Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 01, 2018 | May 01, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 1, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PZZA | |
Entity Registrant Name | PAPA JOHNS INTERNATIONAL INC | |
Entity Central Index Key | 901,491 | |
Current Fiscal Year End Date | --12-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 32,193,319 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 01, 2018 | Jan. 02, 2018 | Dec. 31, 2017 | Mar. 26, 2017 | Dec. 25, 2016 |
Current assets: | |||||
Cash and cash equivalents | $ 31,935 | $ 26,624 | $ 22,345 | $ 22,715 | $ 15,563 |
Accounts receivable, net | 62,949 | 65,137 | 64,644 | ||
Notes receivable, net | 4,662 | 4,333 | 4,333 | ||
Income tax receivable | 3,903 | 3,903 | |||
Inventories | 28,285 | 30,620 | 30,620 | ||
Prepaid expenses | 27,990 | 23,563 | 28,522 | ||
Other current assets | 17,529 | 9,494 | 9,494 | ||
Assets held for sale | 5,900 | 6,133 | 6,133 | ||
Total current assets | 179,250 | 169,807 | 169,994 | ||
Property and equipment, net | 229,576 | 234,331 | 234,331 | ||
Notes receivable, less current portion, net | 16,084 | 15,568 | 15,568 | ||
Goodwill | 86,746 | 86,892 | 86,892 | ||
Deferred income taxes, net | 614 | 585 | 585 | ||
Other assets | 67,547 | 47,276 | 48,183 | ||
Total assets | 579,817 | 554,459 | 555,553 | ||
Current liabilities: | |||||
Accounts payable | 31,072 | 29,845 | 32,006 | ||
Income and other taxes payable | 10,094 | 10,561 | 10,561 | ||
Accrued expenses and other current liabilities | 92,890 | 86,153 | 70,293 | ||
Deferred revenue current | 2,400 | 2,400 | |||
Current portion of long-term debt | 20,000 | 20,000 | 20,000 | ||
Total current liabilities | 156,456 | 148,959 | 132,860 | ||
Deferred revenue | 13,671 | 13,450 | 2,652 | ||
Long-term debt, less current portion, net | 568,770 | 446,565 | 446,565 | ||
Deferred income taxes, net | 6,125 | 6,082 | 12,546 | ||
Other long-term liabilities | 76,993 | 60,146 | 60,146 | ||
Total liabilities | 822,015 | 675,202 | 654,769 | ||
Redeemable noncontrolling interests | 7,037 | 6,738 | 6,738 | ||
Stockholders’ equity (deficit): | |||||
Preferred stock ($0.01 par value per share; no shares issued) | |||||
Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018 and 44,221 at December 31, 2017) | 443 | 442 | 442 | ||
Additional paid-in capital | 163,198 | 184,785 | 184,785 | ||
Accumulated other comprehensive income (loss) | 4,110 | (2,117) | (2,117) | ||
Retained earnings | 280,853 | 270,724 | 292,251 | ||
Treasury stock (12,245 shares at April 1, 2018 and 10,290 shares at December 31, 2017, at cost) | (714,097) | (597,072) | (597,072) | ||
Total stockholders' equity (deficit), net of noncontrolling interests | (265,493) | (143,238) | (121,711) | ||
Noncontrolling interests in subsidiaries | 16,258 | 15,757 | 15,757 | ||
Total stockholders’ equity (deficit) | (249,235) | (127,481) | (105,954) | ||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | $ 579,817 | $ 554,459 | $ 555,553 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Apr. 01, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 44,268 | 44,221 |
Treasury stock, shares | (12,245) | 10,290 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Revenues: | ||
Total revenues | $ 427,369 | $ 449,266 |
Costs and expenses: | ||
General and administrative expenses | 39,729 | 36,414 |
Depreciation and amortization | 11,539 | 10,457 |
Total costs and expenses | 400,256 | 405,585 |
Refranchising gain, net | 204 | |
Operating income | 27,317 | 43,681 |
Net Interest expense | (4,955) | (1,810) |
Income before income taxes | 22,362 | 41,871 |
Income tax expense | 4,982 | 11,972 |
Net income before attribution to noncontrolling interests | 17,380 | 29,899 |
Income attributable to noncontrolling interests | (643) | (1,471) |
Net income attributable to the Company | 16,737 | 28,428 |
Calculation of income for earnings per share: | ||
Net income attributable to the Company | 16,737 | 28,428 |
Change in noncontrolling interest redemption value | 520 | |
Net income attributable to participating securities | (75) | (117) |
Net income attributable to common shareholders | $ 16,662 | $ 28,831 |
Basic earnings per common share | $ 0.50 | $ 0.78 |
Diluted earnings per common share | $ 0.50 | $ 0.77 |
Basic weighted average common shares outstanding | 33,279 | 36,810 |
Diluted weighted average common shares outstanding | 33,552 | 37,350 |
Dividends declared per common share | $ 0.225 | $ 0.200 |
Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 190,242 | $ 206,896 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 157,319 | 165,419 |
North America franchising | ||
Revenues: | ||
Total revenues | 24,806 | 27,607 |
North America commissary | ||
Revenues: | ||
Total revenues | 161,713 | 171,340 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 151,681 | 159,957 |
International | ||
Revenues: | ||
Total revenues | 30,114 | 25,622 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 19,030 | 15,791 |
Other segment | ||
Revenues: | ||
Total revenues | 20,494 | 17,801 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 20,958 | $ 17,547 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||
Net income before attribution to noncontrolling interests | $ 17,380 | $ 29,899 |
Other comprehensive income (loss), before tax: | ||
Foreign currency translation adjustments | 1,983 | 613 |
Interest rate swaps | 6,718 | (468) |
Other comprehensive income (loss), before tax | 8,701 | 145 |
Income tax effect: | ||
Foreign currency translation adjustments | (473) | (227) |
Interest rate swaps | (1,545) | 173 |
Income tax effect | (2,018) | (54) |
Other comprehensive income (loss), net of tax | 6,683 | 91 |
Comprehensive income before attribution to noncontrolling interests | 24,063 | 29,990 |
Less: comprehensive income, redeemable noncontrolling interests | 344 | (794) |
Less: comprehensive income, nonredeemable noncontrolling interests | 299 | (677) |
Comprehensive income attributable to the Company | $ 24,706 | $ 28,519 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Net Interest expense | $ 4,955 | $ 1,810 |
Income tax effects | 4,982 | 11,972 |
Amount reclassified from AOCL | ASU 2018-02 | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Income tax effects | 450 | |
Qualifying as hedges | Interest rate swap | Amount reclassified from AOCL | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Net Interest expense | 108 | 198 |
Income tax effects | $ 25 | $ 73 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Operating activities | ||
Net income before attribution to noncontrolling interests | $ 17,380 | $ 29,899 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for uncollectible accounts and notes receivable | 1,539 | (417) |
Depreciation and amortization | 11,539 | 10,457 |
Deferred income taxes | (2,004) | 1,015 |
Stock-based compensation expense | 2,475 | 2,736 |
Gain on refranchising | (204) | |
Other | 1,903 | 769 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 86 | (1,048) |
Income tax receivable | 3,903 | 2,372 |
Inventories | 2,193 | 2,425 |
Prepaid expenses | (217) | 3,574 |
Other current assets | 5,097 | (134) |
Other assets and liabilities | (514) | (1,577) |
Accounts payable | 1,209 | (5,239) |
Income and other taxes payable | (466) | 7,817 |
Accrued expenses and other current liabilities | (3,103) | (5,164) |
Deferred revenue | 220 | (156) |
Net cash provided by operating activities | 41,036 | 47,329 |
Investing activities | ||
Purchases of property and equipment | (9,320) | (15,064) |
Loans issued | (563) | (715) |
Repayments of loans issued | 1,636 | 863 |
Acquisitions, net of cash acquired | (21) | |
Proceeds from divestitures of restaurants | 3,690 | |
Other | 114 | 7 |
Net cash used in investing activities | (4,443) | (14,930) |
Financing activities | ||
Repayments of term loan | (5,000) | |
Net proceeds (repayments) of revolving credit facility | 127,000 | (5,575) |
Cash dividends paid | (7,565) | (7,354) |
Tax payments for equity award issuances | (1,342) | (2,259) |
Proceeds from exercise of stock options | 1,770 | 3,248 |
Acquisition of Company common stock | (141,736) | (13,075) |
Distributions to noncontrolling interest holders | (432) | (702) |
Other | 183 | 396 |
Net cash used in financing activities | (27,122) | (25,321) |
Effect of exchange rate changes on cash and cash equivalents | 119 | 74 |
Change in cash and cash equivalents | 9,590 | 7,152 |
Cash and cash equivalents at beginning of period | 22,345 | 15,563 |
Cash and cash equivalents at end of period | $ 31,935 | $ 22,715 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Apr. 01, 2018 | |
Basis of Presentation | |
Basis of Presentation | 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual 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 three months ended April 1, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 30, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for Papa John’s International, Inc. (referred to as the “Company”, “Papa John’s” or in the first-person notations of “we”, “us” and “our”) for the year ended December 31, 2017. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2018 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Noncontrolling Interests Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties after the divestiture of one joint venture in the first quarter of 2018. See Note 7 for more information on this divestiture. These joint ventures include 216 restaurants at April 1, 2018. We are required to report the consolidated net income at amounts attributable to the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Condensed Consolidated Statements of Income attributable to the noncontrolling interest holders. The income before income taxes attributable to these joint ventures for the three months ended April 1, 2018 and March 26, 2017 was as follows (in thousands): Three Months Ended April 1, March 26, 2018 2017 Papa John’s International, Inc. $ 1,295 $ 2,362 Noncontrolling interests 643 1,471 Total income before income taxes $ 1,938 $ 3,833 The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint venture with no redemption feature Permanent equity Carrying value Option to require the Company to purchase the noncontrolling interest - not currently redeemable Temporary equity Carrying value Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Delivery costs, including freight associated with our domestic commissary and other sales are accounted for as fulfillment costs and are included in operating costs. As further described in Accounting Standards Adopted and Note 3, Adoption of ASU 2014-09, “Revenue from Contracts with Customers,” revenue recognition in 2018 follows ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” Prior year revenue recognition follows ASU Topic 605, Revenue Recognition. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Restaurant Sales The domestic and international company-owned restaurants principally generate revenue from retail sales of high-quality pizza, side items including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. Revenues from Company-owned restaurants are recognized when the products are delivered to or carried out by customers. Our domestic customer loyalty program, Papa Rewards, is a spend-based program that rewards customers with points for each online purchase. Papa Rewards points are accumulated and redeemed online for free products. The accrued liability in the Condensed Consolidated Balance Sheets, and corresponding reduction of company-owned restaurant sales in the Condensed Consolidated Statements of Income is for the estimated reward redemptions at domestic company-owned restaurants based upon historical redemption patterns. The liability is calculated using the estimated selling price of the products for which rewards are expected to be redeemed. Revenue is recognized when the customer redeems points for products. Prior to the adoption of Topic 606, the liability related to Papa Rewards was estimated using the incremental cost accrual model which was based on the expected cost to satisfy the award. The corresponding expense was recorded in general and administrative expenses in the Condensed Consolidated Statements of Income. Commissary Sales Commissary sales are comprised of food and supplies sold to franchised restaurants and are recognized as revenue upon shipment or delivery of the related products to the franchisees and payments are generally due within 30 days. Franchise Royalties and Fees Franchise royalties which are based on a percentage of franchise restaurant sales are recognized as sales occur. Royalty reductions, offered as part of a new store development incentive or as incentive for other behaviors including acceleration of restaurant remodels or equipment upgrades, are recognized at the same time as the related royalty as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The majority of initial franchise license fees and area development fees are from international locations. The franchise license fees are billed at the store opening date. Area development exclusivity fees are billed upon execution of the development agreements which grant the right to develop franchised restaurants in future periods in specific geographic areas. Area development exclusivity fees are included in deferred revenue in the Condensed Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement. Franchise license renewal fees for both domestic and international locations, which generally occur every 10 years, are billed before the renewal date. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Fees received for future renewal periods are amortized over the life of the renewal period. For periods prior to adoption of Topic 606, revenue was recognized when we performed our obligations related to such fees, primarily the store opening date for initial franchise fees and area development fees, or the date the renewal option was effective for renewal fees. The Company offers various incentive programs for franchisees including royalty incentives, new restaurant opening (i.e. development incentives) and other various support initiatives. Royalties, franchise fees and commissary sales are reduced to reflect any incentives earned or granted under these programs that are in the form of discounts. Other development incentives for opening restaurants are offered in the form of Company equipment through a lease agreement at substantially no cost. This equipment is amortized over the term of the lease agreement, which is generally three to five years, and is recognized in general and administrative expenses in our Condensed Consolidated Statements of Income. The equipment lease agreement has separate and distinguishable obligations from the franchise right and is accounted for under ASC Topic 840, Leases. Other Revenues Fees for information services, including software maintenance fees, help desk fees and online ordering fees are recognized as revenue as such services are provided and are included in other revenue. Revenues for printing, promotional items, and direct mail marketing services are recognized upon shipment of the related products to franchisees and other customers. Direct mail advertising discounts are also periodically offered by our Preferred Marketing Solutions subsidiary. Other revenues are reduced to reflect these advertising discounts. Rental income, primarily derived from properties leased by the Company and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms, in accordance with ASC Topic 840, Leases. Franchise Marketing Fund revenues represent contributions collected by various international and domestic marketing funds where we have determined that we have control over the activities of the fund. Contributions are based on a percentage of monthly restaurant sales. The adoption of Topic 606 revises the determination of whether these arrangements are considered principal versus agent. When we are determined to be the principal in these arrangements, advertising fund contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Income. We expect such advertising fund contributions and expenditures will be largely offsetting and therefore do not expect a significant impact on our reported income before income taxes. Our obligation related to these funds is to develop and conduct advertising activities in a specific country, region, or market, including the placement of electronic and print materials. Marketing fund contributions are billed monthly. For periods prior to the adoption of Topic 606, the revenues and expenses of certain international advertising funds and the Co-op Funds in which we possess majority voting rights, were included in our Condensed Consolidated Statements of Income on a net basis as we previously concluded we were the agent in regard to the funds based upon principal/agent determinations in industry-specific guidance in GAAP that was in effect during those time periods. Deferred Income Tax Accounts and Tax Reserves We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. Discrete items are recorded in the quarter in which they occur. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly decreasing the U.S. federal income tax rate for corporations effective January 1, 2018. As a result, we remeasured our deferred tax assets, liabilities and related valuation allowances. This remeasurement yielded a one-time benefit of approximately $7.0 million due to the lower income tax rate in 2017. Given the substantial changes associated with the Tax Act, the estimated financial impacts for 2017 are provisional and subject to further interpretation and clarification of the Tax Act during 2018. As of April 1, 2018, we had a net deferred income tax liability of approximately $5.5 million. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), that allows for an entity to reclassify disproportionate income tax effects in accumulated other comprehensive income (loss) (“AOCI”) caused by the Tax Act to retained earnings. See “Accounting Standards Adopted” section below for additional details. Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court or state rulings or audit settlements, which may impact our ultimate payment for such exposures. Fair Value Measurements and Disclosures The Company is required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash, accounts receivable and accounts payable. The carrying value of our notes receivable, net of allowances, also approximates fair value. The fair value of the amount outstanding under our revolving credit facility approximates its carrying value due to its variable market-based interest rate. These assets and liabilities are categorized as Level 1 as defined below. Certain assets and liabilities are measured at fair value on a recurring basis and are required to 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 inputs or unobservable inputs that are corroborated by market data. · Level 3: Unobservable inputs that are not corroborated by market data. Our financial assets that were measured at fair value on a recurring basis as of April 1, 2018 and December 31, 2017 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 April 1, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 28,469 $ 28,469 $ — $ — Interest rate swaps (b) 7,369 — 7,369 — December 31, 2017 Financial assets: Cash surrender value of life insurance policies (a) $ 28,645 $ 28,645 $ — $ — Interest rate swaps (b) 651 — 651 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). Our assets and liabilities that were measured at fair value on a non-recurring basis as of April 1, 2018 and December 31, 2017 include assets and liabilities held for sale. The fair value was determined using a market-based approach with unobservable inputs (Level 3) less any estimated selling costs. There were no transfers among levels within the fair value hierarchy during the three months ended April 1, 2018. Variable Interest Entity Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF is a variable interest entity as it does not have sufficient equity to fund its operations without ongoing financial support and contributions from its members. Based on the ownership and governance structure and operating procedures of PJMF, we have determined that we do not have the power to direct the most significant activities of PJMF and therefore are not the primary beneficiary. Accordingly, consolidation of PJMF is not appropriate. Accounting Standards Adopted Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP, including industry-specific requirements, and provides companies with a single revenue recognition framework for recognizing revenue from contracts with customers. In March and April 2016, the FASB issued Topic 606. This update and subsequently issued amendments require companies to recognize revenue at amounts that reflect the consideration to which the companies expect to be entitled in exchange for those goods or services at the time of transfer. Topic 606 requires that we assess contracts to determine each separate and distinct performance obligation. If a contract has multiple performance obligations, we allocate the transaction price using our best estimate of the standalone selling price to each distinct good or service in the contract. The Company adopted Topic 606 as of January 1, 2018. See Note 3 for additional information. Certain Tax effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), guidance that allows for an entity to reclassify disproportionate income tax effects in accumulated other comprehensive income (“AOCI”) caused by the Tax Act to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASU 2018-02 in the first quarter of 2018 by electing to reclassify the income tax effects from AOCI to retained earnings. The impact of the adoption was not material to our condensed consolidated financial statements. Accounting Standards to be Adopted in Future Periods Leases In February 2016, the FASB issued ASU 2016-02, “Leases,” (“ASU 2016-02”), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital leases (financing) with lease terms greater than twelve months. The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will continue to be classified as operating or capital (financing) with lease expense in both cases calculated substantially the same as under the prior leasing guidance. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 (fiscal 2019 for the Company), and early adoption is permitted. The Company has not yet determined the full impact of the adoption on its consolidated financial statements but expects the adoption will result in a significant increase in the non-current assets and liabilities reported on our Consolidated Balance Sheet. Reclassification Certain prior year amounts have been reclassified in the Condensed Consolidated Statement of Income. See Note 10 for additional information. |
Adoption of ASU 2014-09, "Reven
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | 3 Months Ended |
Apr. 01, 2018 | |
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | |
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | 3. Adoption of ASU 2014-09, “Revenue from Contracts with Customers” The Company adopted ASU 2014-09 and Topic 606 using the modified retrospective transition method effective January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented in accordance with Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605, Revenue Recognition. The cumulative effect adjustment of $21.5 million was recorded as a reduction to retained earnings as of January 1, 2018 to reflect the impact of adopting Topic 606. The impact of applying Topic 606 for the quarter ended April 1, 2018, was an increase in revenues of $2.4 million and a decrease of $0.5 million in pre-tax income. The adoption of Topic 606 did not impact the recognition and reporting of our three largest sources of revenue: sales from Company-owned restaurants, commissary sales, or continuing royalties or other revenues from franchisees that are based on a percentage of the franchise sales. The items impacted by the adoption include the presentation and amount of our loyalty program costs, the timing of franchise and development fees revenue recognition, and the presentation of various Domestic co-operative and International advertising funds as further described below. Cumulative adjustment from adoption As noted above, an after-tax reduction of $21.5 million was recorded to retained earnings to reflect the cumulative impact of adopting Topic 606. This is comprised of $10.8 million related to franchise fees, $8.0 million related to the customer loyalty program and $2.7 million related to marketing funds. The following chart presents the specific line items impacted by the cumulative adjustment. Adjusted As Reported Balance Sheet December 31, Total at January 1, (In thousands, except per share amounts) 2017 Adjustments 2018 Assets Current assets: Cash and cash equivalents $ 22,345 $ 4,279 $ 26,624 Accounts receivable, net 64,644 493 65,137 Notes receivable, net 4,333 — 4,333 Income tax receivable 3,903 — 3,903 Inventories 30,620 — 30,620 Prepaid expenses 28,522 (4,959) 23,563 Other current assets 9,494 — 9,494 Assets held for sale 6,133 — 6,133 Total current assets 169,994 (187) 169,807 Property and equipment, net 234,331 — 234,331 Notes receivable, less current portion, net 15,568 — 15,568 Goodwill 86,892 — 86,892 Deferred income taxes, net 585 — 585 Other assets 48,183 (907) 47,276 Total assets $ 555,553 $ (1,094) $ 554,459 Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 32,006 $ (2,161) $ 29,845 Income and other taxes payable 10,561 — 10,561 Accrued expenses and other current liabilities 70,293 15,860 86,153 Deferred revenue current — 2,400 2,400 Current portion of long-term debt 20,000 — 20,000 Total current liabilities 132,860 16,099 148,959 Deferred revenue 2,652 10,798 13,450 Long-term debt, less current portion, net 446,565 — 446,565 Deferred income taxes, net 12,546 (6,464) 6,082 Other long-term liabilities 60,146 — 60,146 Total liabilities 654,769 20,433 675,202 Redeemable noncontrolling interests 6,738 — 6,738 Stockholders’ equity (deficit): Preferred stock ($0.01 par value per share; no shares issued) — — — Common stock ($0.01 par value per share; issued 44,221 at December 31, 2017 442 — 442 Additional paid-in capital 184,785 — 184,785 Accumulated other comprehensive loss (2,117) — (2,117) Retained earnings 292,251 (21,527) 270,724 Treasury stock (10,290 shares at December 31, 2017, at cost) (597,072) — (597,072) Total stockholders’ equity (deficit), net of noncontrolling interests (121,711) (21,527) (143,238) Noncontrolling interests in subsidiaries 15,757 — 15,757 Total stockholders’ equity (deficit) (105,954) (21,527) (127,481) Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) $ 555,553 $ (1,094) $ 554,459 The impact of adoption for the first quarter of 2018 is as follows: As Reported Balance Sheet April 1, Total Without Adoption (In thousands, except per share amounts) 2018 Adjustments of Topic 606 Assets Current assets: Cash and cash equivalents $ 31,935 $ (3,422) $ 28,513 Accounts receivable, net 62,949 (376) 62,573 Notes receivable, net 4,662 — 4,662 Income tax receivable — — — Inventories 28,285 — 28,285 Prepaid expenses 27,990 4,398 32,388 Other current assets 17,529 — 17,529 Assets held for sale 5,900 — 5,900 Total current assets 179,250 600 179,850 Property and equipment, net 229,576 — 229,576 Notes receivable, less current portion, net 16,084 — 16,084 Goodwill 86,746 — 86,746 Deferred income taxes, net 614 — 614 Other assets 67,547 907 68,454 Total assets $ 579,817 $ 1,507 $ 581,324 Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 31,072 $ 1,237 $ 32,309 Income and other taxes payable 10,094 — 10,094 Accrued expenses and other current liabilities 92,890 (14,854) 78,036 Deferred revenue current 2,400 (2,400) — Current portion of long-term debt 20,000 — 20,000 Total current liabilities 156,456 (16,017) 140,439 Deferred revenue 13,671 (11,027) 2,644 Long-term debt, less current portion, net 568,770 — 568,770 Deferred income taxes, net 6,125 6,593 12,718 Other long-term liabilities 76,993 — 76,993 Total liabilities 822,015 (20,451) 801,564 Redeemable noncontrolling interests 7,037 — 7,037 Stockholders’ equity (deficit): Preferred stock ($0.01 par value per share; no shares issued) — — — Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018) 443 — 443 Additional paid-in capital 163,198 — 163,198 Accumulated other comprehensive income (loss) 4,110 — 4,110 Retained earnings 280,853 21,958 302,811 Treasury stock (12,245 shares at April 1, 2018, at cost) (714,097) — (714,097) Total stockholders’ equity (deficit), net of noncontrolling interests (265,493) 21,958 (243,535) Noncontrolling interests in subsidiaries 16,258 — 16,258 Total stockholders’ equity (deficit) (249,235) 21,958 (227,277) Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) $ 579,817 $ 1,507 $ 581,324 As Reported Three Months