Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PZZA | |
Entity Registrant Name | PAPA JOHNS INTERNATIONAL INC | |
Entity Central Index Key | 0000901491 | |
Current Fiscal Year End Date | --12-29 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 31,778,648 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 29,273 | $ 33,258 |
Accounts receivable, net | 80,748 | 78,118 |
Notes receivable, net | 5,983 | 5,498 |
Income tax receivable | 5,431 | 16,146 |
Inventories | 26,144 | 27,203 |
Prepaid expenses | 22,488 | 30,376 |
Other current assets | 18,582 | 5,678 |
Assets held for sale | 10,765 | |
Total current assets | 199,414 | 196,277 |
Property and equipment, net | 217,437 | 226,894 |
Right-of-use assets | 150,216 | |
Notes receivable, less current portion, net | 23,607 | 23,259 |
Goodwill | 83,193 | 84,516 |
Deferred income taxes, net | 1,244 | 1,137 |
Other assets | 63,957 | 63,814 |
Total assets | 739,068 | 595,897 |
Current liabilities: | ||
Accounts payable | 35,214 | 27,106 |
Income and other taxes payable | 7,336 | 6,590 |
Accrued expenses and other current liabilities | 120,975 | 129,167 |
Deferred revenue current | 2,516 | 2,598 |
Current lease liabilities | 22,546 | |
Current portion of long-term debt | 29,982 | 20,009 |
Total current liabilities | 218,569 | 185,470 |
Deferred revenue | 18,562 | 20,674 |
Long-term lease liabilities | 130,391 | |
Long-term debt, less current portion, net | 346,433 | 601,126 |
Deferred income taxes, net | 5,835 | 7,852 |
Other long-term liabilities | 75,887 | 79,324 |
Total liabilities | 795,677 | 894,446 |
Series B Convertible Preferred Stock; $0.01 par value; 260,000 shares authorized, 252,530 shares issued and outstanding at March 31, 2019; no shares issued at December 30, 2018 | 251,303 | |
Redeemable noncontrolling interests | 5,346 | 5,464 |
Stockholders’ (deficit): | ||
Common stock ($0.01 par value per share; issued 44,303 at March 31, 2019 and 44,301 at December 30, 2018) | 443 | 443 |
Additional paid-in capital | 193,243 | 192,984 |
Accumulated other comprehensive (loss) | (4,846) | (3,143) |
Retained earnings | 231,439 | 242,182 |
Treasury stock (12,883 shares at March 31, 2019 and 12,929 shares at December 30, 2018, at cost) | (748,995) | (751,704) |
Total stockholders’ (deficit) | (328,716) | (319,238) |
Noncontrolling interests in subsidiaries | 15,458 | 15,225 |
Total stockholders’ (deficit) | (313,258) | (304,013) |
Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders’ (deficit) | $ 739,068 | $ 595,897 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Condensed Consolidated Balance Sheets | ||
Series B Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Series B Convertible Preferred Stock, shares authorized | 260,000 | 260,000 |
Series B Convertible Preferred Stock, shares issued | 252,500 | 0 |
Series B Convertible Preferred Stock, shares outstanding | 252,530,000 | |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 44,303,000 | 44,301,000 |
Treasury stock, shares | 12,883,000 | 12,929,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Revenues: | ||
Total revenues | $ 398,405 | $ 450,122 |
Costs and expenses: | ||
General and administrative expenses | 51,135 | 39,996 |
Depreciation and amortization | 11,749 | 11,539 |
Total costs and expenses | 392,896 | 422,187 |
Refranchising and impairment gains/(losses), net | 204 | |
Operating income | 5,509 | 28,139 |
Net interest expense | (6,276) | (5,075) |
(Loss) income before income taxes | (767) | 23,064 |
Income tax expense | 831 | 4,978 |
Net (loss) income before attribution to noncontrolling interests | (1,598) | 18,086 |
Income attributable to noncontrolling interests | (133) | (643) |
Net (loss) income attributable to the Company | (1,731) | 17,443 |
Calculation of income for earnings per share: | ||
Net (loss) income attributable to the Company | (1,731) | 17,443 |
Preferred stock dividends | (2,070) | |
Net income (loss) attributable to participating securities | (75) | |
Net (loss) income attributable to common shareholders | $ (3,801) | $ 17,368 |
Basic (loss) earnings per common share | $ (0.12) | $ 0.52 |
Diluted (loss) earnings per common share | $ (0.12) | $ 0.52 |
Basic weighted average common shares outstanding | 31,554 | 33,279 |
Diluted weighted average common shares outstanding | 31,554 | 33,552 |
Dividends declared per common share | $ 0.225 | $ 0.225 |
Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 161,803 | $ 190,242 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 133,053 | 157,574 |
North America franchising | ||
Revenues: | ||
Total revenues | 17,530 | 24,806 |
North America commissary | ||
Revenues: | ||
Total revenues | 148,904 | 161,713 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 138,557 | 151,681 |
International | ||
Revenues: | ||
Total revenues | 25,667 | 30,114 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 14,305 | 19,030 |
Other segment | ||
Revenues: | ||
Total revenues | 44,501 | 43,247 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 44,097 | $ 42,367 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Condensed Consolidated Statements of Comprehensive (Loss) Income | ||
Net (loss) income before attribution to noncontrolling interests | $ (1,598) | $ 18,086 |
Other comprehensive (loss) income, before tax: | ||
Foreign currency translation adjustments | 1,733 | 1,983 |
Interest rate swaps | (3,955) | 6,718 |
Other comprehensive (loss) income, before tax | (2,222) | 8,701 |
Income tax effect: | ||
Foreign currency translation adjustments | (399) | (473) |
Interest rate swaps | 918 | (1,545) |
Income tax effect | 519 | (2,018) |
Other comprehensive (loss) income, net of tax | (1,703) | 6,683 |
Comprehensive (loss) income before attribution to noncontrolling interests | (3,301) | 24,769 |
Less: comprehensive loss (income), redeemable noncontrolling interests | 119 | (344) |
Less: comprehensive income, nonredeemable noncontrolling interests | (252) | (299) |
Comprehensive (loss) income attributable to the Company | $ (3,434) | $ 24,126 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Net Interest income (expense) | $ (6,276) | $ (5,075) |
Income tax effects | 831 | 4,978 |
Amount reclassified from AOCL | ASU 2018-02 | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Income tax effects | 455 | |
Qualifying as hedges | Interest rate swap | Amount reclassified from AOCL | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
Net Interest income (expense) | 148 | (108) |
Income tax effects | $ (94) | $ 25 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Noncontrolling Interests in Subsidiaries | Total |
Cumulative effect of adoption of ASU 2014-09 | $ (24,359) | $ (24,359) | |||||
Adjusted balance | $ 442 | $ 184,785 | $ (2,117) | 267,892 | $ (597,072) | $ 15,757 | (130,313) |
Balance at Dec. 31, 2017 | $ 442 | 184,785 | (2,117) | 292,251 | (597,072) | 15,757 | (105,954) |
Balance (in shares) at Dec. 31, 2017 | 33,931 | ||||||
Net income (loss) | 17,443 | 344 | 17,787 | ||||
Other comprehensive income (loss) | 6,683 | 6,683 | |||||
Adoption of ASU 2018-02 | (455) | 455 | |||||
Cash dividends on common stock | 36 | (7,569) | (7,533) | ||||
Exercise of stock options | $ 1 | 1,769 | 1,770 | ||||
Exercise of stock options (in shares) | 42 | ||||||
Tax effect of equity awards | (1,342) | (1,342) | |||||
Acquisition of Company common stock | (22,000) | (119,736) | (141,736) | ||||
Acquisition of Company common stock (in shares) | (2,001) | ||||||
Stock-based compensation expense | 2,475 | 2,475 | |||||
Issuance of restricted stock | (2,517) | 2,517 | |||||
Issuance of restricted stock (in shares) | 48 | ||||||
Distributions to noncontrolling interests | (432) | (432) | |||||
Other | (8) | (1) | 507 | 194 | 589 | 1,281 | |
Other (in shares) | 3 | ||||||
Balance at Apr. 01, 2018 | $ 443 | 163,198 | 4,110 | 278,728 | (714,097) | 16,258 | (251,360) |
Balance (in shares) at Apr. 01, 2018 | 32,023 | ||||||
Balance at Dec. 30, 2018 | $ 443 | 192,984 | (3,143) | 242,182 | (751,704) | 15,225 | (304,013) |
Balance (in shares) at Dec. 30, 2018 | 31,372 | ||||||
Net income (loss) | (1,731) | 252 | (1,479) | ||||
Other comprehensive income (loss) | (1,703) | (1,703) | |||||
Cash dividends on common stock | 36 | (7,161) | (7,125) | ||||
Cash dividends on preferred stock | (2,040) | (2,040) | |||||
Exercise of stock options | 51 | 51 | |||||
Exercise of stock options (in shares) | 3 | ||||||
Tax effect of equity awards | (869) | (869) | |||||
Stock-based compensation expense | 3,731 | 3,731 | |||||
Issuance of restricted stock | (2,454) | 2,454 | |||||
Issuance of restricted stock (in shares) | 42 | ||||||
Distributions to noncontrolling interests | (19) | (19) | |||||
Other | (236) | 189 | 255 | 208 | |||
Other (in shares) | 3 | ||||||
Balance at Mar. 31, 2019 | $ 443 | $ 193,243 | $ (4,846) | $ 231,439 | $ (748,995) | $ 15,458 | $ (313,258) |
Balance (in shares) at Mar. 31, 2019 | 31,420 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Income attributable to noncontrolling interests | $ 133 | $ 643 |
Income tax effects | 831 | 4,978 |
Accumulated other comprehensive income (loss) | (4,846) | 4,110 |
Unrealized foreign currency translation gains (losses) | (5,525) | (1,556) |
Net unrealized gain (loss) on the interest rate swap agreements | $ 679 | 5,666 |
Amount reclassified from AOCL | ASU 2018-02 | ||
Income tax effects | $ 455 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Operating activities | ||
Net (loss) income before attribution to noncontrolling interests | $ (1,598) | $ 18,086 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision (credit) for uncollectible accounts and notes receivable | (50) | 1,539 |
Depreciation and amortization | 11,749 | 11,539 |
Deferred income taxes | (1,309) | (2,004) |
Preferred stock option mark-to-market adjustment | 5,914 | |
Stock-based compensation expense | 3,731 | 2,475 |
Gain on refranchising | (204) | |
Other | 838 | 1,903 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (3,443) | 2,675 |
Income tax receivable | 10,715 | 3,899 |
Inventories | 810 | 2,193 |
Prepaid expenses | 7,888 | 555 |
Other current assets | (13,855) | (1,264) |
Other assets and liabilities | (3,258) | 475 |
Accounts payable | 8,108 | 2,563 |
Income and other taxes payable | 746 | (466) |
Accrued expenses and other current liabilities | (11,003) | (3,759) |
Deferred revenue | (2,170) | (3,474) |
Net cash provided by operating activities | 13,813 | 36,731 |
Investing activities | ||
Purchases of property and equipment | (8,658) | (9,320) |
Loans issued | (859) | (563) |
Repayments of loans issued | 925 | 1,636 |
Proceeds from divestitures of restaurants | 3,690 | |
Other | 329 | 114 |
Net cash used in investing activities | (8,263) | (4,443) |
Financing activities | ||
Proceeds from issuance of preferred stock | 252,530 | |
Repayments of term loan | (5,000) | (5,000) |
Net proceeds (repayments) of revolving credit facility | (240,026) | 140,308 |
Dividends paid to common stockholders | (7,125) | (7,565) |
Dividends paid to preferred stockholders | (2,040) | |
Issuance costs associated with preferred stock | (7,179) | |
Tax payments for equity award issuances | (869) | (1,342) |
Proceeds from exercise of stock options | 51 | 1,770 |
Acquisition of Company common stock | (141,736) | |
Distributions to noncontrolling interest holders | (19) | (432) |
Other | 50 | 183 |
Net cash used in financing activities | (9,627) | (13,814) |
Effect of exchange rate changes on cash and cash equivalents | 92 | 119 |
Change in cash and cash equivalents | (3,985) | 18,593 |
Cash and cash equivalents at beginning of period | 33,258 | 27,891 |
Cash and cash equivalents at end of period | $ 29,273 | $ 46,484 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2019. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K/A 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 30, 2018. |
Update to Significant Accountin
Update to Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Update to Significant Accounting Policies | |
Update to Significant Accounting Policies | 2. Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items that are subject to such estimates and assumptions include allowance for doubtful accounts and notes receivable, intangible assets, contract assets and contract liabilities, including the online customer loyalty program obligation, right-of-use assets and lease liabilities, gift card breakage, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates. Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation that is designed to break even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised. During the first quarter of 2019, the Company reassessed the governance structure and operating procedures of PJMF and determined that the Company has the power to control certain significant activities of PJMF, as defined by Accounting Standards Codification 810 (“ASC 810”), Consolidations . Therefore, the Company is the primary beneficiary of the VIE, and per ASC 810, must consolidate the VIE. Prior to 2019, the Company did not consolidate PJMF. The Company has concluded the previous accounting policy to not consolidate PJMF was an immaterial error and has determined that PJMF should be consolidated. The Company has corrected this immaterial error by restating the 2018 condensed consolidated financial statements and related notes included herein to include PJMF. Notes 5, 6, 9, 11, 13 and 14 have been updated to reflect the immaterial restatement. The immaterial impacts of this error correction in fiscal year 2018 are as follows: Condensed Consolidated Balance Sheet (unaudited) December 30, 2018 (In thousands) As Reported Change As Restated Cash and cash equivalents $ 19,468 $ 13,790 $ 33,258 Accounts receivable, net 67,854 10,264 78,118 Income tax receivable 16,073 73 16,146 Prepaid expenses 29,935 441 30,376 Other current assets 5,677 1 5,678 Total current assets 171,708 24,569 196,277 Deferred income taxes, net 756 381 1,137 Total assets 570,947 24,950 595,897 Accounts payable 29,891 (2,785) 27,106 Accrued expenses and other current liabilities 105,712 23,455 129,167 Deferred revenue current 2,443 155 2,598 Current portion of long-term debt 20,000 9 20,009 Total current liabilities 164,636 20,834 185,470 Deferred revenue 14,679 5,995 20,674 Total liabilities 867,617 26,829 894,446 Retained earnings 244,061 (1,879) 242,182 Total stockholders' equity (deficit) (302,134) (1,879) (304,013) Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders' equity (deficit) 570,947 24,950 595,897 Condensed Consolidated Statements of Operations: Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Other revenues $ 20,494 $ 22,753 $ 43,247 Total revenues 427,369 22,753 450,122 Domestic Company-owned restaurant expenses 157,319 255 157,574 Other expenses 20,958 21,409 42,367 General and administrative expenses 39,729 267 39,996 Total costs and expenses 400,256 21,931 422,187 Operating income 27,317 822 28,139 Net interest expense (4,955) (120) (5,075) (Loss) income before income taxes 22,362 702 23,064 Income tax expense 4,982 (4) 4,978 Net (loss) income before attribution to noncontrolling interests 17,380 706 18,086 Net (loss) income attributable to the Company 16,737 706 17,443 Net (loss) income attributable to common shareholders 16,662 706 17,368 Basic (loss) earnings per common share 0.50 0.02 0.52 Diluted (loss) earnings per common share 0.50 0.02 0.52 Condensed Consolidated Statement of Cash Flows Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Operating activities Net income before attribution to noncontrolling interests $ 17,380 $ 706 $ 18,086 Accounts receivable 86 2,589 2,675 Income tax receivable 3,903 (4) 3,899 Prepaid expenses (217) 772 555 Other current assets 5,097 (6,361) (1,264) Other assets and liabilities (514) 989 475 Accounts payable 1,209 1,354 2,563 Income and other taxes payable (466) - (466) Accrued expenses and other current liabilities (3,103) (656) (3,759) Deferred revenue 220 (3,694) (3,474) Net cash provided by operating