Papa Johns 2009 Annual Report Download

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Table of contents

  • Page 1

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  • Page 5
    ... (State or other jurisdiction of incorporation or organization) 61-1203323 (I.R.S. Employer Identification No.) 2002 Papa Johns Boulevard Louisville, Kentucky 40299-2367 (Address of principal executive offices) (502) 261-7272 (Registrant's telephone number, including area code) Securities...

  • Page 6
    ... closing sale price on The NASDAQ Stock Market as of the last business day of the Registrant's most recently completed second fiscal quarter, June 28, 2009, was approximately $540,875,044. As of February 16, 2010, there were 27,174,710 shares of the Registrant's Common Stock outstanding. DOCUMENTS...

  • Page 7
    ... Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Exhibits, Financial Statement...

  • Page 8
    ...as soon as reasonably practicable after we electronically file them with the SEC. We also make available free of charge on our website our Corporate Governance Guidelines; Board Committee Charters; and our Code of Ethics, which applies to Papa John's directors, officers and employees. Printed copies...

  • Page 9
    ... of both national and local components. Our domestic national strategy includes national advertising on television, through print, direct mail and online. Ten national television campaigns aired in 2009. Our local restaurant-level marketing programs target consumers within the delivery area of each...

  • Page 10
    ... franchise sales on average are lower than Companyowned restaurants as a higher percentage of our Company-owned restaurants are located in more heavily penetrated markets. The average cash investment for the five domestic Company-owned restaurants opened during the 2009 fiscal year, exclusive...

  • Page 11
    ... utilize dine-in service as part of our international growth strategy based on a country-bycountry evaluation of consumer preferences and trends. We define a "traditional" domestic Papa John's restaurant as a delivery and carryout unit that services a defined trade area. We consider the location of...

  • Page 12
    ...("QC") Centers; Strategic Supply Chain Management Our domestic QC Centers, comprised of nine full-service regional production and distribution centers and one distribution-only center, supply pizza dough, food products, paper products, smallwares and cleaning supplies twice weekly to each restaurant...

  • Page 13
    ... percentage to the Marketing Fund is currently set to average 2.92% for 2010. Restaurant-level marketing programs target the delivery area of each restaurant, making extensive use of targeted print materials including direct mail and store-to-door coupons. The local marketing efforts also include...

  • Page 14
    ... development programs in which instruction is given on all aspects of our systems and operations. The program includes hands-on training at an operating Papa John's restaurant by a Company-certified training general manager. Our training includes new team member orientation, in-store and delivery...

  • Page 15
    ...these restaurants will be opened or that the development schedule set forth in the development agreements will be achieved. During 2009, 207 (79 domestic and 128 international) franchised Papa John's restaurants were opened. Approval. Franchisees are approved on the basis of the applicant's business...

  • Page 16
    ...of the support program include growing market share in a consolidating category and stabilizing transaction levels. International Development and Franchise Agreements. We opened our first franchised restaurant outside the United States in 1998. We define "international" to be all markets outside the...

  • Page 17
    ... certified to deliver Company-approved programs in order to train new team members and management candidates for their restaurants. Internationally, training is monitored by our international operations support team, as well as regional vice presidents and international business managers assigned to...

  • Page 18
    ... to price, service, location, food quality and variety. There are well-established competitors with substantially greater financial and other resources than Papa John's. Competitors include international, national and regional chains, as well as a large number of local independent pizza operators...

  • Page 19
    .... Further national, state and local government initiatives, such as mandatory health insurance coverage, "living wage" or other proposed increases in minimum wage rates and nutritional guidelines or disclosure requirements, could adversely affect Papa John's as well as the restaurant industry...

  • Page 20
    ...700 were QC Center and Preferred Marketing Solutions, Inc. personnel. Most restaurant team members work part-time and are paid on an hourly basis. None of our team members is covered by a collective bargaining agreement. We consider our team member relations to be excellent. Item 1A. Risk Factors We...

