Papa Johns 2002 Annual Report Download - page 61

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15. Lease Commitments and Contingencies
We lease office, retail and commissary space under operating leases with an average term of five years
and providing for at least one renewal. Certain leases further provide that the lease payments may be
increased annually based on the Consumer Price Index. Papa John’s UK, our subsidiary located in the
United Kingdom, leases certain retail space which is primarily subleased to our franchisees. Future
minimum lease payments, including the gross lease cost related to the subleased sites, are as follows:
2003 - $21.6 million; 2004 - $19.4 million; 2005 - $16.1 million; 2006 - $12.9 million; 2007 - $8.6
million, and thereafter - $22.6 million. Future expected sublease payments are as follows: 2003 - $3.9
million; 2004 - $3.7 million; 2005 - $3.5 million; 2006 - $3.4 million; 2007 - $3.0 million, and thereafter -
$14.5 million. We subleased 178, 170 and 168 sites in 2002, 2001 and 2000, respectively, to our
franchisees located in the United Kingdom and received payments of $3.7 million, $3.5 million and $3.6
million, which are included in international operating expenses. Total rent expense was $17.6 million in
2002, $17.8 million in 2001 and $16.1 million in 2000, net of subleased payments received.
We are subject to claims and legal actions in the ordinary course of business. We believe that all such
claims and actions currently pending against us are either adequately covered by insurance or would not
have a material adverse effect on us if decided in a manner unfavorable to us.
16. Share Repurchase and Common Equity Put Options
The Papa John’s Board of Directors has authorized the repurchase of up to $375.0 million of common
stock under a share repurchase program that began December 9, 1999, and runs through December 28,
2003. Funding for the share repurchase program has been provided through a credit facility, operating
cash flow and the liquidation of available investments, cash and cash equivalents.
Through December 29, 2002, a total of 13.4 million shares with an aggregate cost of $345.7 million and
an average price of $25.87 per share have been repurchased under this program and placed in treasury.
Subsequent to year-end, an additional 150,000 shares with an aggregate cost of $4.1 million were
repurchased.
There were 250,000 common equity put options outstanding at December 31, 2000 (none in 2002 and
2001), all of which were sold in the third quarter 2000. The options expired at various dates through July
2001 and had exercise prices between $19.50 and $21.99. The $5.2 million total exercise price of the
options outstanding was reflected in the consolidated balance sheet in other long-term liabilities at
December 31, 2000, and the related offset, net of premiums received of $556,000, was recorded in
treasury stock. Additionally, during 2001, we sold 50,000 common equity put options at an exercise price
of $28.50 that expired during the fourth quarter of 2001. Premiums received from the sale of the common
equity put options, which amounted to $120,000 and $556,000 in 2001 and 2000, respectively, reduced
the net cost of treasury stock as reported in the accompanying consolidated statements of stockholders’
equity.