Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Feb. 19, 2020 | Jun. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 29, 2019 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity File Number | 0-21660 | ||
Entity Tax Identification Number | 61-1203323 | ||
Entity Address, Address Line One | 2002 Papa John’s Boulevard | ||
Entity Address, City or Town | Louisville | ||
Entity Address, State or Province | KY | ||
Entity Address, Postal Zip Code | 40299-2367 | ||
City Area Code | 502 | ||
Local Phone Number | 261-7272 | ||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | PZZA | ||
Security Exchange Name | NASDAQ | ||
Entity Registrant Name | PAPA JOHNS INTERNATIONAL INC | ||
Entity Central Index Key | 0000901491 | ||
Current Fiscal Year End Date | --12-29 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 32,278,582 | ||
Entity Public Float | $ 1,402,556,490 | ||
Entity Shell Company | false |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Total revenues | $ 1,619,248 | $ 1,662,871 | $ 1,783,359 |
Costs and expenses: | |||
General and administrative expenses | 223,460 | 193,534 | 150,866 |
Depreciation and amortization | 47,281 | 46,403 | 43,668 |
Total costs and expenses | 1,599,452 | 1,631,029 | 1,630,668 |
Refranchising and impairment gains (losses), net | 4,739 | (289) | (1,674) |
Operating income | 24,535 | 31,553 | 151,017 |
Investment income | 1,104 | 817 | 608 |
Interest expense | (20,593) | (25,673) | (11,283) |
Income before income taxes | 5,046 | 6,697 | 140,342 |
Income tax (benefit) expense | (611) | 2,624 | 33,817 |
Net income before attribution to noncontrolling interests | 5,657 | 4,073 | 106,525 |
Net income attributable to noncontrolling interests | (791) | (1,599) | (4,233) |
Net income attributable to the Company | 4,866 | 2,474 | 102,292 |
Calculation of net (loss) income for earnings per share: | |||
Net income attributable to the Company | 4,866 | 2,474 | 102,292 |
Preferred stock dividends and accretion | (12,499) | ||
Change in noncontrolling interest redemption value | 1,419 | ||
Net income attributable to participating securities | (423) | ||
Net (loss) income attributable to common shareholders | $ (7,633) | $ 2,474 | $ 103,288 |
Basic (loss) earnings per common share | $ (0.24) | $ 0.08 | $ 2.86 |
Diluted (loss) earnings per common share | $ (0.24) | $ 0.08 | $ 2.83 |
Basic weighted average common shares outstanding | 31,632 | 32,083 | 36,083 |
Diluted weighted average common shares outstanding | 31,632 | 32,299 | 36,522 |
Dividends declared per common share | $ 0.90 | $ 0.90 | $ 0.85 |
Domestic Company-owned restaurants | |||
Revenues: | |||
Total revenues | $ 652,053 | $ 692,380 | $ 816,718 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 526,237 | 577,658 | 664,640 |
Refranchising and impairment gains (losses), net | 4,700 | 1,600 | |
North America franchising | |||
Revenues: | |||
Total revenues | 71,828 | 79,293 | 106,729 |
North America commissary | |||
Revenues: | |||
Total revenues | 612,652 | 609,866 | 673,712 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 569,180 | 575,103 | 631,537 |
International | |||
Revenues: | |||
Total revenues | 102,924 | 110,349 | 114,021 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 57,702 | 67,775 | 70,622 |
Other segment | |||
Revenues: | |||
Total revenues | 179,791 | 170,983 | 72,179 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | $ 175,592 | $ 170,556 | $ 69,335 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive (Loss) Income | |||
Net income before attribution to noncontrolling interests | $ 5,657 | $ 4,073 | $ 106,525 |
Other comprehensive (loss) income, before tax: | |||
Foreign currency translation adjustments | 1,638 | (4,903) | 4,570 |
Interest rate swaps | (10,783) | 4,254 | 1,421 |
Other comprehensive (loss) income, before tax | (9,145) | (649) | 5,991 |
Income tax effect: | |||
Foreign currency translation adjustments | (377) | 1,110 | (1,691) |
Interest rate swaps | 2,480 | (1,032) | (530) |
Income tax effect | 2,103 | 78 | (2,221) |
Other comprehensive (loss) income, net of tax | (7,042) | (571) | 3,770 |
Comprehensive (loss) income before attribution to noncontrolling interests | (1,385) | 3,502 | 110,295 |
Less: comprehensive loss (income), redeemable noncontrolling interests | 519 | 488 | (2,195) |
Less: comprehensive (income), nonredeemable noncontrolling interests | (1,310) | (2,087) | (2,038) |
Comprehensive (loss) income attributable to the Company | $ (2,176) | $ 1,903 | $ 106,062 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) $ in Thousands | Jun. 15, 2018USD ($)restaurant | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($)restaurant | Dec. 31, 2017USD ($) |
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Income tax (benefit) expense | $ (611) | $ 2,624 | $ 33,817 | |
Stores in Beijing and Tianjin, China | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Number of Restaurants Sold | restaurant | 34 | 34 | ||
Other Comprehensive Income (Loss), Foreign Currency Transaction And Translation Reclassification Adjustment From AOCI | $ 1,300 | $ 1,300 | ||
Reversal of deferred tax related to foreign currency translation on refranchised stores | $ (300) | |||
Qualifying as hedges | Interest rate swap | Amount reclassified from AOCL | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Net Interest income (expense) | 660 | (22) | (421) | |
Income tax (benefit) expense | $ 152 | $ (5) | $ (156) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 27,911 | $ 33,258 |
Accounts receivable (less allowance for doubtful accounts of $7,341 in 2019 and $4,205 in 2018) | 80,921 | 78,118 |
Notes receivable, current portion | 7,790 | 5,498 |
Income tax receivable | 4,024 | 16,146 |
Inventories | 27,529 | 27,203 |
Prepaid expenses and other current assets | 33,371 | 36,054 |
Total current assets | 181,546 | 196,277 |
Property and equipment, net | 211,741 | 226,894 |
Finance lease right-of-use assets, net | 9,383 | |
Operating lease right-of-use assets | 148,229 | |
Notes receivable, less current portion (less allowance for doubtful accounts of $3,572 in 2019 and $3,369 in 2018) | 33,010 | 23,259 |
Goodwill | 80,340 | 84,516 |
Deferred income taxes, net | 1,839 | 1,137 |
Other assets | 64,633 | 63,814 |
Total assets | 730,721 | 595,897 |
Current liabilities: | ||
Accounts payable | 29,141 | 27,106 |
Income and other taxes payable | 7,599 | 6,590 |
Accrued expenses and other current liabilities | 120,566 | 129,167 |
Current deferred revenue | 5,624 | 6,022 |
Current finance lease liabilities | 1,789 | |
Current operating lease liabilities | 23,226 | |
Current portion of long-term debt | 20,000 | 20,009 |
Total current liabilities | 207,945 | 188,894 |
Deferred revenue | 14,722 | 17,250 |
Long-term finance lease liabilities | 7,629 | |
Long-term operating lease liabilities | 125,297 | |
Long-term debt, less current portion, net | 347,290 | 601,126 |
Deferred income taxes, net | 2,649 | 7,852 |
Other long-term liabilities | 84,927 | 79,324 |
Total liabilities | 790,459 | 894,446 |
Series B Convertible Preferred Stock; $0.01 par value; 260.0 shares authorized, 252.5 shares issued and outstanding at December 29, 2019; no shares issued at December 30, 2018 | 251,133 | |
Redeemable noncontrolling interests | 5,785 | 5,464 |
Stockholders' deficit: | ||
Common stock ($0.01 par value per share; issued 44,748 at December 29, 2019 and 44,301 at December 30, 2018) | 447 | 443 |
Additional paid-in capital | 219,047 | 192,984 |
Accumulated other comprehensive loss | (10,185) | (3,143) |
Retained earnings | 205,697 | 242,182 |
Treasury stock (12,854 shares at December 29, 2019 and 12,929 shares at December 30, 2018, at cost) | (747,327) | (751,704) |
Total stockholders' deficit | (332,321) | (319,238) |
Noncontrolling interests in subsidiaries | 15,665 | 15,225 |
Total Stockholders' deficit | (316,656) | (304,013) |
Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders' deficit | $ 730,721 | $ 595,897 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 7,341 | $ 4,205 |
Notes receivable, less current portion, allowance for doubtful accounts | $ 3,572 | $ 3,369 |
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 | 252,500 | |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 44,748,000 | 44,301,000 |
Treasury stock, shares | 12,854,000 | 12,929,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Noncontrolling Interests in Subsidiaries | Total |
Balance at Dec. 25, 2016 | $ 441 | $ 172,573 | $ (5,887) | $ 219,278 | $ (390,316) | $ 13,712 | $ 9,801 |
Balance (in shares) at Dec. 25, 2016 | 36,683,000 | ||||||
Net income | 102,292 | 2,038 | 104,330 | ||||
Other comprehensive income (loss) | 3,770 | 3,770 | |||||
Cash dividends on common stock | 136 | (30,728) | (30,592) | ||||
Exercise of stock options | $ 1 | 6,259 | $ 6,260 | ||||
Exercise of stock options (in shares) | 147,000 | 147,000 | |||||
Tax effect of restricted stock awards | (2,428) | $ (2,428) | |||||
Acquisition of Company common stock | (209,586) | (209,586) | |||||
Acquisition of Company common stock (in shares) | (2,960,000) | ||||||
Stock-based compensation expense | 10,413 | 10,413 | |||||
Issuance of restricted stock | (2,427) | 2,427 | |||||
Issuance of restricted stock (in shares) | 54,000 | ||||||
Change in redemption value of noncontrolling interests | 1,419 | 1,419 | |||||
Contributions from noncontrolling interests | 2,956 | 2,956 | |||||
Distributions to noncontrolling interests | (2,949) | (2,949) | |||||
Other | 259 | (10) | 403 | 652 | |||
Other (in shares) | 7,000 | ||||||
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 | 33,931,000 | ||||||
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) |
Net income | 2,474 | 1,874 | 4,348 | ||||
Other comprehensive income (loss) | (571) | (571) | |||||
Adoption of ASU 2018-02 | (455) | 455 | |||||
Cash dividends on common stock | 145 | (28,944) | (28,799) | ||||
Exercise of stock options | $ 1 | 2,698 | $ 2,699 | ||||
Exercise of stock options (in shares) | 75,000 | 75,000 | |||||
Tax effect of restricted stock awards | (1,521) | $ (1,521) | |||||
Acquisition of Company common stock | (158,049) | (158,049) | |||||
Acquisition of Company common stock (in shares) | (2,697,000) | ||||||
Stock-based compensation expense | 9,936 | 9,936 | |||||
Issuance of restricted stock | (3,005) | 3,005 | |||||
Issuance of restricted stock (in shares) | 56,000 | ||||||
Distributions to noncontrolling interests | (2,406) | (2,406) | |||||
Other | (54) | 305 | 412 | 663 | |||
Other (in shares) | 7,000 | ||||||
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 | 31,372,000 | ||||||
Net income | 4,866 | 1,310 | 6,176 | ||||
Other comprehensive income (loss) | (7,042) | (7,042) | |||||
Cash dividends on common stock | 209 | (28,761) | (28,552) | ||||
Cash dividends on preferred stock | (10,020) | (10,020) | |||||
Dividends declared on preferred stock | (2,273) | (2,273) | |||||
Exercise of stock options | $ 4 | 16,006 | $ 16,010 | ||||
Exercise of stock options (in shares) | 447,000 | 448,000 | |||||
Tax effect of restricted stock awards | (1,433) | $ (1,433) | |||||
Stock-based compensation expense | 15,303 | 15,303 | |||||
Issuance of restricted stock | (3,681) | 3,681 | |||||
Issuance of restricted stock (in shares) | 63,000 | ||||||
Distributions to noncontrolling interests | (870) | (870) | |||||
Other | (341) | (297) | 696 | 58 | |||
Other (in shares) | 12,000 | ||||||
Balance at Dec. 29, 2019 | $ 447 | $ 219,047 | $ (10,185) | $ 205,697 | $ (747,327) | $ 15,665 | $ (316,656) |
Balance (in shares) at Dec. 29, 2019 | 31,894,000 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Apr. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Income attributable to noncontrolling interests | $ 791 | $ 1,599 | $ 4,233 | |
Income tax (benefit) expense | (611) | 2,624 | 33,817 | |
Accumulated other comprehensive income (loss) | (10,185) | (3,143) | (2,117) | |
Unrealized foreign currency translation gains (losses) | (5,598) | (6,859) | (2,523) | |
Net unrealized gain (loss) on the interest rate swap agreements | $ (4,587) | $ 3,716 | $ 406 | |
Amount reclassified from AOCL | ASU 2018-02 | ||||
Income tax (benefit) expense | $ 455 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Operating activities | |||
Net income before attribution to noncontrolling interests | $ 5,657 | $ 4,073 | $ 106,525 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for uncollectible accounts and notes receivable | 3,139 | 6,849 | 29 |
Depreciation and amortization | 47,281 | 46,403 | 43,668 |
Deferred income taxes | (3,764) | 1,620 | 498 |
Preferred stock option mark-to-market adjustment | 5,914 | ||
Stock-based compensation expense | 15,303 | 9,936 | 10,413 |
(Gain) loss on refranchising | (4,739) | 289 | |
Impairment loss | 1,674 | ||
Other | 3,203 | 5,677 | 3,375 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (5,329) | 2,157 | (7,358) |
Income tax receivable | 12,122 | (12,157) | (1,531) |
Inventories | (326) | 3,093 | (5,485) |
Prepaid expenses | 792 | (1,039) | (4,414) |
Other current assets | (277) | 4,834 | (1,158) |
Other assets and liabilities | (6,354) | 1,464 | (742) |
Accounts payable | 2,035 | (400) | (8,743) |
Income and other taxes payable | 1,009 | (3,971) | 1,897 |
Accrued expenses and other current liabilities | (11,331) | 21,753 | (3,012) |
Deferred revenue | (2,586) | 1,873 | (661) |
Net cash provided by operating activities | 61,749 | 92,454 | 134,975 |
Investing activities | |||
Purchases of property and equipment | (37,711) | (42,028) | (52,593) |
Loans issued | (15,864) | (10,463) | (8,103) |
Repayments of loans issued | 5,616 | 5,805 | 4,185 |
Acquisitions, net of cash acquired | (21) | ||
Proceeds from divestitures of restaurants | 13,495 | 7,707 | |
Other | 1,889 | 180 | 34 |
Net cash used in investing activities | (32,575) | (38,799) | (56,498) |
Financing activities | |||
Proceeds from issuance of preferred stock | 252,530 | ||
Issuance costs associated with preferred stock | (7,527) | ||
Proceeds from issuance of term loan | 400,000 | ||
Repayments of term loan | (15,000) | (20,000) | (5,000) |
Net (repayments) proceeds of revolving credit facility | (240,026) | 163,585 | (225,575) |
Debt issuance costs | (1,913) | (3,181) | |
Dividends paid to common stockholders | (28,552) | (28,985) | (30,720) |
Dividends paid to preferred stockholders | (10,020) | ||
Tax payments for equity award issuances | (1,433) | (1,521) | (2,428) |
Proceeds from exercise of stock options | 16,010 | 2,699 | 6,260 |
Acquisition of Company common stock | (158,049) | (209,586) | |
Contributions from noncontrolling interest holders | 840 | 2,956 | |
Distributions to noncontrolling interest holders | (870) | (4,269) | (5,449) |
Other | (526) | 356 | 663 |
Net cash used in financing activities | (34,574) | (48,097) | (72,060) |
Effect of exchange rate changes on cash and cash equivalents | 53 | (191) | 365 |
Change in cash and cash equivalents | (5,347) | 5,367 | 6,782 |
Cash and cash equivalents at beginning of period | 33,258 | 27,891 | |
Cash and cash equivalents at beginning of period | 22,345 | 15,563 | |
Cash and cash equivalents at end of period | $ 27,911 | $ 33,258 | 27,891 |
Cash and cash equivalents at end of period | $ 22,345 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 29, 2019 | |
Description of Business | |
Description of Business | 1. Description of Business Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s” or in the first person notations of “we,” “us” and “our”), operates and franchises pizza delivery and carryout restaurants under the trademark “Papa John’s,” in 49 countries and territories as of December 29, 2019. Substantially all revenues are derived from retail sales of pizza and other food and beverage products by Company-owned restaurants, franchise royalties, sales of franchise and development rights, and sales to franchisees of food and paper products, printing and promotional items and information systems and related services used in their operations. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 29, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of Papa John’s and its subsidiaries. All intercompany balances and transactions have been eliminated. 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 Fiscal Year Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2017 fiscal year, which consisted of 53 weeks. Use of Estimates The preparation of 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 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 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. Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes waivers or incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Delivery costs, including freight associated with our domestic commissary and other sales, are accounted for as fulfillment costs and are included in operating costs. The Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”), in the first quarter of 2018. Prior year revenue recognition follows ASC Topic 605, “Revenue Recognition.” The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Restaurant Sales The domestic and international Company-owned restaurants principally generate revenue from retail sales of high-quality pizza, side items including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. Revenues from Company-owned restaurants are recognized when the products are delivered to or carried out by customers. Our North American customer loyalty program, Papa Rewards, is a spend-based program that rewards customers with points for each purchase. Papa Rewards points are accumulated and redeemed. During the fourth quarter of 2018, the program transitioned from product-based rewards to dollar off discounts (“Papa Dough”), which can be used on future purchases within a six month expiration window. The accrued liability in the Consolidated Balance Sheets, and corresponding reduction of Company-owned restaurant sales in the Consolidated Statements of Operations, is for the estimated reward redemptions at domestic Company-owned restaurants based upon estimated redemption patterns. The liability related to Papa Rewards is calculated using the estimated redemption value for which the points and accumulated rewards are expected to be redeemed. Revenue is recognized when the customer redeems the Papa Dough reward. Prior to the adoption of Topic 606, the liability related to Papa Rewards was estimated using the incremental cost accrual model which was based on the expected cost to satisfy the award and the corresponding expense was recorded in general and administrative expenses in the Consolidated Statements of Operations. Franchise Royalties and Fees Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, including acceleration of restaurant remodels or equipment upgrades, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The majority of initial franchise license fees and area development exclusivity fees are from international locations. Initial franchise license fees are billed at the store opening date. Area development exclusivity fees are billed upon execution of the development agreements which grant the right to develop franchised restaurants in future periods in specific geographic areas. Area development exclusivity fees are included in deferred revenue in the Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years . Franchise license renewal fees for both domestic and international locations, which generally occur every 10 years , are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. For periods prior to adoption of Topic 606, revenue was recognized when we performed our obligations related to such fees, primarily the store opening date for initial franchise fees and area development fees, or the date the renewal option was effective for license renewal fees. The Company offers various incentive programs for franchisees including royalty incentives, new restaurant opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary Sales Commissary sales are comprised of food and supplies sold to franchised restaurants and are recognized as revenue upon shipment of the related products to the franchisees. Payments are generally due within 30 days. As noted above, there are various incentive programs available to franchisees related to new restaurant openings including discounts on initial commissary orders and new store equipment incentives, at substantially no cost to franchisees. Commissary sales are reduced to reflect incentives in the form of direct discounts on initial commissary orders. The new store equipment incentive is also recorded as a reduction of commissary sales over the term of the incentive agreement, which is generally three to five years . Other Revenues Fees for information services, including software maintenance fees, help desk fees and online ordering fees are recognized as revenue as such services are provided and are included in other revenue. Revenues for printing, promotional items, and direct mail marketing services are recognized upon shipment of the related products to franchisees and other customers. Direct mail advertising discounts are also periodically offered by our Preferred Marketing Solutions subsidiary. Other revenues are reduced to reflect these advertising discounts. Rental income, primarily derived from properties leased by the Company and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms, in accordance with ASC Topic 842, “Leases”, similar to previous guidance. Franchise Marketing Fund revenues represent contributions collected by PJMF and various other international and domestic marketing funds (“Co-op” or “Co-operative” Funds) where we have determined for purposes of accounting that we have control over the significant 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. The adoption of Topic 606 revised the principal versus agent determination of these arrangements. When we are determined to be the principal in these arrangements, advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations. Our obligation related to these funds is to develop and conduct advertising activities in a specific country, region, or market, including the placement of electronic and print materials. There are no expiration dates and we do not deduct non-usage fees from outstanding gift cards. While the Company and 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 as Other revenue. 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. For periods prior to the adoption of Topic 606, the revenues and expenses of certain international advertising funds and the Co-op Funds in which we possess majority voting rights were included in our Consolidated Statements of Operations on a net basis, as we previously concluded we were the agent in regard to the funds based upon principal/agent determinations in industry-specific guidance that was in effect during those time periods. Advertising and Related Costs Domestic Company-owned advertising and related costs of $54.3 million, $60.8 million and $72.3 million in 2019, 2018 and 2017, respectively, include the costs of domestic Company-owned local restaurant activities such as mail coupons, door hangers and promotional items and contributions to PJMF and various local market cooperative advertising funds. Contributions by domestic Company-owned and franchised restaurants to PJMF and the Co-op Funds are based on an established percentage of monthly restaurant revenues. PJMF is responsible for developing and conducting marketing and advertising for the domestic Papa John’s system. The Co-op Funds are responsible for developing and conducting advertising activities in a specific market, including the placement of electronic and print materials developed by PJMF. During 2019 and 2018, the Company also contributed $27.5 million and $10.0 million, respectively, to PJMF to increase marketing and promotional activities which is included in general and administrative expenses and is a part of Special charges. See Note 19 for additional information. Leases Lease expense is recognized on a straight-line basis over the expected life of the lease term. A lease term often includes option periods, available at the inception of the lease. Lease expense is comprised of operating and finance 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. As further described in Recent Accounting Pronouncements Leases (Topic 842) Stock-Based Compensation Compensation expense for equity grants is estimated on the grant date, net of projected forfeitures, and is recognized over the vesting period (generally in equal installments over three years ). Restricted stock is valued based on the market price of the Company’s shares on the date of grant. Stock options are valued using a Black-Scholes option pricing model. Our specific assumptions for estimating the fair value of options are included in Note 23. Cash Equivalents Cash equivalents consist of highly liquid investments with maturity of three months or less at date of purchase. These investments are carried at cost, which approximates fair value. Accounts Receivable Substantially all accounts receivable is due from franchisees for purchases of food, paper products, point of sale equipment, printing and promotional items, information systems and related services, and royalties. Credit is extended based on an evaluation of the franchisee’s financial condition and collateral is generally not required. A reserve for uncollectible accounts is established as deemed necessary based upon overall accounts receivable aging levels and a specific review of accounts for franchisees with known financial difficulties. Account balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements Notes Receivable The Company provides financing to select franchisees principally for use in the construction and development of their restaurants and for the purchase of restaurants from the Company or other franchisees. Most notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchise. In 2019 and 2018, the Company also provided certain franchisees with royalty payment plans. We establish a reserve for franchisee notes receivables to reduce the outstanding notes receivable to their net realizable values based on a review of each franchisee’s economic performance and market conditions after consideration of the fair value of our underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees. Note balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements Inventories Inventories, which consist of food products, paper goods and supplies, smallwares, and printing and promotional items, are stated at the lower of cost, determined under the first-in, first-out (FIFO) method, or net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets (generally five to ten years for restaurant, commissary and other equipment, 20 to 40 years for buildings and improvements, and five years for technology and communication assets). Leasehold improvements are amortized over the terms of the respective leases, including the first renewal period (generally five to ten years ). Depreciation expense was $45.9 million in 2019, $45.6 million in 2018 and $42.6 million in 2017. Deferred Costs We capitalize certain information systems development and related costs that meet established criteria. Amounts capitalized, which are included in property and equipment, are amortized principally over periods not exceeding five years upon completion of the related information systems project. Total costs deferred were approximately $3.5 million in 2019, $4.3 million in 2018 and $4.1 million in 2017. The unamortized information systems development costs approximated $11.5 million and $12.3 million as of December 29, 2019 and December 30, 2018, respectively. Intangible Assets — Goodwill We evaluate goodwill annually in the fourth quarter or whenever we identify certain triggering events or circumstances that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Such tests are completed separately with respect to the goodwill of each of our reporting units, which includes our domestic Company-owned restaurants, United Kingdom (“PJUK”), China, and Preferred Marketing Solutions operations. We may perform a qualitative assessment or move directly to the quantitative assessment for any reporting unit in any period if we believe that it is more efficient or if impairment indicators exist. We elected to perform a qualitative assessment for our domestic Company-owned restaurants, PJUK, China, and Preferred Marketing Solutions operations in the fourth quarter of 2019. As a result of our qualitative analyses, we determined that it was more-likely-than-not that the fair values of our reporting units were greater than their carrying amounts. Subsequent to completing our goodwill impairment tests, no indicators of impairment were identified. See Note 13 for additional information. 