  • Page 21
    ... as our Companyowned and franchised restaurants may have to provide health care coverage that was not previously offered to certain team members. Additional government mandates, including proposed menu labeling legislation, could increase costs and be harmful to system-wide restaurant sales. 14

  • Page 22
    ... crust dough products. Alternative sources may not be available on a timely basis to supply these key ingredients or be available on terms as favorable to us as under our current arrangements. Domestic restaurants purchase substantially all food and related products from our QC Centers. Accordingly...

  • Page 23
    ... obligations established in franchise agreements with international franchisees. Accordingly, there can be no assurance that our international operations will achieve or maintain profitability or meet planned growth rates. Disruptions of our critical business or information technology systems could...

  • Page 24
    ... on our business. Item 1B. Unresolved Staff Comments None. Item 2. Properties As of December 27, 2009, there were 3,469 Papa John's restaurants system-wide. Company-owned Papa John's Restaurants Number of Restaurants Arizona...Florida...Georgia...Illinois ...Indiana ...Kansas...Kentucky...Maryland...

  • Page 25
    Domestic Franchised Papa John's Restaurants Number of Restaurants 67 27 18 203 45 1 11 202 56 11 70 80 24 19 55 47 7...Connecticut ...Delaware ...Florida ...Georgia...Idaho...Illinois ...Indiana...Iowa...Kansas ...Kentucky ...Louisiana ...Maine ...Maryland ...Massachusetts...Michigan ...Minnesota......

  • Page 26
    ... specify a fixed annual rent. Generally, the leases are triple net leases, which require us to pay all or a portion of the cost of insurance, taxes and utilities. Certain leases further provide that the lease payments may be increased annually, with a small number of escalations based on changes in...

  • Page 27
    ... the larger building houses our corporate offices. A 49,000 square foot full-service QC Center is under construction on land we own in the United Kingdom that will service both our Company-owned and franchised restaurants. The Papa John's UK management team is located in a leased office near London...

  • Page 28
    ... Senior Vice President, Managing Director of Special Projects Senior Vice President, Corporate Communications and General Counsel Senior Vice President, Papa John's Food Service, Inc. President and Chief Operating Officer Senior Vice President and Chief Marketing Officer Donna Alcorn 45 2009...

  • Page 29
    ... Vice President, Papa John's Food Service, Inc., Papa John's food manufacturing and distribution subsidiary, in April 2009. Mr. Thompson joined Papa John's in 2006 as Vice President, QCC Operations. Prior to joining Papa John's, Thompson worked for the Scotts Company for six years as Plant Manager...

  • Page 30
    ... cash dividends on our common stock, and have no current plans to do so. Papa John's Board of Directors has authorized the repurchase of up to $775.0 million of common stock under a share repurchase program that began December 9, 1999, and runs through December 31, 2010. Through December 27, 2009...

  • Page 31
    ...22/2009 11/23/2009 - 12/27/2009 Total Number of Shares Purchased 138 127 10 347 697 Average Price Paid per Share $17.63 $18.37 $19.71 $22.53 $22.52 *There were no share repurchases during this period. The Company utilized a written trading plan under Rule 10b5-1 under the Securities Exchange...

  • Page 32
    ... 28, 2008 December 27, 2009 100.00 100.00 100.00 176.56 104.91 104.82 170.85 112.96 134.06 133.39 123.53 89.53 103.71 71.90 39.82 143.93 86.76 73.75 Papa John's International, Inc. NASDAQ Stock Market (U.S. Companies) NASDAQ Stocks (SIC 5800-5899 U.S. Companies) Eating and Drinking 25

  • Page 33
    ... per share data) Dec. 27, 2009 Income Statement Data Domestic revenues: Company-owned restaurant sales Variable interest entities restaurant sales Franchise royalties (2) Franchise and development fees Commissary sales Other sales International revenues: Royalties and franchise and development fees...

  • Page 34
    ... retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, sales of franchise and development rights, sales to franchisees of food and paper products, printing and promotional items, risk management services, and information...

  • Page 35
    ... and related services by us. We expect the percentage of revenues in 2010 to be consistent with 2009. We believe that, in addition to supporting both Company and franchised growth, these activities contribute to product quality and consistency and restaurant profitability throughout the Papa John...

