Papa Johns 2005 Annual Report Download - page 41

39
Liquidity and Capital Resources
Our debt is comprised of the following (in thousands):
2005 2004
Revolving line of credit 49,000$ 78,500$
Debt associated with VIEs * 6,100 15,709
Other 16 21
Total debt 55,116 94,230
Less: current portion of debt (6,100) (15,709)
Long-term debt 49,016$ 78,521$
*The VIEs' third-party creditors do not have any recourse to Papa John's.
In January 2006, we executed a five-year unsecured Revolving Credit Facility (“New Credit Facility”)
totaling $175.0 million that replaced a $175.0 million Revolving Credit Facility (“Old Credit Facility”).
Under the New Credit Facility, outstanding balances accrue interest at 50.0 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 12.5 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), as defined. Under the Old Credit Facility,
outstanding balances accrued interest at 62.5 to 100.0 basis points over LIBOR. The commitment fee on
the unused balance ranged from 15.0 to 20.0 basis points. The increment over LIBOR and the
commitment fee were determined quarterly based upon the ratio of total indebtedness to EBITDA, as
defined.
Cash flow from operating activitites from continuing operations increased to $82.1 million in 2005,
compared to $38.6 million in 2004. The consolidation of BIBP increased cash flow from operations by
approximately $4.5 million in 2005 and reduced cash flow from operations by approximately $23.5
million in 2004 (as reflected in the net income and deferred income taxes captions in the accompanying
Consolidated Statements of Cash Flows). The primary reasons for the $15.5 million increase in cash flow
from continuing operations in 2005 (prior to BIBP consolidation) were the above-noted increases in
operating income from continuing operations, net of income taxes, favorable working capital changes,
including income taxes, accounts receivable and prepaid expenses, and the tax benefit related to the
exercise of non-qualified stock options.
Cash flow from operating activities from continuing operations decreased to $38.6 million in 2004
compared to $81.6 million in 2003. Approximately $23.5 million of the decrease is attributable to the
consolidation of BIBP and the remaining decrease is primarily due to unfavorable working capital
changes, including increased levels of prepaid insurance due to the timing of payments and general
premium increases, increased accounts receivable due to an extension of the timing of collections of
certain items (such as systems hardware and DVD’s) from franchisees, and increased inventory levels
due to a change in payment terms with a significant supplier and generally higher commodity costs
(primarily cheese).
In the fourth quarter of 2005, we completed the sale of 84 Company-owned restaurants, with annual
revenues approximating $53.0 million, in Colorado and Minnesota to a new franchise group, PJCOMN
Acquisition Corporation, an affiliate of Washington, DC-based private equity firm Milestone Capital
Management, LLC, pursuant to an agreement announced in August 2005. The total consideration was
$12.0 million, including $1.0 million for prepaid royalties, and was received in cash at closing. The sale