Ended Income Statement April 1, Total Without Adoption of (In thousands, except per share amounts) 2018 Adjustments Topic 606 Revenues: Domestic Company-owned restaurant sales $ 190,242 $ 264 $ 190,506 North America franchise royalties and fees 24,806 38 24,844 North America commissary 161,713 — 161,713 International 30,114 149 30,263 Other revenues 20,494 (2,887) 17,607 Total revenues 427,369 (2,436) 424,933 Costs and expenses: Operating costs (excluding depreciation and amortization shown separately below): Domestic Company-owned restaurant expenses 157,319 (66) 157,253 North America commissary 151,681 — 151,681 International expenses 19,030 — 19,030 Other expenses 20,958 (3,359) 17,599 General and administrative expenses 39,729 504 40,233 Depreciation and amortization 11,539 — 11,539 Total costs and expenses 400,256 (2,921) 397,335 Refranchising and impairment gains/(losses), net 204 — 204 Operating income 27,317 485 27,802 Net Interest expense (4,955) — (4,955) Income before income taxes 22,362 485 22,847 Income tax expense 4,982 112 5,094 Net income before attribution to noncontrolling interests 17,380 373 17,753 Income attributable to noncontrolling interests (643) — (643) Net income attributable to the Company $ 16,737 $ 373 $ 17,110 Calculation of income for earnings per share: Net income attributable to the Company $ 16,737 $ 373 $ 17,110 Change in noncontrolling interest redemption value — — — Net income attributable to participating securities (75) — (75) Net income attributable to common shareholders $ 16,662 $ 373 $ 17,035 Basic earnings per common share $ 0.50 $ 0.01 $ 0.51 Diluted earnings per common share $ 0.50 $ 0.01 $ 0.51 Basic weighted average common shares outstanding 33,279 33,279 33,279 Diluted weighted average common shares outstanding 33,552 33,552 33,552 Transaction Price Allocated to the Remaining Performance Obligations The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. Performance Obligations by Period Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total Franchise Fees $ 2,400 $ 2,141 $ 1,909 $ 1,681 $ 1,461 $ 3,835 $ 13,427 An additional $2.6 million of area development fees related to unopened stores is included in deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings. As of April 1, 2018, the amount allocated to the Papa Rewards loyalty program is $15.0 million and is reflected in the Condensed Consolidated Balance Sheet as part of the contract liability. This will be recognized as revenue as the points are redeemed, which is expected to occur within the next year. If participants earn and redeem points at a consistent rate, there would be minimal change to the liability. The Company applies the practical expedient in ASU paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Apr. 01, 2018 | |
Revenue Recognition | |
Revenue Recognition | 4. Revenue Recognition Disaggregation of Revenue In the following table (in thousands), revenue is disaggregated by major product line. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Reportable Segments Quarter Ended April 1, 2018 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 190,242 $ - $ - $ 3,453 $ - $ 193,695 Commissary sales - 217,587 - 17,679 - 235,266 Franchise royalties and fees - - 25,825 8,982 - 34,807 Other revenues - - - 5,488 23,150 28,638 Eliminations - (55,874) (1,019) (70) (8,074) (65,037) Total $ 190,242 $ 161,713 $ 24,806 $ 35,532 $ 15,076 $ 427,369 The revenue summarized above is described in Note 2 under the heading “Significant Accounting Policies – Revenue Recognition.” Contract Balances The following table (in thousands) provides information about contract liabilities. April 1, January 1, 2018 2018 Change Deferred revenue $ 16,071 $ 15,850 $ 220 Customer loyalty program 15,022 14,724 298 Total contract liabilities $ 31,093 $ 30,574 $ 518 The contract liabilities primarily relate to franchise fees which we classify as “Deferred revenue” and customer loyalty program obligations which are classified with “Accrued expenses and other current liabilities.” During the first quarter of 2018, the Company recognized $3.9 million in revenue related to deferred revenue and customer loyalty program. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 3 Months Ended |
Apr. 01, 2018 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | 5. Stockholders’ Equity (Deficit) Shares Authorized and Outstanding The Company has authorized 5.0 million shares of preferred stock and 100.0 million shares of common stock. The Company’s outstanding shares of common stock, net of repurchased common stock, were 32.0 million shares at April 1, 2018 and 33.9 million shares at December 31, 2017. There were no shares of preferred stock issued or outstanding at April 1, 2018 and December 31, 2017. Share Repurchase Program Our Board of Directors has authorized the repurchase of up to $2.075 billion of common stock under a share repurchase program that began on December 9, 1999 and expires on February 27, 2019. Funding for the share repurchase program has been provided through a credit facility, operating cash flow, stock option exercises and cash and cash equivalents. On March 1, 2018, the Company announced a $100 million accelerated share repurchase agreement (“ASR Agreement”) with Bank of America, N.A. (“BofAML”). Pursuant to the terms of the ASR Agreement, we paid BofAML $100.0 million in cash, and on March 6, 2018, we received an initial delivery of approximately 1.3 million shares of common stock for approximately $78.0 million. The accelerated share repurchase transaction qualifies for equity accounting treatment. Shares that have been paid for but not yet delivered are reflected as a reduction of additional paid-in-capital while other repurchased common stock is reflected as an increase in treasury stock within stockholders’ equity (deficit). Additional shares may be received prior to and/or at final settlement, based generally on the average of the daily volume-weighted average prices of our Company’s common stock during the term of the ASR Agreement, less a discount. Subsequent to the end of the quarter through May 1, 2018, the Company acquired an additional 28,739 shares at an aggregate cost of $1.7 million through the ASR Agreement. Cash Dividend The Company paid a cash dividend of approximately $7.6 million ($0.225 per common share) during the first quarter of 2018. Subsequent to the first quarter, on May 2, 2018, our Board of Directors declared a first quarter dividend of $0.225 per common share (approximately $7.3 million based on the number of shares outstanding as of May 1, 2018). The dividend will be paid on May 25, 2018 to shareholders of record as of the close of business on May 14, 2018. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 01, 2018 | |
Earnings Per Share | |
Earnings Per Share | 6. We compute earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. We consider time-based restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights. Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to the Company in determining net income attributable to common shareholders. The calculations of basic and diluted earnings per common share are as follows (in thousands, except per-share data): Three Months Ended April 1, March 26, 2018 2017 Basic earnings per common share: Net income attributable to the Company $ 16,737 $ 28,428 Change in noncontrolling interest redemption value — 520 Net income attributable to participating securities (75) (117) Net income attributable to common shareholders $ 16,662 $ 28,831 Weighted average common shares outstanding 33,279 36,810 Basic earnings per common share $ 0.50 $ 0.78 Diluted earnings per common share: Net income attributable to common shareholders $ 16,662 $ 28,831 Weighted average common shares outstanding 33,279 36,810 Dilutive effect of outstanding equity awards (a) 273 540 Diluted weighted average common shares outstanding 33,552 37,350 Diluted earnings per common share $ 0.50 $ 0.77 (a) Excludes 790 and 117 awards for the three months ended April 1, 2018 and March 26, 2017, respectively, as the effect of including such awards would have been antidilutive. |
Divestiture
Divestiture | 3 Months Ended |
Apr. 01, 2018 | |
Divestiture | |
Divestiture | 7. In the first quarter of 2018, the Company refranchised 31 restaurants owned through a joint venture in the Denver, Colorado market. The Company held a 60% ownership share in the restaurants being refranchised. The noncontrolling interest portion of the joint venture arrangement was previously recorded at redemption value within the Condensed Consolidated Balance Sheet. Total consideration for the asset sale of the restaurants was $4.8 million, consisting of cash proceeds of $3.7 million, including cash paid for various working capital items, and notes financed by Papa John’s for $1.1 million. In connection with the divestiture, we wrote off $745,000 of goodwill. This goodwill was allocated based on the relative fair value of the sales proceeds versus the total fair value of the company-owned restaurants’ reporting unit. There was a refranchising gain of $204,000 on the sale. As a result of assigning our interest in obligations under property leases as a condition of the refranchising of the Denver market, we are contingently liable for payment of the 31 leases. These leases have varying terms, the latest of which expires in 2024. As of April 1, 2018, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $3.9 million. The fair value of the guarantee is not material. |
Debt
Debt | 3 Months Ended |
Apr. 01, 2018 | |
Debt | |
Debt | 8. Long-term debt, net consists of the following (in thousands): April 1, December 31, 2018 2017 Outstanding debt $ 592,000 $ 470,000 Unamortized debt issuance costs (3,230) (3,435) Current portion of long-term debt (20,000) (20,000) Total long-term debt, less current portion, net $ 568,770 $ 446,565 Our outstanding debt of $592.0 million at April 1, 2018 represented amounts outstanding under a new credit agreement. On August 30, 2017, we entered into a new credit agreement (the “Credit Agreement”) replacing the previous $500.0 million credit facility (“Previous Credit Facility”). The Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of $600.0 million (the “Revolving Facility”) and an unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Term Loan Facility” and together with the Revolving Facility, the “Facilities”). Additionally, we have the option to increase the Revolving Facility or the Term Loan Facility in an aggregate amount of up to $300.0 million, subject to certain conditions. Our outstanding debt as of April 1, 2018 under the Facilities of $592.0 million was composed of $390.0 million outstanding under the Term Loan and $202.0 million outstanding under the Revolving Facility. Including outstanding letters of credit, the remaining availability under the Facilities was approximately $364.8 million as of April 1, 2018. In connection with the Credit Agreement, the Company capitalized $3.2 million of debt issuance costs, which are being amortized into interest expense, over the term of the Facilities. Total unamortized debt issuance costs of approximately $3.2 million were netted against debt as of April 1, 2018. Loans under the Facilities accrue interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from 75 to 200 basis points or a base rate (generally determined by a prime rate, federal funds rate or a LIBOR rate plus 1.00%) plus a margin ranging from 0 to 100 basis points. In each case, the actual margin is determined according to a ratio of the Company’s total indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA“) for the then most recently ended four quarter period (the “ Leverage Ratio ”). An unused commitment fee at a rate ranging from 15 to 30 basis points per annum, determined according to the Leverage Ratio, applies to the unutilized commitments under the Revolving Facility. Loans outstanding under the Credit Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings for which a LIBOR rate election is in effect. Up to $35.0 million of the Revolving Facility may be advanced in certain agreed foreign currencies, including Euros, Pounds Sterling, Canadian Dollars, Japanese Yen, and Mexican Pesos . The Facilities mature on August 30, 2022. Quarterly amortization payments are required to be made on the Term Loan Facility in the amount of $5.0 million beginning in the fourth quarter of 2017. The obligations under the Credit Agreement are guaranteed by certain direct and indirect material subsidiaries of the Company. The Credit Agreement contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of specified fixed charges and leverage ratios. At April 1, 2018, we were in compliance with these financial covenants. We attempt to minimize interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative financial instruments. Our swaps are entered into with financial institutions that participate in our Credit Agreement. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract. We use interest rate swaps to hedge against the effects of potential interest rate increases on borrowings under our Facilities. As of April 1, 2018, we have the following interest rate swap agreements: Effective Dates Floating Rate Debt Fixed Rates July 30, 2013 through April 30, 2018 $ 75 million 1.42 % December 30, 2014 through April 30, 2018 $ 50 million 1.36 % April 30, 2018 through April 30, 2023 $ 55 million 2.33 % April 30, 2018 through April 30, 2023 $ 35 million 2.36 % April 30, 2018 through April 30, 2023 $ 35 million 2.34 % January 30, 2018 through August 30, 2022 $ million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 2.00 % January 30, 2018 through August 30, 2022 $ 25 million 1.99 % The effective portion of the gain or loss on the swaps is recognized in other comprehensive income/(loss) and reclassified into earnings in the same period or periods during which the swaps affect earnings. Gains or losses on the swaps representing 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 table provides information on the location and amounts of our swaps in the accompanying condensed consolidated financial statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value April 1, December 31, Balance Sheet Location 2018 2017 Other current and long-term assets $ 7,369 $ 651 There were no derivatives that were not designated as hedging instruments. The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands): Location of Gain Amount of Gain Derivatives - Amount of Gain or or (Loss) or (Loss) Total Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Income Interest rate swaps for the three months ended: April 1, 2018 $ 5,173 Interest expense $ (108) $ (5,220) March 26, 2017 $ (295) Interest expense $ (198) $ (1,946) The weighted average interest rates on our debt, including the impact of the interest rate swap agreements, were 3.5% and 2.2% for the three months ended April 1, 2018 and March 26, 2017, respectively. Interest paid, including payments made or received under the swaps, was $4.9 million and $1.9 million for the three months ended April 1, 2018 and March 26, 2017, respectively. As of April 1, 2018, the portion of the aggregate $7.4 million interest rate swap asset that would be reclassified into earnings during the next twelve months as interest income approximates $1.7 million. |
