Papa Johns 2007 Annual Report Download - page 59

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52
shifting the domestic restaurant portfolio mix more toward franchised units will improve the absolute
level and consistency of operating margin percentage and be more consistent with the trend in franchise
business models in the domestic restaurant category. Of the total 2,760 domestic units open as of
December 30, 2007, 648 or 23.5% were Company-owned (including 128 units owned in joint venture
arrangements with franchisees in which the Company has a majority ownership position). The Company
believes that through a combination of net openings more heavily weighted toward franchise units and
the selective refranchising of certain Company-owned markets, the percentage of Company-owned units
can be decreased below 20% over the next few years. Any such unit sales completed during 2008 are not
expected to have a significant impact on 2008 operating income.
We require capital primarily for the development, acquisition, renovation and maintenance of restaurants,
the development, renovation and maintenance of commissary and print and promotions facilities and
equipment and the enhancement of corporate systems and facilities. Purchases of property and equipment
amounted to $31.1 million, $39.4 million and $17.5 million in 2007, 2006 and 2005, respectively, and are
summarized by operating segment in “Note 22” of “Notes to Consolidated Financial Statements.”
Additionally, we began a common stock repurchase program in December 1999. We repurchased 2.7
million common stock shares for $72.9 million during fiscal 2007. Our Board of Directors has authorized
up to an aggregate of $725.0 million for the share repurchase program through December 28, 2008. At
December 30, 2007, a total of 40.8 million shares have been repurchased for $675.0 million at an average
price of $16.55 per share since the repurchase program started in 1999 (approximately 2.7 million shares
in 2007, 3.4 million shares in 2006, 3.3 million shares in 2005 and 31.4 million shares prior to 2005).
Subsequent to year-end (through February 19, 2008), we acquired an additional 104,000 shares at an
aggregate cost of $2.3 million. As of February 19, 2008, approximately $47.7 million remains available
for repurchase of common stock under this authorization.
The outstanding principal balance under our revolving line of credit increased from $49.0 million in 2005
to $96.5 million in 2006 and increased to $134.0 million in 2007, primarily due to the previously
mentioned restaurant acquisitions and repurchases of our common stock.
Total 2008 capital expenditures are expected to approximate $35 million. The planned capital
expenditures in 2008 will support growth initiatives, including domestic Company-owned new unit
growth, accelerated development of Papa John’s branded units in the United Kingdom and China, as well
as technical support assets for numerous areas of the business, including the online ordering function.
We expect to fund the planned capital expenditures, restaurant acquisitions and any additional share
repurchases of our common stock for the next twelve months from operating cash flow and
approximately $20.6 million remaining availability under our line of credit, reduced for certain
outstanding letters of credit. Our total debt was $142.7 million, including $8.7 million associated with
BIBP, at December 30, 2007, compared to $97.0 million, including $525,000 associated with BIBP, at
December 31, 2006.