10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 26, 2017

OR

☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

At April 25, 2017, there were outstanding 36,766,262 shares of the registrant’s common stock, par value $0.01 per share.

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets — March 26, 2017 and December 25, 2016	3
	Condensed Consolidated Statements of Income — Three months ended March 26, 2017 and March 27, 2016	4
	Consolidated Statements of Comprehensive Income — Three months ended March 26, 2017 and March 27, 2016	5
	Consolidated Statements of Cash Flows — Three months ended March 26, 2017 and March 27, 2016	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6.	Exhibits	23

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	March 26,		December 25,
(In thousands, except per share amounts)	2017		2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	22,715	$	15,563
Accounts receivable, net		60,586		59,691
Notes receivable, net		3,626		3,417
Income taxes receivable		—		2,372
Inventories		22,711		25,132
Prepaid expenses		20,534		24,105
Other current assets		9,365		9,038
Assets held for sale		6,031		6,257
Total current assets		145,568		145,575
Property and equipment, net		230,765		230,473
Notes receivable, less current portion net		10,443		10,141
Goodwill		85,787		85,529
Deferred income taxes		212		769
Other assets		43,674		40,078
Total assets	$	516,449	$	512,565
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	37,362	$	42,701
Income and other taxes payable		16,357		8,540
Accrued expenses and other current liabilities		66,705		76,789
Total current liabilities		120,424		128,030
Deferred revenue		3,157		3,313
Long-term debt, net		294,332		299,820
Deferred income taxes		10,559		10,047
Other long-term liabilities		56,704		53,093
Total liabilities		485,176		494,303
Redeemable noncontrolling interests		8,735		8,461
Stockholders’ equity:
Preferred stock ($0.01 par value per share; no shares issued)		—		—
Common stock ($0.01 par value per share; issued 44,151 at March 26, 2017 and 44,066 at December 25, 2016)		441		441
Additional paid-in capital		174,364		172,573
Accumulated other comprehensive loss		(5,796)		(5,887)
Retained earnings		240,870		219,278
Treasury stock (7,497 shares at March 26, 2017 and 7,383 shares at December 25, 2016, at cost)		(401,029)		(390,316)
Total stockholders’ equity (deficit), net of noncontrolling interests		8,850		(3,911)
Noncontrolling interests in subsidiaries		13,688		13,712
Total stockholders’ equity		22,538		9,801
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	516,449	$	512,565

See accompanying notes.

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Papa John’s International, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

	Three months ended
(In thousands, except per share amounts)	March 26, 2017		March 27, 2016
Revenues:
Domestic Company-owned restaurant sales	$	206,896	$	205,679
North America franchise royalties and fees		27,607		26,476
North America commissary and other sales		186,245		168,985
International		28,518		27,455
Total revenues		449,266		428,595
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below):
Domestic Company-owned restaurant expenses		165,419		161,310
North America commissary and other expenses		173,712		156,806
International expenses		17,990		17,590
General and administrative expenses		38,007		40,247
Depreciation and amortization		10,457		9,744
Total costs and expenses		405,585		385,697
Operating income		43,681		42,898
Net interest expense		(1,810)		(1,489)
Income before income taxes		41,871		41,409
Income tax expense		11,972		13,358
Net income before attribution to noncontrolling interests		29,899		28,051
Income attributable to noncontrolling interests		(1,471)		(1,869)
Net income attributable to the Company	$	28,428	$	26,182
Calculation of income for earnings per share:
Net income attributable to the Company	$	28,428	$	26,182
Change in noncontrolling interest redemption value		520		220
Net income attributable to participating securities		(117)		(110)
Net income attributable to common shareholders	$	28,831	$	26,292
Basic earnings per common share	$	0.78	$	0.69
Diluted earnings per common share	$	0.77	$	0.69
Basic weighted average common shares outstanding		36,810		37,931
Diluted weighted average common shares outstanding		37,350		38,297
Dividends declared per common share	$	0.20	$	0.175

See accompanying notes.

4

Papa John’s International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
(In thousands)	March 26, 2017		March 27, 2016
Net income before attribution to noncontrolling interests	$	29,899	$	28,051
Other comprehensive income (loss), before tax:
Foreign currency income (loss) adjustments		613		(2,071)
Interest rate swaps (1)		(468)		(3,289)
Other comprehensive income (loss), before tax		145		(5,360)
Income tax effect:
Foreign currency translation adjustments		(227)		766
Interest rate swaps (2)		173		1,217
Income tax effect		(54)		1,983
Other comprehensive income (loss), net of tax		91		(3,377)
Comprehensive income before attribution to noncontrolling interests		29,990		24,674
Comprehensive loss, redeemable noncontrolling interests		(794)		(1,244)
Comprehensive loss, nonredeemable noncontrolling interests		(677)		(625)
Comprehensive income attributable to the Company	$	28,519	$	22,805

(1) Amounts reclassified out of accumulated other comprehensive income (loss) into net interest expense included $198 for the three months ended March 26, 2017 and $317 for the three months ended March 27, 2016.

(2) The income tax effects of amounts reclassified out of accumulated other comprehensive income (loss) into net interest expense were $73 for the three months ended March 26, 2017 and $117 for the three months ended March 27, 2016.

See accompanying notes.

5

Papa John’s International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
(In thousands)	March 26, 2017		March 27, 2016
Operating activities
Net income before attribution to noncontrolling interests	$	29,899	$	28,051
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for uncollectible accounts and notes receivable		(417)		216
Depreciation and amortization		10,457		9,744
Deferred income taxes		1,015		7,141
Stock-based compensation expense		2,736		2,172
Other		769		1,101
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(1,048)		6,457
Income taxes receivable		2,372		4,107
Inventories		2,425		(612)
Prepaid expenses		3,574		1,938
Other current assets		(134)		(314)
Other assets and liabilities		(1,577)		(614)
Accounts payable		(5,239)		(10,007)
Income and other taxes payable		7,817		277
Accrued expenses and other current liabilities		(5,164)		(16,738)
Deferred revenue		(156)		934
Net cash provided by operating activities		47,329		33,853
Investing activities
Purchases of property and equipment		(15,064)		(10,249)
Loans issued		(715)		(917)
Repayments of loans issued		863		1,275
Acquisitions, net of cash acquired		(21)		(11,202)
Other		7		159
Net cash used in investing activities		(14,930)		(20,934)
Financing activities
Net (repayments) proceeds from issuance of long-term debt		(5,575)		61,500
Cash dividends paid		(7,354)		(6,628)
Tax payments for equity award issuances		(2,259)		(5,670)
Proceeds from exercise of stock options		3,248		922
Acquisition of Company common stock		(13,075)		(66,033)
Distributions to noncontrolling interest holders		(702)		(980)
Other		396		294
Net cash used in financing activities		(25,321)		(16,595)
Effect of exchange rate changes on cash and cash equivalents		74		(58)
Change in cash and cash equivalents		7,152		(3,734)
Cash and cash equivalents at beginning of period		15,563		21,006
Cash and cash equivalents at end of period	$	22,715	$	17,272

See accompanying notes.

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Papa John’s International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 26, 2017

1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 26, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc. (referred to as the “Company”, “Papa John’s” or in the first person notations of “we”, “us” and “our”) for the year ended December 25, 2016.

2.Significant Accounting Policies

Noncontrolling Interests

Papa John’s has five joint venture arrangements in which there are noncontrolling interests held by third parties. These joint ventures include 223 restaurants at March 26, 2017 and 213 restaurants at March 27, 2016. We are required to report the consolidated net income at amounts attributable to the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the condensed consolidated statements of income attributable to the noncontrolling interest holder.

The income before income taxes attributable to these joint ventures for the three months ended March 26, 2017 and March 27, 2016 was as follows (in thousands):

	March 26,		March 27,
	2017		2016
Papa John’s International, Inc.	$	2,362	$	2,760
Noncontrolling interests		1,471		1,869
Total income before income taxes	$	3,833	$	4,629

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The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements:

Type of Joint Venture Arrangement	Location within the  Balance Sheets	Recorded Value
Joint venture with no redemption feature	Permanent equity	Carrying value
Option to require the Company to purchase the noncontrolling interest - currently redeemable	Temporary equity	Redemption value*
Option to require the Company to purchase the noncontrolling interest - not currently redeemable	Temporary equity	Carrying value

*The change in redemption value is recorded as an adjustment to “Redeemable noncontrolling interests” and “Retained earnings” in the condensed consolidated balance sheets.

Deferred Income Tax Accounts and Tax Reserves

We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. Discrete items are recorded in the quarter in which they occur.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. As a result, our effective tax rate may fluctuate. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. As of March 26, 2017, we had a net deferred tax liability of approximately $10.3 million.

Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.

Fair Value Measurements and Disclosures

The Company is required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash, accounts receivable and accounts payable. The carrying value of our notes receivable net of allowances also approximates fair value. The fair value of the amount outstanding under our revolving credit facility approximates its carrying value due to its variable market-based interest rate. These assets and liabilities are categorized as Level 1 as defined below.

Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following categories:

· Level 1: Quoted market prices in active markets for identical assets or liabilities.

· Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

· Level 3: Unobservable inputs that are not corroborated by market data.

