,502     6,596
  Long-term debt     50,000     99,017
  Other long-term liabilities     11,542     12,100
  Deferred income taxes     7,110     341
  Total liabilities     173,701     208,741
           
  Total stockholders' equity     212,554     207,200
  Total liabilities and stockholders' equity   $ 386,255   $ 415,941
           
           

Note:

The Condensed Consolidated Balance Sheet at December 26, 2010 has been derived from the audited consolidated financial statements at that date, but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.

   

 

         
Papa John's International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
         
         
    Nine Months Ended
(In thousands)   September 25, 2011   September 26, 2010
    (Unaudited)   (Unaudited)
         
Operating activities        
Net income, net of noncontrolling interests   $ 39,674     $ 37,915  

Adjustments to reconcile net income to net cash provided by operating activities:

       
Provision for uncollectible accounts and notes receivable     882       1,257  
Depreciation and amortization     24,711       24,122  
Deferred income taxes     5,219       (850 )
Stock-based compensation expense     5,266       4,491  
Excess tax benefit related to exercise of non-qualified stock options     (576 )     (242 )
Other     1,272       303  
Changes in operating assets and liabilities, net of acquisitions:        
Accounts receivable     (3,071 )     (4,094 )
Inventories     201       (525 )
Prepaid expenses     3,506       1,309  
Other current assets     (107 )     381  
Other assets and liabilities     491       (397 )
Accounts payable     3,896       (2,119 )
Income and other taxes     3,078       5,499  
Accrued expenses     -       (5,701 )
Unearned franchise and development fees     (94 )     810  
Net cash provided by operating activities     84,348       62,159  
         
Investing activities        
Purchase of property and equipment     (20,647 )     (23,608 )
Purchase of investments     (205 )     (548 )
Proceeds from sale or maturity of investments     128       301  
Loans issued     (2,598 )     (1,736 )
Loan repayments     4,542       2,444  
Proceeds from divestitures of restaurants     -       1,423  
Other     62       10  
Net cash used in investing activities     (18,718 )     (21,714 )
         
Financing activities        
Net repayments on line of credit facility     (49,000 )     -  
Excess tax benefit on equity awards     576       242  
Tax payments for restricted stock     (1,041 )     -  
Proceeds from exercise of stock options     10,981       5,304  
Acquisition of Company common stock     (49,579 )     (43,215 )
Noncontrolling interests, net of contributions and distributions     (261 )     (235 )
Other     97       104  
Net cash used in financing activities     (88,227 )     (37,800 )
         
Effect of exchange rate changes on cash and cash equivalents     67       78  
Change in cash and cash equivalents     (22,530 )     2,723  
Cash and cash equivalents at beginning of period     46,225       25,457  
         
Cash and cash equivalents at end of period   $ 23,695     $ 28,180  

Source: Papa John's International, Inc.

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