Papa John's International (PZZA) 8-K Papa John’s Announces Fourth Quarter and Full Year 2015 Results

Exhibit 99.1

Papa John’s Announces Fourth Quarter and Full Year 2015 Results

2016 Operating Assumptions and Earnings Guidance Announced

LOUISVILLE, Ky.--(BUSINESS WIRE)--February 23, 2016--Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the fourth quarter and fiscal year ended December 27, 2015.

Highlights

• Fourth quarter earnings per diluted share of $0.62 in 2015 compared to $0.52 in 2014, an increase of 19.2%
• Adjusted earnings per diluted share of $2.09 for full year 2015, excluding a legal settlement, or an increase of 19.4% over 2014; reported earnings per diluted share of $1.89 for full year 2015
• System-wide comparable sales increases of 1.9% for North America and 5.3% for International for the fourth quarter; System-wide comparable sales increases of 4.2% for North America and 6.9% for International for the full year
• 107 worldwide net unit openings in the fourth quarter and 230 for the full year, of which 182 were International and 48 were in North America

“I’d like to congratulate our entire team for making 2015 another great year for the Papa John’s brand,” said Papa John’s founder, chairman and CEO John Schnatter. “From continued improvements to our product, to digital innovations, to growing our international footprint – all while again growing EPS nearly 20% and running strong positive comp sales – this year has left us tremendously well-positioned entering 2016.”

Fourth quarter 2015 revenues were $416.8 million, a 2.0% decrease from fourth quarter 2014 revenues of $425.5 million. Fourth quarter 2015 net income increased 16.6% to $24.7 million, compared to fourth quarter 2014 net income of $21.2 million. Fourth quarter 2015 diluted earnings per share were $0.62, or a 19.2% increase, compared to fourth quarter 2014 diluted earnings per share of $0.52.

Full year 2015 revenues were $1.64 billion, a 2.5% increase from 2014 revenues of $1.60 billion. Full year 2015 net income was $75.7 million ($83.7 million, or a 14.1% increase, excluding the after-tax expense of a legal settlement as detailed in the “Item Impacting Comparability” table), compared to 2014 net income of $73.3 million. Full year 2015 diluted earnings per share were $1.89 ($2.09, or a 19.4% increase, excluding the legal settlement), compared to 2014 diluted earnings per share of $1.75.

Global Restaurant and Comparable Sales Information

		Three Months Ended		Year Ended
		Dec. 27, 2015	Dec. 28, 2014	Dec. 27, 2015	Dec. 28, 2014
	Global restaurant sales growth (a)	3.4%	6.6%	5.3%	9.8%
	Global restaurant sales growth, excluding the impact of foreign currency (a)	5.7%	8.2%	7.8%	10.6%
	Comparable sales growth (b)
	Domestic company-owned restaurants	3.4%	5.9%	5.9%	8.2%
	North America franchised restaurants	1.3%	3.4%	3.6%	6.2%
	System-wide North America restaurants	1.9%	4.1%	4.2%	6.7%
	System-wide international restaurants	5.3%	8.9%	6.9%	7.4%
(a)	Includes both company-owned and franchised restaurant sales.
(b)	Represents the change in year-over-year sales for the same base of restaurants for the same fiscal periods. Comparable sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation.

We believe global restaurant and comparable sales growth information, as defined in the table above, is useful in analyzing our results since our franchisees pay royalties that are based on a percentage of franchise sales. Franchise sales generate commissary revenue in the United States and in certain international markets. Global restaurant and comparable sales growth information is also useful in analyzing industry trends and the strength of our brand. Management believes the presentation of global restaurant sales growth excluding the impact of foreign currency provides investors with useful information regarding underlying sales trends by presenting sales growth excluding the external factor of foreign currency exchange. Franchise restaurant sales are not included in company revenues.

Revenue and Operating Highlights

All revenue and operating highlights below are compared to the same period of the prior year, unless otherwise noted.