  • Page 36
    ... have developed plans for PJUK to continue to improve its operating results. The plans include efforts to increase Papa John's brand awareness in the United Kingdom, improve sales and profitability for individual restaurants and increase net PJUK franchised unit openings over the next several years...

  • Page 37
    ... cheese prices, but BIBP's operating results are not expected to be cumulatively significant over time. Papa John's will recognize the operating losses generated by BIBP if the shareholders' equity of BIBP is in a net deficit position. Further, Papa John's will recognize subsequent operating income...

  • Page 38
    ... or 2009 financial statements. The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories: • • • Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market based...

  • Page 39
    ... entities reported revenues of approximately $37.7 million during 2009, which are consolidated in our financial statements; however, the consolidation of the entities has had no impact on our operating results during the past three years. Derivatives and Hedging During 2009, Papa John's adopted...

  • Page 40
    ... the years indicated: Year Ended (1) Dec. 27, Dec. 28, Dec. 30, 2009 2008 2007 Income Statement Data: Domestic revenues: Company-owned restaurant sales Variable interest entities restaurant sales Franchise royalties Franchise and development fees Commissary sales Other sales International revenues...

  • Page 41
    ... year's comparable restaurant base Average sales for Company-owned restaurants included in the most recent comparable restaurant base Papa John's Restaurant Progression: U.S. Company-owned: Beginning of period Opened Closed Acquired from franchisees Sold to franchisees End of period International...

  • Page 42
    ... equity balance and the change in such balance during the reporting period. The third component is reflected as investment income or interest expense, depending upon whether BIBP is in a net investment or net borrowing position during the reporting period. In addition, Papa John's has extended loans...

  • Page 43
    ... a decline in sales at our print and promotions subsidiary, Preferred Marketing Solutions, reflecting the deterioration of the U.S. economy. International revenues increased $2.8 million reflecting increases in both the number and average unit volumes of our Company-owned and franchised restaurants...

  • Page 44
    ... 2009 at which point the rate was increased to 4.5%). In January 2010, our domestic royalty rate increased to 4.75%. For 2010, we plan to continue certain domestic franchise support initiatives such as additional contributions to the Marketing Fund and providing targeted royalty relief and local...

  • Page 45
    ... segment basis (in thousands): Increase (Decrease) 2009 Domestic Company-owned restaurants Domestic commissaries Domestic franchising International All others Unallocated corporate expenses Elimination of intersegment profits Income before income taxes, excluding variable interest entities Variable...

  • Page 46
    ... increased revenues due to growth in number of units and unit volumes. The year-over-year improvement declined in the last half of 2009 due to slowing sales and unit growth in response to general worldwide economic conditions. • All Others Segment. Operating income for the "All others" reporting...

  • Page 47
    ... insurance program. The decline in the online ordering system business reflected a reduction in the online fee percentage as we began to operate the online business at a break-even level beginning in 2009. The decline in profitability in our print and promotions business was due to lower sales...

  • Page 48
    ... 2009, there was $5.7 million of unrecognized compensation cost related to non-vested options and restricted stock expected to be recognized during 2010, 2011 and 2012. (ii) The annual management incentive bonus plan is based on the Company's annual operating income performance and certain sales and...

  • Page 49
    ...increase in the royalty rate from 4.25% to 4.50% for the last four months of 2009 and an increase in equivalent units. Average weekly sales for comparable units include restaurants that were open throughout the periods presented. The comparable sales base for Company-owned and franchised restaurants...

  • Page 50
    ...% and 55% of international revenues in 2009 and 2008, respectively. International revenues increased 7.1% to $41.5 million in 2009, from $38.7 million in 2008, reflecting the increase in both the number and average unit volumes of our Company-owned and franchised restaurants over the prior year. 43

  • Page 51
    ... results only represent the portion of BIBP's operating income or loss related to the proportion of BIBP cheese sales to franchisees. The total impact of the consolidation of BIBP on Papa John's pre-tax income was pre-tax income of $22.5 million in 2009 and a pre-tax loss of $10.5 million in 2008...