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Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 26, 2017 and December 25, 2016 are as follows (in thousands):

	Carrying		Fair Value Measurements
	Value		Level 1		Level 2		Level 3
March 26, 2017
Financial assets:
Cash surrender value of life insurance policies (a)	$	24,238	$	24,238	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		1,238		—		1,238		—
December 25, 2016
Financial assets:
Cash surrender value of life insurance policies (a)	$	21,690	$	21,690	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		770		—		770		—

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

(b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”).

Our assets and liabilities that were measured at fair value on a non-recurring basis as of March 26, 2017 and December 25, 2016 include assets held for sale.  The fair value was determined using a discounted cash flow model with unobservable inputs (Level 3) less estimated selling costs.  No impairment loss was recorded for these assets held for sale for the three months ended March 26, 2017.

There were no transfers among levels within the fair value hierarchy during the three months ended March 26, 2017.

Variable Interest Entity

Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF is a variable interest entity as it does not have sufficient equity to fund its operations without ongoing financial support and contributions from its members. Based on the ownership and governance structure and operating procedures of PJMF, we have determined that we do not have the power to direct the most significant activities of PJMF and therefore are not the primary beneficiary. Accordingly, consolidation of PJMF is not appropriate.

Accounting Standards Adopted

Employee Share-Based Payments

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The guidance simplified the accounting and financial reporting of the income tax impact of stock-based compensation arrangements.  This guidance requires excess tax benefits to be recorded as a discrete item within income tax expense rather than additional paid-in capital.  In addition, excess tax benefits are required to be classified as cash from operating activities rather than cash from financing activities. 

The Company adopted this guidance as of the beginning of fiscal 2017.  The Company elected to apply the cash flow guidance of ASU 2016-09 retrospectively to all prior periods.  The impact of retrospectively applying this guidance to the consolidated statement of cash flows for the three months ended March 27, 2016 was a $3.9 million increase in net

9

cash provided by operating activities and a corresponding increase in net cash used in financing activities.  The Company elected to continue to estimate forfeitures, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.

Accounting Standards to be Adopted in Future Periods

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases,” (“ASU 2016-02”) which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital leases (financing) with lease terms greater than twelve months.  The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs.  For income statement purposes, leases will continue to be classified as operating or capital (financing) with lease expense in both cases calculated substantially the same as under the prior leasing guidance. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 (fiscal 2019 for the Company), and early adoption is permitted.  The Company has not yet determined the effect of the adoption on its condensed consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”), a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. This update requires companies to recognize revenue at amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services at the time of transfer. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. Such estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies can either apply a full retrospective adoption or a modified retrospective adoption. In March and April 2016, the FASB issued the following amendments to clarify the implementation guidance: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”.

We are required to adopt ASU 2014-09 in the first quarter of 2018.   We do not expect the adoption will significantly impact our recognition of revenue from Company-owned restaurants, commissary sales or our continuing royalties or other fees from franchisees that are based on a percentage of the franchise sales.  We are continuing to evaluate the impact on other less significant transactions including our loyalty program and the timing of recognizing franchise and development fees. We are also currently evaluating the method of adoption and the impact adoption will have on our related financial statement disclosures.

3.Calculation of Earnings Per Share

We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. We consider time-based restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights. Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to the Company in determining net income attributable to common shareholders.

Additionally,  the change in the redemption value for the noncontrolling interest of one of our joint ventures increases or decreases income attributable to common shareholders.

10

The calculations of basic and diluted earnings per common share are as follows (in thousands, except per-share data):

	Three Months Ended
	March 26,		March 27,
	2017		2016
Basic earnings per common share:
Net income attributable to the Company	$	28,428	$	26,182
Change in noncontrolling interest redemption value		520		220
Net income attributable to participating securities		(117)		(110)
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Basic earnings per common share	$	0.78	$	0.69
Diluted earnings per common share:
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Dilutive effect of outstanding equity awards (a)		540		366
Diluted weighted average common shares outstanding		37,350		38,297
Diluted earnings per common share	$	0.77	$	0.69

(a) Excludes 117 and 476 awards for the three months ended March 26, 2017 and March 27, 2016, respectively, as the effect of including such awards would have been antidilutive.

4.Acquisition of Restaurants

In the first quarter of 2016, we completed the acquisition of 20 franchised Papa John’s restaurants located in Alabama, Florida and Kentucky in two separate transactions with an aggregate purchase price of $11.2 million. These acquisitions were accounted for by the purchase method of accounting, whereby operating results subsequent to the acquisition date are included in our consolidated financial results.

The aggregate final purchase price of the 2016 acquisitions has been allocated as follows (in thousands):

Property and equipment	$	1,028
Franchise rights		1,230
Goodwill		8,837
Other		107
Total purchase price	$	11,202

The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill for the domestic Company-owned restaurants segment and is eligible for deduction over 15 years under U.S. tax regulations. 

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5.Debt

Long-term debt, net consists of the following (in thousands):

		March 26,		December 25,
		2017		2016
Outstanding debt	$	295,000	$	300,575
Debt issuance costs		(668)		(755)
Total long-term debt, net	$	294,332	$	299,820

Our outstanding debt is comprised entirely of a $500 million unsecured revolving line of credit (“Credit Facility”) with an expiration date of October 31, 2019. Including outstanding letters of credit, the remaining availability under the Credit Facility was approximately $176.6 million as of March 26, 2017.

The interest rate charged on outstanding balances is LIBOR plus 75 to 175 basis points. The commitment fee on the unused balance ranges from 15 to 25 basis points.

The Credit Facility contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of specified fixed charges and leverage ratios. At March 26, 2017, we were in compliance with these covenants.

We attempt to minimize interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative financial instruments. Our swaps are entered into with financial institutions and have reset dates and critical terms that match those of our existing debt and the anticipated critical terms of future debt. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract.

As of March 26, 2017, we have the following interest rate swap agreements, including three forward starting swaps executed in 2015 that become effective in 2018 upon expiration of the two existing swaps for $125 million:

Effective Dates	Floating Rate Debt			Fixed Rates
July 30, 2013 through April 30, 2018	$	75	million	1.42	%
December 30, 2014 through April 30, 2018	$	50	million	1.36	%
April 30, 2018 through April 30, 2023	$	55	million	2.33	%
April 30, 2018 through April 30, 2023	$	35	million	2.36	%
April 30, 2018 through April 30, 2023	$	35	million	2.34	%

The weighted average interest rates on the Credit Facility, including the impact of the interest rate swap agreements, were 2.2% and 2.1% for the three months ended March 26, 2017 and March 27, 2016, respectively. Interest paid, including payments made or received under the swaps, was $1.9 million and $1.6 million for the three months ended March 26, 2017 and March 27, 2016, respectively. As of March 26, 2017, the portion of the aggregate $1.2 million interest rate swap liability that would be reclassified into earnings during the next twelve months as interest expense approximates $200,000.

6.Segment Information

We have five reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and “all other” units. The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants in the United States and Canada. The North America franchising segment consists of our franchise sales and support activities

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and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international operations segment principally consists of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as our “all other” segment, which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.

Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or actual estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation.

Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues.

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Our segment information is as follows (in thousands):

(In thousands)	March 26, 2017		March 27, 2016
Revenues from external customers:
Domestic Company-owned restaurants	$	206,896	$	205,679
North America commissaries		171,340		155,954
North America franchising		27,607		26,476
International		28,518		27,455
All others		14,905		13,031
Total revenues from external customers	$	449,266	$	428,595
Intersegment revenues:
North America commissaries	$	61,736	$	58,326
North America franchising		764		713
International		63		65
All others		5,026		4,097
Total intersegment revenues	$	67,589	$	63,201
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	15,487	$	20,187
North America commissaries		12,244		11,546
North America franchising		24,875		23,580
International		4,344		3,038
All others		(166)		51
Unallocated corporate expenses		(15,755)		(16,332)
Elimination of intersegment profit and losses		842		(661)
Total income before income taxes	$	41,871	$	41,409
Property and equipment:
Domestic Company-owned restaurants	$	226,420
North America commissaries		130,475
International		16,426
All others		57,163
Unallocated corporate assets		195,321
Accumulated depreciation and amortization		(395,040)
Net property and equipment	$	230,765

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s” or in the first person notations of “we,” “us” and “our”) began operations in 1984. At March 26, 2017, there were 5,082 Papa John’s restaurants (746 Company-owned and 4,336 franchised) operating in all 50 states and 45 international countries and territories. Our revenues are principally derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, sales of franchise and development rights, sales to franchisees of food and paper products, printing and promotional items, and information systems and related services used in their operations.

The results of operations are based on the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of consolidated financial statements requires management to select accounting policies for critical accounting areas and make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Significant changes in assumptions and/or conditions in our critical accounting policies could materially impact our operating results. See “Notes 1 and 2” of “Notes to Condensed Consolidated Financial Statements” for a discussion of the basis of presentation and the significant accounting policies.