Revenue Highlights

Consolidated revenues decreased $8.7 million, or 2.0%, for the fourth quarter of 2015 and increased $39.2 million, or 2.5%, for the full year. The decrease for the three-month period was primarily due to lower FOCUS equipment sales, as anticipated, since the rollout is now complete and lower domestic commissary sales from lower commodity costs. The following summarizes changes in our revenues for the fourth quarter and full year:

• Domestic company-owned restaurant sales increased $8.4 million, or 4.6%, and $54.5 million, or 7.8%, for the fourth quarter and full year 2015, respectively, primarily due to increases of 3.4% and 5.9% in comparable sales and increases of 1.9% and 2.7% in equivalent units.
• North America franchise royalty revenue increased approximately $800,000, or 3.4%, and $5.6 million, or 6.3%, for the fourth quarter and full year 2015, respectively, primarily due to increases of 1.3% and 3.6% in comparable sales, increases of 1.2% and 1.0% in equivalent units and lower royalty incentives.
• Domestic commissary sales decreased $7.2 million, or 4.4%, and $13.9 million, or 2.2%, for the fourth quarter and full year, respectively, primarily due to lower revenues associated with lower cheese prices, somewhat offset by increases in restaurant sales volumes. Our pricing for cheese is based on a fixed dollar markup; when cheese prices decrease, revenues decrease with no overall impact on the related dollar margin.
• Other sales decreased approximately $9.9 million, or 40.3%, and $9.5 million, or 12.8%, for the fourth quarter and full year 2015, respectively. As previously discussed, the decreases are primarily due to the lower FOCUS equipment sales, as anticipated. The higher levels of FOCUS equipment sales in the fourth quarter and full year of 2014 had no significant impact on operating results.
• International revenues decreased approximately $900,000, or 3.4%, for the fourth quarter and increased approximately $2.2 million, or 2.2%, for the full year 2015. The decrease for the fourth quarter was primarily due to lower sales at company-owned restaurants in China due to the disposition of eleven restaurants in 2014 and negative comparable sales. This decrease was partially offset by higher royalties and commissary revenues due to an increase in the number of franchised restaurants and an increase in franchised comparable sales, calculated on a constant dollar basis. The increase for the full year was primarily due to higher royalties and commissary revenues from the increase in the number of franchised restaurants and an increase in franchised comparable sales. These increases were partially offset by lower sales at company-owned restaurants in China. Foreign currency exchange rates had a negative impact on revenues of approximately $1.5 million and $7.5 million for the fourth quarter and full year, respectively.

Operating Highlights

The tables below summarize income before income taxes on a reporting segment basis for the fourth quarter and full year 2015. Full year 2015 adjusted income before income taxes excludes the previously mentioned legal settlement (as detailed in the “Item Impacting Comparability” section).

	Three Months Ended
	Dec. 27,			Dec. 28,			Increase
(In thousands)	2015			2014			(Decrease)
Domestic company-owned restaurants		15,267		$	8,900		$	6,367
Domestic commissaries		12,027			13,143			(1,116	)
North America franchising		21,770			20,620			1,150
International		4,084			3,179			905
All others		1,075			141			934
Unallocated corporate expenses		(15,260	)		(14,035	)		(1,225	)
Elimination of intersegment profits		(40	)		443			(483	)
Total income before income taxes	$	38,923		$	32,391		$	6,532

	Year Ended
	As Reported			Legal		Adjusted						Adjusted
	Dec. 27,			Settlement		Dec. 27,			Dec. 28,			Increase
(In thousands)	2015			expense		2015			2014			(Decrease)
Domestic company-owned restaurants	$	56,452		$	-	$	56,452		$	40,969		$	15,483
Domestic commissaries		44,721			-		44,721			39,317			5,404
North America franchising		83,315			-		83,315			77,009			6,306
International		10,891			-		10,891			7,250			3,641
All others		845			-		845			(9	)		854
Unallocated corporate expenses		(75,896	)		12,278		(63,618	)		(49,440	)		(14,178	)
Elimination of intersegment profits		(1,181	)		-		(1,181	)		(841	)		(340	)
Total income before income taxes	$	119,147		$	12,278	$	131,425		$	114,255		$	17,170

Fourth quarter 2015 income before income taxes increased approximately $6.5 million, or 20.2%. This increase was primarily due to the following:

• Domestic company-owned restaurants income increased $6.4 million primarily due to higher profits from the 3.4% increase in comparable sales, lower commodity costs and lower insurance costs including non-owned automobile claims of approximately $3.4 million. The improvement in insurance costs is primarily attributable to 2014 including significant adverse claims experience in the fourth quarter. The market price for cheese averaged $1.60 per pound for the fourth quarter of 2015, compared to $1.99 per pound in the fourth quarter of 2014.
• North America franchising income increased $1.2 million primarily due to higher royalties attributable to the 1.3% and 1.2% increases in comparable sales and equivalent units, respectively, and lower royalty incentives.
• International income increased approximately $900,000 primarily due to higher royalties from an increase in units and comparable sales of 5.3% and an improvement in China results, including lower depreciation expense of $500,000 as we are no longer depreciating our China company-owned restaurants, which are classified as held for sale. This was somewhat offset by the negative impact of foreign currency exchange rates of approximately $600,000.
• The results for the “All others” segment increased approximately $900,000 primarily due to lower costs for our digital ordering business and a higher margin at our print and promotions business as the prior year included a reduced cost direct mail campaign offered to our domestic franchised restaurants.

These increases were partially offset by the following decreases:

• Domestic commissaries income decreased approximately $1.1 million due to a planned lower margin. We manage commissary results on a full year basis and the margins can vary somewhat by quarter.
• Unallocated corporate expenses increased approximately $1.2 million primarily due to increases in management incentive costs from higher annual operating results, health insurance claims costs, and interest costs from higher levels of debt and a higher effective interest rate. These increases were partially offset by lower legal costs.

Income before income taxes increased $17.2 million, or 15.0%, for the full year 2015, excluding the $12.3 million legal settlement. This increase was primarily due to the following:

• Domestic company-owned restaurants income increased $15.5 million primarily due to higher profits from the 5.9% increase in comparable sales and lower commodity costs. These increases were partially offset by higher depreciation expense of $1.1 million associated with FOCUS equipment. The market price for cheese averaged $1.61 per pound for 2015, compared to $2.12 per pound for the prior year.
• Domestic commissaries income increased approximately $5.4 million primarily due to incremental profits from higher restaurant volumes and a higher margin, partially offset by incremental insurance expense from higher automobile claims costs of approximately $1.5 million.
• North America franchising income increased $6.3 million primarily due to higher royalties attributable to the 3.6% and 1.0% increases in comparable sales and equivalent units, respectively, and lower royalty incentives.
• International income increased approximately $3.6 million primarily due to an increase in units and comparable sales of 6.9%, which resulted in both higher royalties and an increase in United Kingdom commissary results. Additionally, our Company-owned China results improved primarily due to lower non-operating costs of $1.5 million for impairment, disposition and depreciation. These increases were partially offset by the negative impact of foreign currency exchange rates of approximately $2.8 million.
• The results for the “All others” segment increased approximately $900,000 primarily due to lower infrastructure costs to support our digital ordering business.

These increases were partially offset by higher unallocated corporate expenses of approximately $14.2 million primarily due to higher salaries and benefits, including an increase in health insurance claims costs, as well as increased interest costs associated with higher levels of debt and a higher effective interest rate. In addition, management incentive compensation costs increased in 2015 due to higher annual operating results.

The effective income tax rates were 32.5% and 31.2% for the fourth quarter and full year 2015, respectively, representing an increase of 1.5% for the fourth quarter and a decrease of 0.8% for the full year period. Our effective income tax rate may fluctuate from quarter to quarter for various reasons. The 2015 full year rate includes higher benefits from various tax deductions and credits.

The company’s free cash flow, a non-GAAP financial measure, was as follows (in thousands):

		Year Ended
		Dec. 27,			Dec. 28,
		2015			2014
	Net cash provided by operating activities (a)	$	160,312		$	122,632
	Purchases of property and equipment (b)		(38,972	)		(48,655	)
	Free cash flow	$	121,340		$	73,977
(a)	The increase of approximately $37.7 million was primarily due to higher operating income and favorable changes in inventory and other working capital items. The prior year included higher inventory levels of equipment to support the rollout of FOCUS to our domestic franchised restaurants. The legal settlement does not impact cash provided by operating activities as it was paid in January 2016.
(b)	The decrease of approximately $9.7 million is primarily due to the prior year including FOCUS equipment costs for domestic Company-owned restaurants and higher levels of FOCUS software development costs.

