Papa Johns 2000 Annual Report Download - page 42

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Additionally, during 2001 we may fund up to $5 to $6 million in additional loans under existing franchisee
loan program commitments. Approximately $16.7 million, net of allowance for potential uncollectible
balances, was outstanding under this program as of December 31, 2000. At this time, we do not expect to
significantly expand the program beyond existing commitments.
The Board of Directors has authorized up to $275 million for the share repurchase program through 2001
year-end. Through December 31, 2000, a total of 7.6 million shares have been repurchased for $187.9
million at an average price of $24.67 per share since the repurchase program started in 1999
(approximately 6.3 million shares in 2000 and 1.3 million shares in 1999). These repurchases were funded
by a revolving line of credit, cash flow from operations, and liquidation of available investments, cash and
cash equivalents. Subsequent to year end (through March 12, 2001), we acquired an additional 319,500
shares at an aggregate cost of $7.2 million. As of March 12, 2001, approximately $79.9 million of common
stock remains available for repurchase under this authorization.
The Company expects to fund the planned capital expenditures, acquisition of franchised restaurants,
disbursements under the franchise loan program and additional share repurchases for the next twelve
months from operating cash flow and the remaining availability under the Company's unsecured revolving
line of credit. The Company’ s debt at December 31, 2000 was $146.6 million compared to $6.2 million at
December 26, 1999. The increase in debt is due to the common stock repurchase program.
Through December 2000, we earned approximately $6.0 million ($1.1 million in 2000, $2.9 million in 1999
and $2.0 million in 1998) of an expected $13.0 million in incentives under the Kentucky Jobs Development
Act in connection with the relocation of the corporate offices. We expect to earn the remaining $7.0
million of such incentives through 2007.
Impact of Inflation
We do not believe inflation has materia lly affected earnings during the past three years. Substantial
increases in costs, particularly labor, benefits, food, utilities and fuel costs, could have a significant impact
on us. Thus far in 2001, we have continued to experience higher than normal utility and fuel costs and
ongoing wage rate pressures. Our restaurant and commissary margins continue to be impacted by these
cost factors. Cheese costs appear to be returning to more historical levels, after being unusually low
throughout most of 2000; however, this increase in costs will not begin to impact our restaurant margins
until the third quarter of 2001 due to our existing cheese purchasing arrangement (See "Note 12" of "Notes
to Consolidated Financial Statements”).
Forward Looking Statements
Certain information contained in this annual report, particularly information regarding future financial
performance and plans and objectives of management, is forward looking. Certain factors could cause
actual results to differ materially from those expressed in forward looking statements. These factors
include, but are not limited to, our ability and the ability of our franchisees to obtain suitable locations and
financing for new restaurant development; the hiring, training, and retention of management and other
personnel; competition in the industry with respect to price, service, location, and food quality; an increase
in food cost due to seasonal fluctuations, weather, and demand; changes in consumer tastes and
demographic trends; changes in federal and state laws, such as increases in minimum wage; and risks
inherent to international development, including operational or market risks associated with the planned
conversion of Perfect Pizza restaurants to Papa John’ s in the United Kingdom.