Restaurant Progression

	Three Months Ended
	March 26, 2017		March 27, 2016
North America Company-owned:
Beginning of period		702		707
Opened		2		2
Acquired		1		20
End of period		705		729
International Company-owned:
Beginning of period		42		45
Closed		(1)		(1)
End of period		41		44
North America franchised:
Beginning of period		2,739		2,681
Opened		15		18
Closed		(30)		(18)
Divested		(1)		(20)
End of period		2,723		2,661
International franchised:
Beginning of period		1,614		1,460
Opened		38		24
Closed		(39)		(15)
End of period		1,613		1,469
Total restaurants - end of period		5,082		4,903

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Results of Operations

Review of Consolidated Operating Results

Revenues. Domestic Company-owned restaurant sales were $206.9 million in the first quarter of 2017, an increase of $1.2 million, or 0.6%, compared to the first quarter of 2016, primarily due to a 3.0% increase in comparable sales.  This was somewhat offset by a 2.4% decrease in equivalent units due to the refranchising of 42 restaurants in the fourth quarter of 2016. “Comparable sales” represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. “Equivalent units” represents the number of restaurants open at the beginning of a given period, adjusted for restaurants opened, closed, acquired or sold during the period on a weighted average basis. 

North America franchise royalties and fees were $27.6 million in the first quarter of 2017, an increase of $1.1 million, or 4.3%, compared to the first quarter of 2016. The increase was primarily due to a 1.7% increase in comparable sales and a 2.6% increase in equivalent units. North America franchise restaurant sales increased 4.1% to $587.4 million for the first quarter of 2017. The increase is primarily due to the increase in comparable sales and equivalent units noted above.  Franchise restaurant sales are not included in Company revenues; however, our North America franchise royalties are derived from these sales.

North America commissary and other sales were $186.2 million in the first quarter of 2017, an increase of $17.3 million, or 10.2%, compared to the first quarter of 2016. The increase was primarily due to higher commissary sales from an increase in volumes and the impact of higher commodities, primarily cheese. 

International revenues were $28.5 million in the first quarter of 2017, an increase of $1.1 million, or 3.9%, compared to the first quarter of 2016.  This increase was net of the negative impact of foreign currency exchange rates of approximately $3.1 million.  The increase was primarily due to an increase in the number of restaurants and a 6.0% increase in comparable sales, calculated on a constant dollar basis.  This increase was partially offset by lower China Company-owned restaurant revenues primarily due to negative comparable sales and fewer restaurants.   International franchise restaurant sales increased 14.0% to $175.9 million in the first quarter of 2017. International franchise restaurant sales are not included in Company revenues; however, our international royalty revenue is derived from these sales.

Costs and expenses.  The operating margin for domestic Company-owned restaurants was 20.0% in the first quarter of 2017 compared to 21.6% in the first quarter of 2016, and consisted of the following (dollars in thousands):

	Three Months Ended
	March 26, 2017			March 27, 2016
Restaurant sales	$	206,896		$	205,679
Cost of sales		46,912	22.7%		47,201	22.9%
Other operating expenses		118,507	57.3%		114,109	55.5%
Total expenses	$	165,419	80.0%	$	161,310	78.4%
Margin	$	41,477	20.0%	$	44,369	21.6%

Domestic Company-owned restaurants cost of sales approximated the prior year comparable period. Domestic restaurants other operating expenses were approximately 1.8% higher as a percentage of sales primarily due to increased labor costs including higher minimum wages, higher non-owned automobile claims costs, and increased mileage reimbursement costs from higher fuel prices.  

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North America commissary and other margin was 6.7% in the first quarter of 2017 compared to 7.2% in the first quarter of 2016 and consisted of the following (dollars in thousands):

		Three Months Ended
	March 26, 2017							March 27, 2016
		Revenues		Expenses		Margin $	Margin %		Revenues		Expenses		Margin $	Margin %
North America commissary	$	171,340	$	159,957	$	11,383	6.6%	$	155,954	$	144,573	$	11,381	7.3%
All others		14,905		13,755		1,150	7.7%		13,031		12,233		798	6.1%
North America commissary and other	$	186,245	$	173,712	$	12,533	6.7%	$	168,985	$	156,806	$	12,179	7.2%

North America commissary margin was 0.7% lower primarily due to higher delivery costs including higher driver labor and higher fuel costs.  The “All others” margin was 1.6% higher in the first quarter of 2017 primarily due to improved operating results for our online and mobile ordering business.

The international operating margin was 36.9% in the first quarter of 2017 compared to 35.9% in the first quarter of 2016 and consisted of the following (dollars in thousands):

	Three Months Ended
	March 26, 2017								March 27, 2016
		Revenues		Expenses		Margin $	Margin %		Revenues		Expenses		Margin $	Margin %
Franchise royalties and fees	$	7,936	$	-	$	7,936		$	6,868	$	-	$	6,868
Restaurant, commissary and other		20,582		17,990		2,592	12.6%		20,587		17,590		2,997	14.6%
Total international	$	28,518	$	17,990	$	10,528	36.9%	$	27,455	$	17,590	$	9,865	35.9%

The higher margin was primarily due to an increase in franchise royalties and fees due to an increase in the number of restaurants and comparable sales of 6.0%.  This increase was partially offset by a lower commissary margin in 2017 which was planned.

General and administrative (“G&A”) expenses were $38.0 million, or 8.5% of revenues in the first quarter of 2017, compared to $40.2 million, or 9.4% of revenues in the first quarter of 2016. The decrease of $2.2 million was primarily due to the following:

· Corporate G&A costs decreased primarily due to a decrease in bad debt expense.

· Domestic Company-owned restaurant supervisor bonuses decreased due to lower operating results.

· North America franchise incentive costs were lower.

· International G&A costs decreased primarily due to the timing of advertising spend.

Depreciation and amortization. Depreciation and amortization was $10.5 million, or 2.3% of revenues in the first quarter of 2017, compared to $9.7 million, or 2.3% of revenues in the first quarter of 2016.

Net interest expense. Net interest expense increased approximately $300,000 in the first quarter of 2017 compared to the first quarter of 2016 primarily due to a higher average outstanding debt balance and higher interest rate.

Total income before income taxes. Total income before income taxes increased approximately $500,000, or 1.1%, in the first quarter of 2017 as compared to the first quarter of 2016. The increase is attributable primarily to the factors affecting our revenues and costs and expenses described above.

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Income tax expense.  The effective income tax rate was 28.6% in the first quarter of 2017 compared to 32.3% in the first quarter of 2016.  This decrease was primarily due to the adoption of new accounting guidance for share-based compensation in the first quarter of 2017.  This guidance requires excess tax benefits recognized on stock based awards to be recorded as a reduction of income tax expense rather than equity.  The impact of this adoption decreased our effective tax rate by 3.2%.

Diluted earnings per share. Diluted earnings per share was $0.77 in the first quarter of 2017 compared to $0.69 in the first quarter of 2016, an increase of $0.08, or 11.6%  primarily due to an increase in net income and a decrease in shares outstanding.  Diluted earnings per share was favorably impacted by approximately $0.03 due to the adoption of the new guidance for accounting for share-based compensation.  Excluding the impact of this adoption, diluted earnings per share would have increased 7.2% compared to first quarter 2016.

Liquidity and Capital Resources

Debt

Our debt is comprised entirely of a $500 million unsecured revolving line of credit (“Credit Facility”) with outstanding balances of $295.0 million as of March 26, 2017 and $300.6 million as of December 25, 2016.

The interest rate charged on outstanding balances is LIBOR plus 75 to 175 basis points. The commitment fee on the unused balance ranges from 15 to 25 basis points. The spread over LIBOR and the commitment fee are determined quarterly based upon the ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined by the Credit Facility. The remaining availability under the Credit Facility, reduced for outstanding letters of credit, was approximately $176.6 million as of March 26, 2017.

As of March 26, 2017, we have the following interest rate swap agreements, including three forward starting swaps executed in 2015 that become effective in 2018 upon expiration of the two existing swaps for $125 million:

Effective Dates	Floating Rate Debt		Fixed Rates
July 30, 2013 through April 30, 2018	$	75 million	1.42	%
December 30, 2014 through April 30, 2018	$	50 million	1.36	%
April 30, 2018 through April 30, 2023	$	55 million	2.33	%
April 30, 2018 through April 30, 2023	$	35 million	2.36	%
April 30, 2018 through April 30, 2023	$	35 million	2.34	%

Our Credit Facility contains affirmative and negative covenants, including the following financial covenants, as defined by the Credit Facility:

		Actual Ratio for the
		Quarter Ended
	Permitted Ratio	March 26, 2017
Leverage Ratio	Not to exceed 3.0 to 1.0	1.5 to 1.0
Interest Coverage Ratio	Not less than 3.5 to 1.0	4.8 to 1.0

Our leverage ratio is defined as outstanding debt divided by consolidated EBITDA for the most recent four fiscal quarters. Our interest coverage ratio is defined as the sum of consolidated EBITDA and consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in compliance with all covenants as of March 26, 2017.

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Cash Flows

Cash flow provided by operating activities was $47.3 million for the three months ended March 26, 2017, compared to $33.9 million for the same period in 2016. The increase of approximately $13.5 million was primarily due to the payment of approximately $12.5 million in the first quarter of 2016 for a legal settlement and higher net income.

