Papa Johns 2002 Annual Report Download - page 37

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the time the repurchase program was initiated, at an average price of $24.54 per share). The repurchase of
our common shares resulted in an increase in diluted earnings per share of approximately $0.11 in 2001
as compared to 2000.
Liquidity and Capital Resources
Cash flow from operations was relatively consistent at $95.6 million in 2002 compared to $96.4 million
in 2001, as unfavorable changes in inventory levels, due primarily to heated delivery bags, and deferred
income taxes were substantially offset by favorable changes in accrued expenses, due primarily to
insurance claims reserves, and other components of working capital.
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.
In January 2003, we entered into an agreement to extend our revolving line of credit facility (“New Line
of Credit”). The New Line of Credit allows us to borrow up to $175.0 million with an expiration date in
January 2006. Outstanding balances for the New Line of Credit accrue interest at 62.5 to 100.0 basis
points over the London Interbank Offered Rate (LIBOR) or other bank developed rates at our option. The
commitment fee on the unused balance ranges from 15.0 to 20.0 basis points. The increment 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).
We require capital primarily for the development, acquisition and maintenance of restaurants, new or
replacement QC Centers and Support Services facilities, 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 2002, common stock repurchases of $128.4 million and capital
expenditures of $18.8 million were primarily funded by cash flow from operations, net proceeds from the
revolving line of credit facility, net loan repayments from franchisees, proceeds from stock option
exercises and available cash and cash equivalents.
Total 2003 capital expenditures are expected to be approximately $25.0 million to $30.0 million, about
one-half of which is for the development, relocation or remodeling of restaurants, including routine
replacement of worn equipment, and about one-half of which is for QC Centers, Support Services and
corporate requirements. During 2003, we plan to open approximately 10 new domestic Company-owned
restaurants.
As of December 29, 2002, we had loans to franchisees of $14.1 million, net of allowance for doubtful
accounts of $4.4 million. We do not have any additional loan funding commitments related to existing
franchisee loans at December 29, 2002. We do not plan to extend loans to franchisees in the future.
The Board of Directors has authorized up to $375.0 million for the share repurchase program through
December 28, 2003. At December 29, 2002, a total of 13.4 million shares have been repurchased for
$345.7 million at an average price of $25.87 per share since the repurchase program started in 1999
(approximately 4.5 million shares in 2002, 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 14, 2003), we acquired an additional
150,000 shares at an aggregate cost of $4.1 million. As of March 14, 2003, approximately $25.2 million
of common stock remains available for repurchase under this authorization.
We expect to fund the planned capital expenditures and any additional share repurchases for the next
twelve months from operating cash flow and any remaining availability under our New Line of Credit,
reduced for outstanding letters of credit of $9.6 million. Our debt, which is primarily due to the share
repurchase program, was $140.1 million at December 29, 2002, compared to $105.3 million at December
30, 2001.