Segment Information
Segment Information | 3 Months Ended |
Apr. 01, 2018 | |
Segment Information | |
Segment Information | 9. We have five reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and “all other” units. The domestic Company-owned 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, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. The North America 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 in the United States and Canada. The North America 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 franchisees located in the United States and Canada. The international operations segment principally consists of Company-owned restaurants in China and distribution sales to franchised Papa John’s restaurants located in the United Kingdom, Mexico and China 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. International franchisees are defined as all franchise operations outside of the United States and Canada. All other business units that do not meet the quantitative thresholds for determining reportable segments, which are not operating segments, we refer to as our “all other” segment, which consists of operations that derive revenues from the sale, principally to Company-owned and franchised restaurants, of printing and promotional items, franchise contributions to marketing funds and information systems and related services used in restaurant operations, including our point-of-sale system, online and other technology-based ordering platforms. Generally, we evaluate performance and allocate resources based on profit or loss from operations before income taxes and intercompany 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 activity 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 April 1, March 26, (In thousands) 2018 2017 Revenues Domestic Company-owned restaurants $ 190,242 $ 206,896 North America commissaries 161,713 171,340 North America franchising 24,806 27,607 International 35,532 28,518 All others 15,076 14,905 Total revenues $ 427,369 $ 449,266 Intersegment revenues: North America commissaries $ 55,874 $ 61,736 North America franchising 1,019 764 International 70 63 All others 8,074 5,026 Total intersegment revenues $ 65,037 $ 67,589 Income (loss) before income taxes: Domestic Company-owned restaurants $ 7,229 $ 15,487 North America commissaries (1) 8,610 12,244 North America franchising 22,359 24,875 International 3,537 4,344 All others (1) (2) (909) 460 Unallocated corporate expenses (1) (2) (18,131) (16,381) Elimination of intersegment (profits) losses (333) 842 Total income before income taxes $ 22,362 $ 41,871 Property and equipment: Domestic Company-owned restaurants $ 232,662 North America commissaries 137,002 International 17,784 All others 60,993 Unallocated corporate assets 193,593 Accumulated depreciation and amortization (412,458) Net property and equipment $ 229,576 (1) The Company refined its overhead allocation process in 2018 resulting in transfers of expenses from Unallocated corporate expenses of $3.8 million to other segments, primarily North America commissaries of $2.3 million and All others of $900,000. These allocations were eliminated in consolidation. (2) Certain prior year amounts have been reclassified to conform to current year presentation. |
Reclassifications of Prior Year
Reclassifications of Prior Year Balances | 3 Months Ended |
Apr. 01, 2018 | |
Basis of Presentation | |
Reclassifications of Prior Year Balances | Note 10. Reclassifications of Prior Year Balances As shown in the table below we have reclassified certain prior year amounts within the Condensed Consolidated Statements of Income, for the three months ended March 26, 2017, in order to conform with current year presentation. These reclassifications had no effect on previously reported total consolidated revenues, total costs and expenses and net income. Papa John's International, Inc. and Subsidiaries Condensed Consolidated Statements of Income Summary of Income Statement Presentation Reclassifications Three Months Ended March 26, 2017 (In thousands, except per share amounts) As reported Reclassifications Adjusted Revenues: North America commissary and other sales (1) 186,245 (14,905) 171,340 International (2) 28,518 (2,896) 25,622 Other revenues (1) (2) - 17,801 17,801 Costs and expenses: North America commissary and other expenses (1) 173,712 (13,755) 159,957 International expenses (2) 17,990 (2,199) 15,791 Other expenses (1) (2) (3) - 17,547 17,547 General and administrative expenses (3) 38,007 (1,593) 36,414 (1) Includes reclassification of previous amounts reported in North America commissary and other sales and expenses including print and promotional items, information systems and related services used in restaurant operations, including our point of sale system, online and other technology-based ordering platforms. (2) Includes reclassification of previous amounts reported in International related to advertising expenses and rental income and expenses for United Kingdom head leases which are subleased to United Kingdom franchisees. (3) Includes reclassification of various technology related expenditures for fee-based services discussed in (1) above and advertising expenses to be consistent with 2018 presentation. |
Significant Accounting Polici18
Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 01, 2018 | |
Significant Accounting Policies | |
Noncontrolling Interests | Noncontrolling Interests Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties after the divestiture of one joint venture in the first quarter of 2018. See Note 7 for more information on this divestiture. These joint ventures include 216 restaurants at April 1, 2018. We are required to report the consolidated net income at amounts attributable to the Company and the noncontrolling interests. Additionally, disclosures are required to clearly identify and distinguish between the interests of the Company and the interests of the noncontrolling owners, including a disclosure on the face of the Condensed Consolidated Statements of Income attributable to the noncontrolling interest holders. The income before income taxes attributable to these joint ventures for the three months ended April 1, 2018 and March 26, 2017 was as follows (in thousands): Three Months Ended April 1, March 26, 2018 2017 Papa John’s International, Inc. $ 1,295 $ 2,362 Noncontrolling interests 643 1,471 Total income before income taxes $ 1,938 $ 3,833 The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint venture with no redemption feature Permanent equity Carrying value Option to require the Company to purchase the noncontrolling interest - not currently redeemable Temporary equity Carrying value |
Revenue Recognition | Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Delivery costs, including freight associated with our domestic commissary and other sales are accounted for as fulfillment costs and are included in operating costs. As further described in Accounting Standards Adopted and Note 3, Adoption of ASU 2014-09, “Revenue from Contracts with Customers,” revenue recognition in 2018 follows ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” Prior year revenue recognition follows ASU Topic 605, Revenue Recognition. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Restaurant Sales The domestic and international company-owned restaurants principally generate revenue from retail sales of high-quality pizza, side items including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. Revenues from Company-owned restaurants are recognized when the products are delivered to or carried out by customers. Our domestic customer loyalty program, Papa Rewards, is a spend-based program that rewards customers with points for each online purchase. Papa Rewards points are accumulated and redeemed online for free products. The accrued liability in the Condensed Consolidated Balance Sheets, and corresponding reduction of company-owned restaurant sales in the Condensed Consolidated Statements of Income is for the estimated reward redemptions at domestic company-owned restaurants based upon historical redemption patterns. The liability is calculated using the estimated selling price of the products for which rewards are expected to be redeemed. Revenue is recognized when the customer redeems points for products. Prior to the adoption of Topic 606, the liability related to Papa Rewards was estimated using the incremental cost accrual model which was based on the expected cost to satisfy the award. The corresponding expense was recorded in general and administrative expenses in the Condensed Consolidated Statements of Income. Commissary Sales Commissary sales are comprised of food and supplies sold to franchised restaurants and are recognized as revenue upon shipment or delivery of the related products to the franchisees and payments are generally due within 30 days. Franchise Royalties and Fees Franchise royalties which are based on a percentage of franchise restaurant sales are recognized as sales occur. Royalty reductions, offered as part of a new store development incentive or as incentive for other behaviors including acceleration of restaurant remodels or equipment upgrades, are recognized at the same time as the related royalty as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The majority of initial franchise license fees and area development fees are from international locations. The franchise license fees are billed at the store opening date. Area development exclusivity fees are billed upon execution of the development agreements which grant the right to develop franchised restaurants in future periods in specific geographic areas. Area development exclusivity fees are included in deferred revenue in the Condensed Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement. Franchise license renewal fees for both domestic and international locations, which generally occur every 10 years, are billed before the renewal date. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Fees received for future renewal periods are amortized over the life of the renewal period. For periods prior to adoption of Topic 606, revenue was recognized when we performed our obligations related to such fees, primarily the store opening date for initial franchise fees and area development fees, or the date the renewal option was effective for renewal fees. The Company offers various incentive programs for franchisees including royalty incentives, new restaurant opening (i.e. development incentives) and other various support initiatives. Royalties, franchise fees and commissary sales are reduced to reflect any incentives earned or granted under these programs that are in the form of discounts. Other development incentives for opening restaurants are offered in the form of Company equipment through a lease agreement at substantially no cost. This equipment is amortized over the term of the lease agreement, which is generally three to five years, and is recognized in general and administrative expenses in our Condensed Consolidated Statements of Income. The equipment lease agreement has separate and distinguishable obligations from the franchise right and is accounted for under ASC Topic 840, Leases. Other Revenues Fees for information services, including software maintenance fees, help desk fees and online ordering fees are recognized as revenue as such services are provided and are included in other revenue. Revenues for printing, promotional items, and direct mail marketing services are recognized upon shipment of the related products to franchisees and other customers. Direct mail advertising discounts are also periodically offered by our Preferred Marketing Solutions subsidiary. Other revenues are reduced to reflect these advertising discounts. Rental income, primarily derived from properties leased by the Company and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms, in accordance with ASC Topic 840, Leases. Franchise Marketing Fund revenues represent contributions collected by various international and domestic marketing funds where we have determined that we have control over the activities of the fund. Contributions are based on a percentage of monthly restaurant sales. The adoption of Topic 606 revises the determination of whether these arrangements are considered principal versus agent. When we are determined to be the principal in these arrangements, advertising fund contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Income. We expect such advertising fund contributions and expenditures will be largely offsetting and therefore do not expect a significant impact on our reported income before income taxes. Our obligation related to these funds is to develop and conduct advertising activities in a specific country, region, or market, including the placement of electronic and print materials. Marketing fund contributions are billed monthly. For periods prior to the adoption of Topic 606, the revenues and expenses of certain international advertising funds and the Co-op Funds in which we possess majority voting rights, were included in our Condensed Consolidated Statements of Income on a net basis as we previously concluded we were the agent in regard to the funds based upon principal/agent determinations in industry-specific guidance in GAAP that was in effect during those time periods. |