  • Page 52
    ... 2006 sale of the Perfect Pizza operation and increased provisions for various loans to domestic franchisees. (c) Primarily consists of discretionary contributions to the national marketing fund and other local advertising cooperatives. (d) Includes the consolidation of two additional VIE franchise...

  • Page 53
    ..., as measured on domestic commodity markets, increased approximately 43% in 2008 as compared to 2007. International revenues increased $7.5 million, or 24.2%, reflecting the increase in both the number and average unit volumes of our Company-owned and franchised restaurants over the past year. 46

  • Page 54
    ... segment basis (in thousands): Increase (Decrease) 2008 Domestic Company-owned restaurants Domestic commissaries Domestic franchising International All others Unallocated corporate expenses Elimination of intersegment profits Income before income taxes, excluding variable interest entities Variable...

  • Page 55
    ...62 Company-owned domestic units during 2008. • Domestic Commissary Segment. Domestic commissaries' operating income decreased $5.6 million, reflecting a decline in sales volumes, increases in distribution costs due to higher fuel prices and a reduction in gross margin resulting from increases in...

  • Page 56
    ... annual management incentive bonus plan is based on the Company's annual operating income performance and certain sales and cost control measures as compared to pre-established targets. (b) The Company contributed discretionary contributions to the national marketing fund and other local advertising...

  • Page 57
    ... the increase in the royalty rate from 4.0% to 4.25% for the majority of domestic restaurants effective at the beginning of 2008. Average weekly sales for comparable units include restaurants that were open throughout the periods presented. The comparable sales base for Company-owned and franchised...

  • Page 58
    ...% and 64% of international revenues in 2008 and 2007, respectively. International revenues increased 24.2% to $38.7 million in 2008, from $31.2 million in 2007, reflecting the increase in both the number and average unit volumes of our Company-owned and franchised restaurants over the past year. 51

  • Page 59
    ...the cost of cheese. We chose to mitigate certain commodity cost increases at domestic restaurants by supporting the entire domestic system via reduced commissary margins. Salaries and benefits were $35.1 million in 2008, which was relatively consistent with the prior comparable year. Other operating...

  • Page 60
    ... evaluation of the collectability of our loan issued in connection with the 2006 sale of the Perfect Pizza operations and a loan issued to one domestic franchisee. (c) We contributed discretionary contributions to the national marketing fund and other local advertising cooperatives in both 2007 and...

  • Page 61
    ... at year end (in thousands): 2009 Revolving line of credit Debt associated with VIEs* Other Total debt Less: current portion of debt Long-term debt $ 99,000 50 99,050 $ 99,050 2008 $ 123,500 7,075 79 130,654 (7,075) $ 123,579 *Papa John's is the guarantor of BIBP's debt (none outstanding at...

  • Page 62
    ... Papa John's restaurants (no significant acquisitions in 2008 or 2009), as summarized below (dollars in thousands): Acquistion Month 2007 Period 2 Period 4 Period 7 Period 8 Total 2007* Location Number of Restaurants Cash Paid Recorded Goodwill Pennsylvania Georgia Missouri and Kansas Maryland...

  • Page 63
    ...productivity in Company-owned restaurants and commissaries, and the completion of our commissary in the United Kingdom. We expect to fund the planned capital expenditures and any additional share repurchases of our common stock for the next twelve months from our cash on hand and operating cash flow...

  • Page 64
    ... period of cash settlement with respect to the taxing authority. Off-Balance Sheet Arrangements The off-balance sheet arrangements that are reasonably likely to have a current or future effect on the Company's financial condition are leases of Company-owned restaurant sites, QC Centers, office space...

  • Page 65
    ... pricing or other marketing or promotional strategies by competitors which may adversely affect sales; new product and concept developments by food industry competitors; the ability of the Company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably...

  • Page 66
    .... Consolidation accounting requires the portion of BIBP operating income (loss) related to domestic Company-owned restaurants to be reflected as a reduction (increase) in the "Domestic Company-owned restaurant expenses - cost of sales" line item, thus reflecting the actual market price of cheese had...