activities 41,036 (4,305) 36,731 Financing activities Net proceeds (repayments) of revolving credit facilities 127,000 13,308 140,308 Net cash used in financing activities (27,122) 13,308 (13,814) Change in cash and cash equivalents 9,590 9,003 18,593 Cash and cash equivalents at beginning of period 22,345 5,546 27,891 Cash and cash equivalents at end of period 31,935 14,549 46,484 Noncontrolling Interests Papa John’s has three joint venture arrangements in which there are noncontrolling interests held by third parties that include 183 restaurants at March 31, 2019. We are required to report the consolidated net income (loss) 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 Operations attributable to the noncontrolling interest holders. The income before income taxes attributable to these joint ventures for the three months ended March 31, 2019 and April 1, 2018 was as follows (in thousands): Three Months Ended March 31, April 1, 2019 2018 Papa John’s International, Inc. $ 464 $ 1,295 Noncontrolling interests 133 643 Total income before income taxes $ 597 $ 1,938 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 Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable Temporary equity Carrying value Revenue Recognition Other Revenues Franchise Marketing Fund revenues represent contributions collected by PJMF and various other international and domestic marketing funds (“Co-op” or “Co-operative”) where we have determined for purposes of accounting that we have control over the activities of the funds. PJMF funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised restaurant members. Contributions are based on a percentage of monthly restaurant sales and are billed monthly. Advertising fund contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations. For interim reporting purposes, PJMF and Co-op advertising costs are accrued and expensed when the related franchise advertising revenues are recognized. The Company and its franchisees sell gift cards that are redeemable for products in our restaurants. A subsidiary of PJMF manages the gift card program, and therefore, collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their restaurants. A liability for unredeemed gift cards is included in Deferred revenue in the Condensed Consolidated Balance Sheets. Gift card redemption revenues, which are based on a percentage of the franchise restaurant sales generated by the gift card, are recognized as gift cards are redeemed by customers. There are no expiration dates and we do not deduct non-usage fees from outstanding gift cards. While the franchisees continue to honor all gift cards presented for payment, the likelihood of redemption may be determined to be remote for certain cards due to long periods of inactivity. In these circumstances, the Company recognizes breakage revenue for amounts not subject to unclaimed property laws. Based upon our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote. Breakage revenue is recognized over time in proportion to estimated redemption patterns. Commissions on gift cards sold by third parties are recorded as a reduction to Deferred revenue and a reduction to Other revenue based, upon estimated redemption patterns. 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. As of March 31, 2019, we had a net deferred liability of approximately $4.6 million. 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 and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of our notes receivable, net of allowances, also approximates fair value. The fair value of the amounts outstanding under our term debt and revolving credit facility approximate their carrying values due to the variable market-based interest rate (Level 2). 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 March 31, 2019 and December 30, 2018 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 March 31, 2019 Financial assets: Cash surrender value of life insurance policies (a) $ 31,080 $ 31,080 $ — $ — Interest rate swaps (b) 396 — 396 — December 30, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 27,751 $ 27,751 $ — $ — Interest rate swaps (b) 4,905 — 4,905 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is 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 March 31, 2019 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. Accounting Standards Adopted Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“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 financing leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives. For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The Company adopted Topic 842 as of December 31, 2018 (the first day of fiscal 2019). See Notes 3 and 4 for additional information. Disclosure Update and Simplification In August 2018, the Securities and Exchange Commission (“SEC”) issued SEC Release No. 33-10532, Disclosure Update and Simplification , which updates and simplifies certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The update also expanded the disclosure requirements related to the analysis of stockholders' equity (deficit) for interim financial statements requiring an analysis of changes in each caption of stockholders' equity (deficit) presented in the balance sheet must be provided in a note or separate statement. The analysis must present a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income (loss) is required to be filed. This rule became effective on November 5, 2018, and as a result, the Company has included the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2019 and April 1, 2018 in this quarterly report on Form 10Q. Accounting Standards to be Adopted in Future Periods Financial Instruments – Credit Losses In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ,” which requires measurement and recognition of expected versus incurred losses for financial assets held. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on our condensed consolidated financial statements. Cloud Computing In August 2018, the FASB issued ASU No. 2018-15 “ Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ,” which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Companies can choose to adopt the new guidance prospectively or retrospectively. The Company is currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements. |
Adoption of ASC 842, "Leases"
Adoption of ASC 842, "Leases" | 3 Months Ended |
Mar. 31, 2019 | |
Adoption of ASC 842, "Leases" | |
Adoption of ASC 842, "Leases" | 3. Adoption of ASC 842, “Leases” The Company adopted ASU 2016-02 “ Leases (Topic 842)” along with related clarifications and improvements effective at the beginning of fiscal 2019, using the modified retrospective transition method. There was no cumulative-effect adjustment to the Company's Condensed Consolidated Balance Sheet as of December 31, 2018. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company has significant leases that include most domestic Company-owned restaurant and commissary locations. Other domestic leases include tractor and trailer leases and other equipment used by our commissaries. Additionally, the Company leases a significant number of restaurants within the United Kingdom; these restaurants are then subleased to the franchisees. The Company’s leases are classified as operating leases and are included in the lease Right-of-use assets, Current lease liabilities, and Long-term lease liabilities captions on the Company’s Condensed Consolidated Balance Sheet. Under the new guidance, right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease terms at the commencement dates. The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. We have elected to use the portfolio approach in determining our incremental borrowing rate. The incremental borrowing rate for all existing leases as of the opening balance sheet date was based upon the remaining terms of the leases; the incremental borrowing rate for all new or amended leases is based upon the lease terms. The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by a Company options to extend the leases that the Company is reasonably certain to exercise. The Company has elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward our prior lease classifications under ASC 840, “Leases” (“Topic 840”). We elected to combine lease and non-lease components and have not elected the hindsight practical expedient. Based upon the practical expedient election, leases with an initial term of 12 months or less, but greater than one month, will also not be recorded on the balance sheet for select asset classes. Adoption of Topic 842 did not have a material impact on our annual operating results or cash flows. Operating lease expense is recognized on a straight-line basis over the lease term and is included in operating costs or General and administrative expense. Variable lease payments are expensed as incurred. The effects of the changes made to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2018 for the adoption of Topic 842 is as follows (in thousands): Balance at Adjustments due to Topic 842 Balance at Assets Current assets: Prepaid expenses $ 30,376 $ (4,669) (a) $ 25,707 Other assets: Right-of-use assets - 161,027 (b) 161,027 Liabilities and stockholders' equity (deficit) Current liabilities: Current lease liabilities - 25,348 (c) 25,348 Long-term liabilities: Long-term lease liabilities - 137,511 (d) 137,511 Other long-term liabilities 79,324 (6,501) (e) 72,823 (a) Represents the amount of first quarter 2019 rents that were prepaid as of December 30, 2018 and reclassified to operating lease right-of-use assets (b) Represents the recognition of right-of-use assets, which are calculated as the initial operating lease liabilities, reduced by the year-end 2018 net carrying amounts of prepaid and deferred rent and tenant incentive liabilities (c) Represents the current portion of operating lease liabilities (d) Represents the recognition of operating lease liabilities, net of current portion (e) Represents the net carrying amount of deferred rent liabilities and tenant incentive liabilities, which have been reclassified to operating lease right-of-use assets Changes in lessor accounting under the new standard do not have a significant financial impact. Sublease revenue will continue to be reported as rental income in Other Revenues in the Condensed Consolidated Statements of Operations. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | 4. Leases The Company has significant leases that include most domestic Company-owned restaurant and commissary locations. Other domestic leases include tractor and trailer leases used by our distribution subsidiary as well as commissary equipment. Additionally, the Company leases a significant number of restaurants within the United Kingdom; these restaurants are then subleased to the franchisees. The Company’s leases are classified as operating leases, with terms as follows: Average lease term Domestic Company-owned restaurants Five years, plus at least one renewal United Kingdom franchise-owned restaurants 15 years Domestic commissary locations 10 years, plus at least one renewal Domestic and international tractors and trailers Five to seven years Domestic and international commissary and office equipment Three to five years The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date. Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes. The lease liability is measured at the present value of future lease payments as of the lease commencement date, or the opening balance sheet date for leases existing at adoption of Topic 842. The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index. Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability. The following schedule details the total operating lease assets and liabilities on the Condensed Consolidated Balance Sheet as of March 31, 2019 and the date of adoption on December 31, 2018: Leases March 31, December 31, (thousands) Classification 2019 2018 Assets Operating lease assets, net Right-of-Use Assets $ 150,216 $ 161,027 Operating lease assets, net Assets Held for Sale 3,900 — Total lease assets $ 154,116 $ 161,027 Liabilities Current Operating Current Lease Liabilities 22,546 25,348 Noncurrent Operating Long-term Lease Liabilities 130,391 137,511 Operating leases held for sale Accrued Expenses and other current liabilities 4,065 — Total lease liabilities $ 157,002 $ 162,859 Operating lease assets are recorded net of accumulated amortization of $7.5 million as of March 31, 2019. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense is comprised of operating lease costs, short-term lease costs, and variable lease costs, which are primarily comprised of common area maintenance, real estate taxes, and insurance for the Company’s real estate leases. Lease costs also include variable rent, which is primarily related to the Company’s supply chain tractor and trailer leases that are based on a rate per mile. Lease expense for the first quarter of 2019 is as follows: Three Months Ended (in thousands) March 31, 2019 Operating lease cost $ 10,794 Short-term lease cost 791 Variable lease cost 2,646 Total lease costs $ 14,231 Sublease income (2,339) Total lease costs, net of sublease income $ 11,892 Future minimum lease payments and sublease income under contractually-obligated leases as of March 31, 2019 are as follows (in thousands): Fiscal Year Lease Expected Remainder of 2019 $ 26,018 $ 6,463 2020 35,361 8,259 2021 30,600 7,981 2022 25,042 7,719 2023 19,223 7,463 Thereafter 67,133 44,077 Total future minimum lease payments 203,377 81,962 Less imputed interest (46,375) — Less lease liabilities held for sale (1) (4,065) — Total present value of Lease Liabilities $ 152,937 $ 81,962 (1) Lease liabilities of $4.1 million are separately reported in the Company’s Condensed Consolidated Balance Sheets under the caption “Accrued expenses and other current liabilities”. Future minimum lease payments and sublease income under contractually-obligated leases as of December 30, 2018 were as follows: Fiscal Year Lease Expected 2019 $ 40,834 $ 8,079 2020 36,631 8,061 2021 31,159 7,818 2022 25,188 7,462 2023 18,694 7,182 Thereafter 57,304 42,518 Total future minimum lease payments 209,810 81,120 As of March 31, 2019, the Company had operating leases for approximately 65 new tractor trailers, which have not yet commenced and have a collective estimated future rental commitment of approximately $12 million. These leases will have terms up to seven years. Amounts related to these trucks are not included in the future minimum lease payments schedule above. Lessor Operating Leases We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At March 31, 2019, we leased and subleased approximately 350 Papa John’s restaurants to franchisees in the United Kingdom. The initial lease terms on the franchised sites in the United Kingdom are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. Rental income, primarily derived from properties leased and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms, in accordance with Topic 842, similar to previous guidance. Lease guarantees As a There were no leases recorded between related parties. Supplemental Cash Flow & Other Information Supplemental cash flow information related to leases for the periods reported is as follows: Three Months Ended (in thousands, except for weighted-average amounts) March 31, 2019 Cash paid for operating lease liabilities $ 10,116 Right-of-use assets obtained in exchange for new operating lease liabilities 1,040 Cash received from sublease income 2,061 Weighted-average remaining lease term of operating leases 7.34 Weighted-average discount rate of operating leases |
Papa John's Marketing Fund, Inc
Papa John's Marketing Fund, Inc. | 3 Months Ended |
Mar. 31, 2019 | |
Papa John's Marketing Fund, Inc. | |
