Papa John's Announces Fourth Quarter And Full Year 2015 Results

2016 Operating Assumptions and Earnings Guidance Announced

LOUISVILLE, Ky. - Feb 23, 2016 - (BUSINESS WIRE) - Papa John's International, Inc. (NASDAQ: PZZA) today announced financial results for the fourth quarter and fiscal year ended December 27, 2015.

Highlights

  • Fourth quarter earnings per diluted share of $0.62 in 2015 compared to $0.52 in 2014, an increase of 19.2%
  • Adjusted earnings per diluted share of $2.09 for full year 2015, excluding a legal settlement, or an increase of 19.4% over 2014; reported earnings per diluted share of $1.89 for full year 2015
  • System-wide comparable sales increases of 1.9% for North America and 5.3% for International for the fourth quarter; System-wide comparable sales increases of 4.2% for North America and 6.9% for International for the full year
  • 107 worldwide net unit openings in the fourth quarter and 230 for the full year, of which 182 were International and 48 were inNorth America

"I'd like to congratulate our entire team for making 2015 another great year for the Papa John's brand," said Papa John's founder, chairman and CEO John Schnatter. "From continued improvements to our product, to digital innovations, to growing our international footprint - all while again growing EPS nearly 20% and running strong positive comp sales - this year has left us tremendously well-positioned entering 2016."

Fourth quarter 2015 revenues were $416.8 million, a 2.0% decrease from fourth quarter 2014 revenues of $425.5 million. Fourth quarter 2015 net income increased 16.6% to $24.7 million, compared to fourth quarter 2014 net income of $21.2 million. Fourth quarter 2015 diluted earnings per share were $0.62, or a 19.2% increase, compared to fourth quarter 2014 diluted earnings per share of $0.52.

Full year 2015 revenues were $1.64 billion, a 2.5% increase from 2014 revenues of $1.60 billion. Full year 2015 net income was $75.7 million($83.7 million, or a 14.1% increase, excluding the after-tax expense of a legal settlement as detailed in the "Item Impacting Comparability" table), compared to 2014 net income of $73.3 million. Full year 2015 diluted earnings per share were $1.89 ($2.09, or a 19.4% increase, excluding the legal settlement), compared to 2014 diluted earnings per share of $1.75.

Global Restaurant and Comparable Sales Information

                 
        Three Months Ended     Year Ended
       

Dec. 27,

2015

   

Dec. 28,

2014

   

Dec. 27,

2015

   

Dec. 28,

2014

                           
  Global restaurant sales growth (a)     3.4%     6.6%     5.3%     9.8%
                           
 

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

    5.7%     8.2%     7.8%     10.6%
                           
  Comparable sales growth (b)                        
  Domestic company-owned restaurants     3.4%     5.9%     5.9%     8.2%
  North America franchised restaurants     1.3%     3.4%     3.6%     6.2%
  System-wide North America restaurants     1.9%     4.1%     4.2%     6.7%
                           
  System-wide international restaurants     5.3%     8.9%     6.9%     7.4%
                           

(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 fiscal periods. 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 translation.

We believe 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. Management believes the presentation of global restaurant sales growth excluding the impact of foreign currency provides investors with useful information regarding underlying sales trends by presenting sales growth excluding the external factor of foreign currency exchange. Franchise restaurant sales are not included in company revenues.

Revenue and Operating Highlights

All revenue and operating highlights below are compared to the same period of the prior year, unless otherwise noted.