Our free cash flow, a non-GAAP financial measure, was as follows for the three months ended March 26, 2017 and March 27, 2016 (in thousands): 

	Three Months Ended
	March 26,		March 27,
	2017		2016
Net cash provided by operating activities	$	47,329	$	33,853
Purchases of property and equipment		(15,064)		(10,249)
Free cash flow (a)	$	32,265	$	23,604

(a) Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities (from the consolidated statements of cash flows) less the purchases 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 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 our performance than the Company’s GAAP measures.

Cash flow used in investing activities was $14.9 million for the three months ended March 26, 2017, compared to $20.9 million for the same period in 2016, or a decrease of $6.0 million. The decrease in cash flow used in investing activities was primarily due to the acquisition of 20 restaurants from franchisees in the first quarter of 2016 offset by construction costs for our new domestic commissary in Georgia, which will open in mid-2017.

We also require capital for share repurchases and the payment of cash dividends, which are funded by cash flow from operations and borrowings on our Credit Facility. We repurchased $13.1 million and $66.0 million of common stock for the three months ended March 26, 2017 and March 27, 2016, respectively. Subsequent to March 26, 2017, through April 25, 2017, we repurchased an additional $3.9 million of common stock. As of April 25, 2017, $120.3 million remained available for repurchase under our Board of Directors’ authorization.

We paid cash dividends of $7.4 million ($0.20 per common share) and $6.6 million ($0.175 per common share) for the three months ended March 26, 2017 and March 27, 2016, respectively. Subsequent to the first quarter on April 27, 2017, our Board of Directors declared a second quarter dividend of $0.20 per common share (approximately $7.4 million based on current shareholders of record). The dividend will be paid on May 19, 2017 to shareholders of record as of the close of business on May 8, 2017. The declaration and payment of any future dividends will be at the discretion of our Board of Directors, subject to the Company’s financial results, cash requirements, and other factors deemed relevant by our Board of Directors.

Forward-Looking Statements

Certain matters discussed in this report, including information within Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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, 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.

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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, or geopolitical or other disruptions beyond our control;

· increased risks associated with our international operations, including economic and political conditions, instability or uncertainty in our international markets, especially emerging markets, fluctuations in currency exchange rates, 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, proposed or future legislation that could impact 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;

· 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; and

· changes in GAAP, including new standards for accounting for share-based compensation that may result in changes to our net income. Based on recent share prices, the impact of the 2017 adoption of this guidance would be favorable throughout 2017.

For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K for the year ended December 25, 2016, as well as subsequent filings. 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.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our debt is comprised entirely of a $500 million Credit Facility with outstanding balances of $295.0 million as of March 26, 2017 and $300.6 million as of December 25, 2016, and a maturity date of October 31, 2019.  The interest rate charged on outstanding balances is LIBOR plus 75 to 175 basis points. The commitment fee on the unused balance ranges from 15 to 25 basis points.

We attempt to minimize interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative financial instruments. Our swaps are entered into with financial institutions and have reset dates and critical terms that match those of our existing debt and the anticipated critical terms of future debt. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract.

As of March 26, 2017, we have the following interest rate swap agreements, including three forward starting swaps executed in 2015 that become effective in 2018 upon expiration of the two existing swaps for $125 million:

Effective Dates	Floating Rate Debt		Fixed Rates
July 30, 2013 through April 30, 2018	$	75 million	1.42	%
December 30, 2014 through April 30, 2018	$	50 million	1.36	%
April 30, 2018 through April 30, 2023	$	55 million	2.33	%
April 30, 2018 through April 30, 2023	$	35 million	2.36	%
April 30, 2018 through April 30, 2023	$	35 million	2.34	%

The weighted average interest rate on the Credit Facility, including the impact of the interest rate swap agreements, was 2.2% as of March 26, 2017. An increase in the present interest rate of 100 basis points on the Credit Facility balance outstanding as of March 26, 2017, including the impact of the interest rate swaps, would increase interest expense by $1.7 million.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate fluctuations from our operations outside of the United States, which can adversely impact our revenues, net income and cash flows. Our international operations principally consist of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. For each of the periods presented, between 6% and 7% of our revenues were derived from these operations.

We have not historically hedged our exposure to foreign currency fluctuations. Foreign currency exchange rate fluctuations had a negative impact on our revenues of approximately $3.1 million and $1.9 million for the three months ended March 26, 2017 and March 27, 2016, respectively.  Foreign currency exchange rate fluctuations had no significant impact on income before income taxes for the three months ended March 26, 2017 and a negative impact on our income before income taxes of $700,000 for the three months ended March 27, 2016. 

The recent referendum in the United Kingdom, the outcome of which was a vote to leave the European Union known as Brexit, has resulted in exchange rate fluctuations.  The future impact of Brexit on our franchise operations included in the European Union could also include but may not be limited to additional currency volatility and future trade, tariff, and regulatory changes.  As of March 26, 2017, six of our 45 international country operations are included in the European Union.

Commodity Price Risk

In the ordinary course of business, the food and paper products we purchase, including cheese (our largest individual food cost item), are subject to seasonal fluctuations, weather, availability, demand and other factors that are beyond our

21

control. We have pricing agreements with some of our vendors, including forward pricing agreements for a portion of our cheese purchases for our domestic Company-owned restaurants, which are accounted for as normal purchases; however, we still remain exposed to on-going commodity volatility.

The following table presents the actual average block price for cheese by quarter through the first quarter of 2017 and the projected average block price for cheese by quarter through 2017 (based on the April 25, 2017 Chicago Mercantile Exchange cheese futures market prices):

	2017			2016
	Projected			Actual
	Block Price			Block Price
Quarter 1	$	1.613		$	1.473
Quarter 2		1.523			1.405
Quarter 3		1.684			1.691
Quarter 4		1.711			1.718
Full Year	$	1.633	*	$	1.572

*The full year estimate is based on futures prices and does not include the impact of forward pricing agreements we have for a portion of our cheese purchases for our domestic Company-owned restaurants.  Additionally, the price charged to restaurants can vary somewhat by quarter from the actual block price based upon our monthly pricing mechanism.

Item 4.Controls and Procedures

Under the supervision and with the participation of the Company’s management, including its chief executive officer and chief financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, the chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

During the most recently completed fiscal quarter, there was no change made in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is involved in a number of lawsuits, claims, investigations and proceedings consisting of intellectual property, employment, consumer, commercial and other matters arising in the ordinary course of business. In accordance with Accounting Standards Codification 450, “Contingencies”, the Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company’s consolidated financial statements. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case.

Item 1A. Risk Factors

There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Our Board of Directors has authorized the repurchase of up to $1.575 billion of common stock under a share repurchase program that began on December 9, 1999 and expires on February 28, 2018. Through March 26, 2017, a total of 109.7 million shares with an aggregate cost of $1.5 billion and an average price of $13.22 per share have been repurchased under this program. Subsequent to March 26, 2017, through April 25, 2017, we acquired an additional 49,000 shares at

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an aggregate cost of $3.9 million. As of April 25, 2017, approximately $120.3 million remained available for repurchase of common stock under this authorization.

The following table summarizes our repurchases by fiscal period during the three months ended March 26, 2017 (in thousands, except per-share amounts):

				Total Number	Maximum Dollar
	Total	Average		of Shares Purchased	Value of Shares
	Number	Price		as Part of Publicly	that May Yet Be
	of Shares	Paid per		Announced Plans	Purchased Under the
Fiscal Period	Purchased	Share		or Programs	Plans or Programs
12/26/2016 - 1/22/2017	44	$	86.46	109,645	$	133,463
1/23/2017 - 2/19/2017	50	$	83.94	109,695	$	129,307
2/20/2017 - 3/26/2017	65	$	78.45	109,760	$	124,225

The Company utilizes a written trading plan under Rule 10b5-1 under the Exchange Act from time to time to facilitate the repurchase of shares of our common stock under this share repurchase program. There can be no assurance that we will repurchase shares of our common stock either through a Rule 10b5-1 trading plan or otherwise.

During the fiscal quarter ended March 26, 2017, the Company acquired approximately 23,000 shares of its common stock from employees to satisfy minimum tax withholding obligations that arose upon (i) vesting of restricted stock granted pursuant to approved plans and (ii) distribution of shares of common stock issued pursuant to deferred compensation obligations.