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. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly decreasing the U.S. federal income tax rate for corporations effective January 1, 2018. On that same date, the Securities and Exchange Commission staff also issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, “Income Taxes.” As a result, we remeasured our deferred tax assets, liabilities and related valuation allowances in 2017. This remeasurement yielded a 2017 benefit of approximately $7.0 million due to the lower income tax rate. See Note 20 for additional information. Our net deferred income tax liability was approximately $800,000 at December 29, 2019. 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 and adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures. We recognized decreases in income tax expense of $400,000 and $1.7 million in 2019 and 2017, respectively, associated with the finalization of certain income tax matters. There were no amounts recognized in 2018 as there were no related events. See Note 20 for additional information. Insurance Reserves Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability, property, and health insurance coverage provided to our employees are funded by the Company up to certain retention levels under our retention programs. Retention limits generally range from $100,000 to $1.0 million. Losses are accrued based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our claims loss experience. The determination of the recorded insurance reserves is highly judgmental and complex due to the significant uncertainty in the potential value of reported claims and the number and potential value of incurred but not reported claims, the application of significant judgment in making those estimates and the use of various actuarial valuation methods. The estimated insurance claims losses could be significantly affected should the frequency or ultimate cost of claims differ significantly from historical trends used to estimate the insurance reserves recorded by the Company. The Company records estimated losses above retention within its reserve with a corresponding receivable for expected amounts due from insurance carriers. Derivative Financial Instruments We recognize all derivatives on the balance sheet at fair value. At inception and on an ongoing basis, we assess whether each derivative that qualifies for hedge accounting continues to be highly effective in offsetting changes in the cash flows of the hedged item. If the derivative meets the hedge criteria as defined by certain accounting standards, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of assets, liabilities or firm commitments through earnings or recognized in accumulated other comprehensive income/(loss) until the hedged item is recognized in earnings. In April 2019, we reduced the notional value of our swaps by $50.0 million as a result of paying down a substantial portion of debt under our Revolving Facility using the proceeds received from the sale of our Series B Convertible Preferred Stock (the “Series B Preferred Stock”). The termination of $50.0 million of notional swap value was not significant to our results of operations. We recognized (loss) income of ($10.8) million (($8.3) million after tax) in 2019, $4.3 million ($3.2 million after tax) in 2018, and $1.4 million ($0.9 million after tax) in 2017 in other comprehensive (loss)/income for the net change in the fair value of our interest rate swaps. See Note 14 for additional information on our debt and credit arrangements. Noncontrolling Interests At December 29, 2019, the Company has four joint ventures consisting of 192 restaurants, which have noncontrolling interests. Consolidated net income is required to be reported separately at amounts attributable to both 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 Consolidated Statements of Operations of income attributable to the noncontrolling interest holder. The following summarizes the redemption feature, location and related accounting within the Consolidated Balance Sheets for these four joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value See Notes 11 and 12 for additional information regarding noncontrolling interests and divestitures. Foreign Currency Translation The local currency is the functional currency for each of our foreign subsidiaries. Revenues and expenses are translated into U.S. dollars using monthly average exchange rates, while assets and liabilities are translated using year-end exchange rates and historical rates. The resulting translation adjustments are included as a component of accumulated other comprehensive loss, net of income taxes. In 2018, the Company refranchised 34 Company-owned restaurants and a QC Center located in China. In conjunction with the transaction, approximately $1.3 million of accumulated other comprehensive income and $300,000 associated deferred tax related to foreign currency translation were reversed. See Note 12 for additional information. Recent Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP, including industry-specific requirements, and provides companies with a single revenue recognition framework for recognizing revenue from contracts with customers. In March and April 2016, the FASB issued additional amendments to Topic 606. The Company adopted Topic 606 as of January 1, 2018 under the modified retrospective transition method. Certain Tax Effects from Accumulated Other Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”)” (“ASU 2018-02”), which allows for an entity to reclassify disproportionate income tax in AOCI caused by the Tax Act to retained earnings. The guidance was effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASU 2018-02 in the first quarter of 2018 by electing to reclassify the income tax effects from AOCI to retained earnings. Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” The Company adopted Topic 842 as of December 31, 2018 (the first day of fiscal 2019) under the modified retrospective transition method. See Notes 3 and 4 for additional information. 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 annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. We will adopt the standard effective December 30, 2019. The Company is finalizing its assessment of the impact of adopting this standard on our consolidated financial statements. We do not expect the adoption of ASU 2016-13 to result in a material change to our consolidated financial statements. |
Adoption of ASC 842, "Leases"
Adoption of ASC 842, "Leases" | 12 Months Ended |
Dec. 29, 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) 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. These leases are classified as operating leases and are included in the Operating lease right-of-use assets, Current operating lease liabilities, and Long-term operating lease liabilities captions on the Company’s Consolidated Balance Sheet. There were no finance leases at the date of adoption of ASC 842. 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 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 not be recorded on the balance sheet for select asset classes. Adoption of Topic 842 did not have a material impact on our 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 expenses. Variable lease payments are expensed as incurred. The effects of the changes made to the Company’s Consolidated Balance Sheet as of December 31, 2018 (the first day of fiscal 2019) for the adoption of Topic 842 are 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: Operating lease right-of-use assets - 161,027 (b) 161,027 Liabilities and stockholders' deficit Current liabilities: Current operating lease liabilities - 25,348 (c) 25,348 Long-term liabilities: Long-term operating 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 operating lease 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 unamortized 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 unamortized tenant incentive liabilities, which have been reclassified to operating lease right-of-use assets. Changes in lessor accounting under the new standard did not have a significant financial impact on the recognition of rental income. |
Leases
Leases | 12 Months Ended |
Dec. 29, 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 have 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 All leases entered into prior to the adoption of ASC 842 were classified as operating leases. During 2019, the Company entered into new domestic tractor and trailer leases. These leases were classified as finance leases and were included in the Finance lease right-of-use assets, net, Current finance lease liabilities, and Long-term finance lease liabilities captions on the Company’s Consolidated Balance Sheet. 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. An operating lease right-of-use asset is amortized on a straight-line basis over the lease term and is recognized as a single lease cost against the operating lease liability. A finance lease right-of-use asset is amortized on a straight-line basis, with interest costs reported separately, over the lesser of the useful life of the leased asset or lease term. 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 right-of-use assets and lease liabilities on the Consolidated Balance Sheet as of December 29, 2019 and the date of adoption on December 31, 2018 (in thousands): December 29, December 31, Leases Classification 2019 2018 Assets Finance lease assets, net Finance lease right-of-use assets, net $ 9,383 $ — Operating lease assets, net Operating lease right-of-use assets 148,229 161,027 Total lease assets $ 157,612 $ 161,027 Liabilities Current finance lease liabilities Current finance lease liabilities $ 1,789 $ — Current operating lease liabilities Current operating lease liabilities 23,226 25,348 Noncurrent finance lease liabilities Long-term finance lease liabilities 7,629 — Noncurrent operating lease liabilities Long-term operating lease liabilities 125,297 137,511 Total lease liabilities $ 157,941 $ 162,859 Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense is comprised of operating and finance 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 year ended December 29, 2019 is as follows: Year Ended (in thousands) December 29, 2019 Finance lease: Amortization of right-of-use assets $ 815 Interest on lease liabilities 251 Operating lease: Operating lease cost 42,487 Short-term lease cost 2,704 Variable lease cost 9,558 Total lease costs $ 55,815 Sublease income (10,879) Total lease costs, net of sublease income $ 44,936 Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 29, 2019 are as follows (in thousands): Fiscal Year Finance Operating Expected 2020 $ 2,323 $ 32,809 $ 9,412 2021 2,323 32,636 9,109 2022 2,323 27,325 8,752 2023 2,323 21,783 8,446 2024 1,507 17,438 8,168 Thereafter 55 61,629 44,364 Total future minimum lease payments 10,854 193,620 88,251 Less imputed interest (1,436) (45,097) — Total present value of Lease Liabilities $ 9,418 $ 148,523 $ 88,251 Future minimum lease payments and sublease income under contractually-obligated leases as of December 30, 2018 were as follows (in thousands): Fiscal Year Operating 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 Lessor Operating Leases We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At December 29, 2019, we leased and subleased approximately 380 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 result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 122 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of December 29, 2019, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $19.2 million. This contingent liability is not included in the Consolidated Balance Sheet or future minimum lease obligation. The fair value of the guarantee is not material. There were no leases recorded between related parties. Supplemental Cash Flow & Other Information Supplemental cash flow information related to leases for the year ended December 29, 2019 is as follows: Year Ended (in thousands, except for weighted-average amounts) December 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 269 Financing cash flows from finance leases 781 Operating cash flows from operating leases (a) 40,152 Right-of-use assets obtained in exchange for new finance lease liabilities 10,199 Right-of-use assets obtained in exchange for new operating lease liabilities 20,903 Cash received from sublease income 10,139 Weighted-average remaining lease term (in years): Finance leases 4.75 Operating leases 7.00 Weighted-average discount rate: Finance leases 6.38% Operating leases 6.94% (a) Included within the change in Other assets and liabilities within the Consolidated Statement of Cash Flows offset by non-cash operating lease asset amortization and liability accretion. |
Papa John's Marketing Fund, Inc
Papa John's Marketing Fund, Inc. | 12 Months Ended |
Dec. 29, 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 Consolidated Balance Sheets were as follows (in thousands): December 29, December 30, 2019 2018 Assets Current assets: Cash and cash equivalents $ 4,569 $ 13,790 Accounts receivable, net 11,196 10,264 Income tax receivable 103 73 Prepaid expenses 1,316 441 Other current assets - 1 Total current assets 17,184 24,569 Deferred income taxes, net 410 381 Total assets $ 17,594 $ 24,950 Liabilities Current liabilities: Accounts payable $ 764 $ 20 Accrued expenses and other current liabilities 14,287 23,455 Deferred revenue current 3,252 3,579 Debt - 9 Total current liabilities 18,303 27,063 Deferred revenue 2,094 2,571 Total liabilities $ 20,397 $ 29,634 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 29, 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 correction of the immaterial error regarding 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 $ (21,527) $ (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 effective as of the first quarter of 2018, as discussed in more detail in Note 2. 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 Consolidated Statements of Operations. The new guidance requires these advertising fund contributions and expenditures to be reported on a gross basis in the Consolidated Statements of Operations. 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 years ended December 29, 2019 and December 30, 2018, the Company recognized $34.0 million and $16.3 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 December 29, 2019 December 30, 2018 Change Deferred revenue $ 20,346 $ 23,272 $ (2,926) Customer loyalty program 12,049 18,019 (5,970) Total contract liabilities $ 32,395 $ 41,291 $ (8,896) 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. As of December 29, 2019 and December 30, 2018, the contract assets were approximately $6.0 million and $6.6 million, respectively. For the years ended December 29, 2019 and December 30, 2018, revenue was reduced approximately $3.5 million and $4.0 million, respectively, 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 $ 2,372 $ 2,174 $ 1,966 $ 1,681 $ 1,433 $ 3,456 $ 13,082 Approximately $1.9 million of area development fees related to unopened stores and international 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 $5.3 million, included in Deferred revenue, will be recognized as Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations. As of December 29, 2019 and December 30, 2018, the amount allocated to the Papa Rewards loyalty program is $12.0 million and $18.0 million, respectively, and is reflected in the 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 or expire, which is expected to occur within the next year. The Company applies the practical expedient in ASC 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) | 12 Months Ended |
Dec. 29, 2019 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | 7. Stockholders’ Equity (Deficit) Shares Authorized and Outstanding The Company has authorized 5.0 million shares of preferred stock, 100.0 million shares of common stock, and 260,000 shares of Series B Preferred Stock. The Company’s outstanding shares of common stock were 31.9 million shares at December 29, 2019 and 31.4 million shares at December 30, 2018. There were 252,530 shares of Series B Preferred Stock outstanding at December 29, 2019, and none outstanding as of December 30, 2018. Share Repurchase Program Our Board of Directors previously 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. We repurchased 2.7 million shares of our common stock for an aggregate purchase price of $158.0 million in 2018 and 3.0 million shares of our common stock for an aggregate purchase price of $209.6 million in 2017. We did not repurchase any shares of our common stock in 2019. Funding for the share repurchase program was provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents. Dividends The Company recorded dividends of approximately $40.9 million for the year ended December 29, 2019 consisting of the following: ● $28.6 million paid to common stockholders ( $0.90 per share); ● $4.3 million in common stock “pass-through” dividends paid to Series B Preferred Stockholders on an as-converted basis ( $0.90 per share); ● $5.7 million in preferred dividends on the Series B Preferred Stock ( 3.6% of the investment per annum); and ● $2.3 million in preferred dividends on the Series B Preferred Stock were declared with a record date of December 16, 2019 and paid on December 30, 2019. The Company paid common stock dividends of $29.0 million in 2018 and $30.7 million in 2017. On January 29, 2020 , our Board of Directors declared a first quarter dividend of $0.225 per share of common stock (approximately $7.3 million was paid to common stockholders and $1.1 million was paid as “pass through” dividends to holders of Series B Preferred Stock on an “as converted basis”). The first quarter dividend on outstanding shares of Series B Preferred Stock was also declared on January 29, 2020 . The common stock dividend was paid on February 21, 2020 to stockholders of record as of the close of business on February 10, 2020 . The first quarter preferred dividend of $2.3 million will be paid to holders of Series B Preferred Stock on April 1, 2020 . Stockholder Rights Plan On April 30, 2019, the Company’s stockholders ratified the adoption by the Board of Directors of the Rights Agreement, dated as of July 22, 2018, as amended on February 3, 2019, March 6, 2019, and October 23, 2019 (as amended, the “Rights Agreement”) . The original Rights Agreement adopted by the Board of Directors on July 22, 2018 had an expiration date of July 22, 2019 and a beneficial ownership trigger threshold of 15% in connection with the sale and issuance of the to Starboard (as defined below in Note 8), the original Rights Agreement was amended to exempt Starboard from being considered an “Acquiring Person” under the Rights Agreement solely as a result of its beneficial ownership of extend the term of the Rights Agreement to March 6, 2022, increase the beneficial ownership trigger threshold at which a person becomes an acquiring person from 15% to 20% , except for a “grandfathered person” provision, and make certain other changes. The Rights Agreement was further amended on October 23, 2019 to eliminate the “grandfathered person” provision since there are no stockholders that currently beneficially own 20% or more of the Company’s common stock. |
Series B Convertible Preferred
Series B Convertible Preferred Stock | 12 Months Ended |
Dec. 29, 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 (the “Securities Purchase Agreement”) with certain funds affiliated with, or managed by, 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 Preferred Stock, 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 cash proceeds from the issuance of the Series B Preferred Stock to Starboard was bifurcated between the option and preferred stock at the time of issuance based on a relative fair value allocation approach. 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 may or may not be exercised, the stock is considered contingently redeemable and, accordingly, is classified as temporary equity of $251.1 million on the Consolidated Balance Sheet as of December 29, 2019. This amount is reported net of $7.5 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 fair 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 Consolidated Statement of Operations with no associated tax benefit. Over the initial eight-year term, the $251.1 million investment will be accreted to the related redemption value of approximately $252.5 million as an adjustment to Retained Earnings. The following summarizes changes to our Series B Preferred Stock in 2019 (in thousands): Balance at December 30, 2018 $ — Issuance of preferred stock 252,530 One-time mark-to-market adjustment 5,914 Issuance costs (7,527) Accretion 216 Balance at December 29, 2019 $ 251,133 The Company paid dividends of approximately $10.0 million to holders of Series B Preferred Stock for the year ended December 29, 2019, which consisted of a $5.7 million preferred dividend and a $4.3 million “pass-through” dividend on an as-converted basis to common stock. The Company also declared a $2.3 million preferred dividend with a record date of December 16, 2019, which was paid on December 30, 2019. Dividends paid to holders of Series B Preferred Stock and the related accretion are subtracted from net income attributable to the Company in determining net (loss) income attributable to common stockholders. See Note 9 for additional information. |
(Loss) Earnings per Share
(Loss) Earnings per Share | 12 Months Ended |
Dec. 29, 2019 | |
(Loss) Earnings per Share | |
(Loss) Earnings per Share | 9. (Loss) Earnings per Share We compute (loss) earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines (loss) 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 with common stock. Under the two-class method, total dividends provided to the holders of Series B Preferred Stock, including common dividends and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net income attributable to common stockholders. Additionally, any accretion to redemption value is treated as a deemed dividend in the two-class EPS calculation. Additionally, in accordance with ASC 480, “Distinguishing Liabilities from Equity”, the increase in the redemption value for the noncontrolling interest of one of our prior joint ventures reduced income attributable to common shareholders (and a decrease in redemption value increases income attributable to common shareholders). This joint venture was divested during 2018 and thus no change in redemption value occurred in 2019 or 2018. The change in noncontrolling interest redemption value was $1.4 million for the year ended December 31, 2017. See Note 11 for additional information. Basic (loss) earnings per common share are computed by dividing net income attributable to common shareholders by the weighted-average common shares outstanding. Diluted (loss) earnings per common share are computed by dividing the net (loss) income attributable to common shareholders by the diluted weighted average common shares outstanding. Diluted weighted average common shares outstanding consist of basic weighted average common shares outstanding plus weighted average awards outstanding under our equity compensation plans, which are dilutive securities. The calculations of basic (loss) earnings per common share and diluted (loss) earnings per common share for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 are as follows (in thousands, except per share data): 2019 2018 2017 Basic (loss) earnings per common share: Net income attributable to the Company $ 4,866 $ 2,474 $ 102,292 Preferred stock dividends and accretion (12,499) — — Change in noncontrolling interest redemption value — — 1,419 Net income attributable to participating securities — — (423) Net (loss) income attributable to common shareholders $ (7,633) $ 2,474 $ 103,288 Basic weighted average common shares outstanding 31,632 32,083 36,083 Basic (loss) earnings per common share $ (0.24) $ 0.08 $ 2.86 Diluted (loss) earnings per common share: Net (loss) income attributable to common shareholders $ (7,633) $ 2,474 $ 103,288 Weighted average common shares outstanding 31,632 32,083 36,083 Dilutive effect of outstanding equity awards (a) — 216 439 Diluted weighted average common shares outstanding (b) 31,632 32,299 36,522 Diluted (loss) earnings per common share $ (0.24) $ 0.08 $ 2.83 (a) Shares subject to options to purchase common stock with an exercise price greater than the average market price for the year were not included in the computation of diluted earnings per common share because the effect would have been antidilutive. The weighted average number of shares subject to antidilutive options was 1.2 million in 2018 and 278,000 in 2017. (b) The Company had 252,530 shares of Series B Preferred Stock outstanding as of December 29, 2019. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net 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. See Note 11 for additional information regarding our noncontrolling interests and Note 23 for equity awards, including restricted stock. |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 12 Months Ended |
Dec. 29, 2019 | |
Fair Value Measurements and Disclosures | |
Fair Value Measurements and Disclosures | 10. 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 amount 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 and liabilities that were measured at fair value on a recurring basis as of December 29, 2019 and December 30, 2018 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 December 29, 2019 Financial assets: Cash surrender value of life insurance policies (a) $ 33,220 $ 33,220 $ — $ — Financial liabilities: Interest rate swaps (b) 6,168 — 6,168 — 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”). There were no transfers among levels within the fair value hierarchy during fiscal 2019 or 2018. |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 29, 2019 | |
Noncontrolling Interests | |
Noncontrolling Interests | 11. Noncontrolling Interests As of December 29, 2019, there were 192 restaurants that comprise four joint venture arrangements as compared to 183 restaurants in three joint venture arrangements at December 30, 2018. In the second quarter of 2019, the Company entered into a new joint venture. See Note 21 for more information. We are required to report the consolidated net income 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 Consolidated Statements of Operations of income attributable to the noncontrolling interest holders. The income before income taxes attributable to these joint ventures for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 were as follows (in thousands): 2019 2018 2017 Papa John’s International, Inc. $ 2,560 $ 5,794 $ 7,181 Noncontrolling interests 791 1,599 4,233 Total income before income taxes $ 3,351 $ 7,393 $ 11,414 As of December 29, 2019, the noncontrolling interest holder of two joint ventures have the option to require the Company to purchase their interest, though not currently redeemable. Since redemption of the noncontrolling interests is outside of the Company’s control, the noncontrolling interests are presented in the caption “Redeemable noncontrolling interests” in the Consolidated Balance Sheets. The following summarizes changes in our redeemable noncontrolling interests in 2019 and 2018 (in thousands): Balance at December 31, 2017 $ 6,738 Net loss (274) Distributions (1,000) Balance at December 30, 2018 $ 5,464 Net loss (519) Contributions 840 Distributions — Balance at December 29, 2019 $ 5,785 |