We define free cash flow as net cash provided by operating activities (from the consolidated statements of cash flows) less the amounts spent on the purchase of property and equipment. We view free cash flow as an important measure because it is a factor that management uses in determining the amount of cash available for dividends, share repurchases and discretionary investment. Free cash flow is not a term defined by GAAP, and as a result, our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP measures.

See the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for additional information concerning our operating results and cash flow for the full year ended December 27, 2015.

Global Restaurant Unit Data

At December 27, 2015, there were 4,893 Papa John’s restaurants operating in all 50 states and in 39 international countries and territories, as follows:

	Domestic Company -owned		Franchised North America		Total North America		International		System-wide
Fourth Quarter
Beginning - September 27, 2015	697		2,664		3,361		1,425		4,786
Opened	8		38		46		93		139
Closed	(2	)	(17	)	(19	)	(13	)	(32	)
Acquired (divested)	4		(4	)	-		-		-
Ending - December 27, 2015	707		2,681		3,388		1,505		4,893
Year-to-date
Beginning - December 28, 2014	686		2,654		3,340		1,323		4,663
Opened	16		106		122		235		357
Closed	(2	)	(72	)	(74	)	(53	)	(127	)
Acquired (divested)	7		(7	)	-		-		-
Ending - December 27, 2015	707		2,681		3,388		1,505		4,893
Unit growth	21		27		48		182		230
% increase	3.1	%	1.0	%	1.4	%	13.8	%	4.9	%

Our development pipeline as of December 27, 2015 included approximately 1,140 restaurants (200 units in North America and 940 units internationally), the majority of which are scheduled to open over the next six years.

Item Impacting Comparability

The following table reconciles our GAAP financial results to our adjusted financial results, which are non-GAAP measures, for the fourth quarter and year ended December 27, 2015:

	Three Months Ended				Year Ended
	Dec. 27,		Dec. 28,		Dec. 27,		Dec. 28,
(In thousands, except per share amounts)	2015		2014		2015		2014
Income before income taxes, as reported	$	38,923	$	32,391	$	119,147	$	114,255
Legal Settlement expense		-		-		12,278		-
Income before income taxes, as adjusted	$	38,923	$	32,391	$	131,425	$	114,255
Net income, as reported	$	24,695	$	21,181	$	75,682	$	73,315
Legal Settlement expense		-		-		7,986		-
Net income, as adjusted	$	24,695	$	21,181	$	83,668	$	73,315
Diluted earnings per share, as reported	$	0.62	$	0.52	$	1.89	$	1.75
Legal Settlement expense		-		-		0.20		-
Diluted earnings per share, as adjusted	$	0.62	$	0.52	$	2.09	$	1.75

The legal settlement expense represents a pre-tax expense of $12.3 million for a legal settlement preliminarily approved by the court and recorded in the quarter ended June 28, 2015. The court issued the final approval on January 12, 2016 and the funds were then remitted to the administrator for payment to the class and the plaintiffs’ attorneys. This collective and class action, Perrin v. Papa John’s International, Inc. and Papa John’s USA, Inc., which included approximately 19,000 drivers, alleged delivery drivers were not reimbursed in accordance with the Fair Labor Standards Act. The company continues to deny any wrongdoing in this matter.

The non-GAAP results shown above, which exclude the legal settlement, should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP results. Management believes presenting the financial information excluding the legal settlement is important for purposes of comparison to prior year results. In addition, management uses this metric to evaluate the company’s underlying operating performance and to analyze trends.

Share Repurchase Activity

In February 2016, the company’s Board of Directors approved a $75 million increase in the amount of common stock that may be purchased under the company’s share repurchase program through February 2017, bringing the total authorized under the program to $1.525 billion since its inception in 1999. Approximately $167.1 million remains available under the company’s share repurchase program as of February 16, 2016.