Revenue Highlights

  • Consolidated revenues decreased $8.7 million, or 2.0%, for the fourth quarter of 2015 and increased $39.2 million, or 2.5%, for the full year. The decrease for the three-month period was primarily due to lower FOCUS equipment sales, as anticipated, since the rollout is now complete and lower domestic commissary sales from lower commodity costs. The following summarizes changes in our revenues for the fourth quarter and full year:
  • Domestic company-owned restaurant sales increased $8.4 million, or 4.6%, and $54.5 million, or 7.8%, for the fourth quarter and full year 2015, respectively, primarily due to increases of 3.4% and 5.9% in comparable sales and increases of 1.9% and 2.7% in equivalent units.
    North America franchise royalty revenue increased approximately $800,000, or 3.4%, and $5.6 million, or 6.3%, for the fourth quarter and full year 2015, respectively, primarily due to increases of 1.3% and 3.6% in comparable sales, increases of 1.2% and 1.0% in equivalent units and lower royalty incentives.
  • Domestic commissary sales decreased $7.2 million, or 4.4%, and $13.9 million, or 2.2%, for the fourth quarter and full year, respectively, primarily due to lower revenues associated with lower cheese prices, somewhat offset by increases in restaurant sales volumes. Our pricing for cheese is based on a fixed dollar markup; when cheese prices decrease, revenues decrease with no overall impact on the related dollar margin.
  • Other sales decreased approximately $9.9 million, or 40.3%, and $9.5 million, or 12.8%, for the fourth quarter and full year 2015, respectively. As previously discussed, the decreases are primarily due to the lower FOCUS equipment sales, as anticipated. The higher levels of FOCUS equipment sales in the fourth quarter and full year of 2014 had no significant impact on operating results.
  • International revenues decreased approximately $900,000, or 3.4%, for the fourth quarter and increased approximately $2.2 million, or 2.2%, for the full year 2015. The decrease for the fourth quarter was primarily due to lower sales at company-owned restaurants inChina due to the disposition of eleven restaurants in 2014 and negative comparable sales. This decrease was partially offset by higher royalties and commissary revenues due to an increase in the number of franchised restaurants and an increase in franchised comparable sales, calculated on a constant dollar basis. The increase for the full year was primarily due to higher royalties and commissary revenues from the increase in the number of franchised restaurants and an increase in franchised comparable sales. These increases were partially offset by lower sales at company-owned restaurants in China. Foreign currency exchange rates had a negative impact on revenues of approximately $1.5 million and $7.5 million for the fourth quarter and full year, respectively.
             
      Three Months Ended
      Dec. 27,   Dec. 28,     Increase
(In thousands)   2015   2014     (Decrease)
                 
Domestic company-owned restaurants     15,267     $ 8,900       $ 6,367  
Domestic commissaries     12,027       13,143         (1,116 )
North America franchising     21,770       20,620         1,150  
International     4,084       3,179         905  
All others     1,075       141         934  
Unallocated corporate expenses     (15,260 )     (14,035 )       (1,225 )
Elimination of intersegment profits     (40 )     443         (483 )
Total income before income taxes   $ 38,923     $ 32,391       $ 6,532  
               

 

                         
      Year Ended
      As Reported   Legal   Adjusted         Adjusted
      Dec. 27,   Settlement   Dec. 27,   Dec. 28,     Increase
(In thousands)   2015   expense   2015   2014     (Decrease)
                         
Domestic company-owned restaurants   $ 56,452     $ -   $ 56,452     $ 40,969       $ 15,483  
Domestic commissaries     44,721       -     44,721       39,317         5,404  
North America franchising     83,315       -     83,315       77,009         6,306  
International     10,891       -     10,891       7,250         3,641  
All others     845       -     845       (9 )       854  
Unallocated corporate expenses     (75,896 )     12,278     (63,618 )     (49,440 )       (14,178 )
Elimination of intersegment profits     (1,181 )     -     (1,181 )     (841 )       (340 )
Total income before income taxes   $ 119,147     $ 12,278   $ 131,425     $ 114,255       $ 17,170  
                       

Fourth quarter 2015 income before income taxes increased approximately $6.5 million, or 20.2%. This increase was primarily due to the following:

  • Domestic company-owned restaurants income increased $6.4 million primarily due to higher profits from the 3.4% increase in comparable sales, lower commodity costs and lower insurance costs including non-owned automobile claims of approximately $3.4 million. The improvement in insurance costs is primarily attributable to 2014 including significant adverse claims experience in the fourth quarter. The market price for cheese averaged $1.60 per pound for the fourth quarter of 2015, compared to $1.99 per pound in the fourth quarter of 2014.
  • North America franchising income increased $1.2 million primarily due to higher royalties attributable to the 1.3% and 1.2% increases in comparable sales and equivalent units, respectively, and lower royalty incentives.
  • International income increased approximately $900,000 primarily due to higher royalties from an increase in units and comparable sales of 5.3% and an improvement in China results, including lower depreciation expense of $500,000 as we are no longer depreciating ourChina company-owned restaurants, which are classified as held for sale. This was somewhat offset by the negative impact of foreign currency exchange rates of approximately $600,000.
  • The results for the "All others" segment increased approximately $900,000 primarily due to lower costs for our digital ordering business and a higher margin at our print and promotions business as the prior year included a reduced cost direct mail campaign offered to our domestic franchised restaurants.

These increases were partially offset by the following decreases:

  • Domestic commissaries income decreased approximately $1.1 million due to a planned lower margin. We manage commissary results on a full year basis and the margins can vary somewhat by quarter.
  • Unallocated corporate expenses increased approximately $1.2 million primarily due to increases in management incentive costs from higher annual operating results, health insurance claims costs, and interest costs from higher levels of debt and a higher effective interest rate. These increases were partially offset by lower legal costs.

Income before income taxes increased $17.2 million, or 15.0%, for the full year 2015, excluding the $12.3 million legal settlement. This increase was primarily due to the following:

  • Domestic company-owned restaurants income increased $15.5 million primarily due to higher profits from the 5.9% increase in comparable sales and lower commodity costs. These increases were partially offset by higher depreciation expense of $1.1 millionassociated with FOCUS equipment. The market price for cheese averaged $1.61 per pound for 2015, compared to $2.12 per pound for the prior year.
  • Domestic commissaries income increased approximately $5.4 million primarily due to incremental profits from higher restaurant volumes and a higher margin, partially offset by incremental insurance expense from higher automobile claims costs of approximately$1.5 million.
  • North America franchising income increased $6.3 million primarily due to higher royalties attributable to the 3.6% and 1.0% increases in comparable sales and equivalent units, respectively, and lower royalty incentives.
  • International income increased approximately $3.6 million primarily due to an increase in units and comparable sales of 6.9%, which resulted in both higher royalties and an increase in United Kingdom commissary results. Additionally, our Company-owned Chinaresults improved primarily due to lower non-operating costs of $1.5 million for impairment, disposition and depreciation. These increases were partially offset by the negative impact of foreign currency exchange rates of approximately $2.8 million.
  • The results for the "All others" segment increased approximately $900,000 primarily due to lower infrastructure costs to support our digital ordering business.

These increases were partially offset by higher unallocated corporate expenses of approximately $14.2 million primarily due to higher salaries and benefits, including an increase in health insurance claims costs, as well as increased interest costs associated with higher levels of debt and a higher effective interest rate. In addition, management incentive compensation costs increased in 2015 due to higher annual operating results.

The effective income tax rates were 32.5% and 31.2% for the fourth quarter and full year 2015, respectively, representing an increase of 1.5% for the fourth quarter and a decrease of 0.8% for the full year period. Our effective income tax rate may fluctuate from quarter to quarter for various reasons. The 2015 full year rate includes higher benefits from various tax deductions and credits.

The company's free cash flow, a non-GAAP financial measure, was as follows (in thousands):

       
      Year Ended
      Dec. 27,   Dec. 28,
      2015   2014
           
  Net cash provided by operating activities (a)   $ 160,312     $ 122,632  
  Purchases of property and equipment (b)     (38,972 )     (48,655 )
  Free cash flow   $ 121,340     $ 73,977  
           

(a)

The increase of approximately $37.7 million was primarily due to higher operating income and favorable changes in inventory and other working capital items. The prior year included higher inventory levels of equipment to support the rollout of FOCUS to our domestic franchised restaurants. The legal settlement does not impact cash provided by operating activities as it was paid in January 2016.

           

(b)

The decrease of approximately $9.7 million is primarily due to the prior year including FOCUS equipment costs for domestic Company-owned restaurants and higher levels of FOCUS software development costs.

