Papa John's International (PZZA) 10-Q 4 Aug 09 2009 Q2 Quarterly report Financial data

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Thousands	Jun. 28, 2009		Dec. 28, 2008
Current assets:
Cash and cash equivalents	$24,328	[2]	$10,987	[1]
Accounts receivable	22,091	[2]	23,775	[1]
Inventories	16,167	[2]	16,872	[1]
Prepaid expenses	9,635	[2]	9,797	[1]
Other current assets	3,986	[2]	5,275	[1]
Assets held for sale	1,019	[2]	1,540	[1]
Deferred income taxes	8,716	[2]	7,102	[1]
Total current assets	85,942	[2]	75,348	[1]
Investments	1,717	[2]	530	[1]
Net property and equipment	192,910	[2]	189,992	[1]
Notes receivable	13,464	[2]	7,594	[1]
Deferred income taxes	12,852	[2]	17,518	[1]
Goodwill	76,705	[2]	76,914	[1]
Other assets	20,194	[2]	18,572	[1]
Total assets	403,784	[2]	386,468	[1]
Current liabilities:
Accounts payable	25,957	[2]	29,148	[1]
Income and other taxes	13,525	[2]	9,685	[1]
Accrued expenses	51,096	[2]	54,220	[1]
Current portion of debt	4,475	[2]	7,075	[1]
Total current liabilities	95,053	[2]	100,128	[1]
Unearned franchise and development fees	5,559	[2]	5,916	[1]
Long-term debt, net of current portion	103,067	[2]	123,579	[1]
Other long-term liabilities	19,923	[2]	18,607	[1]
Stockholders' equity:
Preferred stock	0	[2]	0	[1]
Common stock	357	[2]	352	[1]
Additional paid-in capital	227,439	[2]	216,553	[1]
Accumulated other comprehensive income (loss)	(985)	[2]	(3,818)	[1]
Retained earnings	165,775	[2]	133,759	[1]
Treasury stock	(221,818)	[2]	(216,860)	[1]
Total stockholders' equity, net of noncontrolling interests	170,768	[2]	129,986	[1]
Noncontrolling interests in subsidiaries	9,414	[2]	8,252	[1]
Total stockholders' equity	180,182	[2]	138,238	[1]
Total liabilities and stockholders' equity	$403,784	[2]	$386,468	[1]
[1]Note: The balance sheet at December 28, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. See Note 2 for modifications made as a result of adopting recent accounting pronouncements.
[2]Unaudited