  • Page 67
    ... following table presents the 2009, 2008 and 2007 impact by quarter on our pre-tax income due to consolidating BIBP. Additionally, based on the CME milk futures market prices as of February 16, 2010, and the projected 2010 cheese costs to restaurants as determined by the BIBP pricing formula for the...

  • Page 68
    ... external purposes in accordance with generally accepted accounting principles as of December 27, 2009. Ernst & Young LLP, an independent registered public accounting firm, has audited and reported on the consolidated financial statements of Papa John's International, Inc. and on the effectiveness...

  • Page 69
    ... audited the accompanying consolidated balance sheets of Papa John's International, Inc. and subsidiaries as of December 27, 2009 and December 28, 2008, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December...

  • Page 70
    ... the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of Papa John's International, Inc. and subsidiaries as of December 27, 2009 and December 28, 2008, and the related consolidated statements of income, stockholders' equity, and cash flows for...

  • Page 71
    Papa John's International, Inc. and Subsidiaries Consolidated Statements of Income (In thousands, except per share amounts) December 27, 2009 Domestic revenues: Company-owned restaurant sales Variable interest entities restaurant sales Franchise royalties Franchise and development fees Commissary ...

  • Page 72
    Papa John's International, Inc. and Subsidiaries Consolidated Balance Sheets December 27, 2009 December 28, 2008 (In thousands, except per share amounts) Assets Current assets: Cash and cash equivalents Accounts receivable (less allowance for doubtful accounts of $2,791 in 2009 and $3,003 in 2008) ...

  • Page 73
    ...rate swap agreements, net of tax of $781 Foreign currency translation Other Comprehensive income Exercise of stock options Tax effect of non-qualified stock options Acquisition of Company common stock Net contributions (distributions) noncontrolling interests Other Balance at December 27, 2009 Papa...

  • Page 74
    ... and amortization Deferred income taxes Stock-based compensation expense Excess tax benefit related to exercise of non-qualified stock options Other Changes in operating assets and liabilities, net of acquisitions: Accounts receivable Inventories Prepaid expenses Other current assets Other assets...

  • Page 75
    ... and franchises pizza delivery and carryout restaurants under the trademark "Papa John's," currently in all 50 states, the District of Columbia, Puerto Rico and 29 countries. Substantially all revenues are derived from retail sales of pizza and other food and beverage products to the general public...

  • Page 76
    ... out by customers. Domestic production and distribution revenues are comprised of food, promotional items, and supplies sales to franchised restaurants located in the United States and are recognized as revenue upon shipment of the related products to the franchisees. Information services, including...

  • Page 77
    ...the cash sales price that would be received at the time of the sale and the second component is an investment in the continuing franchise agreement, representing the discounted value of future royalties less any incremental direct operating costs, that would be collected under the ten-year franchise...

  • Page 78
    ... have developed plans for PJUK to continue to improve its operating results. The plans include efforts to increase Papa John's brand awareness in the United Kingdom, improve sales and profitability for individual restaurants and increase net PJUK franchised unit openings over the next several years...

  • Page 79
    ...-owned restaurant activities such as mail coupons, door hangers and promotional items and contributions to the Papa John's Marketing Fund, Inc. (the "Marketing Fund") and local market cooperative advertising funds ("Co-op Funds"). Contributions by domestic Company-owned and franchised restaurants to...

  • Page 80
    ... using a Black-Scholes option pricing model. Our specific weighted-average assumptions for the risk-free interest rate, expected term, expected volatility and expected dividend yield are included in Note 18. Restricted stock is valued based on the market price of the Company's shares on the date of...

  • Page 81
    ... Fair value is based on quoted market prices. See Note 7 for additional information on our debt and credit arrangements. Earnings per Share The calculations of basic earnings per common share and earnings per common share - assuming dilution for the years ended December 27, 2009, December 28, 2008...