Item 6.  Exhibits

Exhibit
Number	Description
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the quarterly report on Form 10-Q of Papa John’s International, Inc. for the quarter ended March 26, 2017, filed on May 2, 2017, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURE

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: May 2, 2017	/s/ Lance F. Tucker
	Lance F. Tucker
	Senior Vice President,
	Chief Financial Officer,
	Chief Administrative Officer and Treasurer

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EX-31.1

EXHIBIT 31.1

SECTION 302

CERTIFICATION

I, John H. Schnatter, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Papa John’s International, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May 2, 2017	/s/ John H. Schnatter
	John H. Schnatter
	Founder, Chairman and
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

SECTION 302

CERTIFICATION

I, Lance F. Tucker, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Papa John’s International, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 2, 2017	/s/ Lance F. Tucker
	Lance F. Tucker
	Senior Vice President, Chief Financial
	Officer, Chief Administrative Officer
	and Treasurer

EX-32.1

EXHIBIT 32.1

SECTION 906

CERTIFICATION

I, John H. Schnatter, Founder, Chairman and Chief Executive Officer of Papa John’s International, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.    The Report on Form 10-Q of the Company for the quarterly period ended March 26, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 2, 2017	/s/ John H. Schnatter
	John H. Schnatter
	Founder, Chairman and
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 906

CERTIFICATION

I, Lance F. Tucker, Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer of Papa John’s International, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.    The Report on Form 10-Q of the Company for the quarterly period ended March 26, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 2, 2017	/s/ Lance F. Tucker
	Lance F. Tucker
	Senior Vice President, Chief Financial
	Officer, Chief Administrative Officer and
	Treasurer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 26, 2017	Apr. 25, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 26, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	PZZA
Entity Registrant Name	PAPA JOHNS INTERNATIONAL INC
Entity Central Index Key	0000901491
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		36,766,262

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 26, 2017	Dec. 25, 2016
Current assets:
Cash and cash equivalents	$ 22,715	$ 15,563
Accounts receivable, net	60,586	59,691
Notes receivable, net	3,626	3,417
Income taxes receivable		2,372
Inventories	22,711	25,132
Prepaid expenses	20,534	24,105
Other current assets	9,365	9,038
Assets held for sale	6,031	6,257
Total current assets	145,568	145,575
Property and equipment, net	230,765	230,473
Notes receivable, less current portion net	10,443	10,141
Goodwill	85,787	85,529
Deferred income taxes	212	769
Other assets	43,674	40,078
Total assets	516,449	512,565
Current liabilities:
Accounts payable	37,362	42,701
Income and other taxes payable	16,357	8,540
Accrued expenses and other current liabilities	66,705	76,789
Total current liabilities	120,424	128,030
Deferred revenue	3,157	3,313
Long-term debt, net	294,332	299,820
Deferred income taxes	10,559	10,047
Other long-term liabilities	56,704	53,093
Total liabilities	485,176	494,303
Redeemable noncontrolling interests	8,735	8,461
Stockholders’ equity:
Preferred stock ($0.01 par value per share; no shares issued)
Common stock ($0.01 par value per share; issued 44,151 at March 26, 2017 and 44,066 at December 25, 2016)	441	441
Additional paid-in capital	174,364	172,573
Accumulated other comprehensive loss	(5,796)	(5,887)
Retained earnings	240,870	219,278
Treasury stock (7,497 shares at March 26, 2017 and 7,383 shares at December 25, 2016, at cost)	(401,029)	(390,316)
Total stockholders' equity (deficit), net of noncontrolling interests	8,850	(3,911)
Noncontrolling interests in subsidiaries	13,688	13,712
Total stockholders’ equity	22,538	9,801
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$ 516,449	$ 512,565

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Mar. 26, 2017	Dec. 25, 2016
Condensed Consolidated Balance Sheets
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	44,151	44,066
Treasury stock, shares	7,497	7,383

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Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Revenues:
Total revenues	$ 449,266	$ 428,595
Costs and expenses:
General and administrative expenses	38,007	40,247
Depreciation and amortization	10,457	9,744
Total costs and expenses	405,585	385,697
Operating income	43,681	42,898
Net interest expense	(1,810)	(1,489)
Income before income taxes	41,871	41,409
Income tax expense	11,972	13,358
Net income before attribution to noncontrolling interests	29,899	28,051
Income attributable to noncontrolling interests	(1,471)	(1,869)
Net income attributable to the Company	28,428	26,182
Calculation of income for earnings per share:
Net income attributable to the Company	28,428	26,182
Change in noncontrolling interest redemption value	520	220
Net income attributable to participating securities	(117)	(110)
Net income attributable to common shareholders	$ 28,831	$ 26,292
Basic earnings per common share	$ 0.78	$ 0.69
Diluted earnings per common share	$ 0.77	$ 0.69
Basic weighted average common shares outstanding	36,810	37,931
Diluted weighted average common shares outstanding	37,350	38,297
Dividends declared per common share	$ 0.20	$ 0.175
Domestic Company-owned restaurants
Revenues:
Total revenues	$ 206,896	$ 205,679
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below)	165,419	161,310
North America franchising
Revenues:
Total revenues	27,607	26,476
North America commissary and other
Revenues:
Total revenues	186,245	168,985
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below)	173,712	156,806
International
Revenues:
Total revenues	28,518	27,455
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below)	$ 17,990	$ 17,590

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Consolidated Statements of Comprehensive Income (Unaudited)
Net income before attribution to noncontrolling interests	$ 29,899	$ 28,051
Other comprehensive income (loss), before tax:
Foreign currency income (loss) adjustments	613	(2,071)
Interest rate swaps	(468)	(3,289)
Other comprehensive income (loss), before tax	145	(5,360)
Income tax effect:
Foreign currency translation adjustments	(227)	766
Interest rate swaps	173	1,217
Income tax effect	(54)	1,983
Other comprehensive income (loss), net of tax	91	(3,377)
Comprehensive income before attribution to noncontrolling interests	29,990	24,674
Comprehensive loss, redeemable noncontrolling interests	(794)	(1,244)
Comprehensive loss, nonredeemable noncontrolling interests	(677)	(625)
Comprehensive income attributable to the Company	$ 28,519	$ 22,805

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Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Consolidated Statements of Comprehensive Income (Unaudited)
Net interest expense	$ 1,810	$ 1,489
Income tax effects	11,972	13,358
Qualifying as hedges | Interest rate swap | Amount reclassified from AOCI
Consolidated Statements of Comprehensive Income (Unaudited)
Net interest expense	198	317
Income tax effects	$ 73	$ 117

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Operating activities
Net income before attribution to noncontrolling interests	$ 29,899	$ 28,051
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for uncollectible accounts and notes receivable	(417)	216
Depreciation and amortization	10,457	9,744
Deferred income taxes	1,015	7,141
Stock-based compensation expense	2,736	2,172
Other	769	1,101
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(1,048)	6,457
Income taxes receivable	2,372	4,107
Inventories	2,425	(612)
Prepaid expenses	3,574	1,938
Other current assets	(134)	(314)
Other assets and liabilities	(1,577)	(614)
Accounts payable	(5,239)	(10,007)
Income and other taxes payable	7,817	277
Accrued expenses and other current liabilities	(5,164)	(16,738)
Deferred revenue	(156)	934
Net cash provided by operating activities	47,329	33,853
Investing activities
Purchases of property and equipment	(15,064)	(10,249)
Loans issued	(715)	(917)
Repayments of loans issued	863	1,275
Acquisitions, net of cash acquired	(21)	(11,202)
Other	7	159
Net cash used in investing activities	(14,930)	(20,934)
Financing activities
Net (repayments) proceeds from issuance of long-term debt	(5,575)	61,500
Cash dividends paid	(7,354)	(6,628)
Tax payments for equity award issuances	(2,259)	(5,670)
Proceeds from exercise of stock options	3,248	922
Acquisition of Company common stock	(13,075)	(66,033)
Distributions to noncontrolling interest holders	(702)	(980)
Other	396	294
Net cash used in financing activities	(25,321)	(16,595)
Effect of exchange rate changes on cash and cash equivalents	74	(58)
Change in cash and cash equivalents	7,152	(3,734)
Cash and cash equivalents at beginning of period	15,563	21,006
Cash and cash equivalents at end of period	$ 22,715	$ 17,272

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Basis of Presentation

3 Months Ended

Mar. 26, 2017

Basis of Presentation

Basis of Presentation

1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 26, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc. (referred to as the “Company”, “Papa John’s” or in the first person notations of “we”, “us” and “our”) for the year ended December 25, 2016.

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Significant Accounting Policies

3 Months Ended

Mar. 26, 2017

Significant Accounting Policies

Significant Accounting Policies

2.Significant Accounting Policies

Noncontrolling Interests

Papa John’s has five joint venture arrangements in which there are noncontrolling interests held by third parties. These joint ventures include 223 restaurants at March 26, 2017 and 213 restaurants at March 27, 2016. We are required to report the consolidated net income at amounts attributable to the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the condensed consolidated statements of income attributable to the noncontrolling interest holder.

The income before income taxes attributable to these joint ventures for the three months ended March 26, 2017 and March 27, 2016 was as follows (in thousands):

	March 26,		March 27,
	2017		2016
Papa John’s International, Inc.	$	2,362	$	2,760
Noncontrolling interests		1,471		1,869
Total income before income taxes	$	3,833	$	4,629

The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements:

Type of Joint Venture Arrangement	Location within the  Balance Sheets	Recorded Value
Joint venture with no redemption feature	Permanent equity	Carrying value
Option to require the Company to purchase the noncontrolling interest - currently redeemable	Temporary equity	Redemption value*
Option to require the Company to purchase the noncontrolling interest - not currently redeemable	Temporary equity	Carrying value

*The change in redemption value is recorded as an adjustment to “Redeemable noncontrolling interests” and “Retained earnings” in the condensed consolidated balance sheets.

Deferred Income Tax Accounts and Tax Reserves

We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. Discrete items are recorded in the quarter in which they occur.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. As a result, our effective tax rate may fluctuate. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. As of March 26, 2017, we had a net deferred tax liability of approximately $10.3 million.

Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.

Fair Value Measurements and Disclosures

The Company is required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash, accounts receivable and accounts payable. The carrying value of our notes receivable net of allowances also approximates fair value. The fair value of the amount outstanding under our revolving credit facility approximates its carrying value due to its variable market-based interest rate. These assets and liabilities are categorized as Level 1 as defined below.

Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following categories:

· Level 1: Quoted market prices in active markets for identical assets or liabilities.

· Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

· Level 3: Unobservable inputs that are not corroborated by market data.

Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 26, 2017 and December 25, 2016 are as follows (in thousands):

	Carrying		Fair Value Measurements
	Value		Level 1		Level 2		Level 3
March 26, 2017
Financial assets:
Cash surrender value of life insurance policies (a)	$	24,238	$	24,238	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		1,238		—		1,238		—
December 25, 2016
Financial assets:
Cash surrender value of life insurance policies (a)	$	21,690	$	21,690	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		770		—		770		—

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

(b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”).

Our assets and liabilities that were measured at fair value on a non-recurring basis as of March 26, 2017 and December 25, 2016 include assets held for sale.  The fair value was determined using a discounted cash flow model with unobservable inputs (Level 3) less estimated selling costs.  No impairment loss was recorded for these assets held for sale for the three months ended March 26, 2017.

There were no transfers among levels within the fair value hierarchy during the three months ended March 26, 2017.

Variable Interest Entity

Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF is a variable interest entity as it does not have sufficient equity to fund its operations without ongoing financial support and contributions from its members. Based on the ownership and governance structure and operating procedures of PJMF, we have determined that we do not have the power to direct the most significant activities of PJMF and therefore are not the primary beneficiary. Accordingly, consolidation of PJMF is not appropriate.

Accounting Standards Adopted

Employee Share-Based Payments

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The guidance simplified the accounting and financial reporting of the income tax impact of stock-based compensation arrangements.  This guidance requires excess tax benefits to be recorded as a discrete item within income tax expense rather than additional paid-in capital.  In addition, excess tax benefits are required to be classified as cash from operating activities rather than cash from financing activities. 

The Company adopted this guidance as of the beginning of fiscal 2017.  The Company elected to apply the cash flow guidance of ASU 2016-09 retrospectively to all prior periods.  The impact of retrospectively applying this guidance to the consolidated statement of cash flows for the three months ended March 27, 2016 was a $3.9 million increase in net cash provided by operating activities and a corresponding increase in net cash used in financing activities.  The Company elected to continue to estimate forfeitures, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.

Accounting Standards to be Adopted in Future Periods

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases,” (“ASU 2016-02”) which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital leases (financing) with lease terms greater than twelve months.  The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs.  For income statement purposes, leases will continue to be classified as operating or capital (financing) with lease expense in both cases calculated substantially the same as under the prior leasing guidance. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 (fiscal 2019 for the Company), and early adoption is permitted.  The Company has not yet determined the effect of the adoption on its condensed consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”), a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. This update requires companies to recognize revenue at amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services at the time of transfer. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. Such estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies can either apply a full retrospective adoption or a modified retrospective adoption. In March and April 2016, the FASB issued the following amendments to clarify the implementation guidance: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”.

We are required to adopt ASU 2014-09 in the first quarter of 2018.   We do not expect the adoption will significantly impact our recognition of revenue from Company-owned restaurants, commissary sales or our continuing royalties or other fees from franchisees that are based on a percentage of the franchise sales.  We are continuing to evaluate the impact on other less significant transactions including our loyalty program and the timing of recognizing franchise and development fees. We are also currently evaluating the method of adoption and the impact adoption will have on our related financial statement disclosures.

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Calculation of Earnings per Share

3 Months Ended

Mar. 26, 2017

Calculation of Earnings per Share

Calculation of Earnings per Share

3.Calculation of Earnings Per Share

We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. We consider time-based restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights. Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to the Company in determining net income attributable to common shareholders.

Additionally,  the change in the redemption value for the noncontrolling interest of one of our joint ventures increases or decreases income attributable to common shareholders.

The calculations of basic and diluted earnings per common share are as follows (in thousands, except per-share data):

	Three Months Ended
	March 26,		March 27,
	2017		2016
Basic earnings per common share:
Net income attributable to the Company	$	28,428	$	26,182
Change in noncontrolling interest redemption value		520		220
Net income attributable to participating securities		(117)		(110)
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Basic earnings per common share	$	0.78	$	0.69
Diluted earnings per common share:
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Dilutive effect of outstanding equity awards (a)		540		366
Diluted weighted average common shares outstanding		37,350		38,297
Diluted earnings per common share	$	0.77	$	0.69

(a) Excludes 117 and 476 awards for the three months ended March 26, 2017 and March 27, 2016, respectively, as the effect of including such awards would have been antidilutive.

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Acquisition of Restaurants

3 Months Ended

Mar. 26, 2017

Acquisition of Restaurants

Acquisition of Restaurants

4.Acquisition of Restaurants

In the first quarter of 2016, we completed the acquisition of 20 franchised Papa John’s restaurants located in Alabama, Florida and Kentucky in two separate transactions with an aggregate purchase price of $11.2 million. These acquisitions were accounted for by the purchase method of accounting, whereby operating results subsequent to the acquisition date are included in our consolidated financial results.

The aggregate final purchase price of the 2016 acquisitions has been allocated as follows (in thousands):

Property and equipment	$	1,028
Franchise rights		1,230
Goodwill		8,837
Other		107
Total purchase price	$	11,202

The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill for the domestic Company-owned restaurants segment and is eligible for deduction over 15 years under U.S. tax regulations. 

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Debt

3 Months Ended

Mar. 26, 2017

Debt

Debt

5.Debt

Long-term debt, net consists of the following (in thousands):

		March 26,		December 25,
		2017		2016
Outstanding debt	$	295,000	$	300,575
Debt issuance costs		(668)		(755)
Total long-term debt, net	$	294,332	$	299,820

Our outstanding debt is comprised entirely of a $500 million unsecured revolving line of credit (“Credit Facility”) with an expiration date of October 31, 2019. Including outstanding letters of credit, the remaining availability under the Credit Facility was approximately $176.6 million as of March 26, 2017.

The interest rate charged on outstanding balances is LIBOR plus 75 to 175 basis points. The commitment fee on the unused balance ranges from 15 to 25 basis points.

The Credit Facility contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of specified fixed charges and leverage ratios. At March 26, 2017, we were in compliance with these covenants.

We attempt to minimize interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative financial instruments. Our swaps are entered into with financial institutions and have reset dates and critical terms that match those of our existing debt and the anticipated critical terms of future debt. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract.

As of March 26, 2017, we have the following interest rate swap agreements, including three forward starting swaps executed in 2015 that become effective in 2018 upon expiration of the two existing swaps for $125 million:

Effective Dates	Floating Rate Debt			Fixed Rates
July 30, 2013 through April 30, 2018	$	75	million	1.42	%
December 30, 2014 through April 30, 2018	$	50	million	1.36	%
April 30, 2018 through April 30, 2023	$	55	million	2.33	%
April 30, 2018 through April 30, 2023	$	35	million	2.36	%
April 30, 2018 through April 30, 2023	$	35	million	2.34	%

The weighted average interest rates on the Credit Facility, including the impact of the interest rate swap agreements, were 2.2% and 2.1% for the three months ended March 26, 2017 and March 27, 2016, respectively. Interest paid, including payments made or received under the swaps, was $1.9 million and $1.6 million for the three months ended March 26, 2017 and March 27, 2016, respectively. As of March 26, 2017, the portion of the aggregate $1.2 million interest rate swap liability that would be reclassified into earnings during the next twelve months as interest expense approximates $200,000.

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Segment Information

3 Months Ended

Mar. 26, 2017

Segment Information

Segment Information

6.Segment Information

We have five reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and “all other” units. The domestic Company-owned restaurant segment consists of the operations of all domestic (“domestic” is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company-owned and franchised restaurants in the United States and Canada. The North America franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our franchisees located in the United States and Canada. The international operations segment principally consists of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as our “all other” segment, which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms.

Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and intercompany eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or actual estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the activity in consolidation.

Our reportable segments are business units that provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues.

Our segment information is as follows (in thousands):

(In thousands)	March 26, 2017		March 27, 2016
Revenues from external customers:
Domestic Company-owned restaurants	$	206,896	$	205,679
North America commissaries		171,340		155,954
North America franchising		27,607		26,476
International		28,518		27,455
All others		14,905		13,031
Total revenues from external customers	$	449,266	$	428,595
Intersegment revenues:
North America commissaries	$	61,736	$	58,326
North America franchising		764		713
International		63		65
All others		5,026		4,097
Total intersegment revenues	$	67,589	$	63,201
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	15,487	$	20,187
North America commissaries		12,244		11,546
North America franchising		24,875		23,580
International		4,344		3,038
All others		(166)		51
Unallocated corporate expenses		(15,755)		(16,332)
Elimination of intersegment profit and losses		842		(661)
Total income before income taxes	$	41,871	$	41,409
Property and equipment:
Domestic Company-owned restaurants	$	226,420
North America commissaries		130,475
International		16,426
All others		57,163
Unallocated corporate assets		195,321
Accumulated depreciation and amortization		(395,040)
Net property and equipment	$	230,765

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 26, 2017

Significant Accounting Policies

Noncontrolling Interests

Noncontrolling Interests

Papa John’s has five joint venture arrangements in which there are noncontrolling interests held by third parties. These joint ventures include 223 restaurants at March 26, 2017 and 213 restaurants at March 27, 2016. We are required to report the consolidated net income at amounts attributable to the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the condensed consolidated statements of income attributable to the noncontrolling interest holder.