           

We define free cash flow as net cash provided by operating activities (from the consolidated statements of cash flows) less the amounts spent on the purchase of property and equipment. We view free cash flow as an important measure because it is a factor that management uses in determining the amount of cash available for dividends, share repurchases and discretionary investment. Free cash flow is not a term defined by 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.

See the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for additional information concerning our operating results and cash flow for the full year ended December 27, 2015.

Global Restaurant Unit Data

At December 27, 2015, there were 4,893 Papa John's restaurants operating in all 50 states and in 39 international countries and territories, as follows:

                     
   

Domestic

Company

-owned

 

Franchised

North

America

 

Total North

America

  International   System-wide

Fourth Quarter

                   
Beginning - September 27, 2015   697     2,664     3,361     1,425     4,786  
Opened   8     38     46     93     139  
Closed   (2 )   (17 )   (19 )   (13 )   (32 )
Acquired (divested)   4     (4 )   -     -     -  
Ending - December 27, 2015   707     2,681     3,388     1,505     4,893  
                     

Year-to-date

                   
Beginning - December 28, 2014   686     2,654     3,340     1,323     4,663  
Opened   16     106     122     235     357  
Closed   (2 )   (72 )   (74 )   (53 )   (127 )
Acquired (divested)   7     (7 )   -     -     -  
Ending - December 27, 2015   707     2,681     3,388     1,505     4,893  
                     
Unit growth   21     27     48     182     230  
                     
% increase   3.1 %   1.0 %   1.4 %   13.8 %   4.9 %
                     

Our development pipeline as of December 27, 2015 included approximately 1,140 restaurants (200 units in North America and 940 units internationally), the majority of which are scheduled to open over the next six years.

Item Impacting Comparability

The following table reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures, for the fourth quarter and year ended December 27, 2015:

                 
      Three Months Ended     Year Ended
      Dec. 27,   Dec. 28,     Dec. 27,   Dec. 28,
(In thousands, except per share amounts)     2015   2014     2015   2014
                     
Income before income taxes, as reported     $ 38,923   $ 32,391     $ 119,147   $ 114,255
Legal Settlement expense       -     -       12,278     -
Income before income taxes, as adjusted     $ 38,923   $ 32,391     $ 131,425   $ 114,255
                     
Net income, as reported     $ 24,695   $ 21,181     $ 75,682   $ 73,315
Legal Settlement expense       -     -       7,986     -
Net income, as adjusted     $ 24,695   $ 21,181     $ 83,668   $ 73,315
                     
Diluted earnings per share, as reported     $ 0.62   $ 0.52     $ 1.89   $ 1.75
Legal Settlement expense       -     -       0.20     -
Diluted earnings per share, as adjusted     $ 0.62   $ 0.52     $ 2.09   $ 1.75
                     

The legal settlement expense represents a pre-tax expense of $12.3 million for a legal settlement preliminarily approved by the court and recorded in the quarter ended June 28, 2015. The court issued the final approval on January 12, 2016 and the funds were then remitted to the administrator for payment to the class and the plaintiffs' attorneys. This collective and class action, Perrin v. Papa John's International, Inc. and Papa John's USA, Inc., which included approximately 19,000 drivers, alleged delivery drivers were not reimbursed in accordance with the Fair Labor Standards Act. The company continues to deny any wrongdoing in this matter.

The non-GAAP results shown above, which exclude the legal settlement, should not be construed as a substitute for or a better indicator of the company's performance than the company's GAAP results. Management believes presenting the financial information excluding the legal settlement is important for purposes of comparison to prior year results. In addition, management uses this metric to evaluate the company's underlying operating performance and to analyze trends.

Share Repurchase Activity

In February 2016, the company's Board of Directors approved a $75 million increase in the amount of common stock that may be purchased under the company's share repurchase program through February 2017, bringing the total authorized under the program to$1.525 billion since its inception in 1999. Approximately $167.1 million remains available under the company's share repurchase program as of February 16, 2016.