Consolidated Statements of Inco

Consolidated Statements of Income (USD $)
In Thousands, except Per Share data	3 Months Ended Jun. 28, 2009		3 Months Ended Jun. 29, 2008		6 Months Ended Jun. 28, 2009		6 Months Ended Jun. 29, 2008
Domestic revenues:
Company-owned restaurant sales	$124,966	[1]	$133,815	[1]	$256,671	[1]	$272,670	[1]
Variable interest entities restaurant sales	11,223	[1]	2,239	[1]	16,894	[1]	4,279	[1]
Franchise royalties	14,664	[1]	14,759	[1]	30,025	[1]	30,204	[1]
Franchise and development fees	78	[1]	247	[1]	306	[1]	1,167	[1]
Commissary sales	101,444	[1]	106,321	[1]	209,360	[1]	212,368	[1]
Other sales	13,981	[1]	16,434	[1]	28,750	[1]	33,279	[1]
International revenues:
Royalties and franchise and development fees	3,388	[1]	3,108	[1]	6,623	[1]	6,128	[1]
Restaurant and commissary sales	6,893	[1]	6,485	[1]	12,980	[1]	12,318	[1]
Total revenues	276,637	[1]	283,408	[1]	561,609	[1]	572,413	[1]
Domestic Company-owned restaurant expenses:
Cost of sales	23,893	[1]	30,803	[1]	49,794	[1]	62,375	[1]
Salaries and benefits	36,157	[1]	40,050	[1]	74,360	[1]	81,610	[1]
Advertising and related costs	11,376	[1]	11,913	[1]	22,649	[1]	24,610	[1]
Occupancy costs	7,722	[1]	8,540	[1]	15,638	[1]	17,011	[1]
Other operating expenses	17,181	[1]	18,072	[1]	34,809	[1]	36,379	[1]
Total domestic Company-owned restaurant expenses	96,329	[1]	109,378	[1]	197,250	[1]	221,985	[1]
Variable interest entities restaurant expenses	9,326	[1]	1,987	[1]	14,135	[1]	3,780	[1]
Domestic commissary and other expenses:
Cost of sales	84,586	[1]	89,976	[1]	175,536	[1]	179,982	[1]
Salaries and benefits	8,638	[1]	9,127	[1]	17,469	[1]	18,092	[1]
Other operating expenses	10,945	[1]	12,112	[1]	21,617	[1]	23,644	[1]
Total domestic commissary and other expenses	104,169	[1]	111,215	[1]	214,622	[1]	221,718	[1]
(Income) loss from the franchise cheese-purchasing program, net of minority interest	(5,462)	[1]	4,364	[1]	(12,565)	[1]	9,922	[1]
International operating expenses	5,907	[1]	5,818	[1]	11,264	[1]	11,158	[1]
General and administrative expenses	30,002	[1]	27,237	[1]	57,765	[1]	54,451	[1]
Other general expenses	3,583	[1]	539	[1]	8,050	[1]	2,752	[1]
Depreciation and amortization	8,181	[1]	8,404	[1]	16,136	[1]	16,410	[1]
Total costs and expenses	252,035	[1]	268,942	[1]	506,657	[1]	542,176	[1]
Operating income	24,602	[1]	14,466	[1]	54,952	[1]	30,237	[1]
Investment income	144	[1]	181	[1]	276	[1]	447	[1]
Interest expense	(1,440)	[1]	(1,802)	[1]	(2,856)	[1]	(3,694)	[1]
Income before income taxes	23,306	[1]	12,845	[1]	52,372	[1]	26,990	[1]
Income tax expense	8,037	[1]	4,538	[1]	18,339	[1]	9,514	[1]
Net income, including noncontrolling interests	15,269	[1]	8,307	[1]	34,033	[1]	17,476	[1]
Less: income attributable to noncontrolling interests	(1,092)	[1]	(659)	[1]	(2,017)	[1]	(1,203)	[1]
Net income, net of noncontrolling interests	$14,177	[1]	$7,648	[1]	$32,016	[1]	$16,273	[1]
Basic earnings per common share (in dollars per share)	0.51	[1]	0.27	[1]	1.16	[1]	0.57	[1]
Earnings per common share - assuming dilution (in dollars per share)	0.51	[1]	0.27	[1]	1.15	[1]	0.57	[1]
Basic weighted average shares outstanding (in shares)	27,789	[1]	28,372	[1]	27,715	[1]	28,536	[1]
Diluted weighted average shares outstanding (in shares)	27,989	[1]	28,705	[1]	27,860	[1]	28,754	[1]
[1]Unaudited

Consolidated Statements of Stoc

Consolidated Statements of Stockholders Equity (USD $)

In Thousands

Common Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Treasury Stock

Noncontrolling Interests in Subsidiaries

Total

Balance at beginning of period at Dec. 30, 2007

$349

[4]

$208,598

[4]

$156

[4]

$96,963

[4]

($179,163)

[4]

$8,035

[4]

$134,938

[4]

Balance at beginning of period, Shares Outstanding at Dec. 30, 2007

28,777

[4]

Comprehensive income:

Net income

16,273

[4]

1,203

[4]

17,476

[4]

Change in valuation of interest rate swap agreements, net of tax of $322 and $113, respectively

(229)

[4]

(229)

[4]

Foreign currency translation

133

[4]

133

[4]

Comprehensive income

17,380

[4]

Exercise of stock options, value

1

[4]

964

[4]

965

[4]

Exercise of stock options, shares

50

[4]

Tax effect related to exercise of non-qualified stock options

117

[4]

117

[4]

Acquisition of treasury stock, value

(20,287)

[4]

(20,287)

[4]

Acquisition of treasury stock, shares

(768)

[4]

Distributions to noncontrolling interests

(840)

[4]

(840)

[4]

Other

2,567

[4]

2,567

[4]

Balance at end of period at Jun. 29, 2008

350

[4]

212,246

[4]

60

[2],[4]

113,236

[4]

(199,450)

[4]

8,398

[4]

134,840

[4]

Balance at end of period, Shares Outstanding at Jun. 29, 2008

28,059

[4]

Comprehensive income:

Balance at beginning of period at Dec. 28, 2008

352

[3]

216,553

[3]

(3,818)

[3]

133,759

[3]

(216,860)

[3]

8,252

[3]

138,238

[3]

Balance at beginning of period, Shares Outstanding at Dec. 28, 2008

27,637

[4]