Papa John's Marketing Fund, Inc. | 5 . Papa John’s Marketing Fund, Inc. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States, for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants. Contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations within Other Revenues and Other Expenses. Assets and liabilities of PJMF, which are restricted in their use, included in the Condensed Consolidated Balance Sheets were as follows (in thousands): March 31, December 30, 2019 2018 Assets Current assets: Cash and cash equivalents $ 5,013 $ 13,790 Accounts receivable, net 10,243 10,264 Income tax receivable 66 73 Prepaid expenses 69 441 Other current assets 14,124 1 Total current assets 29,515 24,569 Deferred income taxes, net 381 381 Total assets $ 29,896 $ 24,950 Liabilities Current liabilities: Accounts payable $ 8,423 $ 20 Accrued expenses and other current liabilities 11,537 23,455 Deferred revenue current 97 155 Current portion of long-term debt 9,982 9 Total current liabilities 30,039 23,639 Deferred revenue 4,744 5,995 Total liabilities $ 34,783 $ 29,634 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition | |
Revenue Recognition | 6. Revenue Recognition Adoption of Topic 606 The Company adopted Topic 606 in the first quarter of 2018 with an adjustment to retained earnings to reflect the cumulative impact of adoption. The consolidation of PJMF impacted the cumulative adjustment from adoption as follows: January 1, 2018 (In thousands) As Reported As Restated Cumulative effect of adoption of Topic 606 $ (21,528) $ (24,359) The change to the cumulative effect of adoption on retained earnings is the result of the consolidation of PJMF in the Company’s consolidated financial statements, as discussed in more detail in Notes 2 and 5. This included a change in the timing of breakage revenue and commission expense recognition under Topic 606. The adoption of the new guidance changed the reporting of contributions made to PJMF from franchisees and the related advertising fund expenditures, which were not previously included in the Condensed Consolidated Statements of Operations. The new guidance requires these advertising fund contributions and expenditures to be reported on a gross basis in the Condensed Consolidated Statements of Operations. Disaggregation of Revenue In the following table (in thousands), revenues are disaggregated by major product line. The table also includes a reconciliation of the disaggregated revenues by the reportable segment. Reportable Segments Three Months Ended March 31, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 161,803 $ - $ - $ - $ - $ 161,803 Commissary sales - 194,459 - 15,866 - 210,325 Franchise royalties and fees - - 18,203 9,801 - 28,004 Other revenues - - - 5,930 54,079 60,009 Eliminations - (45,555) (673) (97) (15,411) (61,736) Total $ 161,803 $ 148,904 $ 17,530 $ 31,500 $ 38,668 $ 398,405 Reportable Segments Three Months 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 54,506 59,994 Eliminations - (55,874) (1,019) (70) (16,677) (73,640) Total $ 190,242 $ 161,713 $ 24,806 $ 35,532 $ 37,829 $ 450,122 Contract Balances Our contract liabilities primarily relate to franchise fees and unredeemed gift card liabilities, which we classify as “Deferred revenue” and customer loyalty program obligations which are classified as “Accrued expenses and other current liabilities.” During the three months ended March 31, 2019 and April 1, 2018, the Company recognized $7.4 million and $4.1 million in revenue, respectively, related to deferred revenue and the customer loyalty program. The contract liability balances are included in the following (in thousands): Contract Liabilities (in thousands) March 31, 2019 December 30, 2018 Change Deferred revenue $ 21,078 $ 23,272 $ (2,194) Customer loyalty program 19,295 18,019 1,276 Total contract liabilities $ 40,373 $ 41,291 $ (918) Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the agreement. The contract assets were approximately $6.6 million for both March 31, 2019 and December 30, 2018. For the three months ended March 31, 2019, revenue was reduced approximately $800,000 for the amortization of contract assets over the applicable contract terms. Contract assets are included in Other Current Assets and Other Assets. 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 $ 2,419 $ 2,157 $ 1,951 $ 1,750 $ 1,446 $ 3,757 $ 13,480 Approximately $2.8 million of area development fees related to unopened stores and unearned royalties are included in deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings and franchisees’ revenues. Gift Card liabilities of approximately $4.8 million, included in deferred revenue, will be recognized at Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue when cards are redeemed at franchised restaurant locations. As of March 31, 2019, the amount allocated to the Papa Rewards loyalty program is $19.3 million and is reflected in the Condensed Consolidated Balance Sheet as part of the contract liability included in accrued expenses and other current liabilities. This will be recognized as revenue as the points are redeemed, which is expected to occur within the next year. 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. |
Stockholders' Equity _ (Deficit
Stockholders' Equity / (Deficit) | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity / (Deficit) | |
Stockholders' Equity / (Deficit) | 7. Stockholders’ Equity / (Deficit) Shares Authorized and Outstanding The Company had 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 31.4 million shares at both March 31, 2019 and December 30, 2018. The Company’s outstanding Series B Convertible Preferred Shares were 252,530 at March 31, 2019. Share Repurchase Program Our Board of Directors authorized the repurchase of up to $2.075 billion of common stock under a share repurchase program that began on December 9, 1999 and expired on February 27, 2019. Funding under the previous share repurchase program was provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents. Cash Dividend The Company paid dividends of approximately $9.1 million in the first quarter of 2019 consisting of the following: · $7.1 million paid to common stockholders ($0.225 per share); · $900,000 common stock “pass-through” dividends paid to preferred stockholders on an as-converted basis ($0.225 per share); · $1.1 million preferred dividends (3.6% of the investment per annum). On April 30, 2019, our Board of Directors declared a second quarter dividend of $0.225 per common share (approximately $7.2 million will be paid to common stockholders and $1.1 million of “pass through” dividends to preferred stockholders on “as converted basis”). The second quarter preferred dividend was also declared on April 30, 2019. The common share dividend will be paid on May 24, 2019 to stockholders of record as of the close of business on May 13, 2019. The second quarter preferred dividend of $2.3 million will be paid to preferred stockholders on July 1, 2019. Stockholder Rights Plan On . The original Rights Agreement adopted by the Board of Directors on July 22, 2018 had an expiration date of July 22, 2019 and together with his affiliates and family members). On February 3, 2019, in connection with the sale and issuance of the Series B Convertible Preferred Stock (the “Series B Preferred Stock”), to Starboard (i) shares of common stock beneficially owned by Starboard prior to the sale and issuance of the Series B Preferred Stock, (ii) shares of Series B Preferred Stock issued or issuable to Starboard under the terms of the Securities Purchase Agreement, and (iii) shares of the common stock (or in certain circumstances certain series of preferred stock) issuable upon conversion of the Series B Preferred Stock (or certain series of preferred stock issuable on conversion thereof) pursuant to the terms of the Certificate of Designation On March extend the term of the Rights In connection with the adoption of the original Rights Agreement, on July 22, 2018, the holder to purchase from the Company one one-thousandth (subject to adjustment) of one share of Series A Junior Participating Preferred Stock, $0.01 par value per share of the Company (“ |
Series B Convertible Preferred
Series B Convertible Preferred Stock | 3 Months Ended |
Mar. 31, 2019 | |
Series B Convertible Preferred Stock | |
Series B Convertible Preferred Stock | 8. Series B Convertible Preferred Stock On February 3, 2019, the Company entered into a Securities Purchase Agreement with Starboard Value LP (together with its affiliates, “Starboard”) pursuant to which Starboard made a $200 million strategic investment in the Company’s newly designated Series B convertible preferred stock, par value $0.01 per share, at a purchase price of $1,000 per share. In addition, on March 28, 2019, Starboard made an additional $50 million investment in the Series B Preferred Stock pursuant to an option that was included in the Securities Purchase Agreement. The Company also issued $2.5 million of Series B Preferred Stock on the same terms as Starboard to certain franchisees that represented to the Company that they qualify as an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The initial dividend rate on the Series B Preferred Stock is 3.6% per annum of the stated value of $1,000 per share (the “Stated Value”), payable quarterly in arrears. The Series B Preferred Stock also participates on an as-converted basis in any regular or special dividends paid to common stockholders. If at any time, the Company reduces the regular dividend paid to common stockholders, the Series B Preferred Stock dividend will remain the same as if the common stock dividend had not been reduced. The Series B Preferred Stock is convertible at the option of the holders at any time into shares of common stock based on the conversion rate determined by dividing the Stated Value by $50.06. The Series B Preferred Stock is also redeemable for cash at the option of either party from and after the eight-year anniversary of issuance, subject to certain conditions. The Series B Preferred Stock ranks (i) senior to all of the Common Stock and any other class or series of capital stock of the Company (including the Company’s Series A Junior Participating Preferred Stock), the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series B Preferred Stock, (ii) on a parity basis with each other class or series of capital stock hereafter issued or authorized, the terms of which expressly provide that such class or series ranks on a parity basis with the Series B Preferred Stock and (iii) on a junior basis with each other class or series of capital stock now or hereafter issued or authorized, the terms of which expressly provide that such class or series ranks on a senior basis to the Series B Preferred Stock. Holders of the Series B Preferred Stock have the right to vote with common stockholders on an as-converted basis on all matters, without regard to limitations on conversion other than the Exchange Cap, which is equal to the issuance of greater than 19.99% of the number of shares of common stock outstanding, and subject to certain limitations in the Certificate of Designation for the Series B Preferred Stock. Upon consummation of a change of control of the Company, the holders of Series B Preferred Stock have the right to require the Company to repurchase the Series B Preferred Stock at an amount equal to the sum of (i) the greater of (A) the Stated Value of the Series B Preferred Stock being redeemed plus accrued and unpaid dividends and interest, and (B) the Change of Control As-Converted Value with respect to the Series B Preferred Shares being redeemed and (ii) the Make-Whole Amount (as each of these terms is defined in the Certificate of Designation). Since the holders have the option to redeem their shares of Series B Preferred Stock from and after the eight-year anniversary of issuance, which right may or may not be exercised, the stock is considered contingently redeemable and, accordingly, is classified as temporary equity of $251.3 million on the Condensed Consolidated Balance Sheet as of March 31, 2019. This amount is reported net of $7.2 million of related issuance costs. In accordance with applicable accounting guidance, the Company also recorded a one-time mark-to-market temporary equity adjustment of $5.9 million for the increase in value for both the $50.0 million option exercised by Starboard and the shares purchased by franchisees for the period of time the option was outstanding. The mark-to-market temporary equity adjustment was recorded in General and administrative expenses for $5.6 million (Starboard) and as a reduction to North America franchise royalties and fees of $0.3 million (Franchisees) within the Condensed Consolidated Statement of Operations with no associated tax benefit. Over the initial 8-year term, the $251.3 million investment will be accreted to the related redemption value of approximately $252.5 million as an adjustment to Retained Earnings. The Company paid dividends of approximately $2.0 million to Series B Preferred stockholders during the first quarter of 2019, which consisted of a $1.1 million preferred dividend and a $0.9 million “pass-through” dividend on an as-converted basis to common stock. Dividends paid to Series B Preferred Stockholders and the related accretion are subtracted from net (loss) income attributable to the Company in determining net (loss) income attributable to common stockholders. See Note 9 for additional information. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) Per Share | |
Earnings (Loss) Per Share | 9. Earnings (Loss) Per Share We compute earnings (loss) per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common stockholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The Series B Preferred stock and time-based restricted stock awards are participating securities because holders of such shares have non-forfeitable dividend rights and participate in undistributed earnings within common stock. Under the two-class method, total dividends accorded to the Series B Preferred stockholders and restricted stockholders, including common dividends and undistributed earnings allocated to participating securities are subtracted from net (loss) income attributable to the Company in determining net (loss) income attributable to common stockholders. Additionally, any accretion to redemption value is treated as a deemed dividend in the two-class EPS calculation. The calculations of basic and diluted (loss) earnings per common share are as follows (in thousands, except per-share data): Three Months Ended March 31, April 1, 2019 2018 Basic (loss) earnings per common share: Net (loss) income attributable to the Company $ (1,731) $ 17,443 Preferred stock dividends (2,070) — Net income (loss) attributable to participating securities — (75) Net (loss) income attributable to common shareholders $ (3,801) $ 17,368 Weighted average common shares outstanding 31,554 33,279 Basic (loss) earnings per common share $ (0.12) $ 0.52 Diluted (loss) earnings per common share: Net (loss) income attributable to common shareholders $ (3,801) $ 17,368 Weighted average common shares outstanding 31,554 33,279 Dilutive effect of outstanding equity awards (a) — 273 Diluted weighted average common shares outstanding (b) 31,554 33,552 Diluted (loss) earnings per common share $ (0.12) $ 0.52 (a) Excludes 790 equity awards for the three months ended April 1, 2018 as the effect of including such awards would have been anti-dilutive. (b) In connection with the issuance of the Series B Preferred Stock as described in Note 8, the Company had 252,530 convertible preferred shares outstanding as of March 31, 2019. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net (loss) income attributable to common stockholders. The Company then applied the if-converted method to calculate dilution on the Series B Preferred Stock, which resulted in 5.0 million additional common shares. This calculation was anti-dilutive. |
Assets and Liabilities Held for
Assets and Liabilities Held for Sale | 3 Months Ended |
Mar. 31, 2019 | |
Assets and Liabilities Held for Sale | |
