Papa Johns 2001 Annual Report Download - page 37

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program. The repurchase of the Company’s common shares resulted in an $0.11 increase in the diluted
earnings per share for 2000 as compared to 1999.
Liquidity and Capital Resources
Cash flow from operations for 2001 increased to $96.4 million from $76.7 million in 2000 due primarily
to changes in deferred income taxes and other working capital, principally a reduction in inventory levels.
Cash flow from operations for 2000 decreased to $76.7 million from $89.6 million in 1999 primarily due
to an increase in working capital requirements, principally changes in deferred income taxes, increases in
inventory levels (including accumulation of hot bag inventory for continued installation in franchise
restaurants during 2001), changes in accounts payable and accrued expense levels and a decrease in tax
benefits related to the exercise of non-qualified stock options.
We require capital primarily for the development, acquisition and maintenance of restaurants, new or
replacement QC Centers and Support Services facilities and equipment, the enhancement of corporate
systems and facilities and the funding of franchisee loans. Additionally, we began a common stock
repurchase program in December 1999. During 2001, common stock repurchases of $29.4 million, capital
expenditures of $31.5 million and net repayments on debt of $41.3 million were primarily funded by cash
flow from operations, proceeds from stock option exercises, proceeds from restaurant divestitures, the
liquidation of investments and available cash and cash equivalents.
Total 2002 capital expenditures are expected to be approximately $38.0 million to $40.0 million, about
one-half of which is for the development, relocation or remodeling of restaurants, and about one-half of
which is for QC Centers, Support Services and corporate requirements. During 2002, we plan to open
approximately 10 to 15 new domestic Company-owned restaurants.
Additionally, we may fund up to $7.6 million to BIBP under an existing loan commitment (see “Note 11”
of “Notes to Consolidated Financial Statements”). As of December 30, 2001, we had loans to franchisees,
net of allowance for doubtful accounts, of $17.6 million. We do not have any additional loan funding
commitments related to existing franchisee loans and we do not expect to fund significant amounts related
to any new loans we may extend. We have guaranteed up to $2.0 million of external bank borrowings by
BIBP and up to $3.0 million of borrowings by the Marketing Fund as of December 30, 2001. We do not
anticipate any losses from these guarantees.
The Board of Directors has authorized up to $275.0 million for the share repurchase program through
December 29, 2002. At December 30, 2001, a total of 8.9 million shares have been repurchased for
$217.3 million at an average price of $24.54 per share since the repurchase program started in 1999
(approximately 1.2 million shares in 2001, 6.4 million shares in 2000 and 1.3 million shares in 1999).
Subsequent to year-end (through March 15, 2002), we acquired an additional 1.3 million shares at an
aggregate cost of $35.2 million. As of March 15, 2002, approximately $22.5 million of common stock
remains available for repurchase under this authorization.
The Company expects to fund the planned capital expenditures and any additional share repurchases for
the next twelve months from operating cash flow and the remaining availability under our $200.0 million
unsecured revolving line of credit. The Company’s debt, which is primarily due to the share repurchase
program, was $105.3 million at December 30, 2001 compared to $146.6 million at December 31, 2000.
The line of credit expires in March 2003. We do not anticipate any problems in renewing the line of credit
for periods subsequent to March 2003.
Through December 2001, we earned approximately $7.1 million ($1.1 million in both 2001 and 2000,
$2.9 million in 1999 and $2.0 million in previous years) of an expected $13.0 million in incentives under