Divestitures
Divestitures | 12 Months Ended |
Dec. 29, 2019 | |
Divestitures | |
Divestitures | 12. Divestitures In the third quarter of 2019, the Company refranchised 19 Company-owned restaurants in Macon, Georgia for $5.6 million in cash proceeds. The sale resulted in a pre-tax gain of $1.7 million shown in Refranchising gains (losses), net on the Consolidated Statement of Operations. In connection with the divestiture, we wrote off an allocation of the goodwill related to the domestic Company-owned restaurants reporting unit of $2.0 million, which represents the pro rata fair value of the refranchised restaurants in comparison to the total fair value of the Company-owned restaurants reporting unit. In the fourth quarter of 2019, the Company completed the refranchising of 23 Company-owned restaurants in South Florida for $7.5 million in cash proceeds. The sale resulted in a pre-tax gain of $2.9 million shown in Refranchising gains (losses), net on the Consolidated Statement of Operations. In connection with the divestiture, we wrote off an allocation of the goodwill related to the domestic Company-owned restaurants reporting unit of $2.4 million, which represents the pro rata fair value of the refranchised restaurants in comparison to the total fair value of the Company-owned restaurants reporting unit. Additionally, the Company completed the refranchising of three Company-owned restaurants during the fourth quarter of 2019. The refranchising gains (losses), net were not material to the results of our operations. In the first quarter of 2018, the Company refranchised 31 restaurants owned through a joint venture in the Denver, Colorado market. The Company held a 60% ownership share in the restaurants being refranchised. The noncontrolling interest portion of the joint venture arrangement was previously recorded at redemption value within the Consolidated Balance Sheet. Total consideration for the asset sale of the restaurants was $4.8 million, consisting of cash proceeds of $3.7 million, including cash paid for various working capital items, and notes financed by Papa John’s for $1.1 million. In connection with the divestiture, we wrote off an allocation of the goodwill related to the domestic Company-owned restaurants reporting unit of $700,000, which represents the pro rata fair value of the refranchised restaurants in comparison to the total fair value of the Company-owned restaurants’ reporting unit. We recorded a pre-tax refranchising gain of approximately $690,000. In the second quarter of 2018, the Company refranchised 34 Company-owned restaurants and a quality control center located in Beijing and Tianjin, China. The Company recorded an impairment of $1.7 million in 2017 associated with the China operations. We recorded a pre-tax loss of approximately $1.9 million associated with the sale of the restaurants and reversed $1.3 million of accumulated other comprehensive income related to foreign currency translation as part of the disposal. The $1.9 million pre-tax loss in 2018 and impairment recorded in 2017 are recorded in refranchising and impairment gains (losses), net on the Consolidated Statements of Operations. In addition, we also had $2.4 million of additional tax expense associated with the China refranchise in the second quarter of 2018. This additional tax expense is primarily attributable to the required recapture of operating losses previously taken by the Company. In the third quarter of 2018, the Company completed the refranchising of 31 stores owned through a joint venture in the Minneapolis, Minnesota market. The Company held a 70% ownership share in the restaurants being refranchised. Total consideration for the asset sale of the restaurants was $3.75 million. In connection with the divestiture, we wrote off an allocation of the goodwill related to the domestic Company-owned restaurants reporting unit by approximately $600,000, which represents the pro rata fair value of the refranchised restaurants in comparison to the total fair value of the Company-owned restaurants’ reporting unit. We recorded a pre-tax refranchising gain of approximately $930,000 associated with the sale of the restaurants. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill. | |
Goodwill | 13. Goodwill The following summarizes changes in the Company’s goodwill, by reportable segment (in thousands): Domestic Company- owned Restaurants International (a) All Others Total Balance as of December 31, 2017 $ 70,048 $ 16,408 $ 436 $ 86,892 Divestitures (b) (1,359) — — (1,359) Foreign currency adjustments — (1,017) — (1,017) Balance as of December 30, 2018 68,689 15,391 436 84,516 Divestitures (c) (4,435) — — (4,435) Foreign currency adjustments — 259 — 259 Balance as of December 29, 2019 $ 64,254 $ 15,650 $ 436 $ 80,340 (a) The international goodwill balances for all years presented are net of accumulated impairment of $2.3 million associated with our PJUK reporting unit. (b) Includes 62 restaurants located in two domestic markets. (c) Includes 46 restaurants located primarily in two domestic markets. For fiscal years 2019 and 2017, we performed a qualitative impairment analysis for our domestic Company-owned restaurants, Preferred Marketing Solutions, China, and PJUK reporting units as part of our annual impairment assessment. For fiscal year 2018, we performed a quantitative analysis on each reporting unit. No impairment charges were recorded upon the completion of our goodwill impairment tests in 2019, 2018 and 2017. |
Debt and Credit Arrangements
Debt and Credit Arrangements | 12 Months Ended |
Dec. 29, 2019 | |
Debt and Credit Arrangements | |
Debt and Credit Arrangements | 14. Debt and Credit Arrangements Long-term debt, net consists of the following (in thousands): December 29, December 30, 2019 2018 Outstanding debt $ 370,000 $ 625,009 Unamortized debt issuance costs (2,710) (3,874) Current portion of long-term debt (20,000) (20,009) Total long-term debt, less current portion, net $ 347,290 $ 601,126 The Company has a secured revolving credit facility with available borrowings of $400.0 million (the “Revolving Facility”), of which $10.0 million was outstanding as of December 29, 2019, and a secured term loan facility with an outstanding balance of $360.0 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 LIBOR plus a margin ranging from 125 to 250 basis points or a base rate (generally determined by a prime rate, federal funds rate or LIBOR 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. 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 December 29, 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 owed under the PJI Facilities. Our outstanding debt of $370.0 million at December 29, 2019 under the PJI Facilities was composed of $360.0 million outstanding under the Term Loan Facility and $10.0 million outstanding under the Revolving Facility. Including outstanding letters of credit, the Company’s remaining availability under the PJI Facilities at December 29, 2019 was approximately $343.8 million. As of December 29, 2019, the Company had approximately $2.7 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 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. In April 2019, we reduced the notional value of our swaps by $50.0 million as a result of paying down a substantial portion of debt under our Revolving Facility using the proceeds received from the sale of Series B Preferred Stock. The termination of $50.0 million of notional swap value was not significant to our results of operations. As of December 29, 2019, we have the following interest rate swap agreements with a total notional value of $350 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 $ 50 million 2.00 % The gain or loss on the swaps is recognized in Accumulated other comprehensive loss 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. The following table provides information on the location and amounts of our swaps in the accompanying Consolidated Financial Statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value December 29, December 30, Balance Sheet Location 2019 2018 Other current and long-term assets $ — $ 4,905 Other current and long-term liabilities $ 6,168 $ — The effect of derivative instruments on the accompanying Consolidated Financial Statements is as follows (in thousands): Location of Gain Amount of Gain Derivatives - Amount of Gain or or (Loss) or (Loss) Total Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps: 2019 $ (8,303) Interest expense $ 660 $ (20,593) 2018 $ 3,222 Interest expense $ (22) $ (25,673) 2017 $ 891 Interest expense $ (421) $ (11,283) The weighted average interest rates on our PJI Facilities, including the impact of the interest rate swap agreements, were 4.1% , 3.9% , and 2.7% in fiscal 2019, 2018, and 2017, respectively. Interest paid, including payments made or received under the swaps, was $18.1 million in 2019, $23.5 million in 2018, and $10.8 million in 2017. As of December 29, 2019, the portion of the aggregate $6.2 million interest rate swap liability that would be reclassified into net interest expense during the next twelve months approximates $2.3 million. 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 September 30, 2020. 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 4.1%, 3.4%, and 2.5% in fiscal 2019, 2018, and 2017, respectively. There was no balance outstanding under the PJMF Revolving Facility as of December 29, 2019. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the PJI Credit Agreement. |
Net Property and Equipment
Net Property and Equipment | 12 Months Ended |
Dec. 29, 2019 | |
Net Property and Equipment | |
Net Property and Equipment | 15. Net Property and Equipment Net property and equipment consists of the following (in thousands): December 29, December 30, 2019 2018 Land $ 33,349 $ 33,833 Buildings and improvements 91,514 91,665 Leasehold improvements 121,127 125,192 Equipment and other 423,556 402,991 Construction in progress 6,860 11,491 Total property and equipment 676,406 665,172 Accumulated depreciation and amortization (464,665) (438,278) Net property and equipment $ 211,741 $ 226,894 |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 29, 2019 | |
Notes Receivable | |
Notes Receivable | 16. Notes Receivable Selected domestic and international franchisees have borrowed funds from the Company, principally for use in the construction and development of their restaurants. In 2019 and 2018, the Company also provided certain franchisees with royalty payment plans. We have also entered into loan agreements with certain franchisees that purchased restaurants from us or from other franchisees. Loans outstanding were approximately $40.8 million and $28.8 million on a consolidated basis as of December 29, 2019 and December 30, 2018, respectively, net of allowance for doubtful accounts. The majority of notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchisee. Interest income recorded on franchisee loans was approximately $800,000 in 2019, $750,000 in 2018 and $579,000 in 2017 and is reported in investment income in the accompanying Consolidated Statements of Operations. Based on our review of certain borrowers’ economic performance, underlying collateral value or guarantees, we established allowances of $3.6 million and $3.4 million as of December 29, 2019 and December 30, 2018, respectively, for potentially uncollectible notes receivable. The following summarizes changes in our notes receivable allowance for doubtful accounts (in thousands): Balance as of December 31, 2017 $ 1,047 Recovered from costs and expenses (393) Additions, net of notes written off 2,715 Balance as of December 30, 2018 3,369 Recovered from costs and expenses (77) Additions, net of notes written off 280 Balance as of December 29, 2019 $ 3,572 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 29, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 17. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): December 29, December 30, 2019 2018 Insurance reserves, current $ 32,028 $ 33,769 Salaries, benefits and bonuses 22,659 12,979 Marketing 15,930 27,746 Customer loyalty program 12,049 18,019 Purchases 10,768 11,336 Consulting and professional fees 7,180 8,693 Rent 4,274 3,932 Legal costs 3,487 2,093 Deposits 2,026 1,415 Utilities 405 1,478 Other 9,760 7,707 Total $ 120,566 $ 129,167 |
Other Long-term Liabilities
Other Long-term Liabilities | 12 Months Ended |
Dec. 29, 2019 | |
Other Long-term Liabilities | |
Other Long-term Liabilities | 18. Other Long-term Liabilities Other long-term liabilities consist of the following (in thousands): December 29, December 30, 2019 2018 Insurance reserves $ 45,151 $ 42,144 Deferred compensation plan 33,220 27,796 Accrued rent (a) — 6,461 Other 6,556 2,923 Total $ 84,927 $ 79,324 (a) See Note 2 “Significant Accounting Policies” for Leases and Note 3 “Adoption of ASC 842, Leases” for additional information regarding the change in accounting for accrued rent, which is now classified against right-of-use assets for operating leases. |
Other General Expenses
Other General Expenses | 12 Months Ended |
Dec. 29, 2019 | |
Other General Expenses | |
Other General Expenses | 19. Other General Expenses Other general expenses are included within General and administrative expenses and primarily consist of the following (in thousands): Year Ended December 29, December 30, December 31, 2019 2018 2017 Provision (credit) for uncollectible accounts and notes receivable (a) $ 2,764 $ 3,338 $ (1,441) Loss on disposition of fixed assets 1,130 2,233 2,493 Papa Rewards (b) - - 1,046 Franchise support initiative (c) - 34 2,986 Other (income) expense (915) (1,725) 343 Other general expenses 2,979 3,880 5,427 Special charges (d)(e) 41,322 35,316 - Administrative expenses (f)(g) 179,159 154,338 145,439 General and administrative expenses $ 223,460 $ 193,534 $ 150,866 (a) Bad debt recorded on accounts receivable and notes receivable. (b) Online customer loyalty program costs in 2017 which are now recorded as a change in Domestic Company-owned restaurant revenue under Topic 606. (c) Franchise incentives include incentives to franchisees for opening new restaurants. In 2018, the Company adopted Topic 606 with updated accounting guidelines for new store equipment incentives, which are now recorded as a reduction of commissary revenues. (d) The Special charges for the year ended December 29, 2019 include the following: (1) $27.5 million of marketing fund investments; (2) $5.9 million of legal and advisory fees primarily associated with the review of a wide range of strategic opportunities that culminated in a strategic investment in the Company by affiliates of Starboard; (3) $5.6 million related to a one-time mark-to-market adjustment from the increase in value of the Starboard option to purchase Series B Preferred Stock that culminated in the purchase of $50.0 million of Series B Preferred Stock in late March. See Note 8 for additional information; and (4) $2.4 million that includes severance costs for the Company’s former CEO as well as costs related to the termination of a license agreement for intellectual property no longer being utilized. (e) The Special charges for the year ended December 30, 2018 include the following: (1) $10.0 million of marketing fund investments; (2) $19.5 million of advisory and legal costs primarily associated with the review of a wide range of strategic opportunities that culminated in a strategic investment in the Company by affiliates of Starboard and a third-party audit of the culture at Papa John’s commissioned by a special committee of the Board of Directors; and (3) $5.8 million of reimaging costs at nearly all domestic restaurants including costs to replace or write-off certain branded assets. (f) The increase in administrative expenses of $24.8 million for the year ended December 29, 2019 compared to the prior year comparable periods was primarily due to higher management incentive costs, including equity compensation, and higher legal and professional fees not associated with Special charges. (g) The increase in administrative expenses of $8.9 million for the year ended December 29, 2018 compared to the prior year comparable period was mainly due to higher technology initiative costs and a $1.5 million contribution to our newly formed Papa John’s Foundation, a separate legal entity that is not consolidated in the Company’s results. In addition, administrative expenses increased due to higher legal and professional fees not associated with the Special charges. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 29, 2019 | |
Income Taxes | |
Income Taxes | 20. Income Taxes The following table presents the domestic and foreign components of income (loss) before income taxes for 2019, 2018 and 2017 (in thousands): 2019 2018 2017 Domestic (loss) income $ (16,065) $ (9,665) $ 122,828 Foreign income 21,111 16,362 17,514 Total income $ 5,046 $ 6,697 $ 140,342 Included within the foreign income before income taxes above is $15.6 million, $12.1 million, and $3.0 million of foreign sourced income subject to foreign withholding taxes for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. A summary of the (benefit) provision for income tax follows (in thousands): 2019 2018 2017 Current: Federal $ (2,734) $ (5,262) $ 28,951 Foreign 5,077 4,736 4,602 State and local 810 1,530 (234) Deferred (3,764) 1,620 498 Total income taxes $ (611) $ 2,624 $ 33,817 Significant deferred tax assets (liabilities) follow (in thousands): December 29, December 30, 2019 2018 Accrued liabilities $ 16,686 $ 16,828 Accrued bonuses 2,308 724 Other assets and liabilities 16,244 10,705 Equity awards 7,196 5,862 Lease liability 30,756 — Other 2,418 2,482 Net operating losses 8,205 1,555 Foreign tax credit carryforwards 10,049 7,230 Total deferred tax assets 93,862 45,386 Valuation allowances (17,303) (8,183) Total deferred tax assets, net of valuation allowances 76,559 37,203 Deferred expenses (9,521) (5,970) Accelerated depreciation (27,299) (24,239) Goodwill (9,510) (12,645) Right-of-use asset (30,257) — Other (782) (1,064) Total deferred tax liabilities (77,369) (43,918) Net deferred liability $ (810) $ (6,715) The Company had approximately $6.6 million of state deferred tax assets primarily related to state net operating loss carryforwards as of December 29, 2019. Our ability to utilize these state deferred tax assets is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a full valuation allowance of $6.6 million for these state deferred tax assets as we believe realization based on the more-likely-than-not criteria has not been met as of December 29, 2019. The Company had approximately $6.2 million and $5.3 million of foreign net operating loss and capital loss carryovers as of December 29, 2019 and December 30, 2018, respectively. The Company had approximately $0.5 million and $0.6 million of valuation allowances primarily related to the foreign capital losses as of December 29, 2019 and December 30, 2018, respectively. A substantial majority of our foreign net operating losses do not have an expiration date. In addition, the Company had approximately $10.0 million in foreign tax credit carryforwards as of December 29, 2019 that expire ten years from inception in years 2025 through 2028. Our ability to utilize these foreign tax credit carryforwards is dependent on our ability to generate foreign earnings in future years sufficient to claim foreign tax credits in excess of foreign taxes paid in those years. The Company provided a full valuation allowance of $10.0 million for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 29, 2019. The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 is as follows in both dollars and as a percentage of income before income taxes ($ in thousands): 2019 2018 2017 Income Tax Income Income Tax Income Income Tax Income Expense Tax Rate Expense Tax Rate Expense Tax Rate Tax at U.S. federal statutory rate $ 1,060 21.0 % $ 1,406 21.0 % $ 49,120 35.0 % State and local income taxes 79 1.6 % 150 2.2 % 2,432 1.7 % Foreign income taxes 5,058 100.2 % 4,879 72.9 % 5,306 3.8 % Income of consolidated partnerships attributable to noncontrolling interests (177) (3.5) % (371) (5.6) % (1,554) (1.1) % Non-qualified deferred compensation plan (income) loss (1,260) (25.0) % 483 7.2 % (1,236) (0.9) % Excess tax (benefits) expense on equity awards (212) (4.2) % 447 6.7 % (1,879) (1.4) % Preferred stock option mark-to-market adjustment 1,338 26.5 % — — % — — % Remeasurement of deferred taxes — — % — — % (7,020) (5.0) % Tax credits (6,128) (121.4) % (6,945) (103.7) % (6,909) (4.9) % Disposition of China — — % 4,118 61.5 % — — % Other (369) (7.3) % (1,543) (23.0) % (4,443) (3.1) % Total $ (611) (12.1) % $ 2,624 39.2 % $ 33,817 24.1 % Cash for income taxes (received) paid were ($6.2) million in 2019, $14.0 million in 2018 and $37.2 million in 2017. On December 22, 2017, the Tax Cuts and Jobs Act, (the “Tax Act”) was signed into law. The Tax Act contained substantial changes to the Internal Revenue Code, including a reduction of the corporate tax rate from 35% to 21% effective January 1, 2018. Upon enactment, 2017 deferred tax assets and liabilities were remeasured. This remeasurement yielded a benefit of approximately $7.0 million in the fourth quarter of 2017. At December 30, 2018, the Company had completed its analysis of the Tax Act. See Note 2 for additional information. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2015. The Company is currently undergoing examinations by various tax authorities. The Company anticipates that the finalization of these current examinations and other issues could result in a decrease in the liability for unrecognized tax benefits (and a decrease of income tax expense) of approximately $86,000 during the next 12 months. The Company had $1.6 million of unrecognized tax benefits at December 29, 2019 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded as an other long-term liability (in thousands): Balance at December 31, 2017 $ 2,028 Additions for tax positions of prior years 510 Reductions for tax positions of prior years (515) Reductions for lapse of statute of limitations — Balance at December 30, 2018 2,023 Additions for tax positions of prior years 179 Reductions for tax positions of prior years (623) Reductions for lapse of statute of limitations — Balance at December 29, 2019 $ 1,579 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company’s 2019 and 2018 income tax (benefit) expense includes interest (benefit) expense of ($11,000) and $39,000, respectively. The Company has accrued approximately $154,000 and $165,000 for the payment of interest and penalties as of December 29, 2019 and December 30, 2018, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 29, 2019 | |
Related Party Transactions | |
Related Party Transactions | 21. Related Party Transactions Certain of our officers and directors own equity interests in entities that franchise restaurants. Following is a summary of full-year transactions and year-end balances with franchisees owned by former officers and directors (in thousands): 2019 2018 2017 Revenues from affiliates: North America commissary sales $ 2,697 $ 2,653 $ 2,619 Other sales 587 650 336 North America franchise royalties and fees 331 429 439 Total $ 3,615 $ 3,732 $ 3,394 December 29, December 30, 2019 2018 Accounts receivable affiliates $ 71 $ 69 The revenues from affiliates were at rates and terms available to independent franchisees. On March 21, 2019, Mr. Shaquille O’Neal was appointed to our Board of Directors. On June 11, 2019, the Company entered into an Endorsement Agreement (the “Endorsement Agreement”), effective March 15, 2019, with ABG-Shaq, LLC (“ABG-Shaq”), an entity affiliated with Mr. O’Neal, for the personal services of Mr. O’Neal. Pursuant to the Endorsement Agreement, the Company received the right and license to use Mr. O’Neal’s name, nickname, initials, autograph, voice, video or film portrayals, photograph, likeness and certain other intellectual property rights (individually and collectively, the “Personality Rights”), in each case, solely as approved by ABG-Shaq, in connection with the advertising, promotion and sale of Papa John’s-branded products. Mr. O’Neal also agreed to provide brand ambassador services related to appearances, social media and public relations matters, and to collaborate with us to develop one or more co-branded products using the Personality Rights. As consideration for the rights and services granted under the Endorsement Agreement, the Company agreed to pay to ABG-Shaq aggregate cash payments of $4.125 million over the three years of the Endorsement Agreement. The Company will also pay expenses related to the marketing and personal services provided by Mr. O’Neal. In addition, the Company agreed to grant 87,136 restricted stock units to Mr. O’Neal (as agent of ABG) under our 2018 Omnibus Incentive Plan. The initial term of the Endorsement Agreement ends on March 15, 2022, with an option for a one-year extension upon the parties’ mutual agreement. The Endorsement Agreement also includes customary exclusivity, termination and indemnification clauses. On May 27, 2019, Mr. O’Neal and the Company entered into a joint venture for the operation of nine Atlanta-area Papa John’s restaurants that were previously Company-owned restaurants. The Company owns approximately 70% of the joint venture and Mr. O’Neal owns approximately 30% of the joint venture, which is consolidated into the Company’s financial statements. Mr. O’Neal contributed approximately $840,000 representing his pro rata capital contribution. The Company paid $300,000 in 2018 and $446,000 in 2017 for charter aircraft services provided by an entity owned by a former board member. |
Litigation, Commitments and Con
Litigation, Commitments and Contingencies | 12 Months Ended |
Dec. 29, 2019 | |
Litigation, Commitments and Contingencies | |
Litigation, Commitments and Contingencies | 22. Litigation, Commitments and Contingencies Litigation The Company is involved in a number of lawsuits, claims, investigations and proceedings, including those specifically identified below, 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 has made accruals with respect to these matters, where appropriate, which are reflected in the Company’s consolidated financial statements. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. 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 been completed. As of the close of the opt-in period on October 29, 2018, 9,571 drivers opted into the collective class. 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 December 29, 2019 as it does not believe a loss is probable or reasonably estimable. Danker v. Papa John’s International, Inc. et al. On August 30, 2018, a class action lawsuit was filed in the United States District Court, Southern District of New York on behalf of a class of investors who purchased or acquired stock in Papa John's through a period up to and including July 19, 2018. The complaint alleges violations of Sections l0(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The District Court has appointed the Oklahoma Law Enforcement Retirement System to lead the case and has also issued a scheduling order for the case to proceed. An amended complaint was filed on February 13, 2019, which the Company has moved to dismiss. The Company believes that it has valid and meritorious defenses to these suits and intends to vigorously defend against them. The Company has not recorded any liability related to these lawsuits as of December 29, 2019 as it does not believe a loss is probable or reasonably estimable. |