Assets and Liabilities Held for Sale | 10. Assets and Liabilities Held for Sale The Company has an approved plan to refranchise approximately 40 stores and certain owned properties in the United States. We expect to sell these stores within the next 12 months and have classified the assets and liabilities as held for sale within the Condensed Consolidated Balance Sheet. Upon the transfer of these assets to held for sale, no loss was recognized as their fair value exceeded their carrying value. The following summarizes the associated assets and liabilities that are classified as held for sale (in thousands): Held for Sale March 31, 2019 Cash and cash equivalents $ 25 Inventories 249 Property and equipment, net 4,865 Right-of-use assets 3,900 Goodwill 1,726 Total assets held for sale 10,765 Lease liabilities 4,065 Total liabilities held for sale (a) $ 4,065 ( (a) Liabilities held for sale are included under the caption “Accrued expenses and other current liabilities”. The Company-owned restaurants classified as held for sale recorded income before income taxes of $598,000 and $487,000 for the three months ended March 31, 2019 and April 1, 2018, respectively. All stores were included in the Domestic Company-owned restaurants segment. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt | |
Debt | 11. Long-term debt, net consists of the following (in thousands): March 31, December 30, 2019 2018 Outstanding debt $ 379,982 $ 625,009 Unamortized debt issuance costs (3,567) (3,874) Current portion of long-term debt (29,982) (20,009) Total long-term debt, less current portion, net $ 346,433 $ 601,126 The Company has a secured revolving credit facility with available borrowings of $400.0 million (the “Revolving Facility”) and a secured term loan facility with an outstanding balance of $370.0 million (the “Term Loan Facility”) and together with the Revolving Facility, the “PJI Facilities”. The PJI Facilities mature on August 30, 2022. The loans under the PJI Facilities accrue interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from 125 to 250 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 25 to 150 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”). The Credit Agreement governing the PJI Facilities (the “PJI Credit Agreement”) places certain customary restrictions upon the Company based on its financial covenants. These include limiting the repurchase of common stock and not increasing the cash dividend above the lesser of $0.225 per share per quarter or $35 million per fiscal year if the Company’s leverage ratio is above 3.75 to 1.0. Quarterly amortization payments are required to be made on the Term Loan Facility in the amount of $5.0 million which began in the fourth quarter of 2017. Loans outstanding under the PJI Facilities 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 PJI Credit Agreement contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of the Leverage Ratio and a specified fixed charge coverage ratio. The PJI Credit Agreement allows for a permitted Leverage Ratio of 5.25 to 1.0 beginning in the third quarter of 2018, decreasing over time to 4.00 to 1.0 by 2022; and a fixed charge coverage ratio of 2.00 to 1.0 beginning in the third quarter of 2018 and increasing over time to 2.50 to 1.0 in 2021 and thereafter. We were in compliance with these financial covenants at March 31, 2019. Under the PJI Credit Agreement, 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 the Leverage Ratio of the Company not exceeding 4.00 to 1.00. The Company and certain direct and indirect domestic subsidiaries are required to grant a security interest in substantially all of the capital stock and equity interests of their respective domestic and first tier material foreign subsidiaries to secure the obligations owing under the PJI Facilities. Our outstanding debt under the PJI Facilities at March 31, 2019 was composed of $370.0 million outstanding under the Term Loan Facility, with no amount outstanding under the Revolving Facility. Including outstanding letters of credit, the Company’s remaining availability under the PJI Facilities at March 31, 2019 was approximately $360.0 million. As of March 31, 2019, the Company had approximately $3.6 million in unamortized debt issuance costs, which are being amortized into interest expense over the term of the PJI Facilities. 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 the PJI 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 PJI Facilities. As of March 31, 2019, we have the following interest rate swap agreements with a total notional value of $400 million: Effective Dates Floating Rate Debt Fixed Rates 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 $ 100 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 gain or loss on the swaps is recognized in other comprehensive (loss) income and reclassified into earnings as adjustments to interest expense 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. During the three-month period ended March 31, 2019, the Company paid down a substantial portion of debt under its Revolving Facility using the investment proceeds received from Starboard in the Series B Preferred Stock offering. Based on the updated debt forecast, the Company de-designated hedge accounting on two of its interest rate swap agreements. In April 2019, we terminated two swap agreements with a total notional value of $50 million, which leaves the Company with interest swaps of a total notional value of $350 million. The termination of the two interest rate swap agreements was not significant to our results of operations. 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 March 31, December 30, Balance Sheet Location 2019 2018 Other current and long-term assets $ 396 $ 4,905 The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands): Location of Gain Amount of Gain Total Net interest expense Derivatives - Amount of Gain or or (Loss) or (Loss) on Condensed Cash Flow (Loss) Recognized Reclassified from Reclassified from Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps for the three months ended: March 31, 2019 $ (3,955) Interest income $ 148 $ (6,276) April 1, 2018 $ 6,718 Interest expense $ (108) $ (5,075) The weighted average interest rates on our PJI Facilities, including the impact of the interest rate swap agreements, were 4.5% and 3.5% for the three months ended March 31, 2019 and April 1, 2018, respectively. Interest paid, including payments made or received under the swaps, was $6.7 million and $4.9 million for the three months ended March 31, 2019 and April 1, 2018, respectively. As of March 31, 2019, the portion of the aggregate $396,000 interest rate swap asset that would be reclassified into earnings during the next twelve months is not material given the swap position. PJMF has a $20.0 million revolving line of credit (the “PJMF Revolving Facility”) pursuant to a Revolving Loan Agreement, dated September 30, 2015 (as amended, the “PJMF Loan Agreement”) with U.S. Bank National Association, as lender (“U.S. Bank”). The PJMF Revolving Facility is secured by substantially all assets of PJMF. The PJMF Revolving Facility matures on December 27, 2019. The borrowings under the PJMF Revolving Facility accrue interest at a variable rate of the one-month LIBOR plus 1.75%. The applicable interest rates on the PJMF Revolving Facility were 4.26% and 3.31% as of March 31, 2019, and April 1, 2018, respectively. As of March 31, 2019, the principal amount of debt outstanding under the PJMF Revolving Facility was $10.0 million and is classified as current debt. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the PJI Credit Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Litigation The Company is involved in a number of lawsuits, claims, investigations and proceedings consisting of intellectual property, employment, consumer, commercial and other matters arising in the ordinary course of business. In accordance with ASC 450, “Contingencies” the Company makes accruals and or disclosures, with respect to these matters, where appropriate, which are reflected in the Company’s condensed consolidated financial statements. Ameranth, Inc. vs Papa John’s International, Inc. In August 2011, Ameranth, Inc. (“Ameranth”) filed various patent infringement actions against a number of defendants, including the Company, in the U.S. District Court for the Southern District of California (the “California Court”), which were consolidated by the California Court in October 2012 (the “Consolidated Case”). The Consolidated Case was stayed until January 2017 when Ameranth decided to proceed on only one patent, after the Company received a favorable decision by the Patent and Trademark Office on certain other patents. A Markman hearing was held in December 2017, which did not dispose of Ameranth’s claims, and the California Court set a jury trial date of for the claims against the Company. However, on September 25, 2018, the California Court granted the defendants’ Motion for Summary Judgment and found that the Ameranth patent at issue was invalid. Ameranth filed an appeal on October 25, 2018, which is currently being briefed by the parties. The California Court has issued a stay of the case pending the outcome of the appeal, and the Company does not expect a decision until early 2020. The Company believes this case lacks merit and that it has strong defenses to all of the infringement claims. The Company intends to defend the suit vigorously. However, the Company is unable to predict the likelihood of success of Ameranth’s appeal. The Company has not recorded a liability related to this lawsuit as of March 31, 2019, as it does not believe a loss is probable or reasonably estimable. Durling et al v. Papa John’s International, Inc. , is a conditionally certified collective action filed in May 2016 in the United States District Court for the Southern District of New York (“the New York Court”), alleging that corporate restaurant delivery drivers were not properly reimbursed for vehicle mileage and expenses in accordance with the Fair Labor Standards Act. In July 2018, the New York Court granted a motion to certify a conditional corporate collective class and the opt-in notice process has completed. As of the close of the opt-in period on October 29, 2018, 9,571 drivers opted into the collective class. On February 5, 2019, the Court denied Plaintiffs’ request to amend their complaint. The Company continues to deny any liability or wrongdoing in this matter and intends to vigorously defend this action. The Company has not recorded any liability related to this lawsuit as of March 31, 2019 as it does not believe a loss is probable or reasonably estimable. Settlement Agreement On March 4, 2019, the Company entered into a Settlement Agreement (the “Settlement Agreement”), with John H. Schnatter, who resigned as Chairman of the Board on July 11, 2018, pursuant to which the Company agreed to cooperate with Mr. Schnatter to identify, on or before the 2020 Annual Meeting, a mutually acceptable independent director designee, who must meet certain eligibility criteria set forth in the Settlement Agreement, including that the independent designee have relevant professional experience and be independent of both Mr. Schnatter and Starboard. Mr. Schnatter’s term as a director expired at the 2019 Annual Meeting held on April 30th. In connection with the Settlement Agreement, the Company also amended the Governance Agreement with Starboard to remove the provision that would have required Starboard, for a period of time, to vote the shares of the Company’s securities that it beneficially owns in favor of the Board’s director nominees and in accordance with the Board’s recommendations, and amended the Rights Agreement to eliminate the “acting in concert” definition. Mr. Schnatter also agreed to dismiss certain lawsuits that he had initiated against the Company, and certain officers and Board members, following his resignation as Chairman in July 2018. |
Other General Expenses
Other General Expenses | 3 Months Ended |
Mar. 31, 2019 | |
Other General Expenses | |
Other General Expenses | 13. Other General Expenses Other general expenses are included within General and administrative expenses and primarily consist of the following (in thousands): Three Months Ended March 31, April 1, 2019 2018 Starboard option valuation (a) $ 5,552 $ - Provision for uncollectible accounts and notes receivable (b) 24 1,187 Loss on disposition of fixed assets 289 161 Other (413) 969 Other general expenses 5,452 2,317 Special Committee costs (c) 5,067 - Administrative expenses 40,616 37,679 General and administrative expenses $ 51,135 $ 39,996 (a) A one-time mark-to-market adjustment from the increase in the value of the Starboard option to purchase Series B Preferred Stock that culminated in the purchase of $50.0 million of preferred stock in late March. See Note 8 for additional information. (b) Bad debt expense recorded on accounts receivable and notes receivable. Costs associated with the activities of the Special Committee of the Board of Directors, including legal costs associated with legal proceedings initiated by John H. Schnatter and the Settlement Agreement previously discussed and advisory costs associated with the review of a wide range of strategic opportunities that culminated in Starboard’s strategic investment in the Company by affiliates of Starboard. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Segment Information | 14. We have four reportable segments: domestic Company-owned restaurants, North America commissaries, North America franchising and international operations. 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 segment principally consists of distribution sales to franchised Papa John’s restaurants located in the United Kingdom 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 “all other,” 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 including PJMF 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 March 31, April 1, (In thousands) 2019 2018 Revenues Domestic Company-owned restaurants $ 161,803 $ 190,242 North America commissaries 148,904 161,713 North America franchising 17,530 24,806 International 31,500 35,532 All others 38,668 37,829 Total revenues $ 398,405 $ 450,122 Intersegment revenues: North America commissaries $ 45,555 $ 55,874 North America franchising 673 1,019 International 97 70 All others 15,411 16,677 Total intersegment revenues $ 61,736 $ 73,640 Income (loss) before income taxes: Domestic Company-owned restaurants $ 4,597 $ 7,229 North America commissaries 7,512 8,610 North America franchising (1) 15,691 22,359 International 5,317 3,537 All others (506) 316 Unallocated corporate expenses (1) (32,465) (18,131) Elimination of intersegment (profits) losses (913) (856) Total (loss) income before income taxes $ (767) $ 23,064 Property and equipment: Domestic Company-owned restaurants $ 219,240 North America commissaries 141,146 International 17,062 All others 75,072 Unallocated corporate assets 202,103 Accumulated depreciation and amortization (437,186) Net property and equipment $ 217,437 (1) Includes Special charges of $4.9 million in North America franchising and $11.0 million in Unallocated corporate expenses for the three-month period ended March 31, 2019. |
Update to Significant Account_2
Update to Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Update to Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items that are subject to such estimates and assumptions include allowance for doubtful accounts and notes receivable, intangible assets, contract assets and contract liabilities, including the online customer loyalty program obligation, right-of-use assets and lease liabilities, gift card breakage, insurance reserves and tax reserves. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates. |
