UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
Current Report
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported):
November
4, 2014
Commission File Number: 0-21660
PAPA JOHN’S INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
61-1203323 |
(State or other jurisdiction of |
(I.R.S. Employer Identification |
incorporation or organization) |
Number) |
2002 Papa Johns Boulevard
Louisville,
Kentucky 40299-2367
(Address
of principal executive offices)
(502) 261-7272
(Registrant’s
telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition
On November 4, 2014, Papa John’s International, Inc. issued a press release announcing 2014 third quarter results.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit |
||
Number |
Description |
|
99.1 |
Papa John’s International, Inc. press release dated November 4, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PAPA JOHN’S INTERNATIONAL, INC. |
|
(Registrant) |
|
Date: November 4, 2014 |
/s/ Lance F. Tucker |
Lance F. Tucker | |
Senior Vice President, Chief Financial |
EXHIBIT INDEX
Exhibit |
Description of Exhibit | |
99.1 |
Papa John’s International, Inc. press release dated November 4, 2014. |
Exhibit 99.1
Papa John’s Announces Third Quarter 2014 Results
Third Quarter Comparable Sales Increases of 7.4% for North America and 5.5% for International
LOUISVILLE, Ky.--(BUSINESS WIRE)--November 4, 2014--Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the three and nine months ended September 28, 2014.
Highlights
“I’d like to congratulate our corporate and franchise operators for continuing to drive excellent sales and bottom line results,” said Papa John’s Founder, Chairman, CEO and President John Schnatter. “Our focus on driving quality, digital innovation, and a better customer experience provides the foundation from which we will continue to consistently grow units and profitability.”
Third quarter 2014 revenues were $390.4 million, a 12.7% increase from third quarter 2013 revenues of $346.3 million. Third quarter 2014 net income was $16.1 million, compared to third quarter 2013 net income of $14.3 million. Third quarter 2014 diluted earnings per share were $0.39, compared to third quarter 2013 diluted earnings per share of $0.32.
Revenues were $1.17 billion for the nine months ended September 28, 2014, an 11.6% increase from revenues of $1.05 billion for the same period in 2013. Net income was $52.1 million for the nine months ended September 28, 2014, compared to $50.7 million for the same period in 2013. Diluted earnings per share were $1.23 for the nine months ended September 28, 2014, compared to $1.13 for the same period in 2013.
Global Restaurant and Comparable Sales Information
Three Months Ended | Nine Months Ended | |||||||||||
Sept. 28, |
Sept. 29, |
Sept. 28, |
Sept. 29, |
|||||||||
Global restaurant sales growth (a) | 10.2% | 6.9% | 11.0% | 6.7% | ||||||||
Global restaurant sales growth, excluding the impact of foreign currency (a) |
10.7% | 7.5% | 11.5% | 7.2% | ||||||||
Comparable sales growth (b) | ||||||||||||
Domestic company-owned restaurants | 8.3% | 5.1% | 9.1% | 5.0% | ||||||||
North America franchised restaurants | 7.1% | 0.6% | 7.2% | 1.3% | ||||||||
System-wide North America restaurants | 7.4% | 1.8% | 7.7% | 2.3% | ||||||||
System-wide international restaurants | 5.5% | 8.1% | 6.9% | 7.7% | ||||||||
(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. 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 increased $44.1 million, or 12.7%, for the third quarter of 2014 and increased $121.5 million, or 11.6%, for the nine months ended September 28, 2014. The increases in revenues were primarily due to the following:
Operating Highlights
The table below summarizes income before income taxes on a reporting segment basis:
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
Sept. 28, | Sept. 29, | Increase | Sept. 28, | Sept. 29, | Increase | ||||||||||||||||||||||||||
(In thousands) | 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | |||||||||||||||||||||||||
Domestic company-owned restaurants | $ | 8,133 | $ | 5,535 | $ | 2,598 | $ | 32,069 | $ | 24,666 | $ | 7,403 | |||||||||||||||||||
Domestic commissaries | 8,897 | 6,473 | 2,424 | 26,174 | 26,278 | (104 | ) | ||||||||||||||||||||||||
North America franchising | 19,023 | 16,516 | 2,507 | 56,389 | 52,134 | 4,255 | |||||||||||||||||||||||||
International | 1,436 | 945 | 491 | 4,071 | 2,152 | 1,919 | |||||||||||||||||||||||||
All others | (298 | ) | 590 | (888 | ) | (150 | ) | 2,402 | (2,552 | ) | |||||||||||||||||||||
Unallocated corporate expenses | (12,242 | ) | (8,544 | ) | (3,698 | ) | (35,405 | ) | (28,475 | ) | (6,930 | ) | |||||||||||||||||||
Elimination of intersegment losses (profits) | (731 | ) | (252 | ) | (479 | ) | (1,284 | ) | (989 | ) | (295 | ) | |||||||||||||||||||
Total income before income taxes (a) | $ | 24,218 | $ | 21,263 |