Equity Compensation
Equity Compensation | 12 Months Ended |
Dec. 29, 2019 | |
Equity Compensation | |
Equity Compensation | 23. Equity Compensation We award stock options, time-based restricted stock and performance-based restricted stock units from time to time under the Papa John’s International, Inc. 2018 Omnibus Incentive Plan. There are approximately 5.3 million shares of common stock authorized for issuance and remaining available under the 2018 Omnibus Incentive Plan as of December 29, 2019, which includes 5.3 million shares transferred from the Papa John’s International 2011 Omnibus Incentive Plan. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options outstanding as of December 29, 2019 generally expire ten years from the date of grant and generally vest over a three-year period. We recorded stock-based employee compensation expense of $15.3 million in 2019, $9.9 million in 2018 and $10.4 million in 2017. The total related income tax benefit recognized in the Consolidated Statement of Operations was $3.4 million in 2019, $2.3 million in 2018 and $3.8 million in 2017. At December 29, 2019, there was $16.4 million of unrecognized compensation cost related to nonvested awards, of which the Company expects to recognize $10.8 million in 2020, $4.6 million in 2021 and $1.0 million in 2022. Stock Options Options exercised, which were issued from authorized shares, included 448,000 shares in 2019, 75,000 shares in 2018 and 147,000 shares in 2017. The total intrinsic value of the options exercised during 2019, 2018 and 2017 was $10.6 million, $1.5 million and $5.2 million, respectively. Cash received upon the exercise of stock options was $16.0 million, $2.7 million and $6.3 million during 2019, 2018 and 2017, respectively, and the related excess tax benefits (expense) realized were approximately $200,000, ($400,000) and $1.9 million during the corresponding periods. Information pertaining to option activity during 2019 is as follows (number of options and aggregate intrinsic value in thousands): Weighted Average Weighted Remaining Number Average Contractual Aggregate of Exercise Term Intrinsic Options Price (In Years) Value Outstanding at December 30, 2018 1,614 $ 54.27 Granted 353 44.05 Exercised (448) 35.77 Cancelled (314) 63.72 Outstanding at December 29, 2019 1,205 $ 55.67 7.17 $ 13,120 Exercisable at December 29, 2019 653 $ 58.48 5.90 $ 5,704 The following is a summary of the significant assumptions used in estimating the fair value of options granted in 2019, 2018 and 2017: 2019 2018 2017 Assumptions (weighted average): Risk-free interest rate 2.5 % 2.7 % 2.0 % Expected dividend yield 2.1 % 1.5 % 1.0 % Expected volatility 31.2 % 27.6 % 26.7 % Expected term (in years) 5.7 5.6 5.6 The risk-free interest rate for the periods within the contractual life of an option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield was estimated as the annual dividend divided by the market price of the Company’s shares on the date of grant. Expected volatility was estimated using the Company’s historical share price volatility for a period similar to the expected life of the option. Options granted generally vest in equal installments over three years and expire ten years after grant. The expected term for these options represents the period of time that options granted are expected to be outstanding and was calculated using historical experience. The weighted average grant-date fair values of options granted during 2019, 2018 and 2017 was $11.69, $15.27 and $19.88, respectively. The Company granted options to purchase 353,000, 456,000 and 315,000 shares in 2019, 2018 and 2017, respectively. Restricted Stock We granted shares of restricted stock that are time-based and generally vest in equal installments over three years ( 212,000 in 2019, 260,000 in 2018 and 73,000 in 2017). Upon vesting, the shares are issued from treasury stock. These restricted shares are intended to focus participants on our long-range objectives, while at the same time serving as a retention mechanism. We consider time-based restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights. We declared dividends totaling $310,000 ( $0.90 per share) in 2019, $185,000 ( $0.90 per share) in 2018 and $128,000 ( $0.85 per share) in 2017 to holders of time-based restricted stock. During 2019, we granted 113,000 restricted stock units that are time-based and vest over a period of one to three years . Upon vesting, the units are issued from treasury stock. Total dividends declared for these awards were insignificant to the results of our operations. Additionally, we granted stock settled performance-based restricted stock units to executive management (89,000 units in 2019, 70,000 units in 2018, and 13,000 units in 2017). The 2019 performance-based restricted stock units require the achievement of certain performance factors, which consist of the Company’s Total Shareholder Return (“TSR”) relative to a predetermined peer group. The grant-date fair value of the performance-based restricted stock units was determined through the use of a Monte Carlo simulation model. The following is a summary of the significant assumptions used in estimating the fair value of the performance-based restricted stock units granted in 2019: 2019 Assumptions: Risk-free interest rate 2.5 % Expected volatility 33.9 % The risk-free interest rate for the periods within the contractual life of the performance-based restricted stock unit is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility was estimated using the Company’s historical share price volatility for a period similar to the expected life of the performance-based restricted stock unit. The performance-based restricted stock units granted in 2019 vest over three years (cliff vest), expire ten years after grant, and are expensed over the performance period. The weighted average grant-date fair value of performance-based restricted stock units granted during 2019 was $44.95 . In 2018 and 2017, the Company granted performance-based restricted stock awards under a three-year cliff vest, and the vesting of the awards is dependent upon the Company’s achievement of a compounded annual growth rate of earnings per share and the achievement of certain sales and unit growth metrics. Upon vesting, the shares are issued from authorized shares. The fair value of time-based restricted stock and performance-based restricted stock units is based on the market price of the Company’s shares on the grant date. Information pertaining to these awards during 2019 is as follows (shares in thousands): Weighted Average Grant-Date Shares Fair Value Total as of December 30, 2018 370 $ 59.84 Granted 414 46.14 Forfeited (74) 51.31 Vested (94) 62.45 Total as of December 29, 2019 616 $ 50.90 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 29, 2019 | |
Employee Benefit Plans | |
Employee Benefit Plans | 24. Employee Benefit Plans We have established the Papa John’s International, Inc. 401(k) Plan (the “401(k) Plan”), as a defined contribution benefit plan, in accordance with Section 401(k) of the Internal Revenue Code. The 401(k) Plan is open to employees who meet certain eligibility requirements and allows participating employees to defer receipt of a portion of their compensation and contribute such amount to one or more investment funds. At our discretion, we may make matching contribution payments, which are subject to vesting based on an employee’s length of service with us. In addition, we maintain a non-qualified deferred compensation plan available to certain employees and directors. Under this plan, the participants may defer a certain amount of their compensation, which is credited to the participants’ accounts. The participant-directed investments associated with this plan are included in Other assets ($33.2 million and $27.8 million at December 29, 2019 and December 30, 2018, respectively) and the associated liabilities ($33.2 million and $27.8 million at December 29, 2019 and December 30, 2018, respectively) are included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. At our discretion, we contributed a matching payment of 2.1% in 2019, 1.5% in 2018 and 3% in 2017, up to a maximum of 6% of a participating employee’s earnings deferred into both the 401(k) Plan and the non-qualified deferred compensation plan. Such costs were $1.5 million in 2019, $1.1 million in 2018 and $2.3 million in 2017. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 29, 2019 | |
Segment Information | |
Segment Information | 25. Segment Information 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 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 income (loss) 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: (In thousands) 2019 2018 2017 Revenues: (Note) Domestic Company-owned restaurants $ 652,053 $ 692,380 $ 816,718 North America commissaries 612,652 609,866 673,712 North America franchising 71,828 79,293 106,729 International 126,077 131,268 126,285 All others 156,638 150,064 59,915 Total revenues $ 1,619,248 $ 1,662,871 $ 1,783,359 Intersegment revenues: North America commissaries $ 187,073 $ 201,325 $ 244,699 North America franchising 2,782 2,965 3,342 International 191 283 273 All others 88,286 72,066 16,715 Total intersegment revenues $ 278,332 $ 276,639 $ 265,029 Depreciation and amortization: Domestic Company-owned restaurants $ 12,883 $ 15,411 $ 15,484 North America commissaries 8,131 7,397 6,897 International 1,722 1,696 2,018 All others 10,738 8,513 5,276 Unallocated corporate expenses 13,807 13,386 13,993 Total depreciation and amortization $ 47,281 $ 46,403 $ 43,668 Income (loss) before income taxes: Domestic Company-owned restaurants (1) $ 33,957 $ 18,988 $ 47,548 North America commissaries (2) 30,439 27,961 47,844 North America franchising (3) 64,362 70,732 96,298 International (4) 19,110 14,399 15,888 All others (2) (2,500) (6,082) (179) Unallocated corporate expenses (2)(5) (139,355) (118,296) (66,099) Elimination of intersegment (profits) (967) (1,005) (958) Total income before income taxes $ 5,046 $ 6,697 $ 140,342 Note: Fiscal year 2018 has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (1) Includes $4.7 million and $1.6 million of refranchising gains/(losses), net in 2019 and 2018, respectively. See Note 12 for additional information. (2) The Company refined its overhead allocation process in 2018 resulting in transfers of expenses from Unallocated corporate expenses of $13.2 million to other segments, primarily North America commissaries of $7.9 million and All others of $3.5 million for the year ended December 30, 2018. (3) Includes Special charges of $19.1 million and $15.4 million for the years ended December 29, 2019 and December 30, 2018, respectively. See Note 19 for additional information. (4) Includes a $1.9 million net loss associated with refranchising in 2018, and a $1.7 million impairment loss in 2017. See Note 12 for additional information. (5) Includes Special charges of $41.3 million and $35.3 million for the years ended December 29, 2019 and December 30, 2018, respectively. See Note 19 for additional information. (In thousands) 2019 2018 2017 Property and equipment: Domestic Company-owned restaurants $ 221,420 $ 236,526 $ 235,640 North America commissaries 142,946 140,309 136,701 International 16,031 17,218 17,257 All others 84,167 71,880 58,977 Unallocated corporate assets 211,842 199,239 191,924 Accumulated depreciation and amortization (464,665) (438,278) (406,168) Net property and equipment $ 211,741 $ 226,894 $ 234,331 Expenditures for property and equipment: Domestic Company-owned restaurants $ 8,811 $ 13,568 $ 15,245 North America commissaries 3,773 3,994 14,767 International 1,143 986 1,884 All others 11,541 13,438 8,239 Unallocated corporate 12,443 10,042 12,458 Total expenditures for property and equipment $ 37,711 $ 42,028 $ 52,593 Disaggregation of Revenue In the following tables, revenues are disaggregated by major product line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Reportable Segments Year Ended December 29, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 652,053 $ - $ - $ - $ - $ 652,053 Commissary sales - 799,725 - 64,179 - 863,904 Franchise royalties and fees - - 74,610 38,745 - 113,355 Other revenues - - - 23,344 244,924 268,268 Eliminations - (187,073) (2,782) (191) (88,286) (278,332) Total segment revenues $ 652,053 $ 612,652 $ 71,828 $ 126,077 $ 156,638 $ 1,619,248 International other revenues (1) - - - (23,344) 23,344 - International eliminations (1) - - - 191 (191) - Total revenues $ 652,053 $ 612,652 $ 71,828 $ 102,924 $ 179,791 $ 1,619,248 Reportable Segments Year Ended December 30, 2018 (Note) Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 692,380 $ - $ - $ 6,237 $ - $ 698,617 Commissary sales - 811,191 - 68,124 - 879,315 Franchise royalties and fees - - 82,258 35,988 - 118,246 Other revenues - - - 21,202 222,130 243,332 Eliminations - (201,325) (2,965) (283) (72,066) (276,639) Total segment revenues $ 692,380 $ 609,866 $ 79,293 $ 131,268 $ 150,064 $ 1,662,871 International other revenues (1) - - - (21,202) 21,202 - International eliminations (1) - - - 283 (283) - Total revenues $ 692,380 $ 609,866 $ 79,293 $ 110,349 $ 170,983 $ 1,662,871 Note: Fiscal year 2018 has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (1) Other revenues as reported in the Consolidated Statements of Operations include $23.2 million and $20.9 million of revenue for the years ended December 29, 2019 and December 30, 2018, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to income before income taxes but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Consolidated Statements of Operations. |
Quarterly Data - Unaudited, in
Quarterly Data - Unaudited, in Thousands, except Per Share Data | 12 Months Ended |
Dec. 29, 2019 | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | 26. Quarterly Data - Unaudited, in Thousands, except Per Share Data Our quarterly select financial data is as follows: Quarter 2019 1st 2nd 3rd 4th Total revenues $ 398,405 $ 399,623 $ 403,706 $ 417,514 Operating income (loss) 5,509 14,231 4,927 (132) Net income (loss) attributable to the Company (a) (1,731) 8,354 385 (2,142) Basic (loss) earnings per common share (a) (0.12) 0.15 (0.10) (0.18) Diluted (loss) earnings per common share (a) (0.12) 0.15 (0.10) (0.18) Dividends declared per common share 0.225 0.225 0.225 0.225 Quarter 2018 1st 2nd 3rd 4th (Note) (Note) (Note) (Note) Total revenues $ 450,122 $ 429,952 $ 385,231 $ 397,566 Operating income (loss) 28,139 24,910 (14,170) (7,326) Net income (loss) attributable to the Company (b) 17,443 11,199 (13,300) (12,868) Basic earnings (loss) per common share (b) 0.52 0.35 (0.42) (0.41) Diluted earnings (loss) per common share (b) 0.52 0.35 (0.42) (0.41) Dividends declared per common share 0.225 0.225 0.225 0.225 Note: The quarterly 2018 information has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (a) The year ended December 29, 2019 was impacted by the following: i. The first, second, third and fourth quarters of 2019 include after income tax losses of $13.5 million, $4.2 million, $11.0 million and $19.8 million, respectively, and unfavorable impacts on diluted EPS of $0.43, $0.13, $0.35 and $0.62, respectively, from Special charges. See Note 19 for additional information. ii. The third and fourth quarters of 2019 include after tax gains of $1.3 million and $2.2 million, respectively, and favorable impacts on diluted EPS of $0.04 and $0.07, respectively, related to the Company’s refranchising of Company-owned restaurants. (b) The year ended December 30, 2018 was impacted by the following: i. The second quarter of 2018 includes an after income tax loss of $1.6 million and an unfavorable impact of $0.05 on basic and diluted EPS from the sale of our Company-owned stores in China. See Note 12 for additional information. ii. The second quarter of 2018 also includes a tax increase of $2.4 million and an unfavorable impact of $0.07 on basic and diluted EPS related to the refranchising our China stores. See Note 20 for additional information. iii. The third and fourth quarters of 2018 include after income tax losses of $19.3 million and $19.7 million, respectively, and unfavorable impacts on diluted EPS of $0.61 and $0.63, respectively, from Special charges. See Note 19 for additional information. iv. The fourth quarter of 2018 includes an after tax gain of $1.3 million and a favorable impact of $0.04 on basic and diluted EPS related to the Company’s refranchising of Company-owned restaurants. Quarterly earnings per share on a full-year basis may not agree to the Consolidated Statements of Operations due to rounding. |
Restatement of 2018 Consolidate
Restatement of 2018 Consolidated Financial Statements | 12 Months Ended |
Dec. 29, 2019 | |
Restatement of 2018 Consolidated Financial Statements | |
Restatement of 2018 Consolidated Financial Statements | 27. Restatement of 2018 Consolidated Financial Statements The following tables present the immaterial impact of consolidating Papa John’s Marketing Fund, Inc. in our 2018 consolidated financial statements. See Notes 2 and 5 for additional information. Consolidated Balance Sheet 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 Current deferred revenue 2,443 3,579 6,022 Current portion of long-term debt 20,000 9 20,009 Total current liabilities 164,636 24,258 188,894 Deferred revenue 14,679 2,571 17,250 Total liabilities 867,617 26,829 894,446 Retained earnings 244,061 (1,879) 242,182 Total stockholders' deficit (302,134) (1,879) (304,013) Total liabilities, Series B preferred stock, redeemable noncontrolling interests, and stockholders' deficit 570,947 24,950 595,897 Year Ended December 30, 2018 (In thousands, except per share amounts) As Reported Change As Restated Consolidated Statements of Operations Other revenues $ 81,428 $ 89,555 $ 170,983 Total revenues 1,573,316 89,555 1,662,871 Domestic Company-owned restaurant expenses 576,799 859 577,658 Other expenses 84,016 86,540 170,556 General and administrative expenses 192,551 983 193,534 Total costs and expenses 1,542,647 88,382 1,631,029 Operating income 30,380 1,173 31,553 Interest expense (25,306) (367) (25,673) Income before income taxes 5,891 806 6,697 Income tax expense 2,646 (22) 2,624 Net income before attribution to noncontrolling interests 3,245 828 4,073 Net income attributable to the Company 1,646 828 2,474 Net income attributable to common shareholders 1,646 828 2,474 Basic earnings per common share 0.05 0.03 0.08 Diluted earnings per common share 0.05 0.03 0.08 Consolidated Statement of Cash Flows Operating activities Net income before attribution to noncontrolling interests $ 3,245 $ 828 $ 4,073 Provision for uncollectible accounts and notes receivable 4,761 2,088 6,849 Deferred income taxes 1,705 (85) 1,620 Accounts receivable 1,386 771 2,157 Income tax receivable (12,170) 13 (12,157) Prepaid expenses (2,165) 1,126 (1,039) Accounts payable (1,694) 1,294 (400) Accrued expenses and other current liabilities 10,273 11,480 21,753 Deferred revenue (271) 2,144 1,873 Net cash provided by operating activities 72,795 19,659 92,454 Financing activities Net proceeds (repayments) of revolving credit facilities 175,000 (11,415) 163,585 Net cash used in financing activities (36,682) (11,415) (48,097) Change in cash and cash equivalents (2,877) 8,244 5,367 Cash and cash equivalents at beginning of period 22,345 5,546 27,891 Cash and cash equivalents at end of period 19,468 13,790 33,258 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Account | 12 Months Ended |
Dec. 29, 2019 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Schedule II - Valuation and Qualifying Accounts Charged to Balance at (recovered from) Balance at Beginning of Costs and Additions / End of Classification Year Expenses (Deductions) Year (in thousands) Fiscal year ended December 29, 2019 Deducted from asset accounts: Reserve for uncollectible accounts receivable $ 4,205 $ 3,216 $ (80) (1) $ 7,341 Reserve for franchisee notes receivable 3,369 (77) 280 (1) 3,572 Valuation allowance on deferred tax assets 8,183 (295) 2,819 10,707 $ 15,757 $ 2,844 $ 3,019 $ 21,620 Fiscal year ended December 30, 2018 Deducted from asset accounts: Reserve for uncollectible accounts receivable (2) $ 2,271 $ 7,242 $ (5,308) (1) $ 4,205 Reserve for franchisee notes receivable 1,047 (393) 2,715 (1) 3,369 Valuation allowance on deferred tax assets 7,415 (1,754) 2,522 8,183 $ 10,733 $ 5,095 $ (71) $ 15,757 Fiscal year ended December 31, 2017 Deducted from asset accounts: Reserve for uncollectible accounts receivable $ 1,486 $ 1,744 $ (959) (1) $ 2,271 Reserve for franchisee notes receivable 2,759 (1,715) 3 (1) 1,047 Valuation allowance on deferred tax assets 5,462 (407) 2,360 7,415 $ 9,707 $ (378) $ 1,404 $ 10,733 (1) Uncollectible accounts written off and reclassifications between accounts and notes receivable reserves. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 29, 2019 | |
Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of Papa John’s and its subsidiaries. All intercompany balances and transactions have been eliminated. |
Restatement of Previously Issued Consolidated Financial Statements for Immaterial 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 |
Fiscal Year | Fiscal Year Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 weeks except for the 2017 fiscal year, which consisted of 53 weeks. |
Use of Estimates | Use of Estimates The preparation of 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 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 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. |
Revenue Recognition | Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes waivers or incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Delivery costs, including freight associated with our domestic commissary and other sales, are accounted for as fulfillment costs and are included in operating costs. The Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”), in the first quarter of 2018. Prior year revenue recognition follows ASC Topic 605, “Revenue Recognition.” The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Restaurant Sales The domestic and international Company-owned restaurants principally generate revenue from retail sales of high-quality pizza, side items including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. Revenues from Company-owned restaurants are recognized when the products are delivered to or carried out by customers. Our North American customer loyalty program, Papa Rewards, is a spend-based program that rewards customers with points for each purchase. Papa Rewards points are accumulated and redeemed. During the fourth quarter of 2018, the program transitioned from product-based rewards to dollar off discounts (“Papa Dough”), which can be used on future purchases within a six month expiration window. The accrued liability in the Consolidated Balance Sheets, and corresponding reduction of Company-owned restaurant sales in the Consolidated Statements of Operations, is for the estimated reward redemptions at domestic Company-owned restaurants based upon estimated redemption patterns. The liability related to Papa Rewards is calculated using the estimated redemption value for which the points and accumulated rewards are expected to be redeemed. Revenue is recognized when the customer redeems the Papa Dough reward. Prior to the adoption of Topic 606, the liability related to Papa Rewards was estimated using the incremental cost accrual model which was based on the expected cost to satisfy the award and the corresponding expense was recorded in general and administrative expenses in the Consolidated Statements of Operations. Franchise Royalties and Fees Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, including acceleration of restaurant remodels or equipment upgrades, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The majority of initial franchise license fees and area development exclusivity fees are from international locations. Initial franchise license fees are billed at the store opening date. Area development exclusivity fees are billed upon execution of the development agreements which grant the right to develop franchised restaurants in future periods in specific geographic areas. Area development exclusivity fees are included in deferred revenue in the Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years . Franchise license renewal fees for both domestic and international locations, which generally occur every 10 years , are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. For periods prior to adoption of Topic 606, revenue was recognized when we performed our obligations related to such fees, primarily the store opening date for initial franchise fees and area development fees, or the date the renewal option was effective for license renewal fees. The Company offers various incentive programs for franchisees including royalty incentives, new restaurant opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary Sales Commissary sales are comprised of food and supplies sold to franchised restaurants and are recognized as revenue upon shipment of the related products to the franchisees. Payments are generally due within 30 days. As noted above, there are various incentive programs available to franchisees related to new restaurant openings including discounts on initial commissary orders and new store equipment incentives, at substantially no cost to franchisees. Commissary sales are reduced to reflect incentives in the form of direct discounts on initial commissary orders. The new store equipment incentive is also recorded as a reduction of commissary sales over the term of the incentive agreement, which is generally three to five years . Other Revenues Fees for information services, including software maintenance fees, help desk fees and online ordering fees are recognized as revenue as such services are provided and are included in other revenue. Revenues for printing, promotional items, and direct mail marketing services are recognized upon shipment of the related products to franchisees and other customers. Direct mail advertising discounts are also periodically offered by our Preferred Marketing Solutions subsidiary. Other revenues are reduced to reflect these advertising discounts. Rental income, primarily derived from properties leased by the Company and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms, in accordance with ASC Topic 842, “Leases”, similar to previous guidance. Franchise Marketing Fund revenues represent contributions collected by PJMF and various other international and domestic marketing funds (“Co-op” or “Co-operative” Funds) where we have determined for purposes of accounting that we have control over the significant 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. The adoption of Topic 606 revised the principal versus agent determination of these arrangements. When we are determined to be the principal in these arrangements, advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations. Our obligation related to these funds is to develop and conduct advertising activities in a specific country, region, or market, including the placement of electronic and print materials. There are no expiration dates and we do not deduct non-usage fees from outstanding gift cards. While the Company and 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 as Other revenue. 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. For periods prior to the adoption of Topic 606, the revenues and expenses of certain international advertising funds and the Co-op Funds in which we possess majority voting rights were included in our Consolidated Statements of Operations on a net basis, as we previously concluded we were the agent in regard to the funds based upon principal/agent determinations in industry-specific guidance that was in effect during those time periods. |