Restatement of Previously Issued Consolidated Financial Statements for Error Correction | Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction Papa John’s domestic restaurants, both Company-owned and franchised, participate in Papa John’s Marketing Fund, Inc. (“PJMF”), a nonstock corporation that is designed to break even as it spends all annual contributions received from the system. PJMF collects a percentage of revenues from Company-owned and franchised restaurants in the United States for the purpose of designing and administering advertising and promotional programs. PJMF is a variable interest entity (“VIE”) that funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised. During the first quarter of 2019, the Company reassessed the governance structure and operating procedures of PJMF and determined that the Company has the power to control certain significant activities of PJMF, as defined by Accounting Standards Codification 810 (“ASC 810”), Consolidations . Therefore, the Company is the primary beneficiary of the VIE, and per ASC 810, must consolidate the VIE. Prior to 2019, the Company did not consolidate PJMF. The Company has concluded the previous accounting policy to not consolidate PJMF was an immaterial error and has determined that PJMF should be consolidated. The Company has corrected this immaterial error by restating the 2018 condensed consolidated financial statements and related notes included herein to include PJMF. Notes 5, 6, 9, 11, 13 and 14 have been updated to reflect the immaterial restatement. The immaterial impacts of this error correction in fiscal year 2018 are as follows: Condensed Consolidated Balance Sheet (unaudited) December 30, 2018 (In thousands) As Reported Change As Restated Cash and cash equivalents $ 19,468 $ 13,790 $ 33,258 Accounts receivable, net 67,854 10,264 78,118 Income tax receivable 16,073 73 16,146 Prepaid expenses 29,935 441 30,376 Other current assets 5,677 1 5,678 Total current assets 171,708 24,569 196,277 Deferred income taxes, net 756 381 1,137 Total assets 570,947 24,950 595,897 Accounts payable 29,891 (2,785) 27,106 Accrued expenses and other current liabilities 105,712 23,455 129,167 Deferred revenue current 2,443 155 2,598 Current portion of long-term debt 20,000 9 20,009 Total current liabilities 164,636 20,834 185,470 Deferred revenue 14,679 5,995 20,674 Total liabilities 867,617 26,829 894,446 Retained earnings 244,061 (1,879) 242,182 Total stockholders' equity (deficit) (302,134) (1,879) (304,013) Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders' equity (deficit) 570,947 24,950 595,897 Condensed Consolidated Statements of Operations: Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Other revenues $ 20,494 $ 22,753 $ 43,247 Total revenues 427,369 22,753 450,122 Domestic Company-owned restaurant expenses 157,319 255 157,574 Other expenses 20,958 21,409 42,367 General and administrative expenses 39,729 267 39,996 Total costs and expenses 400,256 21,931 422,187 Operating income 27,317 822 28,139 Net interest expense (4,955) (120) (5,075) (Loss) income before income taxes 22,362 702 23,064 Income tax expense 4,982 (4) 4,978 Net (loss) income before attribution to noncontrolling interests 17,380 706 18,086 Net (loss) income attributable to the Company 16,737 706 17,443 Net (loss) income attributable to common shareholders 16,662 706 17,368 Basic (loss) earnings per common share 0.50 0.02 0.52 Diluted (loss) earnings per common share 0.50 0.02 0.52 Condensed Consolidated Statement of Cash Flows Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Operating activities Net income before attribution to noncontrolling interests $ 17,380 $ 706 $ 18,086 Accounts receivable 86 2,589 2,675 Income tax receivable 3,903 (4) 3,899 Prepaid expenses (217) 772 555 Other current assets 5,097 (6,361) (1,264) Other assets and liabilities (514) 989 475 Accounts payable 1,209 1,354 2,563 Income and other taxes payable (466) - (466) Accrued expenses and other current liabilities (3,103) (656) (3,759) Deferred revenue 220 (3,694) (3,474) Net cash provided by operating activities 41,036 (4,305) 36,731 Financing activities Net proceeds (repayments) of revolving credit facilities 127,000 13,308 140,308 Net cash used in financing activities (27,122) 13,308 (13,814) Change in cash and cash equivalents 9,590 9,003 18,593 Cash and cash equivalents at beginning of period 22,345 5,546 27,891 Cash and cash equivalents at end of period 31,935 14,549 46,484 |
Noncontrolling Interests | Noncontrolling Interests Papa John’s has three joint venture arrangements in which there are noncontrolling interests held by third parties that include 183 restaurants at March 31, 2019. We are required to report the consolidated net income (loss) 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 Operations attributable to the noncontrolling interest holders. The income before income taxes attributable to these joint ventures for the three months ended March 31, 2019 and April 1, 2018 was as follows (in thousands): Three Months Ended March 31, April 1, 2019 2018 Papa John’s International, Inc. $ 464 $ 1,295 Noncontrolling interests 133 643 Total income before income taxes $ 597 $ 1,938 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 Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable Temporary equity Carrying value |
Revenue Recognition | Revenue Recognition Other Revenues Franchise Marketing Fund revenues represent contributions collected by PJMF and various other international and domestic marketing funds (“Co-op” or “Co-operative”) where we have determined for purposes of accounting that we have control over the activities of the funds. PJMF funds its operations with ongoing financial support and contributions from the domestic restaurants, of which approximately 80% are franchised restaurant members. Contributions are based on a percentage of monthly restaurant sales and are billed monthly. Advertising fund contributions and expenditures are reported on a gross basis in the Condensed Consolidated Statements of Operations. For interim reporting purposes, PJMF and Co-op advertising costs are accrued and expensed when the related franchise advertising revenues are recognized. The Company and its franchisees sell gift cards that are redeemable for products in our restaurants. A subsidiary of PJMF manages the gift card program, and therefore, collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their restaurants. A liability for unredeemed gift cards is included in Deferred revenue in the Condensed Consolidated Balance Sheets. Gift card redemption revenues, which are based on a percentage of the franchise restaurant sales generated by the gift card, are recognized as gift cards are redeemed by customers. There are no expiration dates and we do not deduct non-usage fees from outstanding gift cards. While the franchisees continue to honor all gift cards presented for payment, the likelihood of redemption may be determined to be remote for certain cards due to long periods of inactivity. In these circumstances, the Company recognizes breakage revenue for amounts not subject to unclaimed property laws. Based upon our analysis of historical gift card redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote. Breakage revenue is recognized over time in proportion to estimated redemption patterns. Commissions on gift cards sold by third parties are recorded as a reduction to Deferred revenue and a reduction to Other revenue based, upon estimated redemption patterns. |
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. As of March 31, 2019, we had a net deferred liability of approximately $4.6 million. 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 and cash equivalents, accounts receivable, net of allowances, and accounts payable. The carrying value of our notes receivable, net of allowances, also approximates fair value. The fair value of the amounts outstanding under our term debt and revolving credit facility approximate their carrying values due to the variable market-based interest rate (Level 2). 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 March 31, 2019 and December 30, 2018 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 March 31, 2019 Financial assets: Cash surrender value of life insurance policies (a) $ 31,080 $ 31,080 $ — $ — Interest rate swaps (b) 396 — 396 — December 30, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 27,751 $ 27,751 $ — $ — Interest rate swaps (b) 4,905 — 4,905 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is 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 March 31, 2019 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. |
Recent Accounting Pronouncements | Accounting Standards Adopted Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“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 financing leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives. For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The Company adopted Topic 842 as of December 31, 2018 (the first day of fiscal 2019). See Notes 3 and 4 for additional information. Disclosure Update and Simplification In August 2018, the Securities and Exchange Commission (“SEC”) issued SEC Release No. 33-10532, Disclosure Update and Simplification , which updates and simplifies certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The update also expanded the disclosure requirements related to the analysis of stockholders' equity (deficit) for interim financial statements requiring an analysis of changes in each caption of stockholders' equity (deficit) presented in the balance sheet must be provided in a note or separate statement. The analysis must present a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income (loss) is required to be filed. This rule became effective on November 5, 2018, and as a result, the Company has included the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2019 and April 1, 2018 in this quarterly report on Form 10Q. Accounting Standards to be Adopted in Future Periods Financial Instruments – Credit Losses In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ,” which requires measurement and recognition of expected versus incurred losses for financial assets held. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on our condensed consolidated financial statements. Cloud Computing In August 2018, the FASB issued ASU No. 2018-15 “ Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ,” which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Companies can choose to adopt the new guidance prospectively or retrospectively. The Company is currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements. |
Update to Significant Account_3
Update to Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Update to Significant Accounting Policies | |
Schedule of Impact of Corrections to Fiscal Year 2018 | The immaterial impacts of this error correction in fiscal year 2018 are as follows: Condensed Consolidated Balance Sheet (unaudited) December 30, 2018 (In thousands) As Reported Change As Restated Cash and cash equivalents $ 19,468 $ 13,790 $ 33,258 Accounts receivable, net 67,854 10,264 78,118 Income tax receivable 16,073 73 16,146 Prepaid expenses 29,935 441 30,376 Other current assets 5,677 1 5,678 Total current assets 171,708 24,569 196,277 Deferred income taxes, net 756 381 1,137 Total assets 570,947 24,950 595,897 Accounts payable 29,891 (2,785) 27,106 Accrued expenses and other current liabilities 105,712 23,455 129,167 Deferred revenue current 2,443 155 2,598 Current portion of long-term debt 20,000 9 20,009 Total current liabilities 164,636 20,834 185,470 Deferred revenue 14,679 5,995 20,674 Total liabilities 867,617 26,829 894,446 Retained earnings 244,061 (1,879) 242,182 Total stockholders' equity (deficit) (302,134) (1,879) (304,013) Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders' equity (deficit) 570,947 24,950 595,897 Condensed Consolidated Statements of Operations: Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Other revenues $ 20,494 $ 22,753 $ 43,247 Total revenues 427,369 22,753 450,122 Domestic Company-owned restaurant expenses 157,319 255 157,574 Other expenses 20,958 21,409 42,367 General and administrative expenses 39,729 267 39,996 Total costs and expenses 400,256 21,931 422,187 Operating income 27,317 822 28,139 Net interest expense (4,955) (120) (5,075) (Loss) income before income taxes 22,362 702 23,064 Income tax expense 4,982 (4) 4,978 Net (loss) income before attribution to noncontrolling interests 17,380 706 18,086 Net (loss) income attributable to the Company 16,737 706 17,443 Net (loss) income attributable to common shareholders 16,662 706 17,368 Basic (loss) earnings per common share 0.50 0.02 0.52 Diluted (loss) earnings per common share 0.50 0.02 0.52 Condensed Consolidated Statement of Cash Flows Three Months Ended April 1, 2018 (In thousands, except per share amounts) As Reported Change As Restated Operating activities Net income before attribution to noncontrolling interests $ 17,380 $ 706 $ 18,086 Accounts receivable 86 2,589 2,675 Income tax receivable 3,903 (4) 3,899 Prepaid expenses (217) 772 555 Other current assets 5,097 (6,361) (1,264) Other assets and liabilities (514) 989 475 Accounts payable 1,209 1,354 2,563 Income and other taxes payable (466) - (466) Accrued expenses and other current liabilities (3,103) (656) (3,759) Deferred revenue 220 (3,694) (3,474) Net cash provided by operating activities 41,036 (4,305) 36,731 Financing activities Net proceeds (repayments) of revolving credit facilities 127,000 13,308 140,308 Net cash used in financing activities (27,122) 13,308 (13,814) Change in cash and cash equivalents 9,590 9,003 18,593 Cash and cash equivalents at beginning of period 22,345 5,546 27,891 Cash and cash equivalents at end of period 31,935 14,549 46,484 |
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 March 31, 2019 and April 1, 2018 was as follows (in thousands): Three Months Ended March 31, April 1, 2019 2018 Papa John’s International, Inc. $ 464 $ 1,295 Noncontrolling interests 133 643 Total income before income taxes $ 597 $ 1,938 |
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 Joint ventures with 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 March 31, 2019 and December 30, 2018 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 March 31, 2019 Financial assets: Cash surrender value of life insurance policies (a) $ 31,080 $ 31,080 $ — $ — Interest rate swaps (b) 396 — 396 — December 30, 2018 Financial assets: Cash surrender value of life insurance policies (a) $ 27,751 $ 27,751 $ — $ — Interest rate swaps (b) 4,905 — 4,905 — (a) Represents life insurance policies held in our non-qualified deferred compensation plan. (b) The fair value of our interest rate swaps is 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 ASC 842, "Leases" (
Adoption of ASC 842, "Leases" (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Adoption of ASC 842, "Leases" | |
Schedule of impacts of adoption of ASC 842 | The effects of the changes made to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2018 for the adoption of Topic 842 is as follows (in thousands): Balance at Adjustments due to Topic 842 Balance at Assets Current assets: Prepaid expenses $ 30,376 $ (4,669) (a) $ 25,707 Other assets: Right-of-use assets - 161,027 (b) 161,027 Liabilities and stockholders' equity (deficit) Current liabilities: Current lease liabilities - 25,348 (c) 25,348 Long-term liabilities: Long-term lease liabilities - 137,511 (d) 137,511 Other long-term liabilities 79,324 (6,501) (e) 72,823 (a) Represents the amount of first quarter 2019 rents that were prepaid as of December 30, 2018 and reclassified to operating lease right-of-use assets (b) Represents the recognition of right-of-use assets, which are calculated as the initial operating lease liabilities, reduced by the year-end 2018 net carrying amounts of prepaid and deferred rent and tenant incentive liabilities (c) Represents the current portion of operating lease liabilities (d) Represents the recognition of operating lease liabilities, net of current portion (e) Represents the net carrying amount of deferred rent liabilities and tenant incentive liabilities, which have been reclassified to operating lease right-of-use assets |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Schedule of average terms of lease portfolios | The Company’s leases are classified as operating leases, with terms as follows: Average lease term Domestic Company-owned restaurants Five years, plus at least one renewal United Kingdom franchise-owned restaurants 15 years Domestic commissary locations 10 years, plus at least one renewal Domestic and international tractors and trailers Five to seven years Domestic and international commissary and office equipment Three to five years |