The following table reflects our repurchases for the fourth quarter and full year 2015 and subsequent repurchases through February 16, 2016 (in thousands):

                 
Period      

Number

of Shares

      Cost
                 
Fourth Quarter 2015       637       $ 39,627
                 
Full Year 2015       1,845       $ 119,793
                 
December 28, 2015 through February 16, 2016       860       $ 42,589
                 

There were 39.4 million and 40.0 million diluted weighted average shares outstanding for the fourth quarter and full year 2015, respectively, representing decreases of 3.5% and 4.1%, respectively, over the prior year comparable periods. Diluted earnings per share increased $0.02and $0.08, respectively, for the fourth quarter and full year 2015 due to the reduction in shares outstanding, primarily resulting from the share repurchase program. Approximately 38.6 million actual shares of the company's common stock were outstanding as of December 27, 2015.

2016 Key Operating Assumptions and Earnings Guidance

Earnings per Share (EPS) - The company projects 2016 EPS to increase to a range of $2.30 to $2.40, or increase 10% to 15% over 2015 EPS of $2.09, excluding the legal settlement.

Comparable Restaurant Sales - North America system-wide comparable sales are expected to increase 2% to 4% in 2016. International comparable sales are expected to increase 5% to 7%, on a constant dollar basis, in 2016.

Worldwide Net Unit Growth - Worldwide net unit growth in 2016 is expected to range between 180 and 210 units, with approximately 75% of the net unit growth in International markets.

Revenues - Total consolidated revenues are expected to increase 4% to 6% in 2016.

Income Before Income Taxes Margin - Consolidated income before income taxes margin in 2016 is expected to increase up to 25 basis points over 2015 levels. We are assuming full-year block cheese prices in the low $1.60's per pound.

Income Tax Rate - The income tax rate in 2016 is expected to range from 31.0% to 32.5%.

Share Repurchases and Debt - The company expects to repurchase shares of its outstanding stock in a range of $100 to $150 million. Debt is expected to range between 1.5x and 2.0x 2016 earnings before interest, taxes, depreciation and amortization ("EBITDA").

Capital Expenditures - Capital expenditures for 2016 are expected to approximate $55 to $60 million. This includes a new domestic commissary in the Southeast Region to be completed in 2017, company-owned unit development in the U.S., investments in technology and routine capital replacement.

Conference Call

A conference call is scheduled for February 24, 2016 at 10:00 a.m. Eastern Time to review our fourth quarter and full year 2015 earnings results and 2016 guidance. 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, from the company's web site at www.papajohns.com. The Conference ID is 45364479.

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations website, including information contained in investor presentations, may be deemed material. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. We encourage investors and others to sign up for email alerts at our investor relations page under Shareholder Tools at the bottom right side of the page. These email alerts are intended to help investors and others to monitor our investor relations website by notifying them when new information is posted on the site.

Annual Meeting Date Scheduled

The 2016 Annual Meeting of Stockholders will be held on Thursday, April 28, 2016, at 11:00 am local time at the company's corporate offices located at 2002 Papa John's Boulevard, Louisville, Kentucky.

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," "intend," "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 forward-looking statements may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, contingent liabilities, resolution of litigation, commodity costs, profit margins, unit growth, unit level performance, capital expenditures, 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:

  • aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors;
  • changes in consumer preferences or consumer buying habits, including changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending;
  • the adverse impact on the company or our results caused by product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our company-owned or franchised restaurants or others in the restaurant industry;
  • failure to maintain our brand strength, quality reputation and consumer enthusiasm for our better ingredients marketing and advertising strategy;
  • the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, store level employees or suitable sites;
  • increases in food costs or sustained higher other operating costs. This could include increased employee compensation, benefits, insurance, tax rates, new regulatory requirements or increasing compliance costs;
  • increases in insurance claims and related costs for programs funded by the company up to certain retention limits, including medical, owned and non-owned automobiles, workers' compensation, general liability and property;
  • disruption of our supply chain or commissary operations which could be caused by our sole source of supply of cheese or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, geopolitical or other disruptions beyond our control;
  • increased risks associated with our international operations, including economic and political conditions, instability in our international markets,
  • especially emerging markets, fluctuations in currency exchange rates, and difficulty in meeting planned sales targets and new store growth;
  • the impact of current or future claims and litigation, including labor and employment-related claims;
  • current or proposed legislation impacting our business;
  • failure to effectively execute succession planning, and our reliance on the multiple roles of our founder, chairman and chief executive officer, who also serves as our brand spokesperson; and
  • disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and security breaches, including theft of confidential company, employee and customer information, including payment cards.