Comprehensive income:

Net income

32,016

[4]

2,017

[4]

34,033

[4]

Change in valuation of interest rate swap agreements, net of tax of $322 and $113, respectively

573

[4]

573

[4]

Foreign currency translation

2,260

[4]

2,260

[4]

Comprehensive income

36,866

[4]

Exercise of stock options, value

5

[4]

8,052

[4]

8,057

[4]

Exercise of stock options, shares

477

[4]

477

[4]

Tax effect related to exercise of non-qualified stock options

227

[4]

227

[4]

Acquisition of treasury stock, value

(4,958)

[4]

(4,958)

[4]

Acquisition of treasury stock, shares

(275)

[4]

(275)

[4]

Distributions to noncontrolling interests

(855)

[4]

(855)

[4]

Other

2,607

[4]

2,607

[4]

Balance at end of period at Jun. 28, 2009

$357

[4]

$227,439

[4]

($985)

[1],[4]

$165,775

[4]

($221,818)

[4]

$9,414

[4]

$180,182

[4]

Balance at end of period, Shares Outstanding at Jun. 28, 2009

27,839

[4]

[1]At June 28, 2009, the accumulated other comprehensive loss of $985 was comprised of a net unrealized loss on the interest rate swap agreements of $3,378 and an $88 pension plan liability for PJUK, offset by unrealized foreign currency translation gains of $2,481.

[2]At June 29, 2008, the accumulated other comprehensive gain of $60 was comprised of unrealized foreign currency translation gains of $1,588, offset by a net unrealized loss on the interest rate swap agreements of $1,528.

[3]Note: The balance sheet at December 28, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. See Note 2 for modifications made as a result of adopting recent accounting pronouncements.

[4]Unaudited

1_Consolidated Statements of St

Consolidated Statements of Stockholders Equity (Parenthetical) (USD $)
In Thousands	12/29/2008 - 6/28/2009		12/31/2007 - 6/29/2008
Change in valuation of interest rate swap agreements, tax	$322	[1]	$113	[1]
[1]Unaudited

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Thousands	6 Months Ended Jun. 28, 2009		6 Months Ended Jun. 29, 2008
Operating activities
Net income, net of noncontrolling interests	$32,016	[2]	$16,273	[2]
Adjustments to reconcile net income to net cash provided by operating activities:
Restaurant impairment and disposition losses			1,143	[2]
Provision for uncollectible accounts and notes receivable	2,181	[2]	1,264	[2]
Depreciation and amortization	16,136	[2]	16,410	[2]
Deferred income taxes	2,731	[2]	(7,178)	[2]
Stock-based compensation expense	2,607	[2]	2,567	[2]
Excess tax benefit related to exercise of non-qualified stock options	(443)	[2]	(117)	[2]
Other	692	[2]	161	[2]
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	718	[2]	(2,251)	[2]
Inventories	876	[2]	1,825	[2]
Prepaid expenses	184	[2]	1,026	[2]
Other current assets	1,880	[2]	(256)	[2]
Other assets and liabilities	(559)	[2]	(1,233)	[2]
Accounts payable	(4,597)	[2]	293	[2]
Income and other taxes	3,840	[2]	1,704	[2]
Accrued expenses	(3,326)	[2]	(1,885)	[2]
Unearned franchise and development fees	(357)	[2]	(494)	[2]
Net cash provided by operating activities	54,579	[2]	29,252	[2]
Investing activities
Purchase of property and equipment	(15,193)	[2]	(16,010)	[2]
Purchase of investments	(1,187)	[2]	(437)	[2]
Proceeds from sale or maturity of investments			407	[2]
Loans issued	(9,739)	[2]	(681)	[2]
Loan repayments	1,439	[2]	1,078	[2]
Acquisitions	(464)	[2]	(100)	[2]
Proceeds from divestitures of restaurants	830	[2]
Other	18	[2]	156	[2]
Net cash used in investing activities	(24,296)	[2]	(15,587)	[2]
Financing activities
Net (repayments) proceeds from line of credit facility	(20,500)	[2]	1,102	[2]
Net (repayments) proceeds from short-term debt - variable interest entities	(2,600)	[2]	3,525	[2]
Excess tax benefit related to exercise of non-qualified stock options	443	[2]	117	[2]
Proceeds from exercise of stock options	8,057	[2]	965	[2]
Acquisition of Company common stock	(4,958)	[2]	(20,287)	[2]
Noncontrolling interests, net of distributions	1,162	[2]	363	[2]
Other	378	[2]	(24)	[2]
Net cash used in financing activities	(18,018)	[2]	(14,239)	[2]
Effect of exchange rate changes on cash and cash equivalents	(11)	[2]	53	[2]
Change in cash and cash equivalents	12,254	[2]	(521)	[2]
Cash recorded from consolidation of VIEs	1,087	[2]
Cash and cash equivalents at beginning of period	10,987	[1]	8,877	[2]
Cash and cash equivalents at end of period	$24,328	[2]	$8,356	[2]
[1]Note: The balance sheet at December 28, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. See Note 2 for modifications made as a result of adopting recent accounting pronouncements.
[2]Unaudited