Advertising and Related Costs | Advertising and Related Costs Domestic Company-owned advertising and related costs of $54.3 million, $60.8 million and $72.3 million in 2019, 2018 and 2017, respectively, include the costs of domestic Company-owned local restaurant activities such as mail coupons, door hangers and promotional items and contributions to PJMF and various local market cooperative advertising funds. Contributions by domestic Company-owned and franchised restaurants to PJMF and the Co-op Funds are based on an established percentage of monthly restaurant revenues. PJMF is responsible for developing and conducting marketing and advertising for the domestic Papa John’s system. The Co-op Funds are responsible for developing and conducting advertising activities in a specific market, including the placement of electronic and print materials developed by PJMF. During 2019 and 2018, the Company also contributed $27.5 million and $10.0 million, respectively, to PJMF to increase marketing and promotional activities which is included in general and administrative expenses and is a part of Special charges. See Note 19 for additional information. |
Leases | Leases Lease expense is recognized on a straight-line basis over the expected life of the lease term. A lease term often includes option periods, available at the inception of the lease. Lease expense is comprised of operating and finance 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. As further described in Recent Accounting Pronouncements Leases (Topic 842) |
Stock-Based Compensation | Stock-Based Compensation Compensation expense for equity grants is estimated on the grant date, net of projected forfeitures, and is recognized over the vesting period (generally in equal installments over three years ). Restricted stock is valued based on the market price of the Company’s shares on the date of grant. Stock options are valued using a Black-Scholes option pricing model. Our specific assumptions for estimating the fair value of options are included in Note 23. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of highly liquid investments with maturity of three months or less at date of purchase. These investments are carried at cost, which approximates fair value. |
Accounts Receivable | Accounts Receivable Substantially all accounts receivable is due from franchisees for purchases of food, paper products, point of sale equipment, printing and promotional items, information systems and related services, and royalties. Credit is extended based on an evaluation of the franchisee’s financial condition and collateral is generally not required. A reserve for uncollectible accounts is established as deemed necessary based upon overall accounts receivable aging levels and a specific review of accounts for franchisees with known financial difficulties. Account balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements |
Notes Receivable | Notes Receivable The Company provides financing to select franchisees principally for use in the construction and development of their restaurants and for the purchase of restaurants from the Company or other franchisees. Most notes receivable bear interest at fixed or floating rates and are generally secured by the assets of each restaurant and the ownership interests in the franchise. In 2019 and 2018, the Company also provided certain franchisees with royalty payment plans. We establish a reserve for franchisee notes receivables to reduce the outstanding notes receivable to their net realizable values based on a review of each franchisee’s economic performance and market conditions after consideration of the fair value of our underlying collateral rights (e.g., underlying franchisee business, property and equipment) and any guarantees. Note balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements |
Inventories | Inventories Inventories, which consist of food products, paper goods and supplies, smallwares, and printing and promotional items, are stated at the lower of cost, determined under the first-in, first-out (FIFO) method, or net realizable value. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets (generally five to ten years for restaurant, commissary and other equipment, 20 to 40 years for buildings and improvements, and five years for technology and communication assets). Leasehold improvements are amortized over the terms of the respective leases, including the first renewal period (generally five to ten years ). Depreciation expense was $45.9 million in 2019, $45.6 million in 2018 and $42.6 million in 2017. |
Deferred Costs | Deferred Costs We capitalize certain information systems development and related costs that meet established criteria. Amounts capitalized, which are included in property and equipment, are amortized principally over periods not exceeding five years upon completion of the related information systems project. Total costs deferred were approximately $3.5 million in 2019, $4.3 million in 2018 and $4.1 million in 2017. The unamortized information systems development costs approximated $11.5 million and $12.3 million as of December 29, 2019 and December 30, 2018, respectively. |
Intangible Assets - Goodwill | Intangible Assets — Goodwill We evaluate goodwill annually in the fourth quarter or whenever we identify certain triggering events or circumstances that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Such tests are completed separately with respect to the goodwill of each of our reporting units, which includes our domestic Company-owned restaurants, United Kingdom (“PJUK”), China, and Preferred Marketing Solutions operations. We may perform a qualitative assessment or move directly to the quantitative assessment for any reporting unit in any period if we believe that it is more efficient or if impairment indicators exist. We elected to perform a qualitative assessment for our domestic Company-owned restaurants, PJUK, China, and Preferred Marketing Solutions operations in the fourth quarter of 2019. As a result of our qualitative analyses, we determined that it was more-likely-than-not that the fair values of our reporting units were greater than their carrying amounts. Subsequent to completing our goodwill impairment tests, no indicators of impairment were identified. See Note 13 for additional information. |
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. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts we expect to realize. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly decreasing the U.S. federal income tax rate for corporations effective January 1, 2018. On that same date, the Securities and Exchange Commission staff also issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, “Income Taxes.” As a result, we remeasured our deferred tax assets, liabilities and related valuation allowances in 2017. This remeasurement yielded a 2017 benefit of approximately $7.0 million due to the lower income tax rate. See Note 20 for additional information. Our net deferred income tax liability was approximately $800,000 at December 29, 2019. 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 and adjust for events, such as statute of limitations expirations, court rulings or audit settlements, which may impact our ultimate payment for such exposures. We recognized decreases in income tax expense of $400,000 and $1.7 million in 2019 and 2017, respectively, associated with the finalization of certain income tax matters. There were no amounts recognized in 2018 as there were no related events. See Note 20 for additional information. |
Insurance Reserves | Insurance Reserves Our insurance programs for workers’ compensation, owned and non-owned automobiles, general liability, property, and health insurance coverage provided to our employees are funded by the Company up to certain retention levels under our retention programs. Retention limits generally range from $100,000 to $1.0 million. Losses are accrued based upon undiscounted estimates of the liability for claims incurred and for events that have occurred but have not been reported using certain third-party actuarial projections and our claims loss experience. The determination of the recorded insurance reserves is highly judgmental and complex due to the significant uncertainty in the potential value of reported claims and the number and potential value of incurred but not reported claims, the application of significant judgment in making those estimates and the use of various actuarial valuation methods. The estimated insurance claims losses could be significantly affected should the frequency or ultimate cost of claims differ significantly from historical trends used to estimate the insurance reserves recorded by the Company. The Company records estimated losses above retention within its reserve with a corresponding receivable for expected amounts due from insurance carriers. |
Derivative Financial Instruments | Derivative Financial Instruments We recognize all derivatives on the balance sheet at fair value. At inception and on an ongoing basis, we assess whether each derivative that qualifies for hedge accounting continues to be highly effective in offsetting changes in the cash flows of the hedged item. If the derivative meets the hedge criteria as defined by certain accounting standards, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of assets, liabilities or firm commitments through earnings or recognized in accumulated other comprehensive income/(loss) until the hedged item is recognized in earnings. In April 2019, we reduced the notional value of our swaps by $50.0 million as a result of paying down a substantial portion of debt under our Revolving Facility using the proceeds received from the sale of our Series B Convertible Preferred Stock (the “Series B Preferred Stock”). The termination of $50.0 million of notional swap value was not significant to our results of operations. We recognized (loss) income of ($10.8) million (($8.3) million after tax) in 2019, $4.3 million ($3.2 million after tax) in 2018, and $1.4 million ($0.9 million after tax) in 2017 in other comprehensive (loss)/income for the net change in the fair value of our interest rate swaps. See Note 14 for additional information on our debt and credit arrangements. |
Noncontrolling Interests | Noncontrolling Interests At December 29, 2019, the Company has four joint ventures consisting of 192 restaurants, which have noncontrolling interests. Consolidated net income is required to be reported separately at amounts attributable to both 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 Consolidated Statements of Operations of income attributable to the noncontrolling interest holder. The following summarizes the redemption feature, location and related accounting within the Consolidated Balance Sheets for these four joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value See Notes 11 and 12 for additional information regarding noncontrolling interests and divestitures. |
Foreign Currency Translation | Foreign Currency Translation The local currency is the functional currency for each of our foreign subsidiaries. Revenues and expenses are translated into U.S. dollars using monthly average exchange rates, while assets and liabilities are translated using year-end exchange rates and historical rates. The resulting translation adjustments are included as a component of accumulated other comprehensive loss, net of income taxes. In 2018, the Company refranchised 34 Company-owned restaurants and a QC Center located in China. In conjunction with the transaction, approximately $1.3 million of accumulated other comprehensive income and $300,000 associated deferred tax related to foreign currency translation were reversed. See Note 12 for additional information. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP, including industry-specific requirements, and provides companies with a single revenue recognition framework for recognizing revenue from contracts with customers. In March and April 2016, the FASB issued additional amendments to Topic 606. The Company adopted Topic 606 as of January 1, 2018 under the modified retrospective transition method. Certain Tax Effects from Accumulated Other Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”)” (“ASU 2018-02”), which allows for an entity to reclassify disproportionate income tax in AOCI caused by the Tax Act to retained earnings. The guidance was effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASU 2018-02 in the first quarter of 2018 by electing to reclassify the income tax effects from AOCI to retained earnings. Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” The Company adopted Topic 842 as of December 31, 2018 (the first day of fiscal 2019) under the modified retrospective transition method. See Notes 3 and 4 for additional information. 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 annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. We will adopt the standard effective December 30, 2019. The Company is finalizing its assessment of the impact of adopting this standard on our consolidated financial statements. We do not expect the adoption of ASU 2016-13 to result in a material change to our consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Significant Accounting Policies | |
Schedule of Joint Ventures in Which There are Noncontrolling Interests | The following summarizes the redemption feature, location and related accounting within the Consolidated Balance Sheets for these four joint venture arrangements: Type of Joint Venture Arrangement Location within the Balance Sheets Recorded Value Joint ventures with no redemption feature Permanent equity Carrying value Joint ventures with option to require the Company to purchase the noncontrolling interest - not currently redeemable or redemption not probable Temporary equity Carrying value |
Adoption of ASC 842, "Leases" (
Adoption of ASC 842, "Leases" (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Adoption of ASC 842, "Leases" | |
Schedule of impacts of adoption of ASC 842 | The effects of the changes made to the Company’s Consolidated Balance Sheet as of December 31, 2018 (the first day of fiscal 2019) for the adoption of Topic 842 are 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: Operating lease right-of-use assets - 161,027 (b) 161,027 Liabilities and stockholders' deficit Current liabilities: Current operating lease liabilities - 25,348 (c) 25,348 Long-term liabilities: Long-term operating 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 operating lease 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 unamortized 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 unamortized tenant incentive liabilities, which have been reclassified to operating lease right-of-use assets. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Leases | |
Schedule of average terms of lease portfolios | 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 right-of-use assets and lease liabilities on the Consolidated Balance Sheet as of December 29, 2019 and the date of adoption on December 31, 2018 (in thousands): December 29, December 31, Leases Classification 2019 2018 Assets Finance lease assets, net Finance lease right-of-use assets, net $ 9,383 $ — Operating lease assets, net Operating lease right-of-use assets 148,229 161,027 Total lease assets $ 157,612 $ 161,027 Liabilities Current finance lease liabilities Current finance lease liabilities $ 1,789 $ — Current operating lease liabilities Current operating lease liabilities 23,226 25,348 Noncurrent finance lease liabilities Long-term finance lease liabilities 7,629 — Noncurrent operating lease liabilities Long-term operating lease liabilities 125,297 137,511 Total lease liabilities $ 157,941 $ 162,859 |
Schedule of components of lease expense | Year Ended (in thousands) December 29, 2019 Finance lease: Amortization of right-of-use assets $ 815 Interest on lease liabilities 251 Operating lease: Operating lease cost 42,487 Short-term lease cost 2,704 Variable lease cost 9,558 Total lease costs $ 55,815 Sublease income (10,879) Total lease costs, net of sublease income $ 44,936 |
Schedule of future minimum lease payments and sublease income under contractually-obligated leases | Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 29, 2019 are as follows (in thousands): Fiscal Year Finance Operating Expected 2020 $ 2,323 $ 32,809 $ 9,412 2021 2,323 32,636 9,109 2022 2,323 27,325 8,752 2023 2,323 21,783 8,446 2024 1,507 17,438 8,168 Thereafter 55 61,629 44,364 Total future minimum lease payments 10,854 193,620 88,251 Less imputed interest (1,436) (45,097) — Total present value of Lease Liabilities $ 9,418 $ 148,523 $ 88,251 Future minimum lease payments and sublease income under contractually-obligated leases as of December 30, 2018 were as follows (in thousands): Fiscal Year Operating 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 | Year Ended (in thousands, except for weighted-average amounts) December 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 269 Financing cash flows from finance leases 781 Operating cash flows from operating leases (a) 40,152 Right-of-use assets obtained in exchange for new finance lease liabilities 10,199 Right-of-use assets obtained in exchange for new operating lease liabilities 20,903 Cash received from sublease income 10,139 Weighted-average remaining lease term (in years): Finance leases 4.75 Operating leases 7.00 Weighted-average discount rate: Finance leases 6.38% Operating leases 6.94% (a) Included within the change in Other assets and liabilities within the Consolidated Statement of Cash Flows offset by non-cash operating lease asset amortization and liability accretion. |
Papa John's Marketing Fund, I_2
Papa John's Marketing Fund, Inc. (Tables) | 12 Months Ended |
Dec. 29, 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 Consolidated Balance Sheets were as follows (in thousands): December 29, December 30, 2019 2018 Assets Current assets: Cash and cash equivalents $ 4,569 $ 13,790 Accounts receivable, net 11,196 10,264 Income tax receivable 103 73 Prepaid expenses 1,316 441 Other current assets - 1 Total current assets 17,184 24,569 Deferred income taxes, net 410 381 Total assets $ 17,594 $ 24,950 Liabilities Current liabilities: Accounts payable $ 764 $ 20 Accrued expenses and other current liabilities 14,287 23,455 Deferred revenue current 3,252 3,579 Debt - 9 Total current liabilities 18,303 27,063 Deferred revenue 2,094 2,571 Total liabilities $ 20,397 $ 29,634 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Revenue Recognition | |
Schedule of Cumulative Adjustment from Adoption of Topic 606 | January 1, 2018 (In thousands) As Reported As Restated Cumulative effect of adoption of Topic 606 $ (21,527) $ (24,359) |
Schedule of information about contract liabilities | The contract liability balances are included in the following (in thousands): Contract Liabilities December 29, 2019 December 30, 2018 Change Deferred revenue $ 20,346 $ 23,272 $ (2,926) Customer loyalty program 12,049 18,019 (5,970) Total contract liabilities $ 32,395 $ 41,291 $ (8,896) |
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 $ 2,372 $ 2,174 $ 1,966 $ 1,681 $ 1,433 $ 3,456 $ 13,082 |
Series B Convertible Preferre_2
Series B Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Series B Convertible Preferred Stock | |
Schedule of Series B Preferred Stock | The following summarizes changes to our Series B Preferred Stock in 2019 (in thousands): Balance at December 30, 2018 $ — Issuance of preferred stock 252,530 One-time mark-to-market adjustment 5,914 Issuance costs (7,527) Accretion 216 Balance at December 29, 2019 $ 251,133 |
(Loss) Earnings per Share (Tabl
(Loss) Earnings per Share (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
(Loss) Earnings per Share | |
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The calculations of basic (loss) earnings per common share and diluted (loss) earnings per common share for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 are as follows (in thousands, except per share data): 2019 2018 2017 Basic (loss) earnings per common share: Net income attributable to the Company $ 4,866 $ 2,474 $ 102,292 Preferred stock dividends and accretion (12,499) — — Change in noncontrolling interest redemption value — — 1,419 Net income attributable to participating securities — — (423) Net (loss) income attributable to common shareholders $ (7,633) $ 2,474 $ 103,288 Basic weighted average common shares outstanding 31,632 32,083 36,083 Basic (loss) earnings per common share $ (0.24) $ 0.08 $ 2.86 Diluted (loss) earnings per common share: Net (loss) income attributable to common shareholders $ (7,633) $ 2,474 $ 103,288 Weighted average common shares outstanding 31,632 32,083 36,083 Dilutive effect of outstanding equity awards (a) — 216 439 Diluted weighted average common shares outstanding (b) 31,632 32,299 36,522 Diluted (loss) earnings per common share $ (0.24) $ 0.08 $ 2.83 (a) Shares subject to options to purchase common stock with an exercise price greater than the average market price for the year were not included in the computation of diluted earnings per common share because the effect would have been antidilutive. The weighted average number of shares subject to antidilutive options was 1.2 million in 2018 and 278,000 in 2017. (b) The Company had 252,530 shares of Series B Preferred Stock outstanding as of December 29, 2019. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net 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. |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Fair Value Measurements and Disclosures | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Our financial assets and liabilities that were measured at fair value on a recurring basis as of December 29, 2019 and December 30, 2018 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 December 29, 2019 Financial assets: Cash surrender value of life insurance policies (a) $ 33,220 $ 33,220 $ — $ — Financial liabilities: Interest rate swaps (b) 6,168 — 6,168 — 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”). |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Noncontrolling Interests | |
Schedule of Income Before Income Taxes Attributable to Joint Ventures | The income before income taxes attributable to these joint ventures for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 were as follows (in thousands): 2019 2018 2017 Papa John’s International, Inc. $ 2,560 $ 5,794 $ 7,181 Noncontrolling interests 791 1,599 4,233 Total income before income taxes $ 3,351 $ 7,393 $ 11,414 |
Summary of Changes in Redeemable Noncontrolling Interests | The following summarizes changes in our redeemable noncontrolling interests in 2019 and 2018 (in thousands): Balance at December 31, 2017 $ 6,738 Net loss (274) Distributions (1,000) Balance at December 30, 2018 $ 5,464 Net loss (519) Contributions 840 Distributions — Balance at December 29, 2019 $ 5,785 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Goodwill. | |
Summary of Changes to the Company's Goodwill, by Reporting Segment | The following summarizes changes in the Company’s goodwill, by reportable segment (in thousands): Domestic Company- owned Restaurants International (a) All Others Total Balance as of December 31, 2017 $ 70,048 $ 16,408 $ 436 $ 86,892 Divestitures (b) (1,359) — — (1,359) Foreign currency adjustments — (1,017) — (1,017) Balance as of December 30, 2018 68,689 15,391 436 84,516 Divestitures (c) (4,435) — — (4,435) Foreign currency adjustments — 259 — 259 Balance as of December 29, 2019 $ 64,254 $ 15,650 $ 436 $ 80,340 (a) The international goodwill balances for all years presented are net of accumulated impairment of $2.3 million associated with our PJUK reporting unit. (b) Includes 62 restaurants located in two domestic markets. (c) Includes 46 restaurants located primarily in two domestic markets. |
Debt and Credit Arrangements (T
Debt and Credit Arrangements (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Debt and Credit Arrangements | |
Schedule of Long-Term Debt, Net | Long-term debt, net consists of the following (in thousands): December 29, December 30, 2019 2018 Outstanding debt $ 370,000 $ 625,009 Unamortized debt issuance costs (2,710) (3,874) Current portion of long-term debt (20,000) (20,009) Total long-term debt, less current portion, net $ 347,290 $ 601,126 |
Schedule of Interest Rate Swap Agreements | 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 $ 50 million 2.00 % |
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 Consolidated Financial Statements (in thousands): Interest Rate Swap Derivatives Fair Value Fair Value December 29, December 30, Balance Sheet Location 2019 2018 Other current and long-term assets $ — $ 4,905 Other current and long-term liabilities $ 6,168 $ — |
Schedule of Effect of Derivative Instruments on the Accompanying Consolidated Financial Statements | The effect of derivative instruments on the accompanying Consolidated Financial Statements is as follows (in thousands): Location of Gain Amount of Gain Derivatives - Amount of Gain or or (Loss) or (Loss) Total Interest Expense Cash Flow (Loss) Recognized Reclassified from Reclassified from on Consolidated Hedging in AOCI/AOCL AOCI/AOCL into AOCI/AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps: 2019 $ (8,303) Interest expense $ 660 $ (20,593) 2018 $ 3,222 Interest expense $ (22) $ (25,673) 2017 $ 891 Interest expense $ (421) $ (11,283) |
Net Property and Equipment (Tab
Net Property and Equipment (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Net Property and Equipment | |
Schedule of Net Property and Equipment | Net property and equipment consists of the following (in thousands): December 29, December 30, 2019 2018 Land $ 33,349 $ 33,833 Buildings and improvements 91,514 91,665 Leasehold improvements 121,127 125,192 Equipment and other 423,556 402,991 Construction in progress 6,860 11,491 Total property and equipment 676,406 665,172 Accumulated depreciation and amortization (464,665) (438,278) Net property and equipment $ 211,741 $ 226,894 |
Notes Receivable (Tables)
Notes Receivable (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Notes Receivable | |
Summary of Changes in Notes Receivable Allowance for Doubtful Accounts | The following summarizes changes in our notes receivable allowance for doubtful accounts (in thousands): Balance as of December 31, 2017 $ 1,047 Recovered from costs and expenses (393) Additions, net of notes written off 2,715 Balance as of December 30, 2018 3,369 Recovered from costs and expenses (77) Additions, net of notes written off 280 Balance as of December 29, 2019 $ 3,572 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in thousands): December 29, December 30, 2019 2018 Insurance reserves, current $ 32,028 $ 33,769 Salaries, benefits and bonuses 22,659 12,979 Marketing 15,930 27,746 Customer loyalty program 12,049 18,019 Purchases 10,768 11,336 Consulting and professional fees 7,180 8,693 Rent 4,274 3,932 Legal costs 3,487 2,093 Deposits 2,026 1,415 Utilities 405 1,478 Other 9,760 7,707 Total $ 120,566 $ 129,167 |
Other Long-term Liabilities (Ta
Other Long-term Liabilities (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Other Long-term Liabilities | |
Schedule of Other Long-term Liabilities | Other long-term liabilities consist of the following (in thousands): December 29, December 30, 2019 2018 Insurance reserves $ 45,151 $ 42,144 Deferred compensation plan 33,220 27,796 Accrued rent (a) — 6,461 Other 6,556 2,923 Total $ 84,927 $ 79,324 (a) See Note 2 “Significant Accounting Policies” for Leases and Note 3 “Adoption of ASC 842, Leases” for additional information regarding the change in accounting for accrued rent, which is now classified against right-of-use assets for operating leases. |