The income before income taxes attributable to these joint ventures for the three months ended March 26, 2017 and March 27, 2016 was as follows (in thousands):

	March 26,		March 27,
	2017		2016
Papa John’s International, Inc.	$	2,362	$	2,760
Noncontrolling interests		1,471		1,869
Total income before income taxes	$	3,833	$	4,629

The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements:

Type of Joint Venture Arrangement	Location within the  Balance Sheets	Recorded Value
Joint venture with no redemption feature	Permanent equity	Carrying value
Option to require the Company to purchase the noncontrolling interest - currently redeemable	Temporary equity	Redemption value*
Option to require the Company to purchase the noncontrolling interest - not currently redeemable	Temporary equity	Carrying value

*The change in redemption value is recorded as an adjustment to “Redeemable noncontrolling interests” and “Retained earnings” in the condensed consolidated balance sheets.

Deferred Income Tax Accounts and Tax Reserves

Deferred Income Tax Accounts and Tax Reserves

We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. Discrete items are recorded in the quarter in which they occur.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. As a result, our effective tax rate may fluctuate. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. As of March 26, 2017, we had a net deferred tax liability of approximately $10.3 million.

Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures.

Fair Value Measurements and Disclosures

Fair Value Measurements and Disclosures

The Company is required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash, accounts receivable and accounts payable. The carrying value of our notes receivable net of allowances also approximates fair value. The fair value of the amount outstanding under our revolving credit facility approximates its carrying value due to its variable market-based interest rate. These assets and liabilities are categorized as Level 1 as defined below.

Certain assets and liabilities are measured at fair value on a recurring basis and are required to be classified and disclosed in one of the following categories:

· Level 1: Quoted market prices in active markets for identical assets or liabilities.

· Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

· Level 3: Unobservable inputs that are not corroborated by market data.

Our financial assets and liabilities that were measured at fair value on a recurring basis as of March 26, 2017 and December 25, 2016 are as follows (in thousands):

	Carrying		Fair Value Measurements
	Value		Level 1		Level 2		Level 3
March 26, 2017
Financial assets:
Cash surrender value of life insurance policies (a)	$	24,238	$	24,238	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		1,238		—		1,238		—
December 25, 2016
Financial assets:
Cash surrender value of life insurance policies (a)	$	21,690	$	21,690	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		770		—		770		—

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

(b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”).

Our assets and liabilities that were measured at fair value on a non-recurring basis as of March 26, 2017 and December 25, 2016 include assets held for sale.  The fair value was determined using a discounted cash flow model with unobservable inputs (Level 3) less estimated selling costs.  No impairment loss was recorded for these assets held for sale for the three months ended March 26, 2017.

There were no transfers among levels within the fair value hierarchy during the three months ended March 26, 2017.

Variable Interest Entity

Variable Interest Entity

Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF is a variable interest entity as it does not have sufficient equity to fund its operations without ongoing financial support and contributions from its members. Based on the ownership and governance structure and operating procedures of PJMF, we have determined that we do not have the power to direct the most significant activities of PJMF and therefore are not the primary beneficiary. Accordingly, consolidation of PJMF is not appropriate.

Recent Accounting Pronouncements

Accounting Standards Adopted

Employee Share-Based Payments

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The guidance simplified the accounting and financial reporting of the income tax impact of stock-based compensation arrangements.  This guidance requires excess tax benefits to be recorded as a discrete item within income tax expense rather than additional paid-in capital.  In addition, excess tax benefits are required to be classified as cash from operating activities rather than cash from financing activities. 

The Company adopted this guidance as of the beginning of fiscal 2017.  The Company elected to apply the cash flow guidance of ASU 2016-09 retrospectively to all prior periods.  The impact of retrospectively applying this guidance to the consolidated statement of cash flows for the three months ended March 27, 2016 was a $3.9 million increase in net cash provided by operating activities and a corresponding increase in net cash used in financing activities.  The Company elected to continue to estimate forfeitures, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur.

Accounting Standards to be Adopted in Future Periods

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases,” (“ASU 2016-02”) which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital leases (financing) with lease terms greater than twelve months.  The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs.  For income statement purposes, leases will continue to be classified as operating or capital (financing) with lease expense in both cases calculated substantially the same as under the prior leasing guidance. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 (fiscal 2019 for the Company), and early adoption is permitted.  The Company has not yet determined the effect of the adoption on its condensed consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”), a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. This update requires companies to recognize revenue at amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services at the time of transfer. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. Such estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies can either apply a full retrospective adoption or a modified retrospective adoption. In March and April 2016, the FASB issued the following amendments to clarify the implementation guidance: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”.

We are required to adopt ASU 2014-09 in the first quarter of 2018.   We do not expect the adoption will significantly impact our recognition of revenue from Company-owned restaurants, commissary sales or our continuing royalties or other fees from franchisees that are based on a percentage of the franchise sales.  We are continuing to evaluate the impact on other less significant transactions including our loyalty program and the timing of recognizing franchise and development fees. We are also currently evaluating the method of adoption and the impact adoption will have on our related financial statement disclosures.

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Significant Accounting Policies (Tables)

3 Months Ended

Mar. 26, 2017

Significant Accounting Policies

Schedule of Income Before Income Taxes Attributable to Joint Ventures

	March 26,		March 27,
	2017		2016
Papa John’s International, Inc.	$	2,362	$	2,760
Noncontrolling interests		1,471		1,869
Total income before income taxes	$	3,833	$	4,629

Schedule of Joint Ventures in Which There are Noncontrolling Interests

Type of Joint Venture Arrangement	Location within the  Balance Sheets	Recorded Value
Joint venture with no redemption feature	Permanent equity	Carrying value
Option to require the Company to purchase the noncontrolling interest - currently redeemable	Temporary equity	Redemption value*
Option to require the Company to purchase the noncontrolling interest - not currently redeemable	Temporary equity	Carrying value

*The change in redemption value is recorded as an adjustment to “Redeemable noncontrolling interests” and “Retained earnings” in the condensed consolidated balance sheets.

Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

	Carrying		Fair Value Measurements
	Value		Level 1		Level 2		Level 3
March 26, 2017
Financial assets:
Cash surrender value of life insurance policies (a)	$	24,238	$	24,238	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		1,238		—		1,238		—
December 25, 2016
Financial assets:
Cash surrender value of life insurance policies (a)	$	21,690	$	21,690	$	—	$	—
Financial liabilities:
Interest rate swaps (b)		770		—		770		—

(a) Represents life insurance policies held in our non-qualified deferred compensation plan.

(b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”).

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Calculation of Earnings Per Share (Tables)

3 Months Ended

Mar. 26, 2017

Calculation of Earnings per Share

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended
	March 26,		March 27,
	2017		2016
Basic earnings per common share:
Net income attributable to the Company	$	28,428	$	26,182
Change in noncontrolling interest redemption value		520		220
Net income attributable to participating securities		(117)		(110)
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Basic earnings per common share	$	0.78	$	0.69
Diluted earnings per common share:
Net income attributable to common shareholders	$	28,831	$	26,292
Weighted average common shares outstanding		36,810		37,931
Dilutive effect of outstanding equity awards (a)		540		366
Diluted weighted average common shares outstanding		37,350		38,297
Diluted earnings per common share	$	0.77	$	0.69

(a) Excludes 117 and 476 awards for the three months ended March 26, 2017 and March 27, 2016, respectively, as the effect of including such awards would have been antidilutive.

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Acquisition of Restaurants (Tables)

3 Months Ended

Mar. 26, 2017

Acquisition of Restaurants

Schedule of Acquired Restaurants

The aggregate final purchase price of the 2016 acquisitions has been allocated as follows (in thousands):

Property and equipment	$	1,028
Franchise rights		1,230
Goodwill		8,837
Other		107
Total purchase price	$	11,202

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Debt (Tables)

3 Months Ended

Mar. 26, 2017

Debt

Schedule of long-term debt, net

Long-term debt, net consists of the following (in thousands):

		March 26,		December 25,
		2017		2016
Outstanding debt	$	295,000	$	300,575
Debt issuance costs		(668)		(755)
Total long-term debt, net	$	294,332	$	299,820

Schedule of Interest Rate Swap Agreements

Effective Dates	Floating Rate Debt			Fixed Rates
July 30, 2013 through April 30, 2018	$	75	million	1.42	%
December 30, 2014 through April 30, 2018	$	50	million	1.36	%
April 30, 2018 through April 30, 2023	$	55	million	2.33	%
April 30, 2018 through April 30, 2023	$	35	million	2.36	%
April 30, 2018 through April 30, 2023	$	35	million	2.34	%

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Segment Information (Tables)

3 Months Ended

Mar. 26, 2017

Segment Information

Schedule of Segment Reporting Information, by Segment

Our segment information is as follows (in thousands):