The following table reflects our repurchases for the fourth quarter and full year 2015 and subsequent repurchases through February 16, 2016 (in thousands):

Period	Number of Shares	Cost
Fourth Quarter 2015	637	$	39,627
Full Year 2015	1,845	$	119,793
December 28, 2015 through February 16, 2016	860	$	42,589

There were 39.4 million and 40.0 million diluted weighted average shares outstanding for the fourth quarter and full year 2015, respectively, representing decreases of 3.5% and 4.1%, respectively, over the prior year comparable periods. Diluted earnings per share increased $0.02 and $0.08, respectively, for the fourth quarter and full year 2015 due to the reduction in shares outstanding, primarily resulting from the share repurchase program. Approximately 38.6 million actual shares of the company’s common stock were outstanding as of December 27, 2015.

2016 Key Operating Assumptions and Earnings Guidance

Earnings per Share (EPS) – The company projects 2016 EPS to increase to a range of $2.30 to $2.40, or increase 10% to 15% over 2015 EPS of $2.09, excluding the legal settlement.

Comparable Restaurant Sales – North America system-wide comparable sales are expected to increase 2% to 4% in 2016. International comparable sales are expected to increase 5% to 7%, on a constant dollar basis, in 2016.

Worldwide Net Unit Growth – Worldwide net unit growth in 2016 is expected to range between 180 and 210 units, with approximately 75% of the net unit growth in International markets.

Revenues – Total consolidated revenues are expected to increase 4% to 6% in 2016.

Income Before Income Taxes Margin – Consolidated income before income taxes margin in 2016 is expected to increase up to 25 basis points over 2015 levels. We are assuming full-year block cheese prices in the low $1.60’s per pound.

Income Tax Rate – The income tax rate in 2016 is expected to range from 31.0% to 32.5%.

Share Repurchases and Debt – The company expects to repurchase shares of its outstanding stock in a range of $100 to $150 million. Debt is expected to range between 1.5x and 2.0x 2016 earnings before interest, taxes, depreciation and amortization (“EBITDA”).

Capital Expenditures – Capital expenditures for 2016 are expected to approximate $55 to $60 million. This includes a new domestic commissary in the Southeast Region to be completed in 2017, company-owned unit development in the U.S., investments in technology and routine capital replacement.

Conference Call

A conference call is scheduled for February 24, 2016 at 10:00 a.m. Eastern Time to review our fourth quarter and full year 2015 earnings results and 2016 guidance. The call can be accessed from the company’s web page at www.papajohns.com in a listen-only mode, or dial 877-312-8816 (U.S. and Canada) or 253-237-1189 (international). The conference call will be available for replay, including by downloadable podcast, from the company’s web site at www.papajohns.com. The Conference ID is 45364479.

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations website, including information contained in investor presentations, may be deemed material. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. We encourage investors and others to sign up for email alerts at our investor relations page under Shareholder Tools at the bottom right side of the page. These email alerts are intended to help investors and others to monitor our investor relations website by notifying them when new information is posted on the site.

Annual Meeting Date Scheduled

The 2016 Annual Meeting of Stockholders will be held on Thursday, April 28, 2016, at 11:00 am local time at the company’s corporate offices located at 2002 Papa John’s Boulevard, Louisville, Kentucky.

Forward-Looking Statements

Certain matters discussed in this press release and other company communications constitute forward-looking statements within the meaning of the federal securities laws. Generally, the use of words such as “expect,” “intend,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “project,” or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. Such forward-looking statements may relate to projections or guidance concerning business performance, revenue, earnings, cash flow, contingent liabilities, resolution of litigation, commodity costs, profit margins, unit growth, unit level performance, capital expenditures, and other financial and operational measures. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to:

• aggressive changes in pricing or other marketing or promotional strategies by competitors, which may adversely affect sales and profitability; and new product and concept developments by food industry competitors;
• changes in consumer preferences or consumer buying habits, including changes in general economic conditions or other factors that may affect consumer confidence and discretionary spending;
• the adverse impact on the company or our results caused by product recalls, food quality or safety issues, incidences of foodborne illness, food contamination and other general public health concerns about our company-owned or franchised restaurants or others in the restaurant industry;
• failure to maintain our brand strength, quality reputation and consumer enthusiasm for our better ingredients marketing and advertising strategy;
• the ability of the company and its franchisees to meet planned growth targets and operate new and existing restaurants profitably, including difficulties finding qualified franchisees, store level employees or suitable sites;
• increases in food costs or sustained higher other operating costs. This could include increased employee compensation, benefits, insurance, tax rates, new regulatory requirements or increasing compliance costs;
• increases in insurance claims and related costs for programs funded by the company up to certain retention limits, including medical, owned and non-owned automobiles, workers’ compensation, general liability and property;
• disruption of our supply chain or commissary operations which could be caused by our sole source of supply of cheese or limited source of suppliers for other key ingredients or more generally due to weather, natural disasters including drought, disease, geopolitical or other disruptions beyond our control;
• increased risks associated with our international operations, including economic and political conditions, instability in our international markets, especially emerging markets, fluctuations in currency exchange rates, and difficulty in meeting planned sales targets and new store growth;
• the impact of current or future claims and litigation, including labor and employment-related claims;
• current or proposed legislation impacting our business;
• failure to effectively execute succession planning, and our reliance on the multiple roles of our founder, chairman and chief executive officer, who also serves as our brand spokesperson; and
• disruption of critical business or information technology systems, or those of our suppliers, and risks associated with systems failures and data privacy and security breaches, including theft of confidential company, employee and customer information, including payment cards.

These and other risk factors are discussed in detail in “Part I. Item 1A. – Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 27, 2015. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise, except as required by law.

For more information about the company, please visit www.papajohns.com.

Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
			Three Months Ended						Year Ended
			Dec. 27, 2015			Dec. 28, 2014			Dec. 27, 2015			Dec. 28, 2014
(In thousands, except per share amounts)			(Unaudited)			(Unaudited)
Revenues:
	North America:
		Domestic company-owned restaurant sales	$	192,999		$	184,585		$	756,307		$	701,854
		Franchise royalties		24,527			23,715			95,046			89,443
		Franchise and development fees		344			233			1,010			726
		Domestic commissary sales		158,407			165,640			615,610			629,492
		Other sales		14,601			24,475			64,711			74,179
	International:
		Royalties and franchise and development fees		7,395			6,961			27,289			25,730
		Restaurant and commissary sales		18,543			19,900			77,402			76,725
Total revenues				416,816			425,509			1,637,375			1,598,149
Costs and expenses:
	Domestic company-owned restaurant expenses:
		Cost of sales		46,009			46,087			178,952			175,733
		Salaries and benefits		52,609			49,011			207,998			188,234
		Advertising and related costs		17,609			16,484			67,164			63,463
		Occupancy costs and other restaurant operating expenses		37,055			39,677			150,092			144,628
	Total domestic company-owned restaurant expenses			153,282			151,259			604,206			572,058
	Domestic commissary expenses:
		Cost of sales		121,704			128,638			471,812			492,940
		Salaries and benefits and other commissary operating expenses		24,295			23,819			96,715			91,981
	Total domestic commissary expenses			145,999			152,457			568,527			584,921
	Other operating expenses			13,170			23,622			60,896			71,068
	International restaurant and commissary expenses			15,297			16,352			63,506			63,718
	General and administrative expenses			37,392			36,367			157,421			140,566
	Other general expenses			1,778			1,583			6,205			8,223
	Depreciation and amortization			9,669			10,426			40,307			39,965
Total costs and expenses				376,587			392,066			1,501,068			1,480,519
Operating income				40,229			33,443			136,307			117,630
	Legal settlement expense			-			-			(12,278	)		-
	Net interest expense			(1,306	)		(1,052	)		(4,882	)		(3,375	)
Income before income taxes				38,923			32,391			119,147			114,255
	Income tax expense			12,642			10,036			37,183			36,558
Net income before attribution to noncontrolling interests				26,281			22,355			81,964			77,697
	Income attributable to noncontrolling interests			(1,586	)		(1,174	)		(6,282	)		(4,382	)
Net income attributable to the company			$	24,695		$	21,181		$	75,682		$	73,315
Calculation of income for earnings per share:
Net income attributable to the company			$	24,695		$	21,181		$	75,682		$	73,315
Decrease (increase) in noncontrolling interest redemption value				(127	)		37			65			(44	)
Net income attributable to participating securities				(102	)		(107	)		(325	)		(402	)
Net income attributable to common shareholders			$	24,466		$	21,111		$	75,422		$	72,869
Basic earnings per common share			$	0.63		$	0.53		$	1.91		$	1.78
Diluted earnings per common share			$	0.62		$	0.52		$	1.89		$	1.75
Basic weighted average common shares outstanding				38,909			40,097			39,458			40,960
Diluted weighted average common shares outstanding				39,367			40,789			40,000			41,718
Dividends declared per common share			$	0.175		$	0.14		$	0.63		$	0.53