$ |
2,955 |
$ | 81,864 | $ | 78,168 |
$ |
3,696 |
|||||||||||||||||||
(a) | Includes FOCUS system rollout costs of approximately $1.2 million and $2.3 million for the three and nine months ended September 28, 2014, respectively. See the FOCUS Update section of this press release and the Quarterly Report on Form 10-Q for the three and nine months ended September 28, 2014 for additional information. |
Total income before income taxes and other measures excluding FOCUS system rollout costs included within this press release are not measures defined by accounting principles generally accepted in the United States (“GAAP”). These non-GAAP measures should not be construed as substitutes for or better indicators of the company’s performance than the company’s GAAP results. Management believes presenting income before income taxes and other measures excluding the FOCUS system rollout costs is important for purposes of comparison to prior year results and analyzing each segment’s operating results. In addition, management uses these non-GAAP measures to allocate resources and analyze trends and underlying operating performance of the company. | |
Third quarter 2014 income before income taxes increased $3.0 million, or 13.9%. Excluding FOCUS rollout costs of approximately $1.2 million, income before income taxes increased approximately $4.1 million, or 19.5%. Significant results by segment are detailed as follows:
Income before income taxes increased $3.7 million, or 4.7%, for the nine-month period ended September 28, 2014. Excluding FOCUS system rollout costs of approximately $2.3 million, income before income taxes increased by approximately $6.0 million, or 7.7% for the nine-month period. The increase was primarily due to the same reasons as noted above, except the domestic commissaries segment which decreased approximately $100,000 due to higher insurance costs of approximately $1.1 million and higher costs associated with ongoing commissary initiatives. These decreases were substantially offset by a higher margin.
The effective income tax rates were 30.0% and 32.4% for the three and nine months ended September 28, 2014, representing a decrease of 0.1% for the three-month period and an increase of 0.5% for the nine-month period. Our effective income tax rate may fluctuate from quarter to quarter for various reasons. The higher tax rate for the nine months of 2014 was primarily due to the prior year including both favorable state tax settlements and the reinstatement of certain 2012 tax credits under the American Taxpayer Relief Act of 2012.
The company’s free cash flow, a non-GAAP financial measure, was as follows (in thousands):
Nine Months Ended | ||||||||||||||
Sept. 28, | Sept. 29, | |||||||||||||
2014 | 2013 | |||||||||||||
Net cash provided by operating activities (a) | $ | 84,826 | $ | 74,833 | ||||||||||
Purchases of property and equipment (b) | (37,700 | ) | (38,537 | ) | ||||||||||
Free cash flow | $ | 47,126 | $ | 36,296 | ||||||||||
(a) | The increase of approximately $10.0 million was primarily due to higher net income and favorable changes in working capital and other operating activities including higher depreciation and amortization expense. |
(b) | Purchases of property and equipment were relatively consistent for the nine-month periods. The current year period includes FOCUS hardware costs for domestic company-owned restaurants. The prior year period includes expenditures on equipment for New Jersey commissary dough production as well as technology investments, including 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 discretionary investment, dividends or share repurchases. 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) for additional information concerning our operating results and cash flow for the three and nine months ended September 28, 2014.
FOCUS Update
As previously disclosed, the company is implementing a new, proprietary point-of-sale system (“FOCUS”) in substantially all domestic system-wide restaurants. As of September 28, 2014, we had installed FOCUS in almost 50% of our domestic restaurants, including all company-owned restaurants and almost 800 franchised restaurants. Substantial completion is expected to occur by the end of the first quarter of 2015.
The costs related to implementing FOCUS are projected to decrease income before income taxes by approximately $4.0 million in 2014, or a $0.06 negative impact on diluted earnings per share, as compared to 2013. For the three and nine months ended September 28, 2014, the impact was a $1.2 million and $2.3 million reduction in income before income taxes, or a $0.02 and $0.04 reduction in diluted earnings per share, respectively. For additional information, see the Quarterly Report on Form 10-Q for the three- and nine-month periods ended September 28, 2014.