These and other risk factors are discussed in detail in "Part I. Item 1A. - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 27, 2015. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

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

Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
                     
        Three Months Ended   Year Ended
        Dec. 27, 2015   Dec. 28, 2014   Dec. 27, 2015   Dec. 28, 2014
(In thousands, except per share amounts)   (Unaudited)   (Unaudited)        
Revenues:                
  North America:                
    Domestic company-owned restaurant sales   $ 192,999     $ 184,585     $ 756,307     $ 701,854  
    Franchise royalties     24,527       23,715       95,046       89,443  
    Franchise and development fees     344       233       1,010       726  
    Domestic commissary sales     158,407       165,640       615,610       629,492  
    Other sales     14,601       24,475       64,711       74,179  
  International:                
    Royalties and franchise and development fees     7,395       6,961       27,289       25,730  
    Restaurant and commissary sales     18,543       19,900       77,402       76,725  
Total revenues     416,816       425,509       1,637,375       1,598,149  
                     
Costs and expenses:                
  Domestic company-owned restaurant expenses:                
    Cost of sales     46,009       46,087       178,952       175,733  
    Salaries and benefits     52,609       49,011       207,998       188,234  
    Advertising and related costs     17,609       16,484       67,164       63,463  
    Occupancy costs and other restaurant operating expenses     37,055       39,677       150,092       144,628  
  Total domestic company-owned restaurant expenses     153,282       151,259       604,206       572,058  
                     
  Domestic commissary expenses:                
    Cost of sales     121,704       128,638       471,812       492,940  
    Salaries and benefits and other commissary operating expenses     24,295       23,819       96,715       91,981  
  Total domestic commissary expenses     145,999       152,457       568,527       584,921  
                     
  Other operating expenses     13,170       23,622       60,896       71,068  
  International restaurant and commissary expenses     15,297       16,352       63,506       63,718  
  General and administrative expenses     37,392       36,367       157,421       140,566  
  Other general expenses     1,778       1,583       6,205       8,223  
  Depreciation and amortization     9,669       10,426       40,307       39,965  
Total costs and expenses     376,587       392,066       1,501,068       1,480,519  
                     
Operating income     40,229       33,443       136,307       117,630  
  Legal settlement expense     -       -       (12,278 )     -  
  Net interest expense     (1,306 )     (1,052 )     (4,882 )     (3,375 )
Income before income taxes     38,923       32,391       119,147       114,255  
  Income tax expense     12,642       10,036       37,183       36,558  
Net income before attribution to noncontrolling interests     26,281       22,355       81,964       77,697  
  Income attributable to noncontrolling interests     (1,586 )     (1,174 )     (6,282 )     (4,382 )
Net income attributable to the company   $ 24,695     $ 21,181     $ 75,682     $ 73,315  
                     
Calculation of income for earnings per share:                
Net income attributable to the company   $ 24,695     $ 21,181     $ 75,682     $ 73,315  
Decrease (increase) in noncontrolling interest redemption value     (127 )     37       65       (44 )
Net income attributable to participating securities     (102 )     (107 )     (325 )     (402 )
Net income attributable to common shareholders   $ 24,466     $ 21,111     $ 75,422     $ 72,869  
                     
Basic earnings per common share   $ 0.63     $ 0.53     $ 1.91     $ 1.78  
Diluted earnings per common share   $ 0.62     $ 0.52     $ 1.89     $ 1.75  
                     
Basic weighted average common shares outstanding     38,909       40,097       39,458       40,960  
Diluted weighted average common shares outstanding     39,367       40,789       40,000       41,718  
                     
Dividends declared per common share   $ 0.175     $ 0.14     $ 0.63     $ 0.53  
                 

 