  • Page 82
    ...Colonel's Limited, LLC 75 52 Noncontrolling Interest Ownership * 49% 30% Restaurant Locations Texas Maryland and Virginia Papa John's Ownership * 51% 70% *The ownership percentages were the same for the 2009, 2008 and 2007 years presented in the accompanying consolidated financial statements. 75

  • Page 83
    ... and related hedged items affect an entity's financial position, results of operations and cash flows. See Note 7 for additional information. Subsequent Events The Subsequent Events topic of the ASC requires public companies to evaluate subsequent events through the date the financial statements are...

  • Page 84
    ... franchisee-owned corporation. BIBP purchases cheese at the market price and sells it to our distribution subsidiary, PJ Food Service, Inc. ("PJFS"), at a fixed price. PJFS in turn sells cheese to Papa John's restaurants (both Company-owned and franchised) at a set price. Effective in March 2009, we...

  • Page 85
    ... franchise entities. The following table summarizes the balance sheets for our consolidated VIEs as of December 27, 2009 and December 28, 2008: December 27, 2009 Franchisees Total December 28, 2008 Franchisees Total (In thousands) Assets: Cash and cash equivalents Accounts receivable - Papa John...

  • Page 86
    ... purchase method of accounting, whereby operating results subsequent to the acquisition date are included in our consolidated financial statements. The goodwill associated with the above-mentioned acquisitions is eligible for deduction over 15 years under U.S. tax regulations. 5. Goodwill and Other...

  • Page 87
    ...in other general expenses in the accompanying consolidated statements of income during 2009, 2008 and 2007: (in thousands) Net book value of divested restaurants Intangible asset - investment in continuing franchise agreement (2) Adjusted net book value of divested restaurants Cash proceeds received...

  • Page 88
    ... of the restaurant's market, as well as our future operating plans for the restaurant and its market. In estimating fair market value based on future cash flows, we used a discount rate of 10.5%, which approximated the return we expected on those types of investments. Based on our analysis, we...

  • Page 89
    ..., we executed a five-year, unsecured Revolving Credit Facility ("Credit Facility") totaling $175.0 million. Under the 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...

  • Page 90
    ...amounts of our swaps in the accompanying consolidated financial statements (in thousands): Fair Values of Derivative Instruments Liability Derivatives Fair Value Balance Sheet Location 2009 Derivatives designated as hedging instruments: Interest rate swaps Other long-term liabilities $ 4,044 $ 6,173...

  • Page 91
    ... rates (with an average stated rate of 6.4% at December 27, 2009), and are generally secured by the fixtures, equipment, signage and, where applicable, land of each restaurant and the ownership interests in the franchisee. The carrying amounts of the loans approximate market value. Interest income...

  • Page 92
    ... third-party commercial insurance company began providing fully-insured coverage to franchisees participating in the franchise insurance program. Accordingly, the 2004 agreement eliminates our risk of loss for franchise insurance coverage written after September 2004. Our operating income will still...

  • Page 93
    ...compensation plan Captive insurance claims loss reserves Interest rate swaps Minority interest - variable interest entities Other Total $ $ 2009 10,724 1,754 4,044 1,684 364 18,570 $ $ 2008 8,395 2,880 6,173 623 536 18,607 13. Income Taxes A summary of the provision (benefit) for income taxes...

  • Page 94
    ... files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2005. The Company is currently...

  • Page 95
    ... officers and directors own equity interests in entities that generate and/or have rights to develop franchised restaurants. Following is a summary of full-year transactions and year-end balances with franchisees owned by related parties, the Marketing Fund and Papa Card, Inc. (in thousands): 2009...

  • Page 96
    ... contributed $7.7 million in 2009, $4.9 million in 2008 and $2.0 million in 2007 to the Marketing Fund as discretionary advertising contributions. During 2008, a franchise entity that is owned by two executive officers and one former executive officer of Papa John's sold two restaurants for $415,000...

  • Page 97
    ... Papa John's International, Inc. 2003 Stock Option Plan for Non-Employee Directors. Approximately 2.7 million shares were available for future issuance under the Omnibus Plan as of December 27, 2009. Option awards are generally granted with an exercise price equal to the market price of the Company...