Basis of Presentation

Basis of Presentation
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Basis of Presentation	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form10-Q and Article10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the six months ended June28, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ended December27, 2009. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form10-K for Papa Johns International,Inc. (referred to as the Company, Papa Johns or in the first person notations of we, us and our) for the year ended December28, 2008.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Recent Accounting Pronouncements	2. Recent Accounting Pronouncements Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements SFAS No.157 Fair Value Measurements requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. SFAS No.157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. We adopted the provisions of SFAS No.157 in two phases: (1)phase one was effective for financial assets and liabilities in our first quarter of 2008 and (2)phase two was effective for our first quarter of fiscal 2009. The adoption of SFAS No.157 in 2008 and 2009 did not have a significant impact on our financial statements. SFAS No.141R, Business Combinations Papa Johns adopted the provisions of SFAS No.141 - revised 2007 (SFAS No.141R), Business Combinations, in the first quarter of 2009. SFAS No.141R establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS No.141R applies to business combinations for which the acquisition date is on or after December15, 2008. The adoption of this statement has had no impact on our 2009 consolidated financial statements. SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements Papa Johns adopted the provisions of SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements an amendment to ARB No.51, in the first quarter of 2009. SFAS No.160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements, but separate from the equity of the parent company. The statement further requires that consolidated net income be reported at amounts attributable to the parent and the noncontrolling interest, rather than expensing the income attributable to the minority interest holder. This statement also requires sufficient disclosures to clearly identify and distinguish between the interests of the parent company and the interests of the noncontrolling owners, including a disclosure on the face of the consolidated statements for income attributable to the noncontrolling interest holder. The presentation and disclosure requirements of this statement was applied retrospectively for all periods presented, and thus, the prior year financial statements have been modified to incorporate the new requirements. Papa Johns had two joint venture arrangements as of June28, 2009 and June29, 2008, which were as follows: Restaurants Noncontrolling as of Restaurant Papa Johns Interest June28, 2009 Locations Ownership * Ownership * Star Papa, LP 75 Texas 51 % 49 % Colonels Limited, LLC 51

Acquisitions and Dispositions

Acquisitions and Dispositions
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Acquisitions and Dispositions	3. Acquisitions and Dispositions During the second quarter of 2009, we completed the acquisition of 11 restaurants in Florida. The purchase price for those restaurants totaled $2.8 million, which was comprised of cash and the cancellation of a $2.3 million note due to us, of which approximately $1.5 million was recorded as goodwill. The acquisition was accounted for by the purchase method of accounting, whereby operating results subsequent to the acquisition date are included in our consolidated financial results. During the second quarter of 2009, we completed the sale of 10 Company-owned restaurants located in New Mexico. The sales price of $1.1 million consisted of a cash payment of $600,000 and notes financed by Papa Johns to the purchasers, who are current Papa Johns franchisees, for $500,000. We recorded a pre-tax gain of approximately $350,000 associated with the sale of those restaurants.