         
Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
         
    Year Ended
    Dec. 27, 2015   Dec. 28, 2014
(In thousands)        
         
Assets        
Current assets:        
Cash and cash equivalents   $ 21,006   $ 20,122
Accounts receivable, net     63,320     56,047
Notes receivable, net     7,816     6,106
Income tax receivable     272     9,527
Inventories     21,564     27,394
Prepaid expenses and other current assets     29,313     28,564
Assets held for sale     9,299     -
Total current assets     152,590     147,760
         
Property and equipment, net     214,044     219,457
Notes receivable, less current portion, net     11,105     12,801
Goodwill     79,657     82,007
Deferred income taxes     2,415     3,914
Other assets     35,101     38,616
Total assets   $ 494,912   $ 504,555
         
         
Liabilities and stockholders' equity        
Current liabilities:        
Accounts payable   $ 43,492   $ 38,832
Income and other taxes payable     8,527     9,637
Accrued expenses and other current liabilities     80,918     58,293
Total current liabilities     132,937     106,762
         
Deferred revenue     3,190     4,257
Long-term debt     256,000     230,451
Deferred income taxes     4,610     13,940
Other long-term liabilities     47,606     41,875
Total liabilities     444,343     397,285
         
Redeemable noncontrolling interests     8,363     8,555
         
Total stockholders' equity     42,206     98,715
Total liabilities, redeemable noncontrolling interests and stockholders' equity   $ 494,912   $ 504,555
         
         

Note: The Condensed Consolidated Balance Sheets have been derived from the audited consolidated financial statements, but do 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
         
    Year Ended
(In thousands)   Dec. 27, 2015   Dec. 28, 2014
         
Operating activities        
Net income before attribution to noncontrolling interests   $ 81,964     $ 77,697  

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

       
Provision for uncollectible accounts and notes receivable     1,232       1,795  
Depreciation and amortization     40,307       39,965  
Deferred income taxes     (6,246 )     4,422  
Stock-based compensation expense     9,423       8,712  
Other     4,633       4,738  
Changes in operating assets and liabilities, net of acquisitions:        
Accounts receivable     (9,179 )     (5,741 )
Income taxes receivable     9,255       (9,527 )
Inventories     4,967       (2,838 )
Prepaid expenses and other current assets     (1,596 )     (4,781 )
Other assets and liabilities     620       915  
Accounts payable     4,804       3,171  
Income taxes and other taxes payable     (1,113 )     5,233  
Accrued expenses and other current liabilities     21,201       (665 )
Deferred revenue     40       (464 )
Net cash provided by operating activities     160,312       122,632  
         
Investing activities        
Purchases of property and equipment     (38,972 )     (48,655 )
Loans issued     (4,741 )     (6,816 )
Repayments of loans issued     5,183       4,254  
Acquisitions, net of cash acquired     (922 )     (4,773 )
Proceeds from divestitures of restaurants     -       400  
Other     500       556  
Net cash used in investing activities     (38,952 )     (55,034 )
         
Financing activities        
Net proceeds on line of credit facility     25,549       72,551  
Cash dividends paid     (24,844 )     (21,735 )
Excess tax benefit on equity awards     10,151       10,282  
Tax payments for equity award issuances     (10,965 )     (9,235 )
Proceeds from exercise of stock options     5,197       5,837  
Acquisition of Company common stock     (119,793 )     (117,400 )
Contributions from noncontrolling interest holders     684       1,086  
Distributions to noncontrolling interest holders     (6,550 )     (2,800 )
Other     444       491  
Net cash used in financing activities     (120,127 )     (60,923 )
         
Effect of exchange rate changes on cash and cash equivalents     (349 )     (223 )
Change in cash and cash equivalents     884       6,452  
Cash and cash equivalents at beginning of period     20,122       13,670  
         
Cash and cash equivalents at end of period   $ 21,006     $ 20,122  

SOURCE Papa John's International, Inc.

Contact:

Lance Tucker
Papa John's International, Inc.
Chief Financial Officer
502-261-7272

News Provided by Acquire Media

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