Global Restaurant Unit Data
At September 28, 2014, there were 4,537 Papa John’s restaurants operating in all 50 states and in 36 international countries and territories, as follows:
Domestic |
Franchised |
Total North |
International | System-wide | ||||||||||||||||
Third Quarter |
||||||||||||||||||||
Beginning - June 29, 2014 | 672 | 2,614 | 3,286 | 1,201 | 4,487 | |||||||||||||||
Opened | 5 | 37 | 42 | 54 | 96 | |||||||||||||||
Closed | (1 | ) | (14 | ) | (15 | ) | (31 | ) | (46 | ) | ||||||||||
Acquired (divested) | 7 | (7 | ) | - | - | - | ||||||||||||||
Ending - September 28, 2014 | 683 | 2,630 | 3,313 | 1,224 | 4,537 | |||||||||||||||
Year-to-date |
||||||||||||||||||||
Beginning - December 29, 2013 | 665 | 2,621 | 3,286 | 1,142 | 4,428 | |||||||||||||||
Opened | 9 | 86 | 95 | 124 | 219 | |||||||||||||||
Closed | (3 | ) | (65 | ) | (68 | ) | (42 | ) | (110 | ) | ||||||||||
Acquired (divested) | 12 | (12 | ) | - | - | - | ||||||||||||||
Ending - September 28, 2014 | 683 | 2,630 | 3,313 | 1,224 | 4,537 | |||||||||||||||
Unit growth | 18 | 9 | 27 | 82 | 109 | |||||||||||||||
% increase | 2.7 | % | 0.3 | % | 0.8 | % | 7.2 | % | 2.5 | % | ||||||||||
Our development pipeline as of September 28, 2014 included approximately 1,300 restaurants (300 units in North America and 1,000 units internationally), the majority of which are scheduled to open over the next six years.
Share Repurchase Activity
In October 2014, the company’s Board of Directors approved a $125 million increase in the amount of common stock that may be purchased under the company’s share repurchase program through December 31, 2015, bringing the total authorized under the program to $1.325 billion since its inception in 1999. Approximately $142.9 million remains available under the company’s share repurchase program as of October 28, 2014.
The following table reflects our repurchases for the three and nine months ended September 28, 2014 and subsequent repurchases through October 28, 2014 (in thousands):
Period |
Number |
Cost | |||||||||
Three Months Ended September 28, 2014 | 756 | $ | 30,848 | ||||||||
Nine Months Ended September 28, 2014 | 2,060 | $ | 94,152 | ||||||||
September 29, 2014 through October 28, 2014 | 240 | $ | 9,851 | ||||||||
There were 41.4 million and 42.0 million diluted weighted average shares outstanding for the three and nine months ended September 28, 2014, representing decreases of 6.3% and 6.1%, respectively, over the prior year comparable periods. Diluted earnings per share increased $0.03 and $0.08, respectively, for the three and nine months ended September 28, 2014 due to the reduction in shares outstanding, primarily resulting from the share repurchase program. Approximately 40.4 million actual shares of the company’s common stock were outstanding as of September 28, 2014.
2014 Guidance Update
The company provided the following 2014 guidance updates:
Updated Guidance | Previous Guidance | ||||||||
Diluted earnings per share (a) | $1.68 to $1.74 | $1.64 to $1.72 | |||||||
North America comparable sales | +5.0% to +7.0% | +4.0% to +6.0% | |||||||
(a) |
Includes the approximate $0.06 per share impact of implementing FOCUS, which was previously estimated to be $0.08 per share. |
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|
Conference Call
A conference call is scheduled for November 5, 2014 at 8:00 a.m. Eastern Time to review our third quarter 2014 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, from the company’s web site at www.papajohns.com. The Conference ID is 17449361.
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.