  • Page 98
    18. Equity Compensation (continued) We recorded stock-based employee compensation expense of $5.8 million in 2009, $2.6 million in 2008 and $4.9 million in 2007. The total income tax benefit recognized in the income statement for sharebased compensation arrangements was $2.1 million in 2009, $930,...

  • Page 99
    ...'s achievement of compounded annual growth rate (CAGR) of consolidated corporate operating income, as defined. The fair value of the restricted stock is based on the market price of the Company's shares on the grant date. Information pertaining to restricted stock activity during 2009, 2008 and 2007...

  • Page 100
    ... wings, dessert pizza and soft drinks to the general public. The domestic commissary segment consists of the operations of our regional dough production and product distribution centers and derives its revenues principally from the sale and distribution of food and paper products to domestic Company...

  • Page 101
    ... provide different products or services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies. No single external customer accounted for 10% or more of our consolidated revenues. The accounting policies of the segments...

  • Page 102
    ... The decline in our operating margin from our reductions in pricing was offset by a decline in fuel costs for 2009. The 2008 decrease of $5.6 million was principally due to a decline in sales volumes, increases in distribution costs due to higher fuel prices and a reduction in gross margin resulting...

  • Page 103
    ... in operating results reflect leverage on the international organizational structure from increased revenues due to the growth in the number of units and unit volumes. The rate of year-over-year improvement declined in the last half of 2009 due to slowing sales and unit growth in response to general...

  • Page 104
    ... 2008 was $10.5 million ($6.9 million after tax or $0.24 per diluted share). All quarterly information above is presented in 13-week periods. Quarterly earnings per share on a fullyear basis may not agree to the Consolidated Statements of Income due to rounding. Item 9. Changes in and Disagreements...

  • Page 105
    ... by reference from the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Report. We have adopted a written code of ethics that applies to our directors, officers and employees...

  • Page 106
    ... Certain Beneficial Owners and Management and Related Stockholder Matters The following table provides information as of December 27, 2009 regarding the number of shares of the Company's common stock that may be issued under the Company's equity compensation plans. (c) Number of securities remaining...

  • Page 107
    ...: Reports of Independent Registered Public Accounting Firm Consolidated Statements of Income for the years ended December 27, 2009, December 28, 2008 and December 30, 2007 Consolidated Balance Sheets as of December 27, 2009 and December 28, 2008 Consolidated Statements of Stockholders' Equity...

  • Page 108
    (a)(2) Financial Statement Schedules: Schedule II - Valuation and Qualifying Accounts Charged to (recovered from) Costs and Additions / Expenses (Deductions) Classification (in thousands) Fiscal year ended December 27, 2009: Deducted from asset accounts: Reserve for uncollectible accounts ...

  • Page 109
    ... 23, 2010 Director February 23, 2010 Director February 23, 2010 Director February 23, 2010 Director February 23, 2010 Director, President and Chief Operating Officer Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer...

  • Page 110
    ... Option Plan for Non-Employee Directors, Amended and Restated as of January 13, 2006. Exhibit 10 to our Registration Statement on Form S-8 (Registration No. 333-138427) dated November 3, 2006 is incorporated herein by reference. Papa John's International, Inc. 1999 Team Member Stock Ownership Plan...

  • Page 111
    ...Form of Performance Unit Award Agreement - 1999 Team Member Stock Ownership Plan. Exhibit 10.4 to our report on Form 10-K for the fiscal year ended December 31, 2006 is incorporated herein by reference. Papa John's International, Inc. Omnibus Plan. Exhibit 10.1 to our Registration Statement on Form...

  • Page 112
    ... and Papa John's International, Inc. effective March 15, 2006. Exhibit 10.2 to our Annual Report on Form 10-K for the fiscal year ended December 25, 2005 is incorporated herein by reference. 10.23 Agreement for the Sale and Purchase of the Perfect Pizza Franchise Business Operated by Perfect Pizza...

  • Page 113
    ... from the Annual Report on Form 10-K of Papa John's International, Inc. for the year ended December 27, 2009, filed on February 23, 2010, formatted in XBRL: (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Stockholders' Equity, (iv...

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