Other General Expenses (Tables)
Other General Expenses (Tables) | 12 Months Ended |
Dec. 29, 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): Year Ended December 29, December 30, December 31, 2019 2018 2017 Provision (credit) for uncollectible accounts and notes receivable (a) $ 2,764 $ 3,338 $ (1,441) Loss on disposition of fixed assets 1,130 2,233 2,493 Papa Rewards (b) - - 1,046 Franchise support initiative (c) - 34 2,986 Other (income) expense (915) (1,725) 343 Other general expenses 2,979 3,880 5,427 Special charges (d)(e) 41,322 35,316 - Administrative expenses (f)(g) 179,159 154,338 145,439 General and administrative expenses $ 223,460 $ 193,534 $ 150,866 (a) Bad debt recorded on accounts receivable and notes receivable. (b) Online customer loyalty program costs in 2017 which are now recorded as a change in Domestic Company-owned restaurant revenue under Topic 606. (c) Franchise incentives include incentives to franchisees for opening new restaurants. In 2018, the Company adopted Topic 606 with updated accounting guidelines for new store equipment incentives, which are now recorded as a reduction of commissary revenues. (d) The Special charges for the year ended December 29, 2019 include the following: (1) $27.5 million of marketing fund investments; (2) $5.9 million of legal and advisory fees primarily associated with the review of a wide range of strategic opportunities that culminated in a strategic investment in the Company by affiliates of Starboard; (3) $5.6 million related to a one-time mark-to-market adjustment from the increase in value of the Starboard option to purchase Series B Preferred Stock that culminated in the purchase of $50.0 million of Series B Preferred Stock in late March. See Note 8 for additional information; and (4) $2.4 million that includes severance costs for the Company’s former CEO as well as costs related to the termination of a license agreement for intellectual property no longer being utilized. (e) The Special charges for the year ended December 30, 2018 include the following: (1) $10.0 million of marketing fund investments; (2) $19.5 million of advisory and legal costs primarily associated with the review of a wide range of strategic opportunities that culminated in a strategic investment in the Company by affiliates of Starboard and a third-party audit of the culture at Papa John’s commissioned by a special committee of the Board of Directors; and (3) $5.8 million of reimaging costs at nearly all domestic restaurants including costs to replace or write-off certain branded assets. (f) The increase in administrative expenses of $24.8 million for the year ended December 29, 2019 compared to the prior year comparable periods was primarily due to higher management incentive costs, including equity compensation, and higher legal and professional fees not associated with Special charges. (g) The increase in administrative expenses of $8.9 million for the year ended December 29, 2018 compared to the prior year comparable period was mainly due to higher technology initiative costs and a $1.5 million contribution to our newly formed Papa John’s Foundation, a separate legal entity that is not consolidated in the Company’s results. In addition, administrative expenses increased due to higher legal and professional fees not associated with the Special charges. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Income Taxes | |
Schedule of Domestic and Foreign Components of Income (Loss) Before Income Taxes | The following table presents the domestic and foreign components of income (loss) before income taxes for 2019, 2018 and 2017 (in thousands): 2019 2018 2017 Domestic (loss) income $ (16,065) $ (9,665) $ 122,828 Foreign income 21,111 16,362 17,514 Total income $ 5,046 $ 6,697 $ 140,342 |
Summary of the Provision for Income Taxes | A summary of the (benefit) provision for income tax follows (in thousands): 2019 2018 2017 Current: Federal $ (2,734) $ (5,262) $ 28,951 Foreign 5,077 4,736 4,602 State and local 810 1,530 (234) Deferred (3,764) 1,620 498 Total income taxes $ (611) $ 2,624 $ 33,817 |
Schedule of Significant Deferred Tax Assets (Liabilities) | Significant deferred tax assets (liabilities) follow (in thousands): December 29, December 30, 2019 2018 Accrued liabilities $ 16,686 $ 16,828 Accrued bonuses 2,308 724 Other assets and liabilities 16,244 10,705 Equity awards 7,196 5,862 Lease liability 30,756 — Other 2,418 2,482 Net operating losses 8,205 1,555 Foreign tax credit carryforwards 10,049 7,230 Total deferred tax assets 93,862 45,386 Valuation allowances (17,303) (8,183) Total deferred tax assets, net of valuation allowances 76,559 37,203 Deferred expenses (9,521) (5,970) Accelerated depreciation (27,299) (24,239) Goodwill (9,510) (12,645) Right-of-use asset (30,257) — Other (782) (1,064) Total deferred tax liabilities (77,369) (43,918) Net deferred liability $ (810) $ (6,715) |
Schedule of Reconciliation of Income Tax Computed at the U.S. Federal Statutory Rate to Income Tax Expense | The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 is as follows in both dollars and as a percentage of income before income taxes ($ in thousands): 2019 2018 2017 Income Tax Income Income Tax Income Income Tax Income Expense Tax Rate Expense Tax Rate Expense Tax Rate Tax at U.S. federal statutory rate $ 1,060 21.0 % $ 1,406 21.0 % $ 49,120 35.0 % State and local income taxes 79 1.6 % 150 2.2 % 2,432 1.7 % Foreign income taxes 5,058 100.2 % 4,879 72.9 % 5,306 3.8 % Income of consolidated partnerships attributable to noncontrolling interests (177) (3.5) % (371) (5.6) % (1,554) (1.1) % Non-qualified deferred compensation plan (income) loss (1,260) (25.0) % 483 7.2 % (1,236) (0.9) % Excess tax (benefits) expense on equity awards (212) (4.2) % 447 6.7 % (1,879) (1.4) % Preferred stock option mark-to-market adjustment 1,338 26.5 % — — % — — % Remeasurement of deferred taxes — — % — — % (7,020) (5.0) % Tax credits (6,128) (121.4) % (6,945) (103.7) % (6,909) (4.9) % Disposition of China — — % 4,118 61.5 % — — % Other (369) (7.3) % (1,543) (23.0) % (4,443) (3.1) % Total $ (611) (12.1) % $ 2,624 39.2 % $ 33,817 24.1 % |
Schedule of Reconciliation of the Beginning and Ending Liability for Unrecognized Tax Benefits | The Company had $1.6 million of unrecognized tax benefits at December 29, 2019 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded as an other long-term liability (in thousands): Balance at December 31, 2017 $ 2,028 Additions for tax positions of prior years 510 Reductions for tax positions of prior years (515) Reductions for lapse of statute of limitations — Balance at December 30, 2018 2,023 Additions for tax positions of prior years 179 Reductions for tax positions of prior years (623) Reductions for lapse of statute of limitations — Balance at December 29, 2019 $ 1,579 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Related Party Transactions | |
Summary of Full-Year Transactions and Year-End Balances with Franchisees Owned by Related Parties | Certain of our officers and directors own equity interests in entities that franchise restaurants. Following is a summary of full-year transactions and year-end balances with franchisees owned by former officers and directors (in thousands): 2019 2018 2017 Revenues from affiliates: North America commissary sales $ 2,697 $ 2,653 $ 2,619 Other sales 587 650 336 North America franchise royalties and fees 331 429 439 Total $ 3,615 $ 3,732 $ 3,394 December 29, December 30, 2019 2018 Accounts receivable affiliates $ 71 $ 69 |
Equity Compensation (Tables)
Equity Compensation (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Equity Compensation | |
Schedule of Information Pertaining to Option Activity | Information pertaining to option activity during 2019 is as follows (number of options and aggregate intrinsic value in thousands): Weighted Average Weighted Remaining Number Average Contractual Aggregate of Exercise Term Intrinsic Options Price (In Years) Value Outstanding at December 30, 2018 1,614 $ 54.27 Granted 353 44.05 Exercised (448) 35.77 Cancelled (314) 63.72 Outstanding at December 29, 2019 1,205 $ 55.67 7.17 $ 13,120 Exercisable at December 29, 2019 653 $ 58.48 5.90 $ 5,704 |
Summary of the Significant Assumptions Used in Estimating the Fair Value of Options Granted | The following is a summary of the significant assumptions used in estimating the fair value of options granted in 2019, 2018 and 2017: 2019 2018 2017 Assumptions (weighted average): Risk-free interest rate 2.5 % 2.7 % 2.0 % Expected dividend yield 2.1 % 1.5 % 1.0 % Expected volatility 31.2 % 27.6 % 26.7 % Expected term (in years) 5.7 5.6 5.6 |
Summary of the Significant Assumptions Used in Estimating the Fair Value of Performance based Restricted Stock Units Granted | 2019 Assumptions: Risk-free interest rate 2.5 % Expected volatility 33.9 % |
Schedule of Information Pertaining to Restricted Stock Activity | The fair value of time-based restricted stock and performance-based restricted stock units is based on the market price of the Company’s shares on the grant date. Information pertaining to these awards during 2019 is as follows (shares in thousands): Weighted Average Grant-Date Shares Fair Value Total as of December 30, 2018 370 $ 59.84 Granted 414 46.14 Forfeited (74) 51.31 Vested (94) 62.45 Total as of December 29, 2019 616 $ 50.90 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Segment Information | |
Schedule of Segment Reporting Information, by Segment | (In thousands) 2019 2018 2017 Revenues: (Note) Domestic Company-owned restaurants $ 652,053 $ 692,380 $ 816,718 North America commissaries 612,652 609,866 673,712 North America franchising 71,828 79,293 106,729 International 126,077 131,268 126,285 All others 156,638 150,064 59,915 Total revenues $ 1,619,248 $ 1,662,871 $ 1,783,359 Intersegment revenues: North America commissaries $ 187,073 $ 201,325 $ 244,699 North America franchising 2,782 2,965 3,342 International 191 283 273 All others 88,286 72,066 16,715 Total intersegment revenues $ 278,332 $ 276,639 $ 265,029 Depreciation and amortization: Domestic Company-owned restaurants $ 12,883 $ 15,411 $ 15,484 North America commissaries 8,131 7,397 6,897 International 1,722 1,696 2,018 All others 10,738 8,513 5,276 Unallocated corporate expenses 13,807 13,386 13,993 Total depreciation and amortization $ 47,281 $ 46,403 $ 43,668 Income (loss) before income taxes: Domestic Company-owned restaurants (1) $ 33,957 $ 18,988 $ 47,548 North America commissaries (2) 30,439 27,961 47,844 North America franchising (3) 64,362 70,732 96,298 International (4) 19,110 14,399 15,888 All others (2) (2,500) (6,082) (179) Unallocated corporate expenses (2)(5) (139,355) (118,296) (66,099) Elimination of intersegment (profits) (967) (1,005) (958) Total income before income taxes $ 5,046 $ 6,697 $ 140,342 Note: Fiscal year 2018 has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (1) Includes $4.7 million and $1.6 million of refranchising gains/(losses), net in 2019 and 2018, respectively. See Note 12 for additional information. (2) The Company refined its overhead allocation process in 2018 resulting in transfers of expenses from Unallocated corporate expenses of $13.2 million to other segments, primarily North America commissaries of $7.9 million and All others of $3.5 million for the year ended December 30, 2018. (3) Includes Special charges of $19.1 million and $15.4 million for the years ended December 29, 2019 and December 30, 2018, respectively. See Note 19 for additional information. (4) Includes a $1.9 million net loss associated with refranchising in 2018, and a $1.7 million impairment loss in 2017. See Note 12 for additional information. (5) Includes Special charges of $41.3 million and $35.3 million for the years ended December 29, 2019 and December 30, 2018, respectively. See Note 19 for additional information. (In thousands) 2019 2018 2017 Property and equipment: Domestic Company-owned restaurants $ 221,420 $ 236,526 $ 235,640 North America commissaries 142,946 140,309 136,701 International 16,031 17,218 17,257 All others 84,167 71,880 58,977 Unallocated corporate assets 211,842 199,239 191,924 Accumulated depreciation and amortization (464,665) (438,278) (406,168) Net property and equipment $ 211,741 $ 226,894 $ 234,331 Expenditures for property and equipment: Domestic Company-owned restaurants $ 8,811 $ 13,568 $ 15,245 North America commissaries 3,773 3,994 14,767 International 1,143 986 1,884 All others 11,541 13,438 8,239 Unallocated corporate 12,443 10,042 12,458 Total expenditures for property and equipment $ 37,711 $ 42,028 $ 52,593 |
Schedule of revenue disaggregated by major product line | In the following tables, revenues are disaggregated by major product line. The tables also include a reconciliation of the disaggregated revenues by the reportable segment (in thousands): Reportable Segments Year Ended December 29, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 652,053 $ - $ - $ - $ - $ 652,053 Commissary sales - 799,725 - 64,179 - 863,904 Franchise royalties and fees - - 74,610 38,745 - 113,355 Other revenues - - - 23,344 244,924 268,268 Eliminations - (187,073) (2,782) (191) (88,286) (278,332) Total segment revenues $ 652,053 $ 612,652 $ 71,828 $ 126,077 $ 156,638 $ 1,619,248 International other revenues (1) - - - (23,344) 23,344 - International eliminations (1) - - - 191 (191) - Total revenues $ 652,053 $ 612,652 $ 71,828 $ 102,924 $ 179,791 $ 1,619,248 Reportable Segments Year Ended December 30, 2018 (Note) Major Products/Services Lines Domestic Company-owned restaurants North America commissaries North America franchising International All others Total Company-owned restaurant sales $ 692,380 $ - $ - $ 6,237 $ - $ 698,617 Commissary sales - 811,191 - 68,124 - 879,315 Franchise royalties and fees - - 82,258 35,988 - 118,246 Other revenues - - - 21,202 222,130 243,332 Eliminations - (201,325) (2,965) (283) (72,066) (276,639) Total segment revenues $ 692,380 $ 609,866 $ 79,293 $ 131,268 $ 150,064 $ 1,662,871 International other revenues (1) - - - (21,202) 21,202 - International eliminations (1) - - - 283 (283) - Total revenues $ 692,380 $ 609,866 $ 79,293 $ 110,349 $ 170,983 $ 1,662,871 Note: Fiscal year 2018 has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (1) Other revenues as reported in the Consolidated Statements of Operations include $23.2 million and $20.9 million of revenue for the years ended December 29, 2019 and December 30, 2018, respectively, that are part of the international reporting segment. These amounts include marketing fund contributions and sublease rental income from international franchisees in the United Kingdom that provide no significant contribution to income before income taxes but must be reported on a gross basis under accounting requirements. The related expenses for these Other revenues are reported in Other expenses in the Consolidated Statements of Operations. |
Quarterly Data - Unaudited, i_2
Quarterly Data - Unaudited, in Thousands, except Per Share Data (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | |
Schedule of Quarterly Select Financial Data | Quarter 2019 1st 2nd 3rd 4th Total revenues $ 398,405 $ 399,623 $ 403,706 $ 417,514 Operating income (loss) 5,509 14,231 4,927 (132) Net income (loss) attributable to the Company (a) (1,731) 8,354 385 (2,142) Basic (loss) earnings per common share (a) (0.12) 0.15 (0.10) (0.18) Diluted (loss) earnings per common share (a) (0.12) 0.15 (0.10) (0.18) Dividends declared per common share 0.225 0.225 0.225 0.225 Quarter 2018 1st 2nd 3rd 4th (Note) (Note) (Note) (Note) Total revenues $ 450,122 $ 429,952 $ 385,231 $ 397,566 Operating income (loss) 28,139 24,910 (14,170) (7,326) Net income (loss) attributable to the Company (b) 17,443 11,199 (13,300) (12,868) Basic earnings (loss) per common share (b) 0.52 0.35 (0.42) (0.41) Diluted earnings (loss) per common share (b) 0.52 0.35 (0.42) (0.41) Dividends declared per common share 0.225 0.225 0.225 0.225 Note: The quarterly 2018 information has been restated to reflect the consolidation of Papa John’s Marketing Fund, Inc. See Note 2 under the heading “Restatement of Previously Issued Consolidated Financial Statements for Immaterial Error Correction” for more details. (a) The year ended December 29, 2019 was impacted by the following: i. The first, second, third and fourth quarters of 2019 include after income tax losses of $13.5 million, $4.2 million, $11.0 million and $19.8 million, respectively, and unfavorable impacts on diluted EPS of $0.43, $0.13, $0.35 and $0.62, respectively, from Special charges. See Note 19 for additional information. ii. The third and fourth quarters of 2019 include after tax gains of $1.3 million and $2.2 million, respectively, and favorable impacts on diluted EPS of $0.04 and $0.07, respectively, related to the Company’s refranchising of Company-owned restaurants. (b) The year ended December 30, 2018 was impacted by the following: i. The second quarter of 2018 includes an after income tax loss of $1.6 million and an unfavorable impact of $0.05 on basic and diluted EPS from the sale of our Company-owned stores in China. See Note 12 for additional information. ii. The second quarter of 2018 also includes a tax increase of $2.4 million and an unfavorable impact of $0.07 on basic and diluted EPS related to the refranchising our China stores. See Note 20 for additional information. iii. The third and fourth quarters of 2018 include after income tax losses of $19.3 million and $19.7 million, respectively, and unfavorable impacts on diluted EPS of $0.61 and $0.63, respectively, from Special charges. See Note 19 for additional information. iv. The fourth quarter of 2018 includes an after tax gain of $1.3 million and a favorable impact of $0.04 on basic and diluted EPS related to the Company’s refranchising of Company-owned restaurants. |
Restatement of 2018 Consolida_2
Restatement of 2018 Consolidated Financial Statements (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
Restatement of 2018 Consolidated Financial Statements | |
Schedule of Impact of Corrections to Fiscal Year 2018 | Consolidated Balance Sheet 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 Current deferred revenue 2,443 3,579 6,022 Current portion of long-term debt 20,000 9 20,009 Total current liabilities 164,636 24,258 188,894 Deferred revenue 14,679 2,571 17,250 Total liabilities 867,617 26,829 894,446 Retained earnings 244,061 (1,879) 242,182 Total stockholders' deficit (302,134) (1,879) (304,013) Total liabilities, Series B preferred stock, redeemable noncontrolling interests, and stockholders' deficit 570,947 24,950 595,897 Year Ended December 30, 2018 (In thousands, except per share amounts) As Reported Change As Restated Consolidated Statements of Operations Other revenues $ 81,428 $ 89,555 $ 170,983 Total revenues 1,573,316 89,555 1,662,871 Domestic Company-owned restaurant expenses 576,799 859 577,658 Other expenses 84,016 86,540 170,556 General and administrative expenses 192,551 983 193,534 Total costs and expenses 1,542,647 88,382 1,631,029 Operating income 30,380 1,173 31,553 Interest expense (25,306) (367) (25,673) Income before income taxes 5,891 806 6,697 Income tax expense 2,646 (22) 2,624 Net income before attribution to noncontrolling interests 3,245 828 4,073 Net income attributable to the Company 1,646 828 2,474 Net income attributable to common shareholders 1,646 828 2,474 Basic earnings per common share 0.05 0.03 0.08 Diluted earnings per common share 0.05 0.03 0.08 Consolidated Statement of Cash Flows Operating activities Net income before attribution to noncontrolling interests $ 3,245 $ 828 $ 4,073 Provision for uncollectible accounts and notes receivable 4,761 2,088 6,849 Deferred income taxes 1,705 (85) 1,620 Accounts receivable 1,386 771 2,157 Income tax receivable (12,170) 13 (12,157) Prepaid expenses (2,165) 1,126 (1,039) Accounts payable (1,694) 1,294 (400) Accrued expenses and other current liabilities 10,273 11,480 21,753 Deferred revenue (271) 2,144 1,873 Net cash provided by operating activities 72,795 19,659 92,454 Financing activities Net proceeds (repayments) of revolving credit facilities 175,000 (11,415) 163,585 Net cash used in financing activities (36,682) (11,415) (48,097) Change in cash and cash equivalents (2,877) 8,244 5,367 Cash and cash equivalents at beginning of period 22,345 5,546 27,891 Cash and cash equivalents at end of period 19,468 13,790 33,258 |
Description of Business (Detail
Description of Business (Details) | Dec. 29, 2019item |
Description of Business | |
Number of countries in which the entity operates | 49 |
Significant Accounting Polici_4
Significant Accounting Policies - Fiscal Year, Revenue Recognition and Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Percentage of domestic restaurants franchised | 80.00% | ||
Length of fiscal year | 364 days | 364 days | 371 days |
Term of franchise agreement | 10 years | ||
Advertising and related costs | $ 54.3 | $ 60.8 | $ 72.3 |
PJMF | |||
Contributions for additional advertising | $ 27.5 | $ 10 | |
Papa Dough Rewards | |||
Expiration window of rewards program | 6 months | ||
Minimum | |||
Amortization term of equipment incentives | 3 years | ||
Maximum | |||
Amortization term of equipment incentives | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies - Stock-Based Compensation, PP&E, and Deferred Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Property and Equipment | |||
Depreciation expense | $ 45.9 | $ 45.6 | $ 42.6 |
Deferred Costs | |||
Deferred costs, maximum amortization period | 5 years | ||
Deferred costs | $ 3.5 | 4.3 | $ 4.1 |
Unamortized systems development costs | $ 11.5 | $ 12.3 | |
Restaurant, commissary and other equipment | Minimum | |||
Property and Equipment | |||
Estimated useful lives | 5 years | ||
Restaurant, commissary and other equipment | Maximum | |||
Property and Equipment | |||
Estimated useful lives | 10 years | ||
Buildings and improvements | Minimum | |||
Property and Equipment | |||
Estimated useful lives | 20 years | ||
Buildings and improvements | Maximum | |||
Property and Equipment | |||
Estimated useful lives | 40 years | ||
Technology and communication assets | |||
Property and Equipment | |||
Estimated useful lives | 5 years | ||
Leasehold improvements | Minimum | |||
Property and Equipment | |||
Estimated useful lives | 5 years | ||
Leasehold improvements | Maximum | |||
Property and Equipment | |||
Estimated useful lives | 10 years |
Significant Accounting Polici_6
Significant Accounting Policies - Deferred Income Tax Accounts and Tax Reserves (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies | ||||
Provisional Tax Act tax benefit from remeasurement of deferred tax assets, liabilities and related valuation allowances | $ 7,000,000 | $ 7,020,000 | ||
Net deferred income tax liability | $ 800,000 | |||
Decrease in income tax expense | $ 400,000 | $ 0 | $ 1,700,000 |
Significant Accounting Polici_7
Significant Accounting Policies - Insurance Reserves and Derivatives (Details) - USD ($) | 12 Months Ended | |||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | Apr. 28, 2019 | |
Derivative Financial Instruments | ||||
Other comprehensive income (loss), before tax | $ (10,783,000) | $ 4,254,000 | $ 1,421,000 | |
Other comprehensive income (loss), net of tax | (8,300,000) | $ 3,200,000 | $ 900,000 | |
Minimum | ||||
Insurance Reserves | ||||
Employee insurance retention limit per occurrence | 100,000 | |||
Maximum | ||||
Insurance Reserves | ||||
Employee insurance retention limit per occurrence | $ 1,000,000 | |||
Terminated interest rate swaps | ||||
Derivative Financial Instruments | ||||
Interest rate swap agreement, notional amount | $ 50,000,000 |
Significant Accounting Polici_8
Significant Accounting Policies - Noncontrolling Interests and Foreign Currency Translation (Details) | Jun. 15, 2018USD ($)restaurant | Dec. 30, 2018USD ($)entityrestaurant | Dec. 29, 2019restaurantentity |
Noncontrolling Interests | |||
Number of joint ventures having noncontrolling interests | entity | 3 | 4 | |
Stores in Beijing and Tianjin, China | |||
Noncontrolling Interests | |||
Number of restaurants divested | restaurant | 34 | 34 | |
Reversal of accumulated other comprehensive income related to foreign currency translation | $ | $ 1,300,000 | $ 1,300,000 | |
Reversal of deferred tax related to foreign currency translation | $ | $ 300,000 | ||
Joint ventures | |||
Noncontrolling Interests | |||
Number of Restaurants | restaurant | 183 | 192 |
Adoption of ASC 842, "Leases"_2
Adoption of ASC 842, "Leases" (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Election of package of practical expedients | true | ||
Election of hindsight practical expedient | true | ||
Assets | |||
Prepaid expenses | $ 25,707 | $ 30,376 | |
Operating lease right-of-use assets | $ 148,229 | 161,027 | |
Current liabilities: | |||
Current operating lease liabilities | 23,226 | 25,348 | |
Long-term liabilities: | |||
Long-term operating lease liabilities | 125,297 | 137,511 | |
Other long-term liabilities | $ 84,927 | 72,823 | 79,324 |
Total Adjustments | |||
Assets | |||
Prepaid expenses | $ 441 | ||
Accounting Standards Update 2016-02 | Total Adjustments | |||
Assets | |||
Prepaid expenses | (4,669) | ||
Operating lease right-of-use assets | 161,027 | ||
Current liabilities: | |||
Current operating lease liabilities | 25,348 | ||
Long-term liabilities: | |||
Long-term operating lease liabilities | 137,511 | ||
Other long-term liabilities | $ (6,501) |
Leases - Lease Terms, Assets an
Leases - Lease Terms, Assets and Liabilities (Details) $ in Thousands | Dec. 29, 2019USD ($)installment | Dec. 31, 2018USD ($) |
Assets | ||
Finance lease assets, net | $ 9,383 | |
Operating lease assets, net | 148,229 | $ 161,027 |
Total lease assets | 157,612 | 161,027 |
Liabilities | ||
Current finance lease liabilities | 1,789 | |
Current operating lease liabilities | 23,226 | 25,348 |
Noncurrent finance lease liabilities | 7,629 | |
Noncurrent operating lease liabilities | 125,297 | 137,511 |
Total lease liabilities | $ 157,941 | $ 162,859 |
Domestic Company-owned restaurants | ||
Leases | ||
Term of lease contracts | 5 years | |
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 | |
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 | 12 Months Ended |
Dec. 29, 2019USD ($) | |
Leases | |
Amortization of right-of-use assets | $ 815 |
Interest on lease liabilities | 251 |
Operating lease cost | 42,487 |
Short-term lease cost | 2,704 |
Variable lease cost | 9,558 |
Total lease costs | 55,815 |
Sublease income | (10,879) |
Total lease costs, net of sublease income | $ 44,936 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments, Lessor Operating Leases, and Lease Guarantees (Details) $ in Thousands | Dec. 29, 2019USD ($)leaserestaurant |
Finance Lease Costs | |
2020 | $ 2,323 |
2021 | 2,323 |
2022 | 2,323 |
2023 | 2,323 |
2024 | 1,507 |
Thereafter | 55 |
Total future minimum lease payments | 10,854 |
Less imputed interest | (1,436) |
Total present value of Lease Liabilities | 9,418 |
Operating Lease Costs | |
2020 | 32,809 |
2021 | 32,636 |
2022 | 27,325 |
2023 | 21,783 |
2024 | 17,438 |
Thereafter | 61,629 |
Total future minimum lease payments | 193,620 |
Less imputed interest | (45,097) |
Total present value of Lease Liabilities | 148,523 |
Expected Sublease Income: | |
2020 | 9,412 |
2021 | 9,109 |
2022 | 8,752 |
2023 | 8,446 |
2024 | 8,168 |
Thereafter | 44,364 |
Total future minimum lease payments | $ 88,251 |
Number of units leased and subleased | restaurant | 380 |
Initial lease terms on franchised sites | 15 years |
Number of domestic leases for which the Company is contingently liable | lease | 122 |
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 19,200 |
Leases - Future Lease Cost (Det
Leases - Future Lease Cost (Details) $ in Thousands | Dec. 30, 2018USD ($) |
Contingencies | |
Operating Lease Costs, 2019 | $ 40,834 |