Accounting for Variable Interes

Accounting for Variable Interest Entities
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Accounting for Variable Interest Entities	4. Accounting for Variable Interest Entities FASB Interpretation No.46, Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No.51 (FIN 46), provides a framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited-liability company, trust, or any other legal structure used to conduct activities or hold assets that either (1)has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2)has a group of equity owners that are unable to make significant decisions about its activities, or (3)has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. FIN 46 requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIEs activities, is entitled to receive a majority of the VIEs residual returns (if no party absorbs a majority of the VIEs losses), or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIEs assets, liabilities and non-controlling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46 also requires disclosures about VIEs that the variable interest holder is not required to consolidate but in which it has a significant variable interest. We have a purchasing arrangement with BIBP Commodities,Inc. (BIBP), a special-purpose entity formed at the direction of our Franchise Advisory Council for the sole purpose of reducing cheese price volatility to domestic system-wide restaurants. BIBP is an independent, 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 Johns restaurants (both Company-owned and franchised) at a set price. Effective March2009, we modified the BIBP formula to establish the price of cheese on a more frequent basis based on the projected spot market prices. At the current rate of repayment, BIBPs cumulative deficit would be substantially repaid at the end of 2011. PJFS purchased $35.0 million and $71.0 million of cheese from BIBP for the three and six months ended June28, 2009, respectively, compared to $40.6 million and $80.2 million in the 2008 comparable periods, respectively. As defined by FIN 46, we are the primary beneficiary of BIBP, a VIE. We recognize the operating losses generated by BIBP if BIBPs shareholders equity is in a net deficit position. Further, we will recognize the subsequent operating income generated by BIBP up to the amount of any losses previously recognized. We recognized pre-tax g

Debt

Debt
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Debt	5. Debt Our debt is comprised of the following (in thousands): June28, December28, 2009 2008 Revolving line of credit $ 103,000 $ 123,500 Debt associated with VIEs * 4,475 7,075 Other 67 79 Total debt 107,542 130,654 Less: current portion of debt (4,475 ) (7,075 ) Long-term debt $ 103,067 $ 123,579 *Papa Johns is the guarantor of BIBPs outstanding debt. In January2006, 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 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. The remaining availability under our line of credit, reduced for certain outstanding letters of credit, approximated $54.0 million and $31.1 million as of June28, 2009 and December28, 2008, respectively. The fair value of our outstanding debt approximates the carrying value since our debt agreements are variable-rate instruments. The Credit Facility contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of specified fixed charges and leverage ratios. At June28, 2009 and December28, 2008, we were in compliance with these covenants. We presently have two interest rate swap agreements (swaps) that provide fixed interest rates, as compared to LIBOR, as follows: Floating Rate Debt Fixed Rates The first interest rate swap agreement: January16, 2007 to January15, 2009 $ 60 million 4.98 % January15, 2009 to January15, 2011 $ 50 million 4.98 % The second interest rate swap agreement: January31, 2009 to January31, 2011 $ 50 million 3.74 % Our swaps are derivative instruments that are designated as cash flow hedges because the swaps provide a hedge against the effects of rising interest rates on present and/or forecasted future borrowings. The effective portion of the gain or loss on the swaps is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the swaps affect earnings. Gains or losses on the swaps representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Amounts payable or receivable under the swaps are accounted for as adjustments to interest expense. The following tables provide information on the location and amounts of our swaps in the accompanying consolidated financial statements (in thousands): Fair Values of Derivative Instruments Liability Derivatives Balance Sheet Location Fair Value Jun-09 Fair Value Dec-08 Derivatives designated as hedging instruments under Statement 133: Interest

Calculation of Earnings Per Sha

Calculation of Earnings Per Share
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Calculation of Earnings Per Share	6. Calculation of Earnings Per Share The calculations of basic earnings per common share and earnings per common share assuming dilution are as follows (in thousands, except per share data): Three Months Ended Six Months Ended June28, June29, June28, June29, 2009 2008 2009 2008 Basic earnings per common share: Net income, net of noncontrolling interests $ 14,177 $ 7,648 $ 32,016 $ 16,273 Weighted average shares outstanding 27,789 28,372 27,715 28,536 Basic earnings per common share $ 0.51 $ 0.27 $ 1.16 $ 0.57 Earnings per common share - assuming dilution: Net income, net of noncontrolling interests $ 14,177 $ 7,648 $ 32,016 $ 16,273 Weighted average shares outstanding 27,789 28,372 27,715 28,536 Dilutive effect of outstanding stock compensation awards 200 333 145 218 Diluted weighted average shares outstanding 27,989 28,705 27,860 28,754 Earnings per common share - assuming dilution $ 0.51 $ 0.27 $ 1.15 $ 0.57 Shares subject to options to purchase common stock with an exercise price greater than the average market price for the three and six months ended June28, 2009 were not included in the computation of the dilutive effect of common stock options because the effect would have been antidilutive. The weighted average number of shares subject to the antidilutive options were 1.4 million and 1.0 million for the three-month periods ending June28, 2009 and June29, 2008, respectively. The six-month period weighted averages ending June28, 2009 and June29, 2008 were 1.4 million and 1.2 million, respectively.