Deferred Income Tax Accounts and Tax Reserves | Deferred Income Tax Accounts and Tax Reserves We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. We use an estimated annual effective rate based on expected annual income to determine our quarterly provision for income taxes. Discrete items are recorded in the quarter in which they occur. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly decreasing the U.S. federal income tax rate for corporations effective January 1, 2018. As a result, we remeasured our deferred tax assets, liabilities and related valuation allowances. This remeasurement yielded a one-time benefit of approximately $7.0 million due to the lower income tax rate in 2017. Given the substantial changes associated with the Tax Act, the estimated financial impacts for 2017 are provisional and subject to further interpretation and clarification of the Tax Act during 2018. As of April 1, 2018, we had a net deferred income tax liability of approximately $5.5 million. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), that allows for an entity to reclassify disproportionate income tax effects in accumulated other comprehensive income (loss) (“AOCI”) caused by the Tax Act to retained earnings. See “Accounting Standards Adopted” section below for additional details. Tax authorities periodically audit the Company. We record reserves and related interest and penalties for identified exposures as income tax expense. We evaluate these issues on a quarterly basis to adjust for events, such as statute of limitations expirations, court or state rulings or audit settlements, which may impact our ultimate payment for such exposures. |
Fair Value Measurements and Disclosures | Fair Value Measurements and Disclosures The Company is required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including cash, accounts receivable and accounts payable. The carrying value of our notes receivable, net of allowances, also approximates fair value. The fair value of the amount outstanding under our revolving credit facility approximates its carrying value due to its variable market-based interest rate. These assets and liabilities are categorized as Level 1 as defined below. Certain assets and liabilities are measured at fair value on a recurring basis and are required to 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 inputs or unobservable inputs that are corroborated by market data. · Level 3: Unobservable inputs that are not corroborated by market data. Our financial assets that were measured at fair value on a recurring basis as of April 1, 2018 and December 31, 2017 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 April 1, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 28,469 $ 28,469 $ — $ — Interest rate swaps (b) 7,369 — 7,369 — December 31, 2017 Financial assets: Cash surrender value of life insurance policies (a) $ 28,645 $ 28,645 $ — $ — Interest rate swaps (b) 651 — 651 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). Our assets and liabilities that were measured at fair value on a non-recurring basis as of April 1, 2018 and December 31, 2017 include assets and liabilities held for sale. The fair value was determined using a market-based approach with unobservable inputs (Level 3) less any estimated selling costs. There were no transfers among levels within the fair value hierarchy during the three months ended April 1, 2018. |
Variable Interest Entity | Variable Interest Entity Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. PJMF is a variable interest entity as it does not have sufficient equity to fund its operations without ongoing financial support and contributions from its members. Based on the ownership and governance structure and operating procedures of PJMF, we have determined that we do not have the power to direct the most significant activities of PJMF and therefore are not the primary beneficiary. Accordingly, consolidation of PJMF is not appropriate. |
Recent Accounting Pronouncements | Accounting Standards Adopted Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP, including industry-specific requirements, and provides companies with a single revenue recognition framework for recognizing revenue from contracts with customers. In March and April 2016, the FASB issued Topic 606. This update and subsequently issued amendments require companies to recognize revenue at amounts that reflect the consideration to which the companies expect to be entitled in exchange for those goods or services at the time of transfer. Topic 606 requires that we assess contracts to determine each separate and distinct performance obligation. If a contract has multiple performance obligations, we allocate the transaction price using our best estimate of the standalone selling price to each distinct good or service in the contract. The Company adopted Topic 606 as of January 1, 2018. See Note 3 for additional information. Certain Tax effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), guidance that allows for an entity to reclassify disproportionate income tax effects in accumulated other comprehensive income (“AOCI”) caused by the Tax Act to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASU 2018-02 in the first quarter of 2018 by electing to reclassify the income tax effects from AOCI to retained earnings. The impact of the adoption was not material to our condensed consolidated financial statements. Accounting Standards to be Adopted in Future Periods Leases In February 2016, the FASB issued ASU 2016-02, “Leases,” (“ASU 2016-02”), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital leases (financing) with lease terms greater than twelve months. The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will continue to be classified as operating or capital (financing) with lease expense in both cases calculated substantially the same as under the prior leasing guidance. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 (fiscal 2019 for the Company), and early adoption is permitted. The Company has not yet determined the full impact of the adoption on its consolidated financial statements but expects the adoption will result in a significant increase in the non-current assets and liabilities reported on our Consolidated Balance Sheet. |
Reclassification | Reclassification Certain prior year amounts have been reclassified in the Condensed Consolidated Statement of Income. See Note 10 for additional information. |
Significant Accounting Polici19
Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Significant Accounting Policies | |
Schedule of Income Before Income Taxes Attributable to Joint Ventures | The income before income taxes attributable to these joint ventures for the three months ended April 1, 2018 and March 26, 2017 was as follows (in thousands): Three Months Ended April 1, March 26, 2018 2017 Papa John’s International, Inc. $ 1,295 $ 2,362 Noncontrolling interests 643 1,471 Total income before income taxes $ 1,938 $ 3,833 |
Schedule of Joint Ventures in Which There are Noncontrolling Interests | The following summarizes the redemption feature, location and related accounting within the condensed consolidated balance sheets for these joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint venture with no redemption feature Permanent equity Carrying value Option to require the Company to purchase the noncontrolling interest - not currently redeemable Temporary equity Carrying value |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Our financial assets that were measured at fair value on a recurring basis as of April 1, 2018 and December 31, 2017 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 April 1, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 28,469 $ 28,469 $ — $ — Interest rate swaps (b) 7,369 — 7,369 — December 31, 2017 Financial assets: Cash surrender value of life insurance policies (a) $ 28,645 $ 28,645 $ — $ — Interest rate swaps (b) 651 — 651 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected London Interbank Offered Rates (“LIBOR”). |
Adoption of ASU 2014-09, "Rev20
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" | |
Schedule of impacts of adoption of ASU 2014-09 | The following chart presents the specific line items impacted by the cumulative adjustment. Adjusted As Reported Balance Sheet December 31, Total at January 1, (In thousands, except per share amounts) 2017 Adjustments 2018 Assets Current assets: Cash and cash equivalents $ 22,345 $ 4,279 $ 26,624 Accounts receivable, net 64,644 493 65,137 Notes receivable, net 4,333 — 4,333 Income tax receivable 3,903 — 3,903 Inventories 30,620 — 30,620 Prepaid expenses 28,522 (4,959) 23,563 Other current assets 9,494 — 9,494 Assets held for sale 6,133 — 6,133 Total current assets 169,994 (187) 169,807 Property and equipment, net 234,331 — 234,331 Notes receivable, less current portion, net 15,568 — 15,568 Goodwill 86,892 — 86,892 Deferred income taxes, net 585 — 585 Other assets 48,183 (907) 47,276 Total assets $ 555,553 $ (1,094) $ 554,459 Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 32,006 $ (2,161) $ 29,845 Income and other taxes payable 10,561 — 10,561 Accrued expenses and other current liabilities 70,293 15,860 86,153 Deferred revenue current — 2,400 2,400 Current portion of long-term debt 20,000 — 20,000 Total current liabilities 132,860 16,099 148,959 Deferred revenue 2,652 10,798 13,450 Long-term debt, less current portion, net 446,565 — 446,565 Deferred income taxes, net 12,546 (6,464) 6,082 Other long-term liabilities 60,146 — 60,146 Total liabilities 654,769 20,433 675,202 Redeemable noncontrolling interests 6,738 — 6,738 Stockholders’ equity (deficit): Preferred stock ($0.01 par value per share; no shares issued) — — — Common stock ($0.01 par value per share; issued 44,221 at December 31, 2017 442 — 442 Additional paid-in capital 184,785 — 184,785 Accumulated other comprehensive loss (2,117) — (2,117) Retained earnings 292,251 (21,527) 270,724 Treasury stock (10,290 shares at December 31, 2017, at cost) (597,072) — (597,072) Total stockholders’ equity (deficit), net of noncontrolling interests (121,711) (21,527) (143,238) Noncontrolling interests in subsidiaries 15,757 — 15,757 Total stockholders’ equity (deficit) (105,954) (21,527) (127,481) Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) $ 555,553 $ (1,094) $ 554,459 The impact of adoption for the first quarter of 2018 is as follows: As Reported Balance Sheet April 1, Total Without Adoption (In thousands, except per share amounts) 2018 Adjustments of Topic 606 Assets Current assets: Cash and cash equivalents $ 31,935 $ (3,422) $ 28,513 Accounts receivable, net 62,949 (376) 62,573 Notes receivable, net 4,662 — 4,662 Income tax receivable — — — Inventories 28,285 — 28,285 Prepaid expenses 27,990 4,398 32,388 Other current assets 17,529 — 17,529 Assets held for sale 5,900 — 5,900 Total current assets 179,250 600 179,850 Property and equipment, net 229,576 — 229,576 Notes receivable, less current portion, net 16,084 — 16,084 Goodwill 86,746 — 86,746 Deferred income taxes, net 614 — 614 Other assets 67,547 907 68,454 Total assets $ 579,817 $ 1,507 $ 581,324 Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 31,072 $ 1,237 $ 32,309 Income and other taxes payable 10,094 — 10,094 Accrued expenses and other current liabilities 92,890 (14,854) 78,036 Deferred revenue current 2,400 (2,400) — Current portion of long-term debt 20,000 — 20,000 Total current liabilities 156,456 (16,017) 140,439 Deferred revenue 13,671 (11,027) 2,644 Long-term debt, less current portion, net 568,770 — 568,770 Deferred income taxes, net 6,125 6,593 12,718 Other long-term liabilities 76,993 — 76,993 Total liabilities 822,015 (20,451) 801,564 Redeemable noncontrolling interests 7,037 — 7,037 Stockholders’ equity (deficit): Preferred stock ($0.01 par value per share; no shares issued) — — — Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018) 443 — 443 Additional paid-in capital 163,198 — 163,198 Accumulated other comprehensive income (loss) 4,110 — 4,110 Retained earnings 280,853 21,958 302,811 Treasury stock (12,245 shares at April 1, 2018, at cost) (714,097) — (714,097) Total stockholders’ equity (deficit), net of noncontrolling interests (265,493) 21,958 (243,535) Noncontrolling interests in subsidiaries 16,258 — 16,258 Total stockholders’ equity (deficit) (249,235) 21,958 (227,277) Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) $ 579,817 $ 1,507 $ 581,324 As Reported Three Months Ended Income Statement April 1, Total Without Adoption of (In thousands, except per share amounts) 2018 Adjustments Topic 606 Revenues: Domestic Company-owned restaurant sales $ 190,242 $ 264 $ 190,506 North America franchise royalties and fees 24,806 38 24,844 North America commissary 161,713 — 161,713 International 30,114 149 30,263 Other revenues 20,494 (2,887) 17,607 Total revenues 427,369 (2,436) 424,933 Costs and expenses: Operating costs (excluding depreciation and amortization shown separately below): Domestic Company-owned restaurant expenses 157,319 (66) 157,253 North America commissary 151,681 — 151,681 International expenses 19,030 — 19,030 Other expenses 20,958 (3,359) 17,599 General and administrative expenses 39,729 504 40,233 Depreciation and amortization 11,539 — 11,539 Total costs and expenses 400,256 (2,921) 397,335 Refranchising and impairment gains/(losses), net 204 — 204 Operating income 27,317 485 27,802 Net Interest expense (4,955) — (4,955) Income before income taxes 22,362 485 22,847 Income tax expense 4,982 112 5,094 Net income before attribution to noncontrolling interests 17,380 373 17,753 Income attributable to noncontrolling interests (643) — (643) Net income attributable to the Company $ 16,737 $ 373 $ 17,110 Calculation of income for earnings per share: Net income attributable to the Company $ 16,737 $ 373 $ 17,110 Change in noncontrolling interest redemption value — — — Net income attributable to participating securities (75) — (75) Net income attributable to common shareholders $ 16,662 $ 373 $ 17,035 Basic earnings per common share $ 0.50 $ 0.01 $ 0.51 Diluted earnings per common share $ 0.50 $ 0.01 $ 0.51 Basic weighted average common shares outstanding 33,279 33,279 33,279 Diluted weighted average common shares outstanding 33,552 33,552 33,552 |
Schedule of estimated revenue expected to be recognized in the future | The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. Performance Obligations by Period Less than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Thereafter Total Franchise Fees $ 2,400 $ 2,141 $ 1,909 $ 1,681 $ 1,461 $ 3,835 $ 13,427 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Revenue Recognition | |