Schedule of operating lease assets and liabilities | The following schedule details the total operating lease assets and liabilities on the Condensed Consolidated Balance Sheet as of March 31, 2019 and the date of adoption on December 31, 2018: Leases March 31, December 31, (thousands) Classification 2019 2018 Assets Operating lease assets, net Right-of-Use Assets $ 150,216 $ 161,027 Operating lease assets, net Assets Held for Sale 3,900 — Total lease assets $ 154,116 $ 161,027 Liabilities Current Operating Current Lease Liabilities 22,546 25,348 Noncurrent Operating Long-term Lease Liabilities 130,391 137,511 Operating leases held for sale Accrued Expenses and other current liabilities 4,065 — Total lease liabilities $ 157,002 $ 162,859 |
Schedule of components of lease expense | Lease expense for the first quarter of 2019 is as follows: Three Months Ended (in thousands) March 31, 2019 Operating lease cost $ 10,794 Short-term lease cost 791 Variable lease cost 2,646 Total lease costs $ 14,231 Sublease income (2,339) Total lease costs, net of sublease income $ 11,892 |
Schedule of future minimum lease payments and sublease income under contractually-obligated leases | Future minimum lease payments and sublease income under contractually-obligated leases as of March 31, 2019 are as follows (in thousands): Fiscal Year Lease Expected Remainder of 2019 $ 26,018 $ 6,463 2020 35,361 8,259 2021 30,600 7,981 2022 25,042 7,719 2023 19,223 7,463 Thereafter 67,133 44,077 Total future minimum lease payments 203,377 81,962 Less imputed interest (46,375) — Less lease liabilities held for sale (1) (4,065) — Total present value of Lease Liabilities $ 152,937 $ 81,962 (1) Lease liabilities of $4.1 million are separately reported in the Company’s Condensed Consolidated Balance Sheets under the caption “Accrued expenses and other current liabilities”. Future minimum lease payments and sublease income under contractually-obligated leases as of December 30, 2018 were as follows: Fiscal Year Lease Expected 2019 $ 40,834 $ 8,079 2020 36,631 8,061 2021 31,159 7,818 2022 25,188 7,462 2023 18,694 7,182 Thereafter 57,304 42,518 Total future minimum lease payments 209,810 81,120 |
Schedule of supplemental cash flow information | Supplemental cash flow information related to leases for the periods reported is as follows: Three Months Ended (in thousands, except for weighted-average amounts) March 31, 2019 Cash paid for operating lease liabilities $ 10,116 Right-of-use assets obtained in exchange for new operating lease liabilities 1,040 Cash received from sublease income 2,061 Weighted-average remaining lease term of operating leases 7.34 Weighted-average discount rate of operating leases |
Papa John's Marketing Fund, I_2
Papa John's Marketing Fund, Inc. (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Papa John's Marketing Fund, Inc. | |
Schedule of Assets and Liabilities of PJMF | Assets and liabilities of PJMF, which are restricted in their use, included in the Condensed Consolidated Balance Sheets were as follows (in thousands): March 31, December 30, 2019 2018 Assets Current assets: Cash and cash equivalents $ 5,013 $ 13,790 Accounts receivable, net 10,243 10,264 Income tax receivable 66 73 Prepaid expenses 69 441 Other current assets 14,124 1 Total current assets 29,515 24,569 Deferred income taxes, net 381 381 Total assets $ 29,896 $ 24,950 Liabilities Current liabilities: Accounts payable $ 8,423 $ 20 Accrued expenses and other current liabilities 11,537 23,455 Deferred revenue current 97 155 Current portion of long-term debt 9,982 9 Total current liabilities 30,039 23,639 Deferred revenue 4,744 5,995 Total liabilities $ 34,783 $ 29,634 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition | |
Schedule of Cumulative Adjustment from Adoption of Topic 606 | The consolidation of PJMF impacted the cumulative adjustment from adoption as follows: January 1, 2018 (In thousands) As Reported As Restated Cumulative effect of adoption of Topic 606 $ (21,528) $ (24,359) |
Schedule of revenue disaggregated by major product line | In the following table (in thousands), revenues are disaggregated by major product line. The table also includes a reconciliation of the disaggregated revenues by the reportable segment. Reportable Segments Three Months Ended March 31, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 161,803 $ - $ - $ - $ - $ 161,803 Commissary sales - 194,459 - 15,866 - 210,325 Franchise royalties and fees - - 18,203 9,801 - 28,004 Other revenues - - - 5,930 54,079 60,009 Eliminations - (45,555) (673) (97) (15,411) (61,736) Total $ 161,803 $ 148,904 $ 17,530 $ 31,500 $ 38,668 $ 398,405 Reportable Segments Three Months 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 54,506 59,994 Eliminations - (55,874) (1,019) (70) (16,677) (73,640) Total $ 190,242 $ 161,713 $ 24,806 $ 35,532 $ 37,829 $ 450,122 |
Schedule of information about contract liabilities | The contract liability balances are included in the following (in thousands): Contract Liabilities (in thousands) March 31, 2019 December 30, 2018 Change Deferred revenue $ 21,078 $ 23,272 $ (2,194) Customer loyalty program 19,295 18,019 1,276 Total contract liabilities $ 40,373 $ 41,291 $ (918) |
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 $ 2,419 $ 2,157 $ 1,951 $ 1,750 $ 1,446 $ 3,757 $ 13,480 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) Per Share | |
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The calculations of basic and diluted (loss) earnings per common share are as follows (in thousands, except per-share data): Three Months Ended March 31, April 1, 2019 2018 Basic (loss) earnings per common share: Net (loss) income attributable to the Company $ (1,731) $ 17,443 Preferred stock dividends (2,070) — Net income (loss) attributable to participating securities — (75) Net (loss) income attributable to common shareholders $ (3,801) $ 17,368 Weighted average common shares outstanding 31,554 33,279 Basic (loss) earnings per common share $ (0.12) $ 0.52 Diluted (loss) earnings per common share: Net (loss) income attributable to common shareholders $ (3,801) $ 17,368 Weighted average common shares outstanding 31,554 33,279 Dilutive effect of outstanding equity awards (a) — 273 Diluted weighted average common shares outstanding (b) 31,554 33,552 Diluted (loss) earnings per common share $ (0.12) $ 0.52 (a) Excludes 790 equity awards for the three months ended April 1, 2018 as the effect of including such awards would have been anti-dilutive. In connection with the issuance of the Series B Preferred Stock as described in Note 8, the Company had 252,530 convertible preferred shares outstanding as of March 31, 2019. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net (loss) income attributable to common stockholders. The Company then applied the if-converted method to calculate dilution on the Series B Preferred Stock, which resulted in 5.0 million additional common shares. This calculation was anti-dilutive. |
Assets and Liabilities Held f_2
Assets and Liabilities Held for Sale (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Assets and Liabilities Held for Sale | |
Summary of assets and liabilities classified as held for sale | The following summarizes the associated assets and liabilities that are classified as held for sale (in thousands): Held for Sale March 31, 2019 Cash and cash equivalents $ 25 Inventories 249 Property and equipment, net 4,865 Right-of-use assets 3,900 Goodwill 1,726 Total assets held for sale 10,765 Lease liabilities 4,065 Total liabilities held for sale (a) $ 4,065 ( (a) Liabilities held for sale are included under the caption “Accrued expenses and other current liabilities”. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt | |
Schedule of long-term debt, net | Long-term debt, net consists of the following (in thousands): March 31, December 30, 2019 2018 Outstanding debt $ 379,982 $ 625,009 Unamortized debt issuance costs (3,567) (3,874) Current portion of long-term debt (29,982) (20,009) Total long-term debt, less current portion, net $ 346,433 $ 601,126 |
Schedule of Interest Rate Swap Agreements | As of March 31, 2019, we have the following interest rate swap agreements with a total notional value of $400 million: Effective Dates Floating Rate Debt Fixed Rates 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 $ 100 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 March 31, December 30, Balance Sheet Location 2019 2018 Other current and long-term assets $ 396 $ 4,905 |
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 Total Net interest expense Derivatives - Amount of Gain or or (Loss) or (Loss) on Condensed Cash Flow (Loss) Recognized Reclassified from Reclassified from Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps for the three months ended: March 31, 2019 $ (3,955) Interest income $ 148 $ (6,276) April 1, 2018 $ 6,718 Interest expense $ (108) $ (5,075) |
Other General Expenses (Tables)
Other General Expenses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other General Expenses | |
Schedule of Other General Expenses | Other general expenses are included within General and administrative expenses and primarily consist of the following (in thousands): Three Months Ended March 31, April 1, 2019 2018 Starboard option valuation (a) $ 5,552 $ - Provision for uncollectible accounts and notes receivable (b) 24 1,187 Loss on disposition of fixed assets 289 161 Other (413) 969 Other general expenses 5,452 2,317 Special Committee costs (c) 5,067 - Administrative expenses 40,616 37,679 General and administrative expenses $ 51,135 $ 39,996 (a) A one-time mark-to-market adjustment from the increase in the value of the Starboard option to purchase Series B Preferred Stock that culminated in the purchase of $50.0 million of preferred stock in late March. See Note 8 for additional information. (b) Bad debt expense recorded on accounts receivable and notes receivable. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Schedule of Segment Reporting Information, by Segment | Our segment information is as follows: Three Months Ended March 31, April 1, (In thousands) 2019 2018 Revenues Domestic Company-owned restaurants $ 161,803 $ 190,242 North America commissaries 148,904 161,713 North America franchising 17,530 24,806 International 31,500 35,532 All others 38,668 37,829 Total revenues $ 398,405 $ 450,122 Intersegment revenues: North America commissaries $ 45,555 $ 55,874 North America franchising 673 1,019 International 97 70 All others 15,411 16,677 Total intersegment revenues $ 61,736 $ 73,640 Income (loss) before income taxes: Domestic Company-owned restaurants $ 4,597 $ 7,229 North America commissaries 7,512 8,610 North America franchising (1) 15,691 22,359 International 5,317 3,537 All others (506) 316 Unallocated corporate expenses (1) (32,465) (18,131) Elimination of intersegment (profits) losses (913) (856) Total (loss) income before income taxes $ (767) $ 23,064 Property and equipment: Domestic Company-owned restaurants $ 219,240 North America commissaries 141,146 International 17,062 All others 75,072 Unallocated corporate assets 202,103 Accumulated depreciation and amortization (437,186) Net property and equipment $ 217,437 Includes Special charges of $4.9 million in North America franchising and $11.0 million in Unallocated corporate expenses for the three-month period ended March 31, 2019. |
Update to Significant Account_4
Update to Significant Accounting Policies - Impact of Corrections on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | Apr. 01, 2018 | Dec. 31, 2017 |
Percentage of domestic restaurants franchised | 80.00% | ||||
Assets | |||||
Cash and cash equivalents | $ 29,273 | $ 33,258 | |||
Accounts receivable, net | 80,748 | 78,118 | |||
Income tax receivable | 5,431 | 16,146 | |||
Prepaid expenses | 22,488 | $ 25,707 | 30,376 | ||
Other current assets | 18,582 | 5,678 | |||
Total current assets | 199,414 | 196,277 | |||
Deferred income taxes, net | 1,244 | 1,137 | |||
Total assets | 739,068 | 595,897 | |||
Current liabilities: | |||||
Accounts payable | 35,214 | 27,106 | |||
Accrued expenses and other current liabilities | 120,975 | 129,167 | |||
Deferred revenue current | 2,516 | 2,598 | |||
Current portion of long-term debt | 29,982 | 20,009 | |||
Total current liabilities | 218,569 | 185,470 | |||
Deferred revenue | 18,562 | 20,674 | |||
Total liabilities | 795,677 | 894,446 | |||
Retained earnings | 231,439 | 242,182 | |||
Total stockholders' equity (deficit) | (313,258) | (304,013) | $ (251,360) | $ (105,954) | |
Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders’ (deficit) | $ 739,068 | 595,897 | |||
As reported | |||||
Assets | |||||
Cash and cash equivalents | 19,468 | ||||
Accounts receivable, net | 67,854 | ||||
Income tax receivable | 16,073 | ||||
Prepaid expenses | 29,935 | ||||
Other current assets | 5,677 | ||||
Total current assets | 171,708 | ||||
Deferred income taxes, net | 756 | ||||
Total assets | 570,947 | ||||
Current liabilities: | |||||
Accounts payable | 29,891 | ||||
Accrued expenses and other current liabilities | 105,712 | ||||
Deferred revenue current | 2,443 | ||||
Current portion of long-term debt | 20,000 | ||||
Total current liabilities | 164,636 | ||||
Deferred revenue | 14,679 | ||||
Total liabilities | 867,617 | ||||
Retained earnings | 244,061 | ||||
Total stockholders' equity (deficit) | (302,134) | ||||
Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders’ (deficit) | 570,947 | ||||
Total Adjustments | |||||
Assets | |||||
Cash and cash equivalents | 13,790 | ||||
Accounts receivable, net | 10,264 | ||||
Income tax receivable | 73 | ||||
Prepaid expenses | 441 | ||||
Other current assets | 1 | ||||
Total current assets | 24,569 | ||||
Deferred income taxes, net | 381 | ||||
Total assets | 24,950 | ||||
Current liabilities: | |||||
Accounts payable | (2,785) | ||||
Accrued expenses and other current liabilities | 23,455 | ||||
Deferred revenue current | 155 | ||||
Current portion of long-term debt | 9 | ||||
Total current liabilities | 20,834 | ||||
Deferred revenue | 5,995 | ||||
Total liabilities | 26,829 | ||||
Retained earnings | (1,879) | ||||
Total stockholders' equity (deficit) | (1,879) | ||||
Total liabilities, redeemable noncontrolling interests, Series B preferred stock and stockholders’ (deficit) | $ 24,950 |
Update to Significant Account_5
Update to Significant Accounting Policies - Impact of Corrections on Condensed Consolidated Statements of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Revenues: | ||
Total revenues | $ 398,405 | $ 450,122 |
Costs and expenses: | ||
General and administrative expenses | 51,135 | 39,996 |
Total costs and expenses | 392,896 | 422,187 |
Operating income | 5,509 | 28,139 |
Net interest expense | (6,276) | (5,075) |
(Loss) income before income taxes | (767) | 23,064 |
Income tax expense | 831 | 4,978 |
Net (loss) income before attribution to noncontrolling interests | (1,598) | 18,086 |
Net (loss) income attributable to the Company | (1,731) | 17,443 |
Net (loss) income attributable to common shareholders | $ (3,801) | $ 17,368 |
Basic (loss) earnings per common share | $ (0.12) | $ 0.52 |
Diluted (loss) earnings per common share | $ (0.12) | $ 0.52 |
Domestic Company-owned restaurants | ||
Revenues: | ||