Operating Lease Costs, 2020 | 36,631 |
Operating Lease Costs, 2021 | 31,159 |
Operating Lease Costs, 2022 | 25,188 |
Operating Lease Costs, 2023 | 18,694 |
Operating Lease Costs, Thereafter | 57,304 |
Operating Lease Costs, Total | 209,810 |
Future Expected Sublease Income, 2019 | 8,079 |
Future Expected Sublease Income, 2020 | 8,061 |
Future Expected Sublease Income, 2021 | 7,818 |
Future Expected Sublease Income, 2022 | 7,462 |
Future Expected Sublease Income, 2023 | 7,182 |
Future Expected Sublease Income, Thereafter | 42,518 |
Future Expected Sublease Income, Total | $ 81,120 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Thousands | 12 Months Ended |
Dec. 29, 2019USD ($) | |
Leases | |
Operating cash flows from finance leases | $ 269 |
Financing cash flows from finance leases | 781 |
Operating cash flows from operating leases | 40,152 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 10,199 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 20,903 |
Cash received from sublease income | $ 10,139 |
Weighted-average remaining lease term of finance leases | 4 years 9 months |
Weighted-average remaining lease term of operating leases | 7 years |
Weighted-average discount rate of finance leases | 6.38% |
Weighted-average discount rate of operating leases | 6.94% |
Papa John's Marketing Fund, I_3
Papa John's Marketing Fund, Inc. (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 27,911 | $ 33,258 | |
Accounts receivable, net | 80,921 | 78,118 | |
Income tax receivable | 4,024 | 16,146 | |
Prepaid expenses | $ 25,707 | 30,376 | |
Other current assets | 5,678 | ||
Total current assets | 181,546 | 196,277 | |
Deferred income taxes, net | 1,839 | 1,137 | |
Total assets | 730,721 | 595,897 | |
Current liabilities: | |||
Accounts payable | 29,141 | 27,106 | |
Accrued expenses and other current liabilities | 120,566 | 129,167 | |
Deferred revenue current | 5,624 | 6,022 | |
Debt | 20,000 | 20,009 | |
Total current liabilities | 207,945 | 188,894 | |
Deferred revenue | 14,722 | 17,250 | |
Total liabilities | 790,459 | 894,446 | |
Papa John's Marketing Fund Inc. | |||
Current assets: | |||
Cash and cash equivalents | 4,569 | 13,790 | |
Accounts receivable, net | 11,196 | 10,264 | |
Income tax receivable | 103 | 73 | |
Prepaid expenses | 1,316 | 441 | |
Other current assets | 1 | ||
Total current assets | 17,184 | 24,569 | |
Deferred income taxes, net | 410 | 381 | |
Total assets | 17,594 | 24,950 | |
Current liabilities: | |||
Accounts payable | 764 | 20 | |
Accrued expenses and other current liabilities | 14,287 | 23,455 | |
Deferred revenue current | 3,252 | 3,579 | |
Debt | 9 | ||
Total current liabilities | 18,303 | 27,063 | |
Deferred revenue | 2,094 | 2,571 | |
Total liabilities | $ 20,397 | $ 29,634 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 |
Revenue disaggregation | |||
Cumulative effect of adoption of Topic 606 | $ (24,359) | ||
Revenue recognized related to deferred revenue and customer loyalty program | $ 34,000 | $ 16,300 | |
Contract liabilities | 32,395 | 41,291 | |
Change | (8,896) | ||
Contract assets | 6,000 | 6,600 | |
Amortization expense related to contract assets | 3,500 | 4,000 | |
Deferred revenue. | |||
Revenue disaggregation | |||
Contract liabilities | 20,346 | 23,272 | |
Change | (2,926) | ||
Customer loyalty program | |||
Revenue disaggregation | |||
Contract liabilities | 12,049 | $ 18,019 | |
Change | $ (5,970) | ||
As reported | |||
Revenue disaggregation | |||
Cumulative effect of adoption of Topic 606 | $ (21,527) |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to Remaining Performance Obligations (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Performance Obligations by Period | ||
Total deferred revenue | $ 32,395 | $ 41,291 |
Franchise Fees | ||
Performance Obligations by Period | ||
Less than 1 Year | 2,372 | |
1-2 Years | 2,174 | |
2-3 Years | 1,966 | |
3-4 Years | 1,681 | |
4-5 Years | 1,433 | |
Thereafter | 3,456 | |
Total deferred revenue | 13,082 | |
Area development fees | ||
Performance Obligations by Period | ||
Total deferred revenue | 1,900 | |
Gift Card | ||
Performance Obligations by Period | ||
Total deferred revenue | 5,300 | |
Papa Rewards | ||
Performance Obligations by Period | ||
Total deferred revenue | $ 12,000 | $ 18,000 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Shares Authorized and Outstanding (Details) - shares | Dec. 29, 2019 | Dec. 30, 2018 |
Authorized shares of preferred stock | 5,000,000 | |
Authorized shares of common stock | 100,000,000 | |
Outstanding shares of common stock , net of repurchased stock | 31,900,000 | 31,400,000 |
Series B Convertible Preferred Stock, shares outstanding | 252,500 | |
Series B Preferred Stock | ||
Authorized shares of preferred stock | 260,000 | |
Series B Convertible Preferred Stock, shares outstanding | 252,530 | 0 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Share Repurchase Program (Details) - Common stock repurchase program - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Share repurchase program | |||
Stock repurchase program, authorized amount | $ 2,075 | ||
Stock repurchased during period, shares | 0 | 2,700,000 | 3,000,000 |
Stock repurchased during period, value | $ 158 | $ 209.6 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) - Cash Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 01, 2020 | Feb. 21, 2020 | Feb. 10, 2020 | Jan. 29, 2020 | Dec. 16, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 |
Cash Dividend | ||||||||
Total dividends paid | $ 40,900 | $ 29,000 | $ 30,700 | |||||
Dividends paid to common shareholders | 28,600 | |||||||
Dividends paid to common shareholders | $ 28,552 | $ 28,985 | $ 30,720 | |||||
Dividend paid per common share (in dollars per share) | $ 0.90 | |||||||
Preferred stock dividend rate | 3.60% | |||||||
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 | Jan. 29, 2020 | |||||||
Quarterly dividend declared | $ 7,300 | |||||||
Quarterly dividend, date of distribution | Feb. 21, 2020 | |||||||
Quarterly dividend, date of record | Feb. 10, 2020 | |||||||
Subsequent event | Preferred Stock | ||||||||
Cash Dividend | ||||||||
Quarterly dividend, date of declaration | Jan. 29, 2020 | |||||||
Quarterly dividend, date of distribution | Apr. 1, 2020 | |||||||
Series B Preferred Stock | ||||||||
Cash Dividend | ||||||||
Common stock dividends paid to preferred shareholders | $ 4,300 | |||||||
Preferred dividends | $ 2,300 | $ 5,700 | ||||||
Quarterly dividend declared | $ 2,300 | |||||||
Series B Preferred Stock | Subsequent event | ||||||||
Cash Dividend | ||||||||
Preferred dividends | $ 1,100 | |||||||
Quarterly dividend declared | $ 2,300 |
Stockholders' Equity (Deficit_4
Stockholders' Equity (Deficit) - Stockholder Rights Plan (Details) | Oct. 23, 2019 | Mar. 06, 2019 | Jul. 22, 2018 |
Rights | |||
Ownership trigger threshold | 20.00% | 20.00% | 15.00% |
Series B Convertible Preferre_3
Series B Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 16, 2019 | Mar. 28, 2019 | Feb. 03, 2019 | Dec. 29, 2019 |
Redeemable Preferred Shares | ||||
Preferred stock dividend rate | 3.60% | |||
Temporary equity | $ 251,133 | |||
Dividends paid to preferred shareholders | 10,020 | |||
Series B Preferred Stock rollforward | ||||
Balance at end of period | 251,133 | |||
General and administrative expenses | ||||
Redeemable Preferred Shares | ||||
Temporary equity adjustment | 5,900 | |||
Temporary equity adjustment | 5,600 | |||
Series B Preferred Stock | ||||
Redeemable Preferred Shares | ||||
Temporary equity | 251,133 | |||
Dividends paid to preferred shareholders | 5,700 | |||
Preferred dividends | $ 2,300 | 5,700 | ||
Dividends declared | $ 2,300 | |||
Common stock dividends paid to preferred shareholders | 4,300 | |||
Series B Preferred Stock rollforward | ||||
Balance at beginning of period | ||||
Issuance of preferred stock | 252,530 | |||
One time market-to-market adjustment | 5,914 | |||
Issuance costs | (7,527) | |||
Accretion | 216 | |||
Balance at end of period | 251,133 | |||
Series B Preferred Stock | Franchisee | ||||
Redeemable Preferred Shares | ||||
Aggregate purchase price of shares | $ 2,500 | |||
Temporary equity adjustment | 300 | |||
Series B Preferred Stock | Securities Purchase Agreement | ||||
Redeemable Preferred Shares | ||||
Aggregate purchase price of shares | $ 50,000 | $ 200,000 | ||
Purchase price per share | $ 1,000 | |||
Preferred stock dividend rate | 3.60% | |||
Conversion rate (as a percent) | $ 50.06 | |||
Initial redemption term | 8 years | |||
Exchange Cap (as a percent) | 19.99% | |||
Issuance costs | 7,500 | |||
Redemption value | $ 252,500 | |||
Series B Preferred Stock | General and administrative expenses | ||||
Redeemable Preferred Shares | ||||
Aggregate purchase price of shares | 50,000 | |||
Series B Preferred Stock | General and administrative expenses | Securities Purchase Agreement | ||||
Redeemable Preferred Shares | ||||
Temporary equity adjustment | $ 5,600 |
(Loss) Earnings per Share (Deta
(Loss) Earnings per Share (Details) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2019USD ($)$ / shares | Sep. 29, 2019USD ($)$ / shares | Jun. 30, 2019USD ($)$ / shares | Mar. 31, 2019USD ($)$ / shares | Dec. 30, 2018USD ($)$ / shares | Sep. 30, 2018USD ($)$ / shares | Jul. 01, 2018USD ($)$ / shares | Apr. 01, 2018USD ($)$ / shares | Dec. 29, 2019USD ($)item$ / sharesshares | Dec. 30, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Number of joint ventures for which the increase in redemption value for the noncontrolling interest reduces income attributable to common shareholders | item | 1 | ||||||||||
Change in redemption value of noncontrolling interests | $ 1,419,000 | ||||||||||
Basic (loss) earnings per common share: | |||||||||||
Net income (loss) attributable to the Company | $ (2,142,000) | $ 385,000 | $ 8,354,000 | $ (1,731,000) | $ (12,868,000) | $ (13,300,000) | $ 11,199,000 | $ 17,443,000 | $ 4,866,000 | $ 2,474,000 | 102,292,000 |
Preferred stock dividends and accretion | (12,499,000) | ||||||||||
Change in noncontrolling interest redemption value | 1,419,000 | ||||||||||
Net income attributable to participating securities | (423,000) | ||||||||||
Net (loss) income attributable to common shareholders | $ (7,633,000) | $ 2,474,000 | $ 103,288,000 | ||||||||
Basic weighted average common shares outstanding | shares | 31,632,000 | 32,083,000 | 36,083,000 | ||||||||
Basic (loss) earnings per common share | $ / shares | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ (0.41) | $ (0.42) | $ 0.35 | $ 0.52 | $ (0.24) | $ 0.08 | $ 2.86 |
Diluted (loss) earnings per common share: | |||||||||||
Net (loss) income attributable to common shareholders | $ (7,633,000) | $ 2,474,000 | $ 103,288,000 | ||||||||
Basic weighted average common shares outstanding | shares | 31,632,000 | 32,083,000 | 36,083,000 | ||||||||
Dilutive effect of outstanding equity awards | shares | 216,000 | 439,000 | |||||||||
Diluted weighted average common shares outstanding | shares | 31,632,000 | 32,299,000 | 36,522,000 | ||||||||
Diluted (loss) earnings per common share | $ / shares | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ (0.41) | $ (0.42) | $ 0.35 | $ 0.52 | $ (0.24) | $ 0.08 | $ 2.83 |
Weighted average antidilutive awards excluded from computation of earnings per share | shares | 1,200,000 | 278,000 | |||||||||
Joint ventures | |||||||||||
Change in redemption value of noncontrolling interests | $ 0 | $ 0 | $ 1,400,000 | ||||||||
Basic (loss) earnings per common share: | |||||||||||
Change in noncontrolling interest redemption value | $ 0 | $ 0 | $ 1,400,000 | ||||||||
Series B Preferred Stock | |||||||||||
Diluted (loss) earnings per common share: | |||||||||||
Weighted average antidilutive awards excluded from computation of earnings per share | shares | 252,530 | ||||||||||
Weighted average antidilutive awards if converted | shares | 5,000,000 |
Fair Value Measurements and D_3
Fair Value Measurements and Disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Transfers among levels within the fair value hierarchy | $ 0 | $ 0 |
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 | 33,220 | 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 | 6,168 | |
Measured on Recurring Basis | Carrying Value | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Cash surrender value of life insurance policies | 33,220 | 27,751 |
Interest rate swap assets | $ 4,905 | |
Interest rate swap liabilities | $ 6,168 |
Noncontrolling Interests - Join
Noncontrolling Interests - Joint Ventures (Details) | Dec. 29, 2019restaurantentity | Dec. 30, 2018entityrestaurant |
Noncontrolling Interests | ||
Number of joint ventures | entity | 4 | 3 |
Joint ventures | ||
Noncontrolling Interests | ||
Number of Restaurants | restaurant | 192 | 183 |
Noncontrolling Interests - Inco
Noncontrolling Interests - Income Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Noncontrolling Interests | |||
Noncontrolling interests | $ 791 | $ 1,599 | $ 4,233 |
Joint ventures | |||
Noncontrolling Interests | |||
Papa John's International, Inc. | 2,560 | 5,794 | 7,181 |
Noncontrolling interests | 791 | 1,599 | 4,233 |
Total income before income taxes | $ 3,351 | $ 7,393 | $ 11,414 |
Noncontrolling Interests - Chan
Noncontrolling Interests - Changes in Redeemable Noncontrolling Interests (Details) | 12 Months Ended | ||
Dec. 29, 2019USD ($)item | Dec. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Redeemable Noncontrolling Interests | |||
Number of joint ventures under which noncontrolling interest holders have the option to require the Company to purchase their interests | item | 2 | ||
Changes in redeemable noncontrolling interests | |||
Balance at the beginning of the period | $ 5,464,000 | ||
Contributions from noncontrolling interests | $ 2,956,000 | ||
Distributions to noncontrolling interests | (870,000) | $ (2,406,000) | (2,949,000) |
Change in redemption value | (1,419,000) | ||
Balance at the end of the period | 5,785,000 | 5,464,000 | |
Joint ventures | |||
Changes in redeemable noncontrolling interests | |||
Balance at the beginning of the period | 5,464,000 | 6,738,000 | |
Net income (loss) | (519,000) | (274,000) | |
Contributions from noncontrolling interests | 840,000 | ||
Distributions to noncontrolling interests | (1,000,000) | ||
Change in redemption value | 0 | 0 | (1,400,000) |
Balance at the end of the period | $ 5,785,000 | $ 5,464,000 | $ 6,738,000 |
Divestitures - Divestitures (De
Divestitures - Divestitures (Details) | Jul. 02, 2018USD ($)restaurant | Jun. 15, 2018USD ($)restaurant | Dec. 29, 2019USD ($)restaurant | Sep. 29, 2019USD ($)restaurant | Sep. 30, 2018USD ($) | Apr. 01, 2018USD ($)restaurant | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($)restaurant | Dec. 31, 2017USD ($) |
Goodwill written off | $ 4,435,000 | $ 1,359,000 | |||||||
Number of owned restaurants refranchising completed | restaurant | 3 | ||||||||
Impairment loss | $ 1,674,000 | ||||||||
Proceeds from divestitures of restaurants | 13,495,000 | 7,707,000 | |||||||
Refranchising and impairment gains (losses), net | 4,739,000 | $ (289,000) | (1,674,000) | ||||||
Stores in Macon, GA | |||||||||
Number of restaurants divested | restaurant | 19 | ||||||||
Total consideration for asset sale of restaurants | $ 5,600,000 | ||||||||
Refranchising gains (losses), net | 1,700,000 | ||||||||
Goodwill written off | $ 2,000,000 | ||||||||
Stores in South Florida | |||||||||
Number of restaurants divested | restaurant | 23 | ||||||||
Total consideration for asset sale of restaurants | $ 7,500,000 | $ 7,500,000 | |||||||
Refranchising gains (losses), net | 2,900,000 | ||||||||
Goodwill written off | $ 2,400,000 | ||||||||
Stores in Denver, Colorado market | |||||||||
Number of restaurants divested | restaurant | 31 | ||||||||
Ownership share in stores refranchised (as a percent) | 60.00% | ||||||||
Total consideration for asset sale of restaurants | $ 4,800,000 | ||||||||
Consideration for asset sale, notes financed by Papa John's | 1,100,000 | ||||||||
Goodwill written off | 700,000 | ||||||||
Proceeds from divestitures of restaurants | 3,700,000 | ||||||||
Refranchising and impairment gains (losses), net | $ 690,000 | ||||||||
Stores in Minneapolis, Minnesota market | |||||||||
Number of restaurants divested | restaurant | 31 | ||||||||
Ownership share in stores refranchised (as a percent) | 70.00% | ||||||||
Total consideration for asset sale of restaurants | $ 3,750,000 | ||||||||
Goodwill written off | $ 600,000 | ||||||||
Refranchising and impairment gains (losses), net | $ 930,000 | ||||||||
Stores in Beijing and Tianjin, China | |||||||||
Number of restaurants divested | restaurant | 34 | 34 | |||||||
Impairment loss | $ 1,700,000 | ||||||||
Refranchising and impairment gains (losses), net | $ (1,900,000) | ||||||||
Reversal of accumulated other comprehensive income related to foreign currency translation | 1,300,000 | $ 1,300,000 | |||||||
Additional tax expense associated with divestiture of restaurants | $ 2,400,000 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019USD ($)itemrestaurant | Dec. 30, 2018USD ($)restaurantitem | Dec. 31, 2017USD ($) | |
Goodwill | |||
Goodwill, Beginning Balance | $ 84,516 | $ 86,892 | |
Divestitures | (4,435) | (1,359) | |
Foreign currency adjustments | 259 | (1,017) | |
Goodwill, Ending Balance | 80,340 | 84,516 | $ 86,892 |
Goodwill impairment loss | 0 | 0 | 0 |
Domestic Company-owned Restaurants | |||
Goodwill | |||
Goodwill, Beginning Balance | 68,689 | 70,048 | |
Divestitures | (4,435) | (1,359) | |
Goodwill, Ending Balance | $ 64,254 | $ 68,689 | 70,048 |
Number of restaurants divested | restaurant | 46 | 62 | |
Number of domestic markets in which restaurants divested | item | 2 | 2 | |
International | |||
Goodwill | |||
Goodwill, Beginning Balance | $ 15,391 | $ 16,408 | |
Foreign currency adjustments | 259 | (1,017) | |
Goodwill, Ending Balance | 15,650 | 15,391 | 16,408 |
Goodwill, accumulated impairment | 2,300 | 2,300 | 2,300 |
All others | |||
Goodwill | |||
Goodwill, Beginning Balance | 436 | 436 | |
Goodwill, Ending Balance | $ 436 | $ 436 | $ 436 |
Debt and Credit Arrangements -
Debt and Credit Arrangements - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Debt and Credit Arrangements | ||
Outstanding debt | $ 370,000 | $ 625,009 |
Unamortized debt issuance costs | (2,710) | (3,874) |
Current portion of long-term debt | (20,000) | (20,009) |
Total long-term debt, less current portion, net | $ 347,290 | $ 601,126 |
Debt and Credit Arrangements _2
Debt and Credit Arrangements - Credit Agreements (Details) | 12 Months Ended | ||
Dec. 29, 2019USD ($)item$ / shares | Dec. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt | |||
Outstanding debt | $ 370,000,000 | $ 625,009,000 | |
Quarterly dividend paid per common share (in dollars per share) | $ / shares | $ 0.90 | ||
Dividends paid to common shareholders | $ 28,552,000 | 28,985,000 | $ 30,720,000 |
Debt issuance costs | 2,710,000 | $ 3,874,000 | |
PJI Facilities | |||
Debt | |||
Outstanding debt | $ 370,000,000 | ||
Number of quarters in interest margin period | item | 4 | ||
Line of credit facility, remaining availability | $ 343,800,000 | ||
Debt issuance costs | $ 2,700,000 | ||
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 | $ 35,000,000 | ||
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 | $ 300,000,000 | ||
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 | $ 20,000,000 | ||
Outstanding debt | $ 0 | ||
Applicable interest rate | 4.10% | 3.40% | 2.50% |
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 | $ 400,000,000 | ||
Outstanding debt | 10,000,000 | ||
Line of credit facility, maximum borrowing capacity of foreign currencies | 35,000,000 | ||
Term Loan Facility | PJI Facilities | |||
Debt | |||
Outstanding debt | 360,000,000 | ||
Quarterly amortization payment | $ 5,000,000 |
Debt and Credit Arrangements _3
Debt and Credit Arrangements - Derivatives (Details) - USD ($) $ in Millions | Dec. 29, 2019 | Apr. 28, 2019 |
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, $50 million notional amount | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 50 | |
Interest rate swap agreement, fixed interest rate | 2.00% | |
Interest rate swap | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 350 | |
Terminated interest rate swaps | ||
Interest rate swaps | ||
Interest rate swap agreement, notional amount | $ 50 |
Debt and Credit Arrangements _4
Debt and Credit Arrangements - Interest Rate Swaps (Details) - Interest rate swap - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Other current and long-term assets | ||
Debt and Credit Arrangements | ||
Derivatives designated as hedging instruments, fair value | $ 4,905 | |
Other current and long-term Liabilities | ||
Debt and Credit Arrangements | ||
Derivatives designated as hedging instruments, fair value | $ 6,168 |
Debt and Credit Arrangements _5
Debt and Credit Arrangements - Effect of Derivatives on Financial Statements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Debt and Credit Arrangements | |||
Total Net interest expense on Consolidated Statements of Operations | $ (20,593) | $ (25,673) | $ (11,283) |
Weighted average interest rates on debt, including the impact of interest rate swap agreements | 4.10% | 3.90% | 2.70% |
Interest paid, including payments made or received under the swaps | $ 18,100 | $ 23,500 | $ 10,800 |
Interest rate swap | |||
Debt and Credit Arrangements | |||
Portion of derivative liability that would be reclassified into earnings | 6,200 | ||
Interest expense | Interest rate swap | |||
Debt and Credit Arrangements | |||
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative | (8,303) | 3,222 | 891 |
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | 660 | (22) | (421) |
Total Net interest expense on Consolidated Statements of Operations | (20,593) | $ (25,673) | $ (11,283) |
Portion of derivative liability that would be reclassified into earnings | $ 2,300 | ||
Estimate of period of time over which portion of derivative liability would be reclassified into earnings | 12 months |
Net Property and Equipment (Det
Net Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment | |||
Property and equipment, gross | $ 676,406 | $ 665,172 | |
Accumulated depreciation and amortization | (464,665) | (438,278) | $ (406,168) |
Property and equipment, net | 211,741 | 226,894 | $ 234,331 |
Land | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 33,349 | 33,833 | |
Buildings and improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 91,514 | 91,665 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 121,127 | 125,192 | |
Equipment and other | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 423,556 | 402,991 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Property and equipment, gross | $ 6,860 | $ 11,491 |
Notes Receivable - Loan Agreeme
Notes Receivable - Loan Agreement (Details) - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Notes Receivable | |||
Loans outstanding, net of allowance for doubtful accounts | $ 40,800,000 | $ 28,800,000 | |
Interest income on franchisee loans | 800,000 | 750,000 | $ 579,000 |
Allowance for uncollectible notes receivable | $ 3,572,000 | $ 3,369,000 | $ 1,047,000 |
Notes Receivable - Summary of C
Notes Receivable - Summary of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Notes Receivable | ||
Balance at the beginning of the period | $ 3,369 | $ 1,047 |
Recovered from costs and expenses | (77) | (393) |
Additions, net of notes written off | 280 | 2,715 |
Balance at the end of the period | $ 3,572 | $ 3,369 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Insurance reserves, current | $ 32,028 | $ 33,769 |
Salaries, benefits and bonuses | 22,659 | 12,979 |
Marketing | 15,930 | 27,746 |
Customer loyalty program | 5,624 | 6,022 |
Purchases | 10,768 | 11,336 |
Consulting and professional fees | 7,180 | 8,693 |
Rent | 4,274 | 3,932 |
Legal costs | 3,487 | 2,093 |
Deposits | 2,026 | 1,415 |
Utilities | 405 | 1,478 |
Other | 9,760 | 7,707 |
Total | 120,566 | 129,167 |
Customer loyalty program | ||
Customer loyalty program | $ 12,049 | $ 18,019 |
Other Long-term Liabilities (De
Other Long-term Liabilities (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
Other Long-term Liabilities | |||
Insurance reserves | $ 45,151 | $ 42,144 | |
Deferred compensation plan | 33,220 | 27,796 | |
Accrued rent | 6,461 | ||
Other | 6,556 | 2,923 | |
Total | $ 84,927 | $ 72,823 | $ 79,324 |
Other General Expenses (Details
Other General Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
General and Administrative Expenses | |||
Provision (credit) for uncollectible accounts and notes receivable | $ 3,139 | $ 6,849 | $ 29 |
Advertising and related costs | 54,300 | 60,800 | 72,300 |
General and administrative expenses | 223,460 | 193,534 | 150,866 |
General and administrative expenses | |||
General and Administrative Expenses | |||
Starboard option valuation | 5,600 | ||
Provision (credit) for uncollectible accounts and notes receivable | 2,764 | 3,338 | (1,441) |
Loss on disposition of fixed assets | 1,130 | 2,233 | 2,493 |
Franchise support initiative | 34 | 2,986 | |
Other (income) expense | (915) | (1,725) | 343 |
Other general expenses | 2,979 | 3,880 | 5,427 |
Special charges | 41,322 | 35,316 | |
Marketing fund investment amount | 27,500 | 10,000 | |
Advisory and legal costs | 5,900 | 19,500 | |
Severance costs | 2,400 | ||
Reimaging costs | 5,800 | ||
Administrative expenses | 223,460 | 193,534 | 150,866 |
Management incentive costs and professional fees | 24,800 | ||
Technology initiative costs and contribution to Papa John's foundation | 8,900 | ||
Contribution to Papa Johns Foundation | 1,500 | ||
General and administrative expenses | 179,159 | $ 154,338 | 145,439 |
General and administrative expenses | Series B Preferred Stock | |||
General and Administrative Expenses | |||
Aggregate purchase price of shares | $ 50,000 | ||
Papa Rewards | General and administrative expenses | |||
General and Administrative Expenses | |||
Advertising and related costs | $ 1,046 |
Income Taxes - Domestic and For
Income Taxes - Domestic and Foreign Components of Income and Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Components of income (loss) before income taxes | |||
Domestic (loss) income | $ (16,065) | $ (9,665) | $ 122,828 |
Foreign income | 21,111 | 16,362 | 17,514 |
Income before income taxes | 5,046 | 6,697 | 140,342 |
Foreign income subject to foreign withholding taxes | 15,600 | 12,100 | 3,000 |
Current: | |||
Federal | (2,734) | (5,262) | 28,951 |
Foreign | 5,077 | 4,736 | 4,602 |
State and local | 810 | 1,530 | (234) |
Deferred: | |||
Deferred | (3,764) | 1,620 | 498 |
Total income taxes | $ (611) | $ 2,624 | $ 33,817 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Deferred tax assets | ||
Accrued liabilities | $ 16,686 | $ 16,828 |
Accrued bonuses | 2,308 | 724 |
Other assets and liabilities | 16,244 | 10,705 |
Equity awards | 7,196 | 5,862 |
Lease liability | 30,756 | |
Other | 2,418 | 2,482 |
Net operating losses | 8,205 | 1,555 |
Foreign tax credit carryforwards | 10,049 | 7,230 |
Total deferred tax assets | 93,862 | 45,386 |
Valuation allowances | (17,303) | (8,183) |
Total deferred tax assets, net of valuation allowances | 76,559 | 37,203 |
Deferred tax liabilities | ||
Deferred expenses | (9,521) | (5,970) |
Accelerated depreciation | (27,299) | (24,239) |
Goodwill | (9,510) | (12,645) |
Right-of-use asset | (30,257) | |
Other | (782) | (1,064) |
Total deferred tax liabilities | (77,369) | (43,918) |
Net deferred liability | (810) | (6,715) |
Other tax disclosures | ||
Net operating loss carryovers | 6,600 | |
Valuation allowance related to net operating losses | $ 6,600 | |
Expiration term of foreign tax credit carryforwards | 10 years | |
Foreign tax authority | ||
Other tax disclosures | ||
Net operating loss carryovers | $ 6,200 | 5,300 |
Valuation allowance related to net operating losses | 500 | $ 600 |
Foreign tax credit carryforwards | ||