Comprehensive Income

Comprehensive Income
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Comprehensive Income	7. Comprehensive Income Comprehensive income is comprised of the following: Three Months Ended Six Months Ended (In thousands) June28, 2009 June29, 2008 June28, 2009 June29, 2008 Net income, including noncontrolling interests $ 15,269 $ 8,307 $ 34,033 $ 17,476 Change in valuation of interest rate swap agreements, net of tax 447 1,116 573 (229 ) Foreign currency translation 3,275 9 2,260 133 Comprehensive income $ 18,991 $ 9,432 $ 36,866 $ 17,380

Notes Receivable

Notes Receivable
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Notes Receivable	8. Notes Receivable Selected franchisees have borrowed funds from our subsidiary, Capital Delivery, Ltd., principally for use in the acquisition, construction and development of their restaurants. We have also entered into loan agreements with certain franchisees that purchased restaurants from us or from other franchisees. In addition, as part of the 2006 sale of our former Perfect Pizza operations, we have a loan outstanding from the purchaser. Loans outstanding, net of allowance for doubtful accounts, were approximately $13.5 million as of June28, 2009 and $7.6 million as of December28, 2008. We have recorded reserves of $7.2 million and $5.4 million as of June28, 2009 and December28, 2008, respectively, for potentially uncollectible notes receivable from franchisees and the purchaser of the Perfect Pizza operations. We concluded the reserves were necessary due to certain franchisees economic performance and underlying collateral value and credit risk related to the Perfect Pizza operations. In connection with the 2006 sale of our former Perfect Pizza operations, we remain contingently liable for payment under approximately 70 lease arrangements, primarily associated with Perfect Pizza restaurants sites. The leases have varying terms, the latest of which expires in 2017. As of June28, 2009, the potential amount of undiscounted payments we could be required to make in the event of non-payment by Perfect Pizza and associated franchisees was approximately $6.2 million. We have not recorded a liability with respect to such leases as of June28, 2009 as our cross-default provisions with the Perfect Pizza franchisor substantially reduce the risk that we will be required to make payments under these leases at the present time.

Segment Information

Segment Information
	6 Months Ended Jun. 28, 2009 USD / shares
Notes to Financial Statements
Segment Information	9. Segment Information We have defined five reportable segments: domestic restaurants, domestic commissaries, domestic franchising, international operations and variable interest entities (VIEs). The domestic restaurant segment consists of the operations of all domestic (domestic is defined as contiguous United States) Company-owned restaurants and derives its revenues principally from retail sales of pizza and side items, such as breadsticks, cheesesticks, chicken strips, chicken 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-owned and franchised restaurants. The domestic franchising segment consists of our franchise sales and support activities and derives its revenues from sales of franchise and development rights and collection of royalties from our domestic franchisees. The international operations segment principally consists of our Company-owned restaurants and distribution sales to franchised Papa Johns restaurants located in the United Kingdom, China and Mexico and our franchise sales and support activities, which derive revenues from sales of franchise and development rights and the collection of royalties from our international franchisees. VIEs consist of entities in which we are deemed the primary beneficiary, as defined in Note 4, and include BIBP and certain franchisees to which we have extended loans. All other business units that do not meet the quantitative thresholds for determining reportable segments consist of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, risk management services, and information systems and related services used in restaurant operations and certain partnership development activities. Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and eliminations. Certain administrative and capital costs are allocated to segments based upon predetermined rates or actual estimated resource usage. We account for intercompany sales and transfers as if the sales or transfers were to third parties and eliminate the related profit in consolidation. Our reportable segments are business units that 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. Our segment information is as follows: Three Months Ended Six Months Ended (In thousands) June28, 2009 June29, 2008 June28, 2009 June29, 2008 Revenues from external customers: Domestic Company-owned restaurants $ 124,966 $ 133,815 $ 256,671 $ 272,670 Domestic commissaries 101,444 106,321 209,360 212,368 Domestic franchising 14,742 15,006 30,331 31,371 In

Document and Entity Information

Document and Entity Information (USD $)
	6 Months Ended Jun. 28, 2009	Jul. 29, 2009	Jun. 29, 2008
Document and Entity Information
Entity Registrant Name	PAPA JOHNS INTERNATIONAL INC
Entity Central Index Key	0000901491
Document Type	10-Q
Document Period End Date	2009-06-28
Amendment Flag	false
Current Fiscal Year End Date	--12-27
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$574,220,073
Entity Common Stock, Shares Outstanding		28,065,439