Papa Johns 2003 Annual Report Download - page 62

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61
14. Related Party Transactions (continued)
See Note 3 for information related to our purchasing arrangement with BIBP.
15. Lease Commitments and Contingencies
We lease office, retail and commissary space under operating leases, which have an average term of five
years and provide 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. We also
lease the trailers used by our distribution subsidiary, PJFS, for an average period of eight years.
Future gross lease costs, future expected sublease payments and net lease costs are as follows (in
thousands):
Future
Expected
Gross Lease
Sublease
Net Lease
Year
Costs
Payments
Costs
2004
21,686
$
4,161
$
17,525
$
2005
19,557
4,154
15,403
2006
16,332
3,929
12,403
2007
11,860
3,530
8,330
2008
8,362
3,260
5,102
Thereafter
25,458
13,798
11,660
Total
103,255
$
32,832
$
70,423
$
We subleased 180 sites in 2003, 178 sites in 2002 and 170 sites in 2001 to our franchisees located in the
United Kingdom and received payments of $4.3 million, $3.7 million and $3.5 million, which are netted
with international operating expenses. Total rent expense was $18.0 million in 2003, $17.6 million in
2002 and $17.8 million in 2001, 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.
During 2003, we recognized $2.0 million of income from the settlement of a litigation matter, recorded as
a reduction in other general expenses in the accompanying consolidated statements of income.
16. Share Repurchase and Common Equity Put Options
The Papa John’s Board of Directors has authorized the repurchase of up to $400 million of common
stock under a share repurchase program that began December 9, 1999, and runs through December 26,
2004. Funding for the share repurchase program has been provided through a credit facility, operating
cash flow, stock option exercises and the liquidation of available investments, cash and cash equivalents.
Through December 28, 2003, a total of 13.6 million shares with an aggregate cost of $351.6 million and
an average price of $25.92 per share have been repurchased under this program and placed in treasury.