Total revenues | $ 161,803 | $ 190,242 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 133,053 | 157,574 |
Other segment | ||
Revenues: | ||
Total revenues | 44,501 | 43,247 |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 44,097 | 42,367 |
As reported | ||
Revenues: | ||
Total revenues | 427,369 | |
Costs and expenses: | ||
General and administrative expenses | 39,729 | |
Total costs and expenses | 400,256 | |
Operating income | 27,317 | |
Net interest expense | (4,955) | |
(Loss) income before income taxes | 22,362 | |
Income tax expense | 4,982 | |
Net (loss) income before attribution to noncontrolling interests | 17,380 | |
Net (loss) income attributable to the Company | 16,737 | |
Net (loss) income attributable to common shareholders | $ 16,662 | |
Basic (loss) earnings per common share | $ 0.50 | |
Diluted (loss) earnings per common share | $ 0.50 | |
As reported | Domestic Company-owned restaurants | ||
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 157,319 | |
As reported | Other segment | ||
Revenues: | ||
Total revenues | 20,494 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | 20,958 | |
Total Adjustments | ||
Revenues: | ||
Total revenues | 22,753 | |
Costs and expenses: | ||
General and administrative expenses | 267 | |
Total costs and expenses | 21,931 | |
Operating income | 822 | |
Net interest expense | (120) | |
(Loss) income before income taxes | 702 | |
Income tax expense | (4) | |
Net (loss) income before attribution to noncontrolling interests | 706 | |
Net (loss) income attributable to the Company | 706 | |
Net (loss) income attributable to common shareholders | $ 706 | |
Basic (loss) earnings per common share | $ 0.02 | |
Diluted (loss) earnings per common share | $ 0.02 | |
Total Adjustments | Domestic Company-owned restaurants | ||
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 255 | |
Total Adjustments | Other segment | ||
Revenues: | ||
Total revenues | 22,753 | |
Costs and expenses: | ||
Operating costs (excluding depreciation and amortization shown separately below): | $ 21,409 |
Update to Significant Account_6
Update to Significant Accounting Policies - Impact of Corrections on Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Operating activities | ||
Net income before attribution to noncontrolling interests | $ (1,598) | $ 18,086 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (3,443) | 2,675 |
Income tax receivable | 10,715 | 3,899 |
Prepaid expenses | 7,888 | 555 |
Other current assets | (13,855) | (1,264) |
Other assets and liabilities | (3,258) | 475 |
Accounts payable | 8,108 | 2,563 |
Income and other taxes payable | 746 | (466) |
Accrued expenses and other current liabilities | (11,003) | (3,759) |
Deferred revenue | (2,170) | (3,474) |
Net cash provided by operating activities | 13,813 | 36,731 |
Financing activities | ||
Net proceeds (repayments) of revolving credit facility | (240,026) | 140,308 |
Net cash used in financing activities | (9,627) | (13,814) |
Change in cash and cash equivalents | (3,985) | 18,593 |
Cash and cash equivalents at beginning of period | 33,258 | 27,891 |
Cash and cash equivalents at end of period | $ 29,273 | 46,484 |
As reported | ||
Operating activities | ||
Net income before attribution to noncontrolling interests | 17,380 | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 86 | |
Income tax receivable | 3,903 | |
Prepaid expenses | (217) | |
Other current assets | 5,097 | |
Other assets and liabilities | (514) | |
Accounts payable | 1,209 | |
Income and other taxes payable | (466) | |
Accrued expenses and other current liabilities | (3,103) | |
Deferred revenue | 220 | |
Net cash provided by operating activities | 41,036 | |
Financing activities | ||
Net proceeds (repayments) of revolving credit facility | 127,000 | |
Net cash used in financing activities | (27,122) | |
Change in cash and cash equivalents | 9,590 | |
Cash and cash equivalents at beginning of period | 22,345 | |
Cash and cash equivalents at end of period | 31,935 | |
Total Adjustments | ||
Operating activities | ||
Net income before attribution to noncontrolling interests | 706 | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 2,589 | |
Income tax receivable | (4) | |
Prepaid expenses | 772 | |
Other current assets | (6,361) | |
Other assets and liabilities | 989 | |
Accounts payable | 1,354 | |
Accrued expenses and other current liabilities | (656) | |
Deferred revenue | (3,694) | |
Net cash provided by operating activities | (4,305) | |
Financing activities | ||
Net proceeds (repayments) of revolving credit facility | 13,308 | |
Net cash used in financing activities | 13,308 | |
Change in cash and cash equivalents | 9,003 | |
Cash and cash equivalents at beginning of period | 5,546 | |
Cash and cash equivalents at end of period | $ 14,549 |
Update to Significant Account_7
Update to Significant Accounting Policies - Noncontrolling Interest and Joint Ventures (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)restaurantentity | Apr. 01, 2018USD ($) | |
Noncontrolling Interests | ||
Number of Joint Ventures Having Noncontrolling Interests | entity | 3 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | ||
Total income before income taxes | $ (767) | $ 23,064 |
Joint ventures | ||
Noncontrolling Interests | ||
Number of Restaurants | restaurant | 183 | |
Income Amounts Attributable to Noncontrolling Interest, Disclosures | ||
Papa John's International, Inc. | $ 464 | 1,295 |
Noncontrolling interests | 133 | 643 |
Total income before income taxes | $ 597 | $ 1,938 |
Update to Significant Account_8
Update to Significant Accounting Policies - Deferred Income Tax Accounts and Tax Reserves (Details) $ in Millions | Mar. 31, 2019USD ($) |
Update to Significant Accounting Policies | |
Net deferred income tax liability | $ 4.6 |
Update to Significant Account_9
Update to Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Carrying Value | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Cash surrender value of life insurance policies | $ 31,080 | $ 27,751 |
Interest rate swap assets | 4,905 | |
Interest rate swap liabilities | 396 | |
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 | 31,080 | 27,751 |
Measured on Recurring Basis | Level 2 | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Interest rate swap assets | $ 4,905 | |
Interest rate swap liabilities | $ 396 |
Adoption of ASC 842, "Leases"_2
Adoption of ASC 842, "Leases" (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Election of package of practical expedients | true | ||
Election of hindsight practical expedient | false | ||
Assets | |||
Prepaid expenses | $ 22,488 | $ 25,707 | $ 30,376 |
Right-of-use assets | 150,216 | 161,027 | |
Current liabilities: | |||
Current lease liabilities | 22,546 | 25,348 | |
Long-term liabilities: | |||
Long-term lease liabilities | 130,391 | 137,511 | |
Other long-term liabilities | $ 75,887 | 72,823 | 79,324 |
Total Adjustments | |||
Assets | |||
Prepaid expenses | $ 441 | ||
Accounting Standards Update 2016-02 | Total Adjustments | |||
Assets | |||
Prepaid expenses | (4,669) | ||
Right-of-use assets | 161,027 | ||
Current liabilities: | |||
Current lease liabilities | 25,348 | ||
Long-term liabilities: | |||
Long-term lease liabilities | 137,511 | ||
Other long-term liabilities | $ (6,501) |
Leases - Lease Terms, Assets an
Leases - Lease Terms, Assets and Liabilities (Details) $ in Thousands | Mar. 31, 2019USD ($)installment | Dec. 31, 2018USD ($) |
Assets | ||
Operating lease assets | $ 150,216 | $ 161,027 |
Right-of-use assets held for sale | 3,900 | |
Total lease assets | 154,116 | 161,027 |
Liabilities | ||
Current Operating | 22,546 | 25,348 |
Noncurrent Operating | 130,391 | 137,511 |
Lease liabilities held for sale | 4,065 | |
Total lease liabilities | 157,002 | $ 162,859 |
Operating lease assets, accumulated amortization | $ 7,500 | |
Domestic Company-owned restaurants | ||
Leases | ||
Term of lease contracts | 5 years | |
Domestic Company-owned restaurants | Minimum | ||
Leases | ||
Number of operating lease renewals | installment | 1 | |
United Kingdom franchise-owned restaurants | ||
Leases | ||
Term of lease contracts | 15 years | |
Domestic commissary locations | ||
Leases | ||
Term of lease contracts | 10 years | |
Domestic commissary locations | Minimum | ||
Leases | ||
Number of operating lease renewals | installment | 1 | |
Domestic and international tractors and trailers | Minimum | ||
Leases | ||
Term of lease contracts | 5 years | |
Domestic and international tractors and trailers | Maximum | ||
Leases | ||
Term of lease contracts | 7 years | |
Domestic and international commissary and office equipment | Minimum | ||
Leases | ||
Term of lease contracts | 3 years | |
Domestic and international commissary and office equipment | Maximum | ||
Leases | ||
Term of lease contracts | 5 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases | |
Operating lease cost | $ 10,794 |
Short-term lease cost | 791 |
Variable lease cost | 2,646 |
Total lease costs | 14,231 |
Sublease income | (2,339) |
Total lease costs, net of sublease income | $ 11,892 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments, Lessor Operating Leases, and Lease Guarantees (Details) $ in Thousands | Mar. 31, 2019USD ($)itemrestaurantlease | Dec. 30, 2018USD ($) |
Lease Costs | ||
Remainder of 2019 | $ 26,018 | |
2019 | $ 40,834 | |
2020 | 35,361 | 36,631 |
2021 | 30,600 | 31,159 |
2022 | 25,042 | 25,188 |
2023 | 19,223 | 18,694 |
Thereafter | 67,133 | 57,304 |
Total future minimum lease payments | 203,377 | 209,810 |
Less imputed interest | (46,375) | |
Less lease liabilities held for sale | (4,065) | |
Total present value of Lease Liabilities | 152,937 | |
Expected Sublease Income: | ||
Remainder of 2019 | 6,463 | |
2019 | 8,079 | |
2020 | 8,259 | 8,061 |
2021 | 7,981 | 7,818 |
2022 | 7,719 | 7,462 |
2023 | 7,463 | 7,182 |
Thereafter | 44,077 | 42,518 |
Total future minimum lease payments | $ 81,962 | $ 81,120 |
Number of domestic leases for which the Company is contingently liable | lease | 97 | |
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 10,900 | |
Domestic and international tractors and trailers | ||
Expected Sublease Income: | ||
Number of units included in future rental commitments | item | 65 | |
Estimated future rental commitment of operating leases that have not yet commenced | $ 12,000 | |
Domestic and international tractors and trailers | Maximum | ||
Expected Sublease Income: | ||
Term of additional leases that have not yet commenced | 7 years | |
United Kingdom franchise-owned restaurants | ||
Expected Sublease Income: | ||
Number of units leased and subleased | restaurant | 350 | |
Initial lease terms on franchised sites | 15 years |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases | |
Cash paid for operating lease liabilities | $ 10,116 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,040 |
Cash received from sublease income | $ 2,061 |
Weighted-average remaining lease term of operating leases | 7 years 4 months 2 days |
Weighted-average discount rate of operating leases | 6.91% |
Papa John's Marketing Fund, I_3
Papa John's Marketing Fund, Inc. (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 29,273 | $ 33,258 | |
Accounts receivable, net | 80,748 | 78,118 | |
Income tax receivable | 5,431 | 16,146 | |
Prepaid expenses | 22,488 | $ 25,707 | 30,376 |
Other current assets | 18,582 | 5,678 | |
Total current assets | 199,414 | 196,277 | |
Deferred income taxes, net | 1,244 | 1,137 | |
Total assets | 739,068 | 595,897 | |
Current liabilities: | |||
Accounts payable | 35,214 | 27,106 | |
Accrued expenses and other current liabilities | 120,975 | 129,167 | |
Deferred revenue current | 2,516 | 2,598 | |
Current portion of long-term debt | 29,982 | 20,009 | |
Total current liabilities | 218,569 | 185,470 | |
Deferred revenue | 18,562 | 20,674 | |
Total liabilities | 795,677 | 894,446 | |
Papa John's Marketing Fund Inc. | |||
Current assets: | |||
Cash and cash equivalents | 5,013 | 13,790 | |
Accounts receivable, net | 10,243 | 10,264 | |
Income tax receivable | 66 | 73 | |
Prepaid expenses | 69 | 441 | |
Other current assets | 14,124 | 1 | |
Total current assets | 29,515 | 24,569 | |
Deferred income taxes, net | 381 | 381 | |
Total assets | 29,896 | 24,950 | |
Current liabilities: | |||
Accounts payable | 8,423 | 20 | |
Accrued expenses and other current liabilities | 11,537 | 23,455 | |
Deferred revenue current | 97 | 155 | |
Current portion of long-term debt | 9,982 | 9 | |
Total current liabilities | 30,039 | 23,639 | |
Deferred revenue | 4,744 | 5,995 | |
Total liabilities | $ 34,783 | $ 29,634 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Mar. 31, 2019 | Apr. 01, 2018 |
Revenue, Major Customer [Line Items] | |||
Cumulative effect of adoption of Topic 606 | $ (24,359) | ||
Total revenues | $ 398,405 | $ 450,122 | |
As reported | |||
Revenue, Major Customer [Line Items] | |||
Cumulative effect of adoption of Topic 606 | $ (21,528) | ||
Total revenues | 427,369 | ||
Company-owned Restaurants | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 161,803 | 193,695 | |
Commissary Sales | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 210,325 | 235,266 | |
Franchise Fees | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 28,004 | 34,807 | |
Other Sales | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 60,009 | 59,994 | |
Domestic Company-owned restaurants | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 161,803 | 190,242 | |
Domestic Company-owned restaurants | Company-owned Restaurants | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 161,803 | 190,242 | |
North America commissary | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 148,904 | 161,713 | |
North America commissary | Commissary Sales | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 194,459 | 217,587 | |
North America franchising | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 17,530 | 24,806 | |
North America franchising | Franchise Fees | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 18,203 | 25,825 | |
International. | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 31,500 | 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 | 15,866 | 17,679 | |
International. | Franchise Fees | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 9,801 | 8,982 | |
International. | Other Sales | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 5,930 | 5,488 | |
All others | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 38,668 | 37,829 | |
All others | Other Sales | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 54,079 | 54,506 | |
Elimination | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | (61,736) | (73,640) | |
Elimination | North America commissary | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | (45,555) | (55,874) | |
Elimination | North America franchising | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | (673) | (1,019) | |
Elimination | International. | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | (97) | (70) | |
Elimination | All others | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | $ (15,411) | $ (16,677) |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | Dec. 30, 2018 | |
Revenue, Major Customer [Line Items] | |||
Revenue recognized related to deferred revenue and customer loyalty program | $ 7,400,000 | $ 4,100,000 | |
Contract liabilities | 40,373,000 | $ 41,291,000 | |
Change | (918,000) | ||
Contract assets | 6,600,000 | 6,600,000 | |
Amortization expense related to contract assets | 800,000 | ||
Deferred revenue. | |||
Revenue, Major Customer [Line Items] | |||
Contract liabilities | 21,078,000 | 23,272,000 | |
Change | (2,194,000) | ||
Customer loyalty program | |||
Revenue, Major Customer [Line Items] | |||
Contract liabilities | 19,295,000 | $ 18,019,000 | |
Change | $ 1,276,000 |
Revenue Recognition _ Transacti
Revenue Recognition – Transaction Price Allocated to Remaining Performance Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Performance Obligations by Period | ||