Schedule of revenue disaggregated by major product line | In the following table (in thousands), revenue is disaggregated by major product line. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Reportable Segments Quarter Ended April 1, 2018 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 190,242 $ - $ - $ 3,453 $ - $ 193,695 Commissary sales - 217,587 - 17,679 - 235,266 Franchise royalties and fees - - 25,825 8,982 - 34,807 Other revenues - - - 5,488 23,150 28,638 Eliminations - (55,874) (1,019) (70) (8,074) (65,037) Total $ 190,242 $ 161,713 $ 24,806 $ 35,532 $ 15,076 $ 427,369 |
Schedule of information about contract liabilities | The following table (in thousands) provides information about contract liabilities. April 1, January 1, 2018 2018 Change Deferred revenue $ 16,071 $ 15,850 $ 220 Customer loyalty program 15,022 14,724 298 Total contract liabilities $ 31,093 $ 30,574 $ 518 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Earnings Per Share | |
Schedule of Earnings Per Share, Basic and Diluted | The calculations of basic and diluted earnings per common share are as follows (in thousands, except per-share data): Three Months Ended April 1, March 26, 2018 2017 Basic earnings per common share: Net income attributable to the Company $ 16,737 $ 28,428 Change in noncontrolling interest redemption value — 520 Net income attributable to participating securities (75) (117) Net income attributable to common shareholders $ 16,662 $ 28,831 Weighted average common shares outstanding 33,279 36,810 Basic earnings per common share $ 0.50 $ 0.78 Diluted earnings per common share: Net income attributable to common shareholders $ 16,662 $ 28,831 Weighted average common shares outstanding 33,279 36,810 Dilutive effect of outstanding equity awards (a) 273 540 Diluted weighted average common shares outstanding 33,552 37,350 Diluted earnings per common share $ 0.50 $ 0.77 (a) Excludes 790 and 117 awards for the three months ended April 1, 2018 and March 26, 2017, respectively, as the effect of including such awards would have been antidilutive. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Debt | |
Schedule of long-term debt, net | Long-term debt, net consists of the following (in thousands): April 1, December 31, 2018 2017 Outstanding debt $ 592,000 $ 470,000 Unamortized debt issuance costs (3,230) (3,435) Current portion of long-term debt (20,000) (20,000) Total long-term debt, less current portion, net $ 568,770 $ 446,565 |
Schedule of Interest Rate Swap Agreements | As of April 1, 2018, we have the following interest rate swap agreements: Effective Dates Floating Rate Debt Fixed Rates July 30, 2013 through April 30, 2018 $ 75 million 1.42 % December 30, 2014 through April 30, 2018 $ 50 million 1.36 % April 30, 2018 through April 30, 2023 $ 55 million 2.33 % April 30, 2018 through April 30, 2023 $ 35 million 2.36 % April 30, 2018 through April 30, 2023 $ 35 million 2.34 % January 30, 2018 through August 30, 2022 $ million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 1.99 % January 30, 2018 through August 30, 2022 $ 75 million 2.00 % January 30, 2018 through August 30, 2022 $ 25 million 1.99 % |
Schedule of Location and Amounts of Swaps in the Accompanying Consolidated Financial Statements | The following table provides information on the location and amounts of our swaps in the accompanying condensed consolidated financial statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value April 1, December 31, Balance Sheet Location 2018 2017 Other current and long-term assets $ 7,369 $ 651 |
Schedule of Effect of Derivative Instruments on the Accompanying Consolidated Financial Statements | The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands): Location of Gain Amount of Gain Derivatives - Amount of Gain or or (Loss) or (Loss) Total Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Income Interest rate swaps for the three months ended: April 1, 2018 $ 5,173 Interest expense $ (108) $ (5,220) March 26, 2017 $ (295) Interest expense $ (198) $ (1,946) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Segment Information | |
Schedule of Segment Reporting Information, by Segment | Our segment information is as follows: Three Months Ended April 1, March 26, (In thousands) 2018 2017 Revenues Domestic Company-owned restaurants $ 190,242 $ 206,896 North America commissaries 161,713 171,340 North America franchising 24,806 27,607 International 35,532 28,518 All others 15,076 14,905 Total revenues $ 427,369 $ 449,266 Intersegment revenues: North America commissaries $ 55,874 $ 61,736 North America franchising 1,019 764 International 70 63 All others 8,074 5,026 Total intersegment revenues $ 65,037 $ 67,589 Income (loss) before income taxes: Domestic Company-owned restaurants $ 7,229 $ 15,487 North America commissaries (1) 8,610 12,244 North America franchising 22,359 24,875 International 3,537 4,344 All others (1) (2) (909) 460 Unallocated corporate expenses (1) (2) (18,131) (16,381) Elimination of intersegment (profits) losses (333) 842 Total income before income taxes $ 22,362 $ 41,871 Property and equipment: Domestic Company-owned restaurants $ 232,662 North America commissaries 137,002 International 17,784 All others 60,993 Unallocated corporate assets 193,593 Accumulated depreciation and amortization (412,458) Net property and equipment $ 229,576 (1) The Company refined its overhead allocation process in 2018 resulting in transfers of expenses from Unallocated corporate expenses of $3.8 million to other segments, primarily North America commissaries of $2.3 million and All others of $900,000. These allocations were eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. |
Reclassificaitons of Prior Year
Reclassificaitons of Prior Year Balances (Tables) | 3 Months Ended |
Apr. 01, 2018 | |
Basis of Presentation | |
Schedule of Certain Prior Year Amounts Reclassified within the Condensed Consolidated Statements of Income | Three Months Ended March 26, 2017 (In thousands, except per share amounts) As reported Reclassifications Adjusted Revenues: North America commissary and other sales (1) 186,245 (14,905) 171,340 International (2) 28,518 (2,896) 25,622 Other revenues (1) (2) - 17,801 17,801 Costs and expenses: North America commissary and other expenses (1) 173,712 (13,755) 159,957 International expenses (2) 17,990 (2,199) 15,791 Other expenses (1) (2) (3) - 17,547 17,547 General and administrative expenses (3) 38,007 (1,593) 36,414 (1) Includes reclassification of previous amounts reported in North America commissary and other sales and expenses including print and promotional items, information systems and related services used in restaurant operations, including our point of sale system, online and other technology-based ordering platforms. (2) Includes reclassification of previous amounts reported in International related to advertising expenses and rental income and expenses for United Kingdom head leases which are subleased to United Kingdom franchisees. Includes reclassification of various technology related expenditures for fee-based services discussed in (1) above and advertising expenses to be consistent with 2018 presentation. |
Significant Accounting Polici26
Significant Accounting Policies - Noncontrolling Interest and Joint Ventures (Details) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018USD ($)restaurantitementity | Mar. 26, 2017USD ($) | |
Noncontrolling Interests | ||
Number of joint ventures divested | item | 1 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | ||
Total income before income taxes | $ 22,362 | $ 41,871 |
Joint ventures | ||
Noncontrolling Interests | ||
Number of Joint Ventures Having Noncontrolling Interests | entity | 4 | |
Number of Restaurants | restaurant | 216 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | ||
Papa John's International, Inc. | $ 1,295 | 2,362 |
Noncontrolling interests | 643 | 1,471 |
Total income before income taxes | $ 1,938 | $ 3,833 |
Significant Accounting Polici27
Significant Accounting Policies – Revenue Recognition (Details) | 3 Months Ended |
Apr. 01, 2018 | |
Significant Accounting Policies | |
Term of franchise agreement | 10 years |
Significant Accounting Polici28
Significant Accounting Policies - Deferred Income Tax Accounts and Tax Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2017 | Apr. 01, 2018 | |
Significant Accounting Policies | ||
Provisional one-time Tax Act tax benefit from remeasurement of deferred tax assets, liabilities and related valuation allowances | $ 7 | |
Net deferred income tax liability | $ 5.5 |
Significant Accounting Polici29
Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Dec. 31, 2017 | |
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Transfers among levels within the fair value hierarchy | $ 0 | |
Carrying Value | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Cash surrender value of life insurance policies | 28,469 | $ 28,645 |
Interest rate swap assets | 7,369 | 651 |
Measured on Recurring Basis | Level 1 | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Cash surrender value of life insurance policies | 28,469 | 28,645 |
Measured on Recurring Basis | Level 2 | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Interest rate swap assets | $ 7,369 | $ 651 |
Adoption of ASU 2014-09, "Rev30
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" - Cumulative Effect Adjustments (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Apr. 01, 2018 | Mar. 26, 2017 |
Retained Earnings Adjustments [Line Items] | |||
Total revenues | $ 427,369 | $ 449,266 | |
Income (loss) before income taxes | 22,362 | $ 41,871 | |
Franchise royalties and fees | |||
Retained Earnings Adjustments [Line Items] | |||
Total revenues | 34,807 | ||
Accounting Standards Update 2014-09 | |||
Retained Earnings Adjustments [Line Items] | |||
Cumulative effect adjustment to retained earnings | $ (21,500) | ||
Accounting Standards Update 2014-09 | Franchise royalties and fees | |||
Retained Earnings Adjustments [Line Items] | |||
Cumulative effect adjustment to retained earnings | (10,800) | ||
Accounting Standards Update 2014-09 | Customer loyalty program | |||
Retained Earnings Adjustments [Line Items] | |||
Cumulative effect adjustment to retained earnings | (8,000) | ||
Accounting Standards Update 2014-09 | Marketing funds | |||
Retained Earnings Adjustments [Line Items] | |||
Cumulative effect adjustment to retained earnings | $ (2,700) | ||
Total Adjustments | Accounting Standards Update 2014-09 | |||
Retained Earnings Adjustments [Line Items] | |||
Total revenues | (2,436) | ||
Income (loss) before income taxes | $ 485 |
Adoption of ASU 2014-09, "Rev31
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" – Line Items Impacted by Cumulative Adjustment (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 01, 2018 | Jan. 02, 2018 | Dec. 31, 2017 | Mar. 26, 2017 | Dec. 25, 2016 |
Current assets: | |||||
Cash and cash equivalents | $ 31,935 | $ 26,624 | $ 22,345 | $ 22,715 | $ 15,563 |
Accounts receivable, net | 62,949 | 65,137 | 64,644 | ||
Notes receivable, net | 4,662 | 4,333 | 4,333 | ||
Income tax receivable | 3,903 | 3,903 | |||
Inventories | 28,285 | 30,620 | 30,620 | ||
Prepaid expenses | 27,990 | 23,563 | 28,522 | ||
Other current assets | 17,529 | 9,494 | 9,494 | ||
Assets held for sale | 5,900 | 6,133 | 6,133 | ||
Total current assets | 179,250 | 169,807 | 169,994 | ||
Property and equipment, net | 229,576 | 234,331 | 234,331 | ||
Notes receivable, less current portion, net | 16,084 | 15,568 | 15,568 | ||
Goodwill | 86,746 | 86,892 | 86,892 | ||
Deferred income taxes, net | 614 | 585 | 585 | ||
Other assets | 67,547 | 47,276 | 48,183 | ||
Total assets | 579,817 | 554,459 | 555,553 | ||
Current liabilities: | |||||
Accounts payable | 31,072 | 29,845 | 32,006 | ||
Income and other taxes payable | 10,094 | 10,561 | 10,561 | ||
Accrued expenses and other current liabilities | 92,890 | 86,153 | 70,293 | ||
Deferred revenue current | 2,400 | 2,400 | |||
Current portion of long-term debt | 20,000 | 20,000 | 20,000 | ||
Total current liabilities | 156,456 | 148,959 | 132,860 | ||
Deferred revenue | 13,671 | 13,450 | 2,652 | ||
Long-term debt, less current portion, net | 568,770 | 446,565 | 446,565 | ||
Deferred income taxes, net | 6,125 | 6,082 | 12,546 | ||
Other long-term liabilities | 76,993 | 60,146 | 60,146 | ||
Total liabilities | 822,015 | 675,202 | 654,769 | ||
Redeemable noncontrolling interests | 7,037 | 6,738 | 6,738 | ||
Stockholders’ equity (deficit): | |||||
Preferred stock ($0.01 par value per share; no shares issued) | |||||
Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018 and 44,221 at December 31, 2017) | 443 | 442 | 442 | ||
Additional paid-in capital | 163,198 | 184,785 | 184,785 | ||
Accumulated other comprehensive income (loss) | 4,110 | (2,117) | (2,117) | ||
Retained earnings | 280,853 | 270,724 | 292,251 | ||
Treasury stock (12,245 shares at April 1, 2018 and 10,290 shares at December 31, 2017, at cost) | (714,097) | (597,072) | (597,072) | ||
Total stockholders' equity (deficit), net of noncontrolling interests | (265,493) | (143,238) | (121,711) | ||
Noncontrolling interests in subsidiaries | 16,258 | 15,757 | 15,757 | ||
Total stockholders’ equity (deficit) | (249,235) | (127,481) | (105,954) | ||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | $ 579,817 | 554,459 | $ 555,553 | ||
Preferred stock, par value | $ 0.01 | $ 0.01 | |||
Preferred stock, shares issued | 0 | 0 | |||
Common stock, par value | $ 0.01 | $ 0.01 | |||
Common stock, shares issued | 44,268 | 44,221 | |||
Treasury stock, shares | (12,245) | 10,290 | |||
Accounting Standards Update 2014-09 | Total Adjustments | |||||
Current assets: | |||||
Cash and cash equivalents | $ (3,422) | 4,279 | |||
Accounts receivable, net | (376) | 493 | |||
Prepaid expenses | 4,398 | (4,959) | |||
Total current assets | 600 | (187) | |||
Other assets | 907 | (907) | |||
Total assets | 1,507 | (1,094) | |||
Current liabilities: | |||||
Accounts payable | 1,237 | (2,161) | |||
Accrued expenses and other current liabilities | (14,854) | 15,860 | |||
Deferred revenue current | (2,400) | 2,400 | |||
Total current liabilities | (16,017) | 16,099 | |||
Deferred revenue | (11,027) | 10,798 | |||
Deferred income taxes, net | 6,593 | (6,464) | |||
Total liabilities | (20,451) | 20,433 | |||
Stockholders’ equity (deficit): | |||||
Retained earnings | 21,958 | (21,527) | |||
Total stockholders' equity (deficit), net of noncontrolling interests | 21,958 | (21,527) | |||
Total stockholders’ equity (deficit) | 21,958 | (21,527) | |||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | $ 1,507 | $ (1,094) |