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 forward-looking statements may relate to projections or guidance concerning business performance, revenue, earnings, contingent liabilities, resolution of litigation, commodity costs, profit margins, unit growth, 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:
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 29, 2013. 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 | Nine Months Ended | |||||||||||||||||||||
Sept. 28, 2014 |
Sept. 29, 2013 | Sept. 28, 2014 | Sept. 29, 2013 | |||||||||||||||||||
(In thousands, except per share amounts) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
North America: | ||||||||||||||||||||||
Domestic company-owned restaurant sales | $ | 169,076 | $ | 152,662 | $ | 517,269 | $ | 465,713 | ||||||||||||||
Franchise royalties | 22,131 | 19,419 | 65,728 | 60,382 | ||||||||||||||||||
Franchise and development fees | 217 | 263 | 493 | 1,028 | ||||||||||||||||||
Domestic commissary sales | 149,224 | 138,044 | 463,852 | 421,941 | ||||||||||||||||||
Other sales | 23,359 | 13,566 | 49,704 | 38,617 | ||||||||||||||||||
International: | ||||||||||||||||||||||
Royalties and franchise and development fees | 6,673 | 5,454 | 18,769 | 15,912 | ||||||||||||||||||
Restaurant and commissary sales | 19,719 | 16,934 | 56,825 | 47,539 | ||||||||||||||||||
Total revenues | 390,399 | 346,342 | 1,172,640 | 1,051,132 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||
Domestic company-owned restaurant expenses: | ||||||||||||||||||||||
Cost of sales | 42,460 | 38,233 | 129,646 | 113,131 | ||||||||||||||||||
Salaries and benefits | 45,835 | 41,701 | 139,223 | 127,026 | ||||||||||||||||||
Advertising and related costs | 15,369 | 14,424 | 46,979 | 43,894 | ||||||||||||||||||
Occupancy costs | 10,344 | 9,583 | 29,101 | 27,233 | ||||||||||||||||||
Other restaurant operating expenses | 25,343 | 23,061 | 75,850 | 68,237 | ||||||||||||||||||
Total domestic company-owned restaurant expenses | 139,351 | 127,002 | 420,799 | 379,521 | ||||||||||||||||||
Domestic commissary expenses: | ||||||||||||||||||||||
Cost of sales | 116,908 | 107,930 | 364,302 | 326,529 | ||||||||||||||||||
Salaries and benefits | 7,208 | 6,173 | 21,079 | 18,273 | ||||||||||||||||||
Other commissary operating expenses | 15,013 | 15,262 | 47,083 | 45,908 | ||||||||||||||||||
Total domestic commissary expenses | 139,129 | 129,365 | 432,464 | 390,710 | ||||||||||||||||||
Other operating expenses | 22,794 | 12,510 | 47,446 | 35,094 | ||||||||||||||||||
International restaurant and commissary expenses | 16,605 | 14,372 | 47,366 | 40,008 | ||||||||||||||||||
General and administrative expenses | 33,671 | 31,780 | 104,199 | 98,064 | ||||||||||||||||||
Other general expenses | 3,143 | 1,260 | 6,640 | 4,042 | ||||||||||||||||||
Depreciation and amortization | 10,520 | 8,605 | 29,539 | 25,672 | ||||||||||||||||||
Total costs and expenses | 365,213 | 324,894 | 1,088,453 | 973,111 | ||||||||||||||||||
Operating income | 25,186 | 21,448 | 84,187 | 78,021 | ||||||||||||||||||
Net interest (expense) income | (968 | ) | (185 | ) | (2,323 | ) | 147 | |||||||||||||||
Income before income taxes | 24,218 | 21,263 | 81,864 | 78,168 | ||||||||||||||||||
Income tax expense | 7,256 | 6,385 | 26,522 | 24,926 | ||||||||||||||||||
Net income before attribution to noncontrolling interests | 16,962 | 14,878 | 55,342 | 53,242 | ||||||||||||||||||
Income attributable to noncontrolling interests | (887 | ) | (602 | ) | (3,208 | ) | (2,510 | ) | ||||||||||||||
Net income attributable to the company | $ | 16,075 | $ | 14,276 | $ | 52,134 | $ | 50,732 | ||||||||||||||
Calculation of income for earnings per share: | ||||||||||||||||||||||
Net income attributable to the company | $ | 16,075 | $ | 14,276 | $ | 52,134 | $ | 50,732 | ||||||||||||||
Increase in noncontrolling interest redemption value | (42 | ) | - | (81 | ) | - | ||||||||||||||||
Net income attributable to participating securities | (77 | ) | - | (295 | ) | - | ||||||||||||||||
Net income attributable to common shareholders | $ | 15,956 | $ | 14,276 | $ | 51,758 | $ | 50,732 | ||||||||||||||
Basic earnings per common share | $ | 0.39 | $ | 0.33 | $ | 1.25 | $ | 1.16 | ||||||||||||||
Diluted earnings per common share | $ | 0.39 | $ | 0.32 | $ | 1.23 | $ | 1.13 | ||||||||||||||
Basic weighted average common shares outstanding | 40,739 | 43,182 | 41,248 | 43,710 | ||||||||||||||||||
Diluted weighted average common shares outstanding | 41,386 | 44,168 | 42,021 | 44,762 | ||||||||||||||||||
Dividends declared per common share | $ | 0.14 | $ | 0.125 | $ | 0.39 | $ | 0.375 | ||||||||||||||