(In thousands)	March 26, 2017		March 27, 2016
Revenues from external customers:
Domestic Company-owned restaurants	$	206,896	$	205,679
North America commissaries		171,340		155,954
North America franchising		27,607		26,476
International		28,518		27,455
All others		14,905		13,031
Total revenues from external customers	$	449,266	$	428,595
Intersegment revenues:
North America commissaries	$	61,736	$	58,326
North America franchising		764		713
International		63		65
All others		5,026		4,097
Total intersegment revenues	$	67,589	$	63,201
Income (loss) before income taxes:
Domestic Company-owned restaurants	$	15,487	$	20,187
North America commissaries		12,244		11,546
North America franchising		24,875		23,580
International		4,344		3,038
All others		(166)		51
Unallocated corporate expenses		(15,755)		(16,332)
Elimination of intersegment profit and losses		842		(661)
Total income before income taxes	$	41,871	$	41,409
Property and equipment:
Domestic Company-owned restaurants	$	226,420
North America commissaries		130,475
International		16,426
All others		57,163
Unallocated corporate assets		195,321
Accumulated depreciation and amortization		(395,040)
Net property and equipment	$	230,765

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Significant Accounting Policies - Noncontrolling Interest and Joint Ventures (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2017 USD ($) restaurant entity	Mar. 27, 2016 USD ($) restaurant
Income Amounts Attributable to Noncontrolling Interest, Disclosures
Noncontrolling interests	$ 1,471	$ 1,869
Total income before income taxes	$ 41,871	$ 41,409
Joint ventures
Noncontrolling Interests
Number of Joint Ventures Having Noncontrolling Interests | entity	5
Number of Restaurants | restaurant	223	213
Income Amounts Attributable to Noncontrolling Interest, Disclosures
Papa John's International, Inc.	$ 2,362	$ 2,760
Noncontrolling interests	1,471	1,869
Total income before income taxes	$ 3,833	$ 4,629

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Significant Accounting Policies - Deferred Income Tax Accounts and Tax Reserves (Details) $ in Millions	Mar. 26, 2017 USD ($)
Deferred Income Tax Accounts and Tax Reserves
Net deferred tax liability, net	$ 10.3

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Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2017	Dec. 25, 2016
Measurement of financial assets and liabilities at fair value on a recurring basis
Transfers among levels within the fair value hierarchy	$ 0
Level 3
Measurement of financial assets and liabilities at fair value on a recurring basis
Impairment loss recorded for assets held for sale	0
Carrying Value
Measurement of financial assets and liabilities at fair value on a recurring basis
Cash surrender value of life insurance policies	24,238	$ 21,690
Interest rate swap liabilities	1,238	770
Measured on Recurring Basis | Level 1
Measurement of financial assets and liabilities at fair value on a recurring basis
Cash surrender value of life insurance policies	24,238	21,690
Measured on Recurring Basis | Level 2
Measurement of financial assets and liabilities at fair value on a recurring basis
Interest rate swap liabilities	$ 1,238	$ 770

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Significant Accounting Policies – Accounting Standards Adopted (Details) - Accounting Standards Update 2016-09 - Restatement $ in Millions	3 Months Ended
	Mar. 27, 2016 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net cash provided by operating activities	$ 3.9
Net cash used in financing activities	$ 3.9

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Calculation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Basic earnings per common share:
Net income attributable to the Company	$ 28,428	$ 26,182
Change in noncontrolling interest redemption value	520	220
Net income attributable to participating securities	(117)	(110)
Net income attributable to common shareholders	$ 28,831	$ 26,292
Weighted average common shares outstanding	36,810	37,931
Basic earnings per common share	$ 0.78	$ 0.69
Diluted earnings per common share:
Net income attributable to common shareholders	$ 28,831	$ 26,292
Weighted average common shares outstanding	36,810	37,931
Dilutive effect of outstanding equity awards	540	366
Diluted weighted average common shares outstanding	37,350	38,297
Diluted earnings per common share	$ 0.77	$ 0.69
Weighted average antidilutive awards excluded from computation of earnings per share	117	476

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Acquisition of Restaurants (Details) $ in Thousands	3 Months Ended
	Mar. 27, 2016 USD ($) item restaurant	Mar. 26, 2017 USD ($)	Dec. 25, 2016 USD ($)
Fair value allocation of purchase price
Goodwill		$ 85,787	$ 85,529
Multiple restaurants acquired, 2016
Purchase price
Number of restaurants acquired | restaurant	20
Number of transactions in which acquisition completed | item	2
Fair value allocation of purchase price
Property and equipment	$ 1,028
Franchise rights	1,230
Goodwill	8,837
Other	107
Total purchase price	$ 11,202

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Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Mar. 26, 2017	Dec. 25, 2016
Debt
Outstanding debt	$ 295,000	$ 300,575
Debt issuance costs	(668)	(755)
Total long-term debt, net	$ 294,332	$ 299,820

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Debt (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 26, 2017 USD ($) derivative	Dec. 27, 2015 derivative
Interest rate swap, July 2013 1.42% fixed
Interest rate swaps
Interest rate swap agreement, fixed interest rate	1.42%
Interest rate swap agreement, notional amount	$ 75.0
Interest rate swap, December 2014 1.36% fixed
Interest rate swaps
Interest rate swap agreement, fixed interest rate	1.36%
Interest rate swap agreement, notional amount	$ 50.0
Interest rate swap, April 2018, 2.33% fixed
Interest rate swaps
Interest rate swap agreement, fixed interest rate	2.33%
Interest rate swap agreement, notional amount	$ 55.0
Interest rate swap, April 2018, 2.36% fixed
Interest rate swaps
Interest rate swap agreement, fixed interest rate	2.36%
Interest rate swap agreement, notional amount	$ 35.0
Interest rate swap, April 2018, 2.34% fixed
Interest rate swaps
Interest rate swap agreement, fixed interest rate	2.34%
Interest rate swap agreement, notional amount	$ 35.0
Interest rate swap
Interest rate swaps
Number of derivatives held | derivative	2
Number of additional derivatives executed | derivative		3
Interest rate swap agreement, notional amount	$ 125.0
Revolving credit facility
Debt
Line of credit facility, maximum borrowing capacity	500.0
Line of credit facility, remaining availability	$ 176.6
Revolving credit facility | Minimum
Debt
Percentage of commitment fee on unused credit facility	0.15%
Revolving credit facility | Maximum
Debt
Percentage of commitment fee on unused credit facility	0.25%
Revolving credit facility | LIBOR | Minimum
Debt
Interest margin rate on debt	0.75%
Revolving credit facility | LIBOR | Maximum
Debt
Interest margin rate on debt	1.75%

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Debt - Derivatives (Details) - USD ($)	3 Months Ended
	Mar. 26, 2017	Mar. 27, 2016
Debt
Weighted average interest rate for Credit Facility borrowings, including the impact of interest rate swaps	2.20%	2.10%
Interest paid	$ 1,900,000	$ 1,600,000
Interest rate swap
Debt
Interest rate swap liabilities	1,200,000
Interest rate swap | Interest expense
Debt
Portion of derivative liability that would be reclassified into earnings	$ 200,000
Estimate of period of time over which portion of derivative liability would be reclassified into earnings	12 months

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Segment Information - Concentration (Details)	Mar. 26, 2017 customer
Consolidated revenues
Major customers disclosures
Concentration risk, number	0

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Segment Information - Schedule of Segment Reporting Information, by Segment (Details) $ in Thousands	3 Months Ended
	Mar. 26, 2017 USD ($) segment	Mar. 27, 2016 USD ($)	Dec. 25, 2016 USD ($)
Segment Information
Reportable segments, number | segment	5
Revenues	$ 449,266	$ 428,595
Income (loss) before income taxes	41,871	41,409
Accumulated depreciation and amortization	(395,040)
Net property and equipment	230,765		$ 230,473
Domestic Company-owned restaurants
Segment Information
Revenues	206,896	205,679
North America franchising
Segment Information
Revenues	27,607	26,476
International
Segment Information
Revenues	28,518	27,455
Operating segments
Segment Information
Revenues	449,266	428,595
Operating segments | Domestic Company-owned restaurants
Segment Information
Revenues	206,896	205,679
Income (loss) before income taxes	15,487	20,187
Property and equipment, gross	226,420
Operating segments | North America commissaries
Segment Information
Revenues	171,340	155,954
Income (loss) before income taxes	12,244	11,546
Property and equipment, gross	130,475
Operating segments | North America franchising
Segment Information
Revenues	27,607	26,476
Income (loss) before income taxes	24,875	23,580
Operating segments | International
Segment Information
Revenues	28,518	27,455
Income (loss) before income taxes	4,344	3,038
Property and equipment, gross	16,426
Operating segments | All others
Segment Information
Revenues	14,905	13,031
Income (loss) before income taxes	(166)	51
Property and equipment, gross	57,163
Elimination
Segment Information
Revenues	67,589	63,201
Income (loss) before income taxes	842	(661)
Elimination | North America commissaries
Segment Information
Revenues	61,736	58,326
Elimination | North America franchising
Segment Information
Revenues	764	713
Elimination | International
Segment Information
Revenues	63	65
Elimination | All others
Segment Information
Revenues	5,026	4,097
Unallocated corporate
Segment Information
Income (loss) before income taxes	(15,755)	$ (16,332)
Property and equipment, gross	$ 195,321