Adoption of ASU 2014-09, "Rev32
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" – Impact of Adoption for the First Quarter on the Balance Sheet (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 01, 2018 | Jan. 02, 2018 | Dec. 31, 2017 | Mar. 26, 2017 | Dec. 25, 2016 |
Current assets: | |||||
Cash and cash equivalents | $ 31,935 | $ 26,624 | $ 22,345 | $ 22,715 | $ 15,563 |
Accounts receivable, net | 62,949 | 65,137 | 64,644 | ||
Notes receivable, net | 4,662 | 4,333 | 4,333 | ||
Income tax receivable | 3,903 | 3,903 | |||
Inventories | 28,285 | 30,620 | 30,620 | ||
Prepaid expenses | 27,990 | 23,563 | 28,522 | ||
Other current assets | 17,529 | 9,494 | 9,494 | ||
Assets held for sale | 5,900 | 6,133 | 6,133 | ||
Total current assets | 179,250 | 169,807 | 169,994 | ||
Property and equipment, net | 229,576 | 234,331 | 234,331 | ||
Notes receivable, less current portion, net | 16,084 | 15,568 | 15,568 | ||
Goodwill | 86,746 | 86,892 | 86,892 | ||
Deferred income taxes, net | 614 | 585 | 585 | ||
Other assets | 67,547 | 47,276 | 48,183 | ||
Total assets | 579,817 | 554,459 | 555,553 | ||
Current liabilities: | |||||
Accounts payable | 31,072 | 29,845 | 32,006 | ||
Income and other taxes payable | 10,094 | 10,561 | 10,561 | ||
Accrued expenses and other current liabilities | 92,890 | 86,153 | 70,293 | ||
Deferred revenue current | 2,400 | 2,400 | |||
Current portion of long-term debt | 20,000 | 20,000 | 20,000 | ||
Total current liabilities | 156,456 | 148,959 | 132,860 | ||
Deferred revenue | 13,671 | 13,450 | 2,652 | ||
Long-term debt, less current portion, net | 568,770 | 446,565 | 446,565 | ||
Deferred income taxes, net | 6,125 | 6,082 | 12,546 | ||
Other long-term liabilities | 76,993 | 60,146 | 60,146 | ||
Total liabilities | 822,015 | 675,202 | 654,769 | ||
Redeemable noncontrolling interests | 7,037 | 6,738 | 6,738 | ||
Stockholders’ equity (deficit): | |||||
Preferred stock ($0.01 par value per share; no shares issued) | |||||
Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018 and 44,221 at December 31, 2017) | 443 | 442 | 442 | ||
Additional paid-in capital | 163,198 | 184,785 | 184,785 | ||
Accumulated other comprehensive income (loss) | 4,110 | (2,117) | (2,117) | ||
Retained earnings | 280,853 | 270,724 | 292,251 | ||
Treasury stock (12,245 shares at April 1, 2018 and 10,290 shares at December 31, 2017, at cost) | (714,097) | (597,072) | (597,072) | ||
Total stockholders' equity (deficit), net of noncontrolling interests | (265,493) | (143,238) | (121,711) | ||
Noncontrolling interests in subsidiaries | 16,258 | 15,757 | 15,757 | ||
Total stockholders’ equity (deficit) | (249,235) | (127,481) | (105,954) | ||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | $ 579,817 | 554,459 | $ 555,553 | ||
Preferred stock, par value | $ 0.01 | $ 0.01 | |||
Preferred stock, shares issued | 0 | 0 | |||
Common stock, par value | $ 0.01 | $ 0.01 | |||
Common stock, shares issued | 44,268 | 44,221 | |||
Treasury stock, shares | (12,245) | 10,290 | |||
Accounting Standards Update 2014-09 | Total Adjustments | |||||
Current assets: | |||||
Cash and cash equivalents | $ (3,422) | 4,279 | |||
Accounts receivable, net | (376) | 493 | |||
Prepaid expenses | 4,398 | (4,959) | |||
Total current assets | 600 | (187) | |||
Other assets | 907 | (907) | |||
Total assets | 1,507 | (1,094) | |||
Current liabilities: | |||||
Accounts payable | 1,237 | (2,161) | |||
Accrued expenses and other current liabilities | (14,854) | 15,860 | |||
Deferred revenue current | (2,400) | 2,400 | |||
Total current liabilities | (16,017) | 16,099 | |||
Deferred revenue | (11,027) | 10,798 | |||
Deferred income taxes, net | 6,593 | (6,464) | |||
Total liabilities | (20,451) | 20,433 | |||
Stockholders’ equity (deficit): | |||||
Retained earnings | 21,958 | (21,527) | |||
Total stockholders' equity (deficit), net of noncontrolling interests | 21,958 | (21,527) | |||
Total stockholders’ equity (deficit) | 21,958 | (21,527) | |||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | 1,507 | $ (1,094) | |||
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | |||||
Current assets: | |||||
Cash and cash equivalents | 28,513 | ||||
Accounts receivable, net | 62,573 | ||||
Notes receivable, net | 4,662 | ||||
Inventories | 28,285 | ||||
Prepaid expenses | 32,388 | ||||
Other current assets | 17,529 | ||||
Assets held for sale | 5,900 | ||||
Total current assets | 179,850 | ||||
Property and equipment, net | 229,576 | ||||
Notes receivable, less current portion, net | 16,084 | ||||
Goodwill | 86,746 | ||||
Deferred income taxes, net | 614 | ||||
Other assets | 68,454 | ||||
Total assets | 581,324 | ||||
Current liabilities: | |||||
Accounts payable | 32,309 | ||||
Income and other taxes payable | 10,094 | ||||
Accrued expenses and other current liabilities | 78,036 | ||||
Current portion of long-term debt | 20,000 | ||||
Total current liabilities | 140,439 | ||||
Deferred revenue | 2,644 | ||||
Long-term debt, less current portion, net | 568,770 | ||||
Deferred income taxes, net | 12,718 | ||||
Other long-term liabilities | 76,993 | ||||
Total liabilities | 801,564 | ||||
Redeemable noncontrolling interests | 7,037 | ||||
Stockholders’ equity (deficit): | |||||
Common stock ($0.01 par value per share; issued 44,268 at April 1, 2018 and 44,221 at December 31, 2017) | 443 | ||||
Additional paid-in capital | 163,198 | ||||
Accumulated other comprehensive income (loss) | 4,110 | ||||
Retained earnings | 302,811 | ||||
Treasury stock (12,245 shares at April 1, 2018 and 10,290 shares at December 31, 2017, at cost) | (714,097) | ||||
Total stockholders' equity (deficit), net of noncontrolling interests | (243,535) | ||||
Noncontrolling interests in subsidiaries | 16,258 | ||||
Total stockholders’ equity (deficit) | (227,277) | ||||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit) | $ 581,324 |
Adoption of ASU 2014-09, "Rev33
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" – Impact of Adoption for the First Quarter on the Statement of Income (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Revenues: | ||
Total revenues | $ 427,369 | $ 449,266 |
Costs and expenses: | ||
General and administrative expenses | 39,729 | 36,414 |
Depreciation and amortization | 11,539 | 10,457 |
Total costs and expenses | 400,256 | 405,585 |
Refranchising and impairment gains/(losses), net | 204 | |
Operating income | 27,317 | 43,681 |
Net Interest expense | (4,955) | (1,810) |
Income before income taxes | 22,362 | 41,871 |
Income tax expense | 4,982 | 11,972 |
Net income before attribution to noncontrolling interests | 17,380 | 29,899 |
Income attributable to noncontrolling interests | (643) | (1,471) |
Net income attributable to the Company | 16,737 | 28,428 |
Calculation of income for earnings per share: | ||
Net income attributable to the Company | 16,737 | 28,428 |
Change in noncontrolling interest redemption value | 520 | |
Net income attributable to participating securities | (75) | (117) |
Net income attributable to common shareholders | $ 16,662 | $ 28,831 |
Basic earnings per common share | $ 0.50 | $ 0.78 |
Diluted earnings per common share | $ 0.50 | $ 0.77 |
Basic weighted average common shares outstanding | 33,279 | 36,810 |
Diluted weighted average common shares outstanding | 33,552 | 37,350 |
Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 190,242 | $ 206,896 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 157,319 | 165,419 |
North America franchising | ||
Revenues: | ||
Total revenues | 24,806 | 27,607 |
North America commissary | ||
Revenues: | ||
Total revenues | 161,713 | 171,340 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 151,681 | 159,957 |
International | ||
Revenues: | ||
Total revenues | 30,114 | 25,622 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 19,030 | 15,791 |
Other segment | ||
Revenues: | ||
Total revenues | 20,494 | 17,801 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 20,958 | $ 17,547 |
Accounting Standards Update 2014-09 | Total Adjustments | ||
Revenues: | ||
Total revenues | (2,436) | |
Costs and expenses: | ||
General and administrative expenses | 504 | |
Total costs and expenses | (2,921) | |
Operating income | 485 | |
Income before income taxes | 485 | |
Income tax expense | 112 | |
Net income before attribution to noncontrolling interests | 373 | |
Net income attributable to the Company | 373 | |
Calculation of income for earnings per share: | ||
Net income attributable to the Company | 373 | |
Net income attributable to common shareholders | $ 373 | |
Basic earnings per common share | $ 0.01 | |
Diluted earnings per common share | $ 0.01 | |
Basic weighted average common shares outstanding | 33,279 | |
Diluted weighted average common shares outstanding | 33,552 | |
Accounting Standards Update 2014-09 | Total Adjustments | Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 264 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | (66) | |
Accounting Standards Update 2014-09 | Total Adjustments | North America franchising | ||
Revenues: | ||
Total revenues | 38 | |
Accounting Standards Update 2014-09 | Total Adjustments | International | ||
Revenues: | ||
Total revenues | 149 | |
Accounting Standards Update 2014-09 | Total Adjustments | Other segment | ||
Revenues: | ||
Total revenues | (2,887) | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | (3,359) | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | ||
Revenues: | ||
Total revenues | 424,933 | |
Costs and expenses: | ||
General and administrative expenses | 40,233 | |
Depreciation and amortization | 11,539 | |
Total costs and expenses | 397,335 | |
Refranchising and impairment gains/(losses), net | 204 | |
Operating income | 27,802 | |
Net Interest expense | (4,955) | |
Income before income taxes | 22,847 | |
Income tax expense | 5,094 | |
Net income before attribution to noncontrolling interests | 17,753 | |
Income attributable to noncontrolling interests | (643) | |
Net income attributable to the Company | 17,110 | |
Calculation of income for earnings per share: | ||
Net income attributable to the Company | 17,110 | |
Net income attributable to participating securities | (75) | |
Net income attributable to common shareholders | $ 17,035 | |
Basic earnings per common share | $ 0.51 | |
Diluted earnings per common share | $ 0.51 | |
Basic weighted average common shares outstanding | 33,279 | |
Diluted weighted average common shares outstanding | 33,552 | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 190,506 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 157,253 | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | North America franchising | ||
Revenues: | ||
Total revenues | 24,844 | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | North America commissary | ||
Revenues: | ||
Total revenues | 161,713 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 151,681 | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | International | ||
Revenues: | ||
Total revenues | 30,263 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 19,030 | |
Accounting Standards Update 2014-09 | Without Adoption of Topic 606 | Other segment | ||
Revenues: | ||
Total revenues | 17,607 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 17,599 |
Adoption of ASU 2014-09, "Rev34
Adoption of ASU 2014-09, "Revenue from Contracts with Customers" – Transaction Price Allocated to Remaining Performance Obligations (Details) - USD ($) $ in Thousands | Apr. 01, 2018 | Jan. 01, 2018 |
Performance Obligations by Period | ||
Total deferred revenue | $ 31,093 | $ 30,574 |
Franchise royalties and fees | ||
Performance Obligations by Period | ||
Less than 1 Year | 2,400 | |
1-2 Years | 2,141 | |
2-3 Years | 1,909 | |
3-4 Years | 1,681 | |
4-5 Years | 1,461 | |
Thereafter | 3,835 | |
Total deferred revenue | 13,427 | |
Area development fees | ||
Performance Obligations by Period | ||
Total deferred revenue | 2,600 | |
Customer loyalty program | ||
Performance Obligations by Period | ||
Total deferred revenue | $ 15,022 | $ 14,724 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Revenue, Major Customer [Line Items] | ||
Total revenues | $ 427,369 | $ 449,266 |
Company-owned Restaurants | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 193,695 | |
Commissary Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 235,266 | |
Franchise royalties and fees | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 34,807 | |
Other Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 28,638 | |
Domestic Company-owned restaurants | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 190,242 | 206,896 |
Domestic Company-owned restaurants | Company-owned Restaurants | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 190,242 | |
North America commissary | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 161,713 | 171,340 |
North America commissary | Commissary Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 217,587 | |
North America franchising | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 24,806 | 27,607 |
North America franchising | Franchise royalties and fees | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 25,825 | |
International. | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 35,532 | |
International. | Company-owned Restaurants | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 3,453 | |
International. | Commissary Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 17,679 | |
International. | Franchise royalties and fees | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 8,982 | |
International. | Other Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 5,488 | |
All others | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 15,076 | |
All others | Other Sales | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 23,150 | |
Elimination | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | (65,037) | (67,589) |
Elimination | North America commissary | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | (55,874) | (61,736) |
Elimination | North America franchising | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | (1,019) | $ (764) |
Elimination | International. | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | (70) | |
Elimination | All others | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | $ (8,074) |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Jan. 01, 2018 | |
Revenue, Major Customer [Line Items] | ||
Contract liabilities | $ 31,093 | $ 30,574 |