Papa John's International, Inc. and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets | |||||||
September 28, | December 29, | ||||||
2014 | 2013 | ||||||
(In thousands) | (Unaudited) | (Note) | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,148 | $ | 13,670 | |||
Accounts receivable, net | 57,262 | 53,203 | |||||
Notes receivable, net | 6,064 | 3,566 | |||||
Inventories | 34,428 | 23,035 | |||||
Deferred income taxes | 6,924 | 8,004 | |||||
Prepaid expenses and other current assets | 21,696 | 23,562 | |||||
Total current assets | 143,522 | 125,040 | |||||
Property and equipment, net | 218,453 | 212,097 | |||||
Notes receivable, less current portion, net | 12,359 | 13,239 | |||||
Goodwill | 82,689 | 79,391 | |||||
Other assets | 35,158 | 34,524 | |||||
Total assets | $ | 492,181 | $ | 464,291 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 34,273 | $ | 35,653 | |||
Income and other taxes payable | 10,837 | 4,401 | |||||
Accrued expenses and other current liabilities | 52,866 | 57,807 | |||||
Total current liabilities | 97,976 | 97,861 | |||||
Deferred revenue | 4,887 | 5,827 | |||||
Long-term debt | 224,684 | 157,900 | |||||
Deferred income taxes | 12,604 | 14,660 | |||||
Other long-term liabilities | 39,180 | 42,835 | |||||
Total liabilities | 379,331 | 319,083 | |||||
Redeemable noncontrolling interests | 8,970 | 7,024 | |||||
Total stockholders' equity | 103,880 | 138,184 | |||||
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ | 492,181 | $ | 464,291 | |||
Note: The Condensed Consolidated Balance Sheet has been derived from the audited consolidated financial statements, 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. |
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Papa John's International, Inc. and Subsidiaries | |||||||||||
Consolidated Statements of Cash Flows | |||||||||||
Nine Months Ended | |||||||||||
(In thousands) | September 28, 2014 | September 29, 2013 | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
Operating activities | |||||||||||
Net income before attribution to noncontrolling interests | $ | 55,342 | $ | 53,242 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||
Provision for uncollectible accounts and notes receivable | 1,714 | 1,130 | |||||||||
Depreciation and amortization | 29,539 | 25,672 | |||||||||
Deferred income taxes | 7,687 | 6,994 | |||||||||
Stock-based compensation expense | 5,958 | 5,642 | |||||||||
Excess tax benefit on equity awards | (8,493 | ) | (4,108 | ) | |||||||
Other | 3,916 | 1,260 | |||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable | (6,861 | ) | (4,666 | ) | |||||||
Inventories | (9,792 | ) | (740 | ) | |||||||
Prepaid expenses and other current assets | 2,148 | 281 | |||||||||
Other assets and liabilities | 3,887 | (3,254 | ) | ||||||||
Accounts payable | (1,380 | ) | 1,457 | ||||||||
Income and other taxes payable | 6,434 | (4,511 | ) | ||||||||
Accrued expenses and other current liabilities | (5,163 | ) | (3,217 | ) | |||||||
Deferred revenue | (110 | ) | (349 | ) | |||||||
Net cash provided by operating activities | 84,826 | 74,833 | |||||||||
Investing activities | |||||||||||
Purchases of property and equipment | (37,700 | ) | (38,537 | ) | |||||||
Loans issued | (5,221 | ) | (3,830 | ) | |||||||
Repayments of loans issued | 3,371 | 3,687 | |||||||||
Acquisitions, net of cash acquired | (4,264 | ) | - | ||||||||
Other | 25 | 324 | |||||||||
Net cash used in investing activities | (43,789 | ) | (38,356 | ) | |||||||
Financing activities | |||||||||||
Net proceeds on line of credit facility | 66,784 | 31,742 | |||||||||
Cash dividends paid | (16,119 | ) | (5,414 | ) | |||||||
Excess tax benefit on equity awards | 8,493 | 4,108 | |||||||||
Tax payments for equity award issuances | (7,540 | ) | (1,862 | ) | |||||||
Proceeds from exercise of stock options | 4,752 | 4,193 | |||||||||
Acquisition of Company common stock | (94,152 | ) | (69,137 | ) | |||||||
Contributions from noncontrolling interest holders | 1,086 | 850 | |||||||||
Distributions to noncontrolling interest holders | (1,200 | ) | (3,200 | ) | |||||||
Other | 423 | (501 | ) | ||||||||
Net cash used in financing activities | (37,473 | ) | (39,221 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (86 | ) | 37 | ||||||||
Change in cash and cash equivalents | 3,478 | (2,707 | ) | ||||||||
Cash and cash equivalents at beginning of period | 13,670 | 16,396 | |||||||||
Cash and cash equivalents at end of period | $ | 17,148 | $ | 13,689 |
CONTACT:
Papa John’s International, Inc.
Lance Tucker,
502-261-4218
Chief Financial Officer