Papa John's International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
	Year Ended
	Dec. 27, 2015		Dec. 28, 2014
(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	21,006	$	20,122
Accounts receivable, net		63,320		56,047
Notes receivable, net		7,816		6,106
Income tax receivable		272		9,527
Inventories		21,564		27,394
Prepaid expenses and other current assets		29,313		28,564
Assets held for sale		9,299		-
Total current assets		152,590		147,760
Property and equipment, net		214,044		219,457
Notes receivable, less current portion, net		11,105		12,801
Goodwill		79,657		82,007
Deferred income taxes		2,415		3,914
Other assets		35,101		38,616
Total assets	$	494,912	$	504,555
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	43,492	$	38,832
Income and other taxes payable		8,527		9,637
Accrued expenses and other current liabilities		80,918		58,293
Total current liabilities		132,937		106,762
Deferred revenue		3,190		4,257
Long-term debt		256,000		230,451
Deferred income taxes		4,610		13,940
Other long-term liabilities		47,606		41,875
Total liabilities		444,343		397,285
Redeemable noncontrolling interests		8,363		8,555
Total stockholders' equity		42,206		98,715
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	494,912	$	504,555
Note: The Condensed Consolidated Balance Sheets have been derived from the audited consolidated financial statements, but do not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.

Papa John's International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
	Year Ended
(In thousands)	Dec. 27, 2015			Dec. 28, 2014
Operating activities
Net income before attribution to noncontrolling interests	$	81,964		$	77,697
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for uncollectible accounts and notes receivable		1,232			1,795
Depreciation and amortization		40,307			39,965
Deferred income taxes		(6,246	)		4,422
Stock-based compensation expense		9,423			8,712
Other		4,633			4,738
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(9,179	)		(5,741	)
Income taxes receivable		9,255			(9,527	)
Inventories		4,967			(2,838	)
Prepaid expenses and other current assets		(1,596	)		(4,781	)
Other assets and liabilities		620			915
Accounts payable		4,804			3,171
Income taxes and other taxes payable		(1,113	)		5,233
Accrued expenses and other current liabilities		21,201			(665	)
Deferred revenue		40			(464	)
Net cash provided by operating activities		160,312			122,632
Investing activities
Purchases of property and equipment		(38,972	)		(48,655	)
Loans issued		(4,741	)		(6,816	)
Repayments of loans issued		5,183			4,254
Acquisitions, net of cash acquired		(922	)		(4,773	)
Proceeds from divestitures of restaurants		-			400
Other		500			556
Net cash used in investing activities		(38,952	)		(55,034	)
Financing activities
Net proceeds on line of credit facility		25,549			72,551
Cash dividends paid		(24,844	)		(21,735	)
Excess tax benefit on equity awards		10,151			10,282
Tax payments for equity award issuances		(10,965	)		(9,235	)
Proceeds from exercise of stock options		5,197			5,837
Acquisition of Company common stock		(119,793	)		(117,400	)
Contributions from noncontrolling interest holders		684			1,086
Distributions to noncontrolling interest holders		(6,550	)		(2,800	)
Other		444			491
Net cash used in financing activities		(120,127	)		(60,923	)
Effect of exchange rate changes on cash and cash equivalents		(349	)		(223	)
Change in cash and cash equivalents		884			6,452
Cash and cash equivalents at beginning of period		20,122			13,670
Cash and cash equivalents at end of period	$	21,006		$	20,122

CONTACT:
Papa John’s International, Inc.
Lance Tucker, 502-261-7272
Chief Financial Officer