Change | 518 | |
Revenue recognized related to deferred revenue and customer loyalty program | 3,900 | |
Deferred revenue. | ||
Revenue, Major Customer [Line Items] | ||
Contract liabilities | 16,071 | 15,850 |
Change | 220 | |
Customer loyalty program | ||
Revenue, Major Customer [Line Items] | ||
Contract liabilities | 15,022 | $ 14,724 |
Change | $ 298 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Shares Authorized and Outstanding (Details) - shares shares in Thousands | Apr. 01, 2018 | Dec. 31, 2017 |
Stockholders' Equity (Deficit) | ||
Authorized shares of preferred stock | 5,000 | |
Authorized shares of common stock | 100,000 | |
Outstanding shares of common stock , net of repurchased stock | 32,000 | 33,900 |
Preferred shares issued | 0 | 0 |
Preferred shares outstanding | 0 | 0 |
Stockholders' Equity (Deficit38
Stockholders' Equity (Deficit) - Share Repurchase Program (Details) - USD ($) $ in Thousands | Mar. 06, 2018 | Mar. 01, 2018 | May 01, 2018 | Apr. 01, 2018 | Mar. 26, 2017 |
Share repurchase program | |||||
Cash payment for repurchase of common stock | $ 141,736 | $ 13,075 | |||
Common stock repurchase program | |||||
Share repurchase program | |||||
Stock repurchase program, authorized amount | $ 2,075,000 | ||||
Common stock repurchase program | Subsequent event | |||||
Share repurchase program | |||||
Stock repurchased during period, shares | 28,739 | ||||
Stock repurchased during period, value | $ 1,700 | ||||
ASR Agreement | |||||
Share repurchase program | |||||
Stock repurchase program, authorized amount | $ 100,000 | ||||
Cash payment for repurchase of common stock | $ 100,000 | ||||
Stock repurchased during period, shares | 1,300,000 | ||||
Stock repurchased during period, value | $ 78,000 |
Stockholders' Equity (Deficit39
Stockholders' Equity (Deficit) - Cash Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | May 25, 2018 | May 14, 2018 | May 02, 2018 | Apr. 01, 2018 | Mar. 26, 2017 |
Cash Dividend | |||||
Dividends paid | $ 7,565 | $ 7,354 | |||
Quarterly dividend paid per common share (in dollars per share) | $ 0.225 | ||||
Subsequent event | |||||
Cash Dividend | |||||
Quarterly dividend, date of declaration | May 2, 2018 | ||||
Quarterly dividend declared, per share (in dollars per share) | $ 0.225 | ||||
Quarterly dividend declared | $ 7,300 | ||||
Quarterly dividend, date of distribution | May 25, 2018 | ||||
Quarterly dividend, date of record | May 14, 2018 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Basic earnings per common share: | ||
Net income attributable to the Company | $ 16,737 | $ 28,428 |
Change in noncontrolling interest redemption value | 520 | |
Net income attributable to participating securities | (75) | (117) |
Net income attributable to common shareholders | $ 16,662 | $ 28,831 |
Weighted average common shares outstanding | 33,279 | 36,810 |
Basic earnings per common share | $ 0.50 | $ 0.78 |
Diluted earnings per common share: | ||
Net income attributable to common shareholders | $ 16,662 | $ 28,831 |
Weighted average common shares outstanding | 33,279 | 36,810 |
Dilutive effect of outstanding equity awards | 273 | 540 |
Diluted weighted average common shares outstanding | 33,552 | 37,350 |
Diluted earnings per common share | $ 0.50 | $ 0.77 |
Weighted average antidilutive awards excluded from computation of earnings per share | 790 | 117 |
Divestiture (Details)
Divestiture (Details) | 3 Months Ended |
Apr. 01, 2018USD ($)restaurantlease | |
Proceeds from divestitures of restaurants | $ 3,690,000 |
Refranchising gain, net | $ 204,000 |
Stores in Denver, Colorado market | |
Number of restaurants divested | restaurant | 31 |
Ownership share in stores refranchised (as a percent) | 60.00% |
Total consideration for asset sale of restaurants | $ 4,800,000 |
Proceeds from divestitures of restaurants | 3,700,000 |
Consideration for asset sale, notes financed by Papa John's | 1,100,000 |
Goodwill written off | 745,000 |
Refranchising gain, net | $ 204,000 |
Number of domestic leases for which the Company is contingently liable | lease | 31 |
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 3,900,000 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Apr. 01, 2018 | Jan. 02, 2018 | Dec. 31, 2017 |
Debt | |||
Outstanding debt | $ 592,000 | $ 470,000 | |
Unamortized debt issuance costs | (3,230) | (3,435) | |
Current portion of long-term debt | (20,000) | $ (20,000) | (20,000) |
Total long-term debt, less current portion, net | $ 568,770 | $ 446,565 | $ 446,565 |
Debt - Credit Agreements (Detai
Debt - Credit Agreements (Details) $ in Thousands | Aug. 30, 2017USD ($)item | Apr. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 25, 2016USD ($) |
Debt | ||||
Outstanding debt | $ 592,000 | $ 470,000 | ||
Debt issuance costs | 3,230 | $ 3,435 | ||
Previous Credit Facility | ||||
Debt | ||||
Line of credit facility, maximum borrowing capacity | $ 500,000 | |||
Credit Agreement | ||||
Debt | ||||
Outstanding debt | 592,000 | |||
Additional amount that company has option to increase borrowing capacity | $ 300,000 | |||
Line of credit facility, remaining availability | 364,800 | |||
Debt issuance costs | $ 3,200 | 3,200 | ||
Number of quarters in interest margin period | item | 4 | |||
Credit Agreement | LIBOR | Minimum | ||||
Debt | ||||
Interest margin rate on debt | 0.75% | |||
Credit Agreement | LIBOR | Maximum | ||||
Debt | ||||
Interest margin rate on debt | 2.00% | |||
Credit Agreement | Base rate | Minimum | ||||
Debt | ||||
Interest margin rate on debt | 0.00% | |||
Credit Agreement | Base rate | Maximum | ||||
Debt | ||||
Interest margin rate on debt | 1.00% | |||
Revolving Facility | Credit Agreement | ||||
Debt | ||||
Outstanding debt | 202,000 | |||
Line of credit facility, maximum borrowing capacity | $ 600,000 | |||
Line of credit facility, maximum borrowing capacity of foreign currencies | $ 35,000 | |||
Revolving Facility | Credit Agreement | Minimum | ||||
Debt | ||||
Percentage of commitment fee on unused credit facility | 0.15% | |||
Revolving Facility | Credit Agreement | Maximum | ||||
Debt | ||||
Percentage of commitment fee on unused credit facility | 0.30% | |||
Term Loan Facility | Credit Agreement | ||||
Debt | ||||
Outstanding debt | $ 400,000 | $ 390,000 | ||
Quarterly amortization payment | $ 5,000 |
Debt - Derivatives (Details)
Debt - Derivatives (Details) $ in Millions | Apr. 01, 2018USD ($) |
Interest rate swap, April 2018, 2.33% fixed | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 55 |
Interest rate swap agreement, fixed interest rate | 2.33% |
Interest rate swap, April 2018, 2.36% fixed | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 35 |
Interest rate swap agreement, fixed interest rate | 2.36% |
Interest rate swap, April 2018, 2.34% fixed | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 35 |
Interest rate swap agreement, fixed interest rate | 2.34% |
Interest rate swap, July 2013, 1.42% fixed | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 75 |
Interest rate swap agreement, fixed interest rate | 1.42% |
Interest rate swap, December 2014, 1.36% fixed | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 50 |
Interest rate swap agreement, fixed interest rate | 1.36% |
Interest rate swap, January 2018, 1.99% fixed, $100 million notional amount | Subsequent event | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 100 |
Interest rate swap agreement, fixed interest rate | 1.99% |
Interest rate swap, January 2018, 1.99% fixed, $75 million notional amount | Subsequent event | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 75 |
Interest rate swap agreement, fixed interest rate | 1.99% |
Interest rate swap, January 2018, 2.00% fixed, $75 million notional amount | Subsequent event | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 75 |
Interest rate swap agreement, fixed interest rate | 2.00% |
Interest rate swap, January 2018, 1.99% fixed, $25 million notional amount | Subsequent event | |
Interest rate swaps | |
Interest rate swap agreement, notional amount | $ 25 |
Interest rate swap agreement, fixed interest rate | 1.99% |
Debt - Interest Rate Swaps (Det
Debt - Interest Rate Swaps (Details) $ in Thousands | Apr. 01, 2018USD ($)item | Dec. 31, 2017USD ($) |
Not designated as a hedge | ||
Debt and Credit Arrangements | ||
Number of derivatives held | item | 0 | |
Interest rate swap | Other current and long-term assets | ||
Debt and Credit Arrangements | ||
Derivatives designated as hedging instruments, fair value | $ | $ 7,369 | $ 651 |
Debt - Effect of Derivatives on
Debt - Effect of Derivatives on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Debt and Credit Arrangements | ||
Weighted average interest rates on debt, including impact of interest rate swaps | 3.50% | 2.20% |
Interest paid, including payments made or received under the swaps | $ 4,900 | $ 1,900 |
Interest rate swap | ||
Debt and Credit Arrangements | ||
Interest rate swap assets | 7,400 | |
Interest expense | Interest rate swap | ||
Debt and Credit Arrangements | ||
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative | 5,173 | (295) |
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | (108) | (198) |
Total Interest Expense on Consolidated Statements of Income | $ (5,220) | $ (1,946) |
Estimate of period of time over which portion of derivative liability would be reclassified into earnings | 12 months | |
Portion of derivative asset that would be reclassified into earnings | $ 1,700 |
Segment Information - Concentra
Segment Information - Concentration (Details) | Apr. 01, 2018entity |
Consolidated revenues | |
Major customers disclosures | |
Concentration risk, number | 0 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information, by Segment (Details) | 3 Months Ended | |||
Apr. 01, 2018USD ($)entity | Mar. 26, 2017USD ($) | Jan. 02, 2018USD ($) | Dec. 31, 2017USD ($) | |
Segment Information | ||||
Reportable segments, number | entity | 5 | |||
Revenues | $ 427,369,000 | $ 449,266,000 | ||
Income (loss) before income taxes | 22,362,000 | 41,871,000 | ||
Accumulated depreciation and amortization | (412,458,000) | |||
Net property and equipment | 229,576,000 | $ 234,331,000 | $ 234,331,000 | |
Domestic Company-owned restaurants | ||||
Segment Information | ||||
Revenues | 190,242,000 | 206,896,000 | ||
North America commissary | ||||
Segment Information | ||||
Revenues | 161,713,000 | 171,340,000 | ||
North America franchising | ||||
Segment Information | ||||
Revenues | 24,806,000 | 27,607,000 | ||
International | ||||
Segment Information | ||||
Revenues | 30,114,000 | 25,622,000 | ||
Other segment | ||||
Segment Information | ||||
Revenues | 20,494,000 | 17,801,000 | ||
Operating segments | ||||
Segment Information | ||||
Revenues | 427,369,000 | 449,266,000 | ||
Operating segments | Domestic Company-owned restaurants | ||||
Segment Information | ||||
Revenues | 190,242,000 | 206,896,000 | ||
Income (loss) before income taxes | 7,229,000 | 15,487,000 | ||
Property and equipment, gross | 232,662,000 | |||
Operating segments | North America commissary | ||||
Segment Information | ||||
Revenues | 161,713,000 | 171,340,000 | ||
Income (loss) before income taxes | 8,610,000 | 12,244,000 | ||
Property and equipment, gross | 137,002,000 | |||
Transfer of expenses between unallocated corporate and segments | 2,300,000 | |||
Operating segments | North America franchising | ||||
Segment Information | ||||
Revenues | 24,806,000 | 27,607,000 | ||
Income (loss) before income taxes | 22,359,000 | 24,875,000 | ||
Operating segments | International | ||||
Segment Information | ||||
Revenues | 35,532,000 | 28,518,000 | ||
Income (loss) before income taxes | 3,537,000 | 4,344,000 | ||
Property and equipment, gross | 17,784,000 | |||
Operating segments | Other segment | ||||
Segment Information | ||||
Revenues | 15,076,000 | 14,905,000 | ||
Income (loss) before income taxes | (909,000) | 460,000 | ||
Property and equipment, gross | 60,993,000 | |||
Transfer of expenses between unallocated corporate and segments | 900,000 | |||
Elimination | ||||
Segment Information | ||||
Revenues | (65,037,000) | (67,589,000) | ||
Income (loss) before income taxes | (333,000) | 842,000 | ||
Elimination | North America commissary | ||||
Segment Information | ||||
Revenues | (55,874,000) | (61,736,000) | ||
Elimination | North America franchising | ||||
Segment Information | ||||
Revenues | (1,019,000) | (764,000) | ||
Elimination | International | ||||
Segment Information | ||||
Revenues | (70,000) | (63,000) | ||
Elimination | Other segment | ||||
Segment Information | ||||
Revenues | (8,074,000) | (5,026,000) | ||
Unallocated corporate | ||||
Segment Information | ||||
Income (loss) before income taxes | (18,131,000) | $ (16,381,000) | ||
Property and equipment, gross | 193,593,000 | |||
Transfer of expenses between unallocated corporate and segments | $ (3,800,000) |
Reclassifications of Prior Ye49
Reclassifications of Prior Year Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2018 | Mar. 26, 2017 | |
Revenues: | ||
Total revenues | $ 427,369 | $ 449,266 |
Costs and expenses: | ||
General and administrative expenses | 39,729 | 36,414 |
North America commissary | ||
Revenues: | ||
Total revenues | 161,713 | 171,340 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | 151,681 | 159,957 |
International | ||
Revenues: | ||
Total revenues | 30,114 | 25,622 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | 19,030 | 15,791 |
Other segment | ||
Revenues: | ||
Total revenues | 20,494 | 17,801 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | $ 20,958 | 17,547 |
As reported | ||
Costs and expenses: | ||
General and administrative expenses | 38,007 | |
As reported | North America commissary | ||
Revenues: | ||
Total revenues | 186,245 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | 173,712 | |
As reported | International | ||
Revenues: | ||
Total revenues | 28,518 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | 17,990 | |
Reclassifications | ||
Costs and expenses: | ||
General and administrative expenses | (1,593) | |
Reclassifications | North America commissary | ||
Revenues: | ||
Total revenues | (14,905) | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | (13,755) | |
Reclassifications | International | ||
Revenues: | ||
Total revenues | (2,896) | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | (2,199) | |
Reclassifications | Other segment | ||
Revenues: | ||
Total revenues | 17,801 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization) | $ 17,547 |