Total deferred revenue | $ 40,373 | $ 41,291 |
Franchise Fees | ||
Performance Obligations by Period | ||
Less than 1 Year | 2,419 | |
1-2 Years | 2,157 | |
2-3 Years | 1,951 | |
3-4 Years | 1,750 | |
4-5 Years | 1,446 | |
Thereafter | 3,757 | |
Total deferred revenue | 13,480 | |
Area development fees | ||
Performance Obligations by Period | ||
Total deferred revenue | 2,800 | |
Gift Card | ||
Performance Obligations by Period | ||
Total deferred revenue | 4,800 | |
Papa Rewards | ||
Performance Obligations by Period | ||
Total deferred revenue | $ 19,300 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Shares Authorized and Outstanding (Details) - shares shares in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
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 | 31,400 | 31,400 |
Series B Convertible Preferred Stock, shares outstanding | 252,530 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Share Repurchase Program (Details) $ in Millions | Mar. 31, 2019USD ($) |
Common stock repurchase program | |
Share repurchase program | |
Stock repurchase program, authorized amount | $ 2,075 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) - Cash Dividend (Details) - USD ($) | Jul. 01, 2019 | May 24, 2019 | May 13, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Apr. 01, 2018 |
Cash Dividend | ||||||
Total dividends paid | $ 9,100,000 | |||||
Dividends paid to common shareholders | $ 7,125,000 | $ 7,565,000 | ||||
Quarterly dividend paid per common share (in dollars per share) | $ 0.225 | |||||
Common stock dividends paid to preferred shareholders | $ 900,000 | |||||
Preferred dividends | $ 1,100,000 | |||||
Preferred stock dividend rate | 3.60% | |||||
Forecast | ||||||
Cash Dividend | ||||||
Dividends paid to common shareholders | $ 7,200,000 | |||||
Common stock dividends paid to preferred shareholders | $ 1,100,000 | |||||
Preferred dividends | $ 2,300,000 | |||||
Subsequent event | ||||||
Cash Dividend | ||||||
Quarterly dividend declared, per share (in dollars per share) | $ 0.225 | |||||
Subsequent event | Common Stock | ||||||
Cash Dividend | ||||||
Quarterly dividend, date of declaration | Apr. 30, 2019 | |||||
Quarterly dividend, date of distribution | May 24, 2019 | |||||
Quarterly dividend, date of record | May 13, 2019 | |||||
Subsequent event | Preferred Stock | ||||||
Cash Dividend | ||||||
Quarterly dividend, date of declaration | Apr. 30, 2019 | |||||
Quarterly dividend, date of distribution | Jul. 1, 2019 |
Stockholders' Equity (Deficit_4
Stockholders' Equity (Deficit) - Stockholder Rights Plan (Details) - Rights - $ / shares | Mar. 06, 2019 | Jul. 22, 2018 |
Ownership trigger threshold | 20.00% | 15.00% |
Series A Junior Participating Preferred Stock | ||
Number of preferred share purchase rights granted for each outstanding share of common stock | 1 | |
Number of shares of stock available to purchase per right | 0.001 | |
Preferred stock, par value | $ 0.01 | |
Exercise price per right | $ 250 | |
John H. Schnatter with his affiliates and family members | ||
Ownership trigger threshold | 31.00% | 31.00% |
Series B Convertible Preferre_2
Series B Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, shares in Millions | Mar. 29, 2019 | Feb. 03, 2019 | Mar. 31, 2019 |
Redeemable Preferred Shares | |||
Preferred stock dividend rate | 3.60% | ||
Authorized shares of preferred stock | 5 | ||
Temporary equity | $ 251,303,000 | ||
Issuance costs | 7,179,000 | ||
Dividends paid to preferred shareholders | 2,040,000 | ||
Preferred dividends | 1,100,000 | ||
Common stock dividends paid to preferred shareholders | 900,000 | ||
Series B Preferred Stock | |||
Redeemable Preferred Shares | |||
Temporary equity | 251,300,000 | ||
Temporary equity adjustment | 5,900,000 | ||
Dividends paid to preferred shareholders | 2,000,000 | ||
Series B Preferred Stock | Franchisee | |||
Redeemable Preferred Shares | |||
Aggregate purchase price of shares | $ 2,500,000 | ||
Temporary equity adjustment | 300,000 | ||
Series B Preferred Stock | Securities Purchase Agreement | |||
Redeemable Preferred Shares | |||
Aggregate purchase price of shares | $ 50,000,000 | $ 200,000,000 | |
Preferred stock, par value | $ 0.01 | ||
Purchase price per share | $ 1,000 | ||
Preferred stock dividend rate | 3.60% | ||
Conversion rate | $ 50.06 | ||
Initial redemption term | 8 years | ||
Exchange Cap (as a percent) | 19.99% | ||
Issuance costs | 7,200,000 | ||
Temporary equity adjustment | $ 5,600,000 | ||
Redemption value | $ 252,500,000 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Basic (loss) earnings per common share: | ||
Net (loss) income attributable to the Company | $ (1,731) | $ 17,443 |
Preferred stock dividends | (2,070) | |
Net income (loss) attributable to participating securities | (75) | |
Net (loss) income attributable to common shareholders | $ (3,801) | $ 17,368 |
Weighted average common shares outstanding | 31,554 | 33,279 |
Basic (loss) earnings per common share | $ (0.12) | $ 0.52 |
Diluted (loss) earnings per common share: | ||
Net (loss) income attributable to common shareholders | $ (3,801) | $ 17,368 |
Weighted average common shares outstanding | 31,554 | 33,279 |
Dilutive effect of outstanding equity awards | 273 | |
Diluted weighted average common shares outstanding | 31,554 | 33,552 |
Diluted (loss) earnings per common share | $ (0.12) | $ 0.52 |
Weighted average antidilutive awards excluded from computation of earnings per share | 5,000 | 790 |
Series B Convertible Preferred Stock, shares outstanding | 252,530 |
Assets and Liabilities Held f_3
Assets and Liabilities Held for Sale (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($)restaurant | Apr. 01, 2018USD ($) | |
Assets and Liabilities Held for Sale | ||
Number of stores available to be refranchised | restaurant | 40 | |
Expected time to sell markets | 12 months | |
Loss recognized upon transfer to held for sale | $ 0 | |
Summary of associated assets classified as held for sale: | ||
Cash and cash equivalents | 25,000 | |
Inventories | 249,000 | |
Property and equipment, net | 4,865,000 | |
Right-of-use assets | 3,900,000 | |
Goodwill | 1,726,000 | |
Total assets held for sale | 10,765,000 | |
Lease liabilities | 4,065,000 | |
Total liabilities held for sale | 4,065,000 | |
Income before income taxes of restaurants classified as held for sale | $ 598,000 | $ 487,000 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Debt | ||
Outstanding debt | $ 379,982 | $ 625,009 |
Unamortized debt issuance costs | (3,567) | (3,874) |
Current portion of long-term debt | (29,982) | (20,009) |
Total long-term debt, less current portion, net | $ 346,433 | $ 601,126 |
Debt - Credit Agreements (Detai
Debt - Credit Agreements (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019USD ($)item$ / shares | Apr. 01, 2018USD ($) | Dec. 30, 2018USD ($) | Dec. 31, 2017 | |
Debt | ||||
Outstanding debt | $ 379,982 | $ 625,009 | ||
Quarterly dividend paid per common share (in dollars per share) | $ / shares | $ 0.225 | |||
Dividends paid to common shareholders | $ 7,125 | $ 7,565 | ||
Debt issuance costs | $ 3,567 | $ 3,874 | ||
PJI Facilities | ||||
Debt | ||||
Number of quarters in interest margin period | item | 4 | |||
Line of credit facility, remaining availability | $ 360,000 | |||
Debt issuance costs | $ 3,600 | |||
PJI Facilities | Minimum | Modification of financial covenants beginning in the third quarter of 2018 | ||||
Debt | ||||
Fixed charge coverage ratio | 2 | |||
PJI Facilities | Minimum | Modification of financial covenants in 2021 and thereafter | ||||
Debt | ||||
Fixed charge coverage ratio | 2.50 | |||
PJI Facilities | Maximum | Ability to make dividends and distributions based on Leverage Ratio | ||||
Debt | ||||
Quarterly dividend paid per common share (in dollars per share) | $ / shares | $ 0.225 | |||
Dividends paid to common shareholders | $ 35,000 | |||
Leverage Ratio | 3.75 | |||
PJI Facilities | Maximum | Modification of financial covenants beginning in the third quarter of 2018 | ||||
Debt | ||||
Leverage Ratio | 5.25 | |||
PJI Facilities | Maximum | Modification of financial covenants by 2022 | ||||
Debt | ||||
Leverage Ratio | 4 | |||
PJI Facilities | Maximum | Option to increase the Revolving Facility or the Term Loan Facility | ||||
Debt | ||||
Leverage Ratio | 4 | |||
Additional amount that company has option to increase borrowing capacity | $ 300,000 | |||
PJI Facilities | LIBOR | Minimum | ||||
Debt | ||||
Interest margin rate on debt | 1.25% | |||
PJI Facilities | LIBOR | Maximum | ||||
Debt | ||||
Interest margin rate on debt | 2.50% | |||
PJI Facilities | Base rate | Minimum | ||||
Debt | ||||
Interest margin rate on debt | 0.25% | |||
PJI Facilities | Base rate | Maximum | ||||
Debt | ||||
Interest margin rate on debt | 1.50% | |||
PJMF Revolving Facility | ||||
Debt | ||||
Line of credit facility, maximum borrowing capacity | $ 20,000 | |||
Outstanding debt | $ 10,000 | |||
Applicable interest rate | 4.26% | 3.31% | ||
PJMF Revolving Facility | One-month LIBOR | ||||
Debt | ||||
Interest margin rate on debt | 1.75% | |||
Revolving Facility | PJI Facilities | ||||
Debt | ||||
Line of credit facility, maximum borrowing capacity | $ 400,000 | |||
Outstanding debt | 0 | |||
Line of credit facility, maximum borrowing capacity of foreign currencies | 35,000 | |||
Term Loan Facility | PJI Facilities | ||||
Debt | ||||
Outstanding debt | 370,000 | |||
Quarterly amortization payment | $ 5,000 |
Debt - Derivatives (Details)
Debt - Derivatives (Details) $ in Millions | Apr. 30, 2019USD ($)derivative | Mar. 31, 2019USD ($) |
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, January 2018, 1.99% fixed, $100 million notional amount | ||
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 | ||
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 | ||
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 | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 25 | |
Interest rate swap agreement, fixed interest rate | 1.99% | |
Interest rate swap | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 400 | |
Interest rate swap | Subsequent event | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 350 | |
Terminated interest rate swaps | Subsequent event | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 50 | |
Number of derivatives held | derivative | 2 |
Debt - Interest Rate Swaps (Det
Debt - Interest Rate Swaps (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 30, 2018 |
Interest rate swap | Other current and long-term assets | ||
Debt and Credit Arrangements | ||
Derivatives designated as hedging instruments, fair value | $ 396 | $ 4,905 |
Debt - Effect of Derivatives on
Debt - Effect of Derivatives on Financial Statements (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
Debt and Credit Arrangements | ||
Weighted average interest rates on debt, including impact of interest rate swaps | 4.50% | 3.50% |
Interest paid, including payments made or received under the swaps | $ 6,700,000 | $ 4,900,000 |
Interest rate swap | ||
Debt and Credit Arrangements | ||
Portion of derivative asset that would be reclassified into earnings | 396,000 | |
Interest income | Interest rate swap | ||
Debt and Credit Arrangements | ||
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative | (3,955,000) | |
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | 148,000 | |
Total Net interest expense on Consolidated Statements of Operations | $ (6,276,000) | |
Interest expense | Interest rate swap | ||
Debt and Credit Arrangements | ||
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative | 6,718,000 | |
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | (108,000) | |
Total Net interest expense on Consolidated Statements of Operations | $ (5,075,000) | |
Estimate of period of time over which portion of derivative liability would be reclassified into earnings | 12 months |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 29, 2018employee |
Durling et al v. Papa John's International, Inc. | |
Loss Contingencies [Line Items] | |
Approximate number of employees who opted into the class action | 9,571 |
Other General Expenses (Details
Other General Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 01, 2018 | |
General and Administrative Expenses | ||
Provision (credit) for uncollectible accounts and notes receivable | $ (50) | $ 1,539 |
General and administrative expenses | 51,135 | 39,996 |
General and administrative expenses | ||
General and Administrative Expenses | ||
Starboard option valuation | 5,552 | |
Provision (credit) for uncollectible accounts and notes receivable | 24 | 1,187 |
Loss on disposition of fixed assets | 289 | 161 |
Other | (413) | 969 |
Other general expenses | 5,452 | 2,317 |
Special Committee costs | 5,067 | |
Administrative expenses | 40,616 | 37,679 |
General and administrative expenses | 51,135 | $ 39,996 |
General and administrative expenses | Series B Preferred Stock | ||
General and Administrative Expenses | ||
Aggregate purchase price of shares | $ 50,000 |
Segment Information - Concentra
Segment Information - Concentration (Details) | 3 Months Ended |
Mar. 31, 2019segmententity | |
Major customers disclosures | |
Number of reportable segments | segment | 4 |
Consolidated revenues | |
Major customers disclosures | |
Concentration risk, number | entity | 0 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 01, 2018 | Dec. 30, 2018 | |
Segment Information | |||
Total revenues | $ 398,405 | $ 450,122 | |
Income (loss) before income taxes | (767) | 23,064 | |
Accumulated depreciation and amortization | (437,186) | ||
Net property and equipment | 217,437 | $ 226,894 | |
Domestic Company-owned restaurants | |||
Segment Information | |||
Total revenues | 161,803 | 190,242 | |
North America commissary | |||
Segment Information | |||
Total revenues | 148,904 | 161,713 | |
North America franchising | |||
Segment Information | |||
Total revenues | 17,530 | 24,806 | |
Special charges | 4,900 | ||
International | |||
Segment Information | |||
Total revenues | 25,667 | 30,114 | |
Other segment | |||
Segment Information | |||
Total revenues | 44,501 | 43,247 | |
Operating segments | |||
Segment Information | |||
Total revenues | 398,405 | 450,122 | |
Operating segments | Domestic Company-owned restaurants | |||
Segment Information | |||
Total revenues | 161,803 | 190,242 | |
Income (loss) before income taxes | 4,597 | 7,229 | |
Property and equipment, gross | 219,240 | ||
Operating segments | North America commissary | |||
Segment Information | |||
Total revenues | 148,904 | 161,713 | |
Income (loss) before income taxes | 7,512 | 8,610 | |
Property and equipment, gross | 141,146 | ||
Operating segments | North America franchising | |||
Segment Information | |||
Total revenues | 17,530 | 24,806 | |
Income (loss) before income taxes | 15,691 | 22,359 | |
Operating segments | International | |||
Segment Information | |||
Total revenues | 31,500 | 35,532 | |
Income (loss) before income taxes | 5,317 | 3,537 | |
Property and equipment, gross | 17,062 | ||
Operating segments | Other segment | |||
Segment Information | |||
Total revenues | 38,668 | 37,829 | |
Income (loss) before income taxes | (506) | 316 | |
Property and equipment, gross | 75,072 | ||
Elimination | |||
Segment Information | |||
Total revenues | (61,736) | (73,640) | |
Income (loss) before income taxes | (913) | (856) | |
Elimination | North America commissary | |||
Segment Information | |||
Total revenues | (45,555) | (55,874) | |
Elimination | North America franchising | |||
Segment Information | |||
Total revenues | (673) | (1,019) | |
Elimination | International | |||
Segment Information | |||
Total revenues | (97) | (70) | |
Elimination | Other segment | |||
Segment Information | |||
Total revenues | (15,411) | (16,677) | |
Unallocated corporate | |||
Segment Information | |||
Income (loss) before income taxes | (32,465) | $ (18,131) | |
Property and equipment, gross | 202,103 | ||
Special charges | $ 11,000 |