Deferred tax assets | ||
Valuation allowances | $ (10,000) |
Income Taxes - Reconciliation a
Income Taxes - Reconciliation and Tax Act (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 |
Income Tax Expense | |||||
Tax at U.S. federal statutory rate | $ 1,060,000 | $ 1,406,000 | $ 49,120,000 | ||
State and local income taxes | 79,000 | 150,000 | 2,432,000 | ||
Foreign income taxes | 5,058,000 | 4,879,000 | 5,306,000 | ||
Income of consolidated partnerships attributable to noncontrolling interests | (177,000) | (371,000) | (1,554,000) | ||
Non-qualified deferred compensation plan (income) loss | (1,260,000) | 483,000 | (1,236,000) | ||
Excess tax (benefits) expense on equity awards | (212,000) | 447,000 | (1,879,000) | ||
Preferred stock option mark-to-market adjustment | 1,338,000 | ||||
Remeasurement of deferred taxes | $ (7,000,000) | (7,020,000) | |||
Tax credits | (6,128,000) | (6,945,000) | (6,909,000) | ||
Disposition of China | 4,118,000 | ||||
Other | (369,000) | (1,543,000) | (4,443,000) | ||
Total income taxes | $ (611,000) | $ 2,624,000 | $ 33,817,000 | ||
Income Tax Rate | |||||
Tax at U.S. federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% | 35.00% | |
State and local income taxes (as a percent) | 1.60% | 2.20% | 1.70% | ||
Foreign income taxes (as a percent) | 100.20% | 72.90% | 3.80% | ||
Income of consolidated partnerships attributable to noncontrolling interests (as a percent) | (3.50%) | (5.60%) | (1.10%) | ||
Non-qualified deferred compensation plan (income) loss (as a percent) | (25.00%) | 7.20% | (0.90%) | ||
Excess tax (benefits) expense on equity awards (as a percent) | (4.20%) | 6.70% | (1.40%) | ||
Preferred stock option mark-to-market adjustment (as a percent) | 26.50% | ||||
Remeasurement of deferred taxes (as a percent) | (5.00%) | ||||
Tax credits (as a percent) | (121.40%) | (103.70%) | (4.90%) | ||
Disposition of China (as a percent) | 61.50% | ||||
Other (as a percent) | (7.30%) | (23.00%) | (3.10%) | ||
Total (as a percent) | (12.10%) | 39.20% | 24.10% | ||
Income taxes (received) paid | $ (6,200,000) | $ 14,000,000 | $ 37,200,000 | ||
Decrease in liability for unrecognized tax benefits resulting from finalization of current examinations and other issues in the next 12 months | $ 86,000 |
Income Taxes - Tax Benefits (De
Income Taxes - Tax Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Income Taxes | ||
Balance at the beginning of the period | $ 2,023,000 | $ 2,028,000 |
Additions for tax positions of prior years | 179,000 | 510,000 |
Reductions for tax positions of prior years | (623,000) | (515,000) |
Balance at the end of the period | 1,579,000 | 2,023,000 |
Interest expense (benefit) included in income tax expense | 11,000 | (39,000) |
Income tax expense, accrued interest and penalties | $ 154,000 | $ 165,000 |
Related Party Transactions - Fr
Related Party Transactions - Franchisees (Details) | Jun. 11, 2019USD ($)shares | May 27, 2019USD ($)restaurant | Dec. 29, 2019USD ($) | Sep. 29, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($) | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Related party transactions | |||||||||||||
Revenues | $ 417,514,000 | $ 403,706,000 | $ 399,623,000 | $ 398,405,000 | $ 397,566,000 | $ 385,231,000 | $ 429,952,000 | $ 450,122,000 | $ 1,619,248,000 | $ 1,662,871,000 | $ 1,783,359,000 | ||
Related Party Restricted Stock Units Shares Issued | shares | 87,136 | ||||||||||||
North America commissary | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 612,652,000 | 609,866,000 | 673,712,000 | ||||||||||
All others | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 179,791,000 | 170,983,000 | |||||||||||
North America franchising | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 71,828,000 | 79,293,000 | 106,729,000 | ||||||||||
Franchisees owned by related parties | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 3,615,000 | 3,732,000 | 3,394,000 | ||||||||||
Accounts receivable - affiliates | $ 71,000 | $ 69,000 | 71,000 | 69,000 | |||||||||
Franchisees owned by related parties | North America commissary | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 2,697,000 | 2,653,000 | 2,619,000 | ||||||||||
Franchisees owned by related parties | All others | |||||||||||||
Related party transactions | |||||||||||||
Revenues | 587,000 | 650,000 | 336,000 | ||||||||||
Franchisees owned by related parties | North America franchising | |||||||||||||
Related party transactions | |||||||||||||
Revenues | $ 331,000 | $ 429,000 | $ 439,000 | ||||||||||
Mr. Shaquille O'Neal | |||||||||||||
Related party transactions | |||||||||||||
Cash payments | $ 4,125,000 | ||||||||||||
Period of related party agreement | 3 years | ||||||||||||
Period of extension of agreement | 1 year | ||||||||||||
Number of restaurants included in joint venture agreement | restaurant | 9 | ||||||||||||
Ownership percentage of joint venture by Company (as a percent) | 70.00% | ||||||||||||
Ownership percentage of joint venture by Partner (as a percent) | 30.00% | ||||||||||||
The amount contributed to joint venture by Partner | $ 840,000 |
Related Party Transactions - Fo
Related Party Transactions - Founder and Chairman and PJMF (Details) - USD ($) | 12 Months Ended | |
Dec. 30, 2018 | Dec. 31, 2017 | |
Transactions with entity owned by Founder | ||
Related party transactions | ||
Cash paid for charter aircraft services | $ 300,000 | $ 446,000 |
Litigation, Commitments and C_2
Litigation, Commitments and Contingencies - Durling (Details) - Pending Litigation | Dec. 29, 2019USD ($) | Oct. 29, 2018employee |
Durling et al v. Papa John's International, Inc. | ||
Loss Contingency Information About Litigation Matters | ||
Approximate number of employees who opted into the class action | employee | 9,571 | |
Expected future costs | $ 0 | |
Danker V. Papa John's International, Inc. | ||
Loss Contingency Information About Litigation Matters | ||
Expected future costs | $ 0 |
Equity Compensation - Other (De
Equity Compensation - Other (Details) - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Stock-based employee compensation expense | $ 15,300,000 | $ 9,900,000 | $ 10,400,000 |
Total income tax benefit recognized for share-based compensation arrangements | 3,400,000 | $ 2,300,000 | $ 3,800,000 |
Unrecognized compensation cost related to nonvested option awards and restricted stock | 16,400,000 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock, current | 10,800,000 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock to be recognized in two years | 4,600,000 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock to be recognized in three years | $ 1,000,000 | ||
Exercise of stock options (in shares) | 448,000 | 75,000 | 147,000 |
Total intrinsic value of the options exercised | $ 10,600,000 | $ 1,500,000 | $ 5,200,000 |
Cash received upon exercise of stock options | 16,010,000 | 2,699,000 | 6,260,000 |
Tax benefits (expense) realized upon the exercise of stock options | $ 200,000 | $ (400,000) | $ 1,900,000 |
Omnibus Incentive 2018 Plan | |||
Equity Compensation | |||
Shares of common stock authorized for issuance | 5,300,000 | ||
Shares of common stock available for future issuance | 5,300,000 | ||
Omnibus Incentive 2011 Plan | |||
Equity Compensation | |||
Shares of common stock available for future issuance | 5,300,000 | ||
Options | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Options | Maximum | |||
Equity Compensation | |||
Award expiration period, in years | 10 years | ||
Options | Omnibus Incentive 2018 Plan | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Options | Omnibus Incentive 2018 Plan | Maximum | |||
Equity Compensation | |||
Award expiration period, in years | 10 years |
Equity Compensation - Option Ac
Equity Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Number of Options | |||
Number of Options, Outstanding (in shares) | 1,614,000 | ||
Number of Options, Granted (in shares) | 353,000 | 456,000 | 315,000 |
Number of Options, Exercised (in shares) | (448,000) | (75,000) | (147,000) |
Number of Options, Cancelled (in shares) | (314,000) | ||
Number of Options, Outstanding (in shares) | 1,205,000 | 1,614,000 | |
Number of Options, Exercisable (in shares) | 653,000 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 54.27 | ||
Weighted Average Exercise Price, Granted (in dollars per share) | 44.05 | ||
Weighted Average Exercise Price, Exercised (in dollars per share) | 35.77 | ||
Weighted Average Exercise Price, Cancelled (in dollars per share) | 63.72 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | 55.67 | $ 54.27 | |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 58.48 | ||
Options, Additional Disclosures | |||
Weighted Average Remaining Contractual Term, Outstanding | 7 years 2 months 1 day | ||
Weighted Average Remaining Contractual Term, Exercisable | 5 years 10 months 24 days | ||
Aggregate Intrinsic Value, Outstanding | $ 13,120 | ||
Aggregate Intrinsic Value, Exercisable | $ 5,704 |
Equity Compensation - Fair Valu
Equity Compensation - Fair Value (Details) - Options | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Assumptions (weighted average): | |||
Risk-free interest rate (as a percent) | 2.50% | 2.70% | 2.00% |
Expected dividend yield (as a percent) | 2.10% | 1.50% | 1.00% |
Expected volatility (as a percent) | 31.20% | 27.60% | 26.70% |
Expected term (in years) | 5 years 8 months 12 days | 5 years 7 months 6 days | 5 years 7 months 6 days |
Equity Compensation - Vesting (
Equity Compensation - Vesting (Details) - $ / shares | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Weighted average grant-date fair values of options granted | $ 11.69 | $ 15.27 | $ 19.88 |
Options granted, shares | 353,000 | 456,000 | 315,000 |
Options | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Options | Maximum | |||
Equity Compensation | |||
Award expiration period, in years | 10 years |
Equity Compensation - RSU's (De
Equity Compensation - RSU's (Details) - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Restricted Stock | |||
Equity Compensation | |||
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 46.14 | ||
Restricted Shares, Granted | 414 | ||
Restricted Stock Units | |||
Equity Compensation | |||
Restricted Shares, Granted | 113,000 | ||
Restricted Stock Units | Minimum | |||
Equity Compensation | |||
Award vesting period, in years | 1 year | ||
Restricted Stock Units | Maximum | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Time based restricted stock | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | 3 years | 3 years |
Restricted Shares, Granted | 212,000 | 260,000 | 73,000 |
Dividends declared to holders of time-based restricted stock (in dollars) | $ 310,000 | $ 185,000 | $ 128,000 |
Dividends declared to holders of time-based restricted stock (in dollars per share) | $ 0.90 | $ 0.90 | $ 0.85 |
Performance based restricted stock units | |||
Equity Compensation | |||
Risk-free interest rate (as a percent) | 2.50% | ||
Expected volatility (as a percent) | 33.90% | ||
Award vesting period, in years | 3 years | 3 years | 3 years |
Award expiration period, in years | 10 years | ||
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 44.95 | ||
Performance based restricted stock units | Executive Management | |||
Equity Compensation | |||
Restricted Shares, Granted | 89,000 | 70,000 | 13,000 |
Equity Compensation - RSU Rollf
Equity Compensation - RSU Rollforward (Details) | 12 Months Ended |
Dec. 29, 2019$ / sharesshares | |
Restricted Stock | |
Shares | |
Restricted Shares, Beginning Balance | shares | 370 |
Restricted Shares, Granted | shares | 414 |
Restricted Shares, Forfeited | shares | (74) |
Restricted Shares, Vested | shares | (94) |
Restricted Shares, Ending Balance | shares | 616 |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant-Date Fair Value, Beginning Balance (in dollars per share) | $ 59.84 |
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | 46.14 |
Weighted Average Grant-Date Fair Value, Forfeited (in dollars per share) | 51.31 |
Weighted Average Grant-Date Fair Value, Vested (in dollars per share) | 62.45 |
Weighted Average Grant-Date Fair Value, Ending Balance (in dollars per share) | 50.90 |
Performance based restricted stock units | |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 44.95 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Employee Benefit Plans | |||
Deferred compensation plan assets, noncurrent | $ 33,200 | $ 27,800 | |
Deferred compensation liability classified, noncurrent | $ 33,220 | $ 27,796 | |
Employer discretionary matching contribution made to 401(k) plan and non-qualified deferred compensation plan, percentage | 2.10% | 1.50% | 3.00% |
Maximum employee contribution percentage eligible for employer match | 6.00% | 6.00% | 6.00% |
Costs of 401(k) plan and non-qualified deferred compensation plan | $ 1,500 | $ 1,100 | $ 2,300 |
Segment Information - Concentra
Segment Information - Concentration (Details) | 12 Months Ended |
Dec. 29, 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 | 12 Months Ended | |||||||||
Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 30, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Segment Information | |||||||||||
Total revenues | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 397,566 | $ 385,231 | $ 429,952 | $ 450,122 | $ 1,619,248 | $ 1,662,871 | $ 1,783,359 |
Depreciation and amortization | 47,281 | 46,403 | 43,668 | ||||||||
Income (loss) before income taxes | 5,046 | 6,697 | 140,342 | ||||||||
Refranchising and impairment gains (losses), net | 4,739 | (289) | (1,674) | ||||||||
Impairment loss | 1,674 | ||||||||||
Property and equipment, gross | 676,406 | 665,172 | 676,406 | 665,172 | |||||||
Accumulated depreciation and amortization | (464,665) | (438,278) | (464,665) | (438,278) | (406,168) | ||||||
Property and equipment, net | 211,741 | 226,894 | 211,741 | 226,894 | 234,331 | ||||||
Expenditures for property and equipment | 37,711 | 42,028 | 52,593 | ||||||||
China Operations | |||||||||||
Segment Information | |||||||||||
Refranchising loss | 1,900 | ||||||||||
Impairment loss | 1,700 | ||||||||||
Domestic Company-owned restaurants | |||||||||||
Segment Information | |||||||||||
Total revenues | 652,053 | 692,380 | 816,718 | ||||||||
Refranchising and impairment gains (losses), net | 4,700 | 1,600 | |||||||||
North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | 71,828 | 79,293 | 106,729 | ||||||||
North America franchising | Negative publicity and consumer sentiment | |||||||||||
Segment Information | |||||||||||
Special charges | 19,100 | 15,400 | |||||||||
International | |||||||||||
Segment Information | |||||||||||
Total revenues | 102,924 | 110,349 | 114,021 | ||||||||
All others | |||||||||||
Segment Information | |||||||||||
Total revenues | 179,791 | 170,983 | |||||||||
Operating segments | |||||||||||
Segment Information | |||||||||||
Total revenues | 1,619,248 | 1,662,871 | |||||||||
Operating segments | Domestic Company-owned restaurants | |||||||||||
Segment Information | |||||||||||
Total revenues | 652,053 | 692,380 | 816,718 | ||||||||
Depreciation and amortization | 12,883 | 15,411 | 15,484 | ||||||||
Income (loss) before income taxes | 33,957 | 18,988 | 47,548 | ||||||||
Property and equipment, gross | 221,420 | 236,526 | 221,420 | 236,526 | 235,640 | ||||||
Expenditures for property and equipment | 8,811 | 13,568 | 15,245 | ||||||||
Operating segments | North America commissaries | |||||||||||
Segment Information | |||||||||||
Total revenues | 612,652 | 609,866 | 673,712 | ||||||||
Depreciation and amortization | 8,131 | 7,397 | 6,897 | ||||||||
Income (loss) before income taxes | 30,439 | 27,961 | 47,844 | ||||||||
Transfer of expenses between unallocated corporate and segments | 7,900 | ||||||||||
Property and equipment, gross | 142,946 | 140,309 | 142,946 | 140,309 | 136,701 | ||||||
Expenditures for property and equipment | 3,773 | 3,994 | 14,767 | ||||||||
Operating segments | North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | 71,828 | 79,293 | 106,729 | ||||||||
Income (loss) before income taxes | 64,362 | 70,732 | 96,298 | ||||||||
Operating segments | International | |||||||||||
Segment Information | |||||||||||
Total revenues | 126,077 | 131,268 | 126,285 | ||||||||
Depreciation and amortization | 1,722 | 1,696 | 2,018 | ||||||||
Income (loss) before income taxes | 19,110 | 14,399 | 15,888 | ||||||||
Property and equipment, gross | 16,031 | 17,218 | 16,031 | 17,218 | 17,257 | ||||||
Expenditures for property and equipment | 1,143 | 986 | 1,884 | ||||||||
Operating segments | All others | |||||||||||
Segment Information | |||||||||||
Total revenues | 156,638 | 150,064 | 59,915 | ||||||||
Depreciation and amortization | 10,738 | 8,513 | 5,276 | ||||||||
Income (loss) before income taxes | (2,500) | (6,082) | (179) | ||||||||
Transfer of expenses between unallocated corporate and segments | 3,500 | ||||||||||
Property and equipment, gross | 84,167 | 71,880 | 84,167 | 71,880 | 58,977 | ||||||
Expenditures for property and equipment | 11,541 | 13,438 | 8,239 | ||||||||
Elimination | |||||||||||
Segment Information | |||||||||||
Total revenues | (278,332) | (276,639) | (265,029) | ||||||||
Income (loss) before income taxes | (967) | (1,005) | (958) | ||||||||
Elimination | North America commissaries | |||||||||||
Segment Information | |||||||||||
Total revenues | (187,073) | (201,325) | (244,699) | ||||||||
Elimination | North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | (2,782) | (2,965) | (3,342) | ||||||||
Elimination | International | |||||||||||
Segment Information | |||||||||||
Total revenues | (191) | (283) | (273) | ||||||||
Elimination | All others | |||||||||||
Segment Information | |||||||||||
Total revenues | (88,286) | (72,066) | (16,715) | ||||||||
Unallocated corporate | |||||||||||
Segment Information | |||||||||||
Depreciation and amortization | 13,807 | 13,386 | 13,993 | ||||||||
Income (loss) before income taxes | (139,355) | (118,296) | (66,099) | ||||||||
Transfer of expenses between unallocated corporate and segments | 13,200 | ||||||||||
Special charges | 41,300 | 35,300 | |||||||||
Property and equipment, gross | $ 211,842 | $ 199,239 | 211,842 | 199,239 | 191,924 | ||||||
Expenditures for property and equipment | $ 12,443 | $ 10,042 | $ 12,458 |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 30, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Revenue disaggregation | |||||||||||
Total revenues | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 397,566 | $ 385,231 | $ 429,952 | $ 450,122 | $ 1,619,248 | $ 1,662,871 | $ 1,783,359 |
Domestic Company-owned restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 652,053 | 692,380 | 816,718 | ||||||||
North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 71,828 | 79,293 | 106,729 | ||||||||
North America commissary | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 612,652 | 609,866 | 673,712 | ||||||||
International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 102,924 | 110,349 | |||||||||
International. | International other revenue | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (23,344) | (21,202) | |||||||||
International. | International eliminations | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 191 | 283 | |||||||||
All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 179,791 | 170,983 | |||||||||
All others | International other revenue | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 23,344 | 21,202 | |||||||||
All others | International eliminations | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (191) | (283) | |||||||||
Operating segments | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 1,619,248 | 1,662,871 | |||||||||
Operating segments | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 652,053 | 698,617 | |||||||||
Operating segments | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 863,904 | 879,315 | |||||||||
Operating segments | Franchise Fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 113,355 | 118,246 | |||||||||
Operating segments | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 268,268 | 243,332 | |||||||||
Operating segments | Domestic Company-owned restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 652,053 | 692,380 | 816,718 | ||||||||
Operating segments | Domestic Company-owned restaurants | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 652,053 | 692,380 | |||||||||
Operating segments | North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 71,828 | 79,293 | 106,729 | ||||||||
Operating segments | North America franchising | Franchise Fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 74,610 | 82,258 | |||||||||
Operating segments | North America commissary | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 612,652 | 609,866 | |||||||||
Operating segments | North America commissary | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 799,725 | 811,191 | |||||||||
Operating segments | International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 126,077 | 131,268 | |||||||||
Other revenue from marketing fund contributions and sublease rental income | 23,200 | 20,900 | |||||||||
Operating segments | International. | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 6,237 | ||||||||||
Operating segments | International. | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 64,179 | 68,124 | |||||||||
Operating segments | International. | Franchise Fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 38,745 | 35,988 | |||||||||
Operating segments | International. | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 23,344 | 21,202 | |||||||||
Operating segments | All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 156,638 | 150,064 | 59,915 | ||||||||
Operating segments | All others | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 244,924 | 222,130 | |||||||||
Elimination | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (278,332) | (276,639) | (265,029) | ||||||||
Elimination | North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (2,782) | (2,965) | (3,342) | ||||||||
Elimination | North America commissary | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (187,073) | (201,325) | |||||||||
Elimination | International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (191) | (283) | |||||||||
Elimination | All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | $ (88,286) | $ (72,066) | $ (16,715) |
Quarterly Data - Unaudited, i_3
Quarterly Data - Unaudited, in Thousands, except Per Share Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 30, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Total revenues | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 397,566 | $ 385,231 | $ 429,952 | $ 450,122 | $ 1,619,248 | $ 1,662,871 | $ 1,783,359 |
Operating income (loss) | (132) | 4,927 | 14,231 | 5,509 | (7,326) | (14,170) | 24,910 | 28,139 | 24,535 | 31,553 | 151,017 |
Net income (loss) attributable to the Company | $ (2,142) | $ 385 | $ 8,354 | $ (1,731) | $ (12,868) | $ (13,300) | $ 11,199 | $ 17,443 | $ 4,866 | $ 2,474 | $ 102,292 |
Basic (loss) earnings per common share | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ (0.41) | $ (0.42) | $ 0.35 | $ 0.52 | $ (0.24) | $ 0.08 | $ 2.86 |
Diluted (loss) earnings per common share | (0.18) | (0.10) | 0.15 | (0.12) | (0.41) | (0.42) | 0.35 | 0.52 | (0.24) | 0.08 | 2.83 |
Dividends declared per common share | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.225 | $ 0.90 | $ 0.90 | $ 0.85 |
After tax loss from Special charges | $ (19,800) | $ (11,000) | $ (4,200) | $ (13,500) | $ 19,700 | $ 19,300 | |||||
Unfavorable impact on diluted EPS from Special charges | $ 0.62 | $ 0.35 | $ 0.13 | $ 0.43 | $ 0.63 | $ 0.61 | |||||
After tax gain related to refranchising of restaurants | $ 2,200 | $ 1,300 | $ 1,300 | ||||||||
After tax gain related to refranchising of restaurants (per share) | $ 0.07 | $ 0.04 | $ 0.04 | ||||||||
China Operations | |||||||||||
After tax loss from the sale of company-owned stores | $ 1,600 | ||||||||||
Impact on basic and diluted EPS from the sale of company-owned stores | $ 0.05 | ||||||||||
Tax increase related to refranchising of stores | $ 2,400 | ||||||||||
Unfavorable impact on basic and diluted EPS related to refranchising of stores | $ 0.07 |
Restatement of 2018 Consolida_3
Restatement of 2018 Consolidated Financial Statements - Impact of Corrections on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | Dec. 31, 2017 | Dec. 25, 2016 |
Percentage of domestic restaurants franchised | 80.00% | ||||
Assets | |||||
Cash and cash equivalents | $ 27,911 | $ 33,258 | |||
Accounts receivable, net | 80,921 | 78,118 | |||
Income tax receivable | 4,024 | 16,146 | |||
Prepaid expenses | $ 25,707 | 30,376 | |||
Other current assets | 5,678 | ||||
Total current assets | 181,546 | 196,277 | |||
Deferred income taxes, net | 1,839 | 1,137 | |||
Total assets | 730,721 | 595,897 | |||
Current liabilities: | |||||
Accounts payable | 29,141 | 27,106 | |||
Accrued expenses and other current liabilities | 120,566 | 129,167 | |||
Current deferred revenue | 5,624 | 6,022 | |||
Current portion of long-term debt | 20,000 | 20,009 | |||
Total current liabilities | 207,945 | 188,894 | |||
Deferred revenue | 14,722 | 17,250 | |||
Total liabilities | 790,459 | 894,446 | |||
Retained earnings | 205,697 | 242,182 | |||
Total stockholders' deficit | (316,656) | (304,013) | $ (105,954) | $ 9,801 | |
Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders' (deficit) | $ 730,721 | 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 | ||||
Current deferred revenue | 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' deficit | (302,134) | ||||
Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests 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 | ||||
Current deferred revenue | 3,579 | ||||
Current portion of long-term debt | 9 | ||||
Total current liabilities | 24,258 | ||||
Deferred revenue | 2,571 | ||||
Total liabilities | 26,829 | ||||
Retained earnings | (1,879) | ||||
Total stockholders' deficit | (1,879) | ||||
Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders' (deficit) | $ 24,950 |
Restatement of 2018 Consolida_4
Restatement of 2018 Consolidated Financial Statements - Impact of Corrections on Condensed Consolidated Statements of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 30, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Revenues: | |||||||||||
Total revenues | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 397,566 | $ 385,231 | $ 429,952 | $ 450,122 | $ 1,619,248 | $ 1,662,871 | $ 1,783,359 |
Costs and expenses: | |||||||||||
General and administrative expenses | 223,460 | 193,534 | 150,866 | ||||||||
Total costs and expenses | 1,599,452 | 1,631,029 | 1,630,668 | ||||||||
Operating income | (132) | 4,927 | 14,231 | 5,509 | (7,326) | (14,170) | 24,910 | 28,139 | 24,535 | 31,553 | 151,017 |
Interest expense | (20,593) | (25,673) | (11,283) | ||||||||
Income before income taxes | 5,046 | 6,697 | 140,342 | ||||||||
Income tax expense | (611) | 2,624 | 33,817 | ||||||||
Net income before attribution to noncontrolling interests | 5,657 | 4,073 | 106,525 | ||||||||
Net income attributable to the Company | $ (2,142) | $ 385 | $ 8,354 | $ (1,731) | $ (12,868) | $ (13,300) | $ 11,199 | $ 17,443 | 4,866 | 2,474 | 102,292 |
Net income attributable to common shareholders | $ (7,633) | $ 2,474 | $ 103,288 | ||||||||
Basic earnings per common share | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ (0.41) | $ (0.42) | $ 0.35 | $ 0.52 | $ (0.24) | $ 0.08 | $ 2.86 |
Diluted earnings per common share | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ (0.41) | $ (0.42) | $ 0.35 | $ 0.52 | $ (0.24) | $ 0.08 | $ 2.83 |
Domestic Company-owned restaurants | |||||||||||
Revenues: | |||||||||||
Total revenues | $ 652,053 | $ 692,380 | $ 816,718 | ||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | 526,237 | 577,658 | 664,640 | ||||||||
Other segment | |||||||||||
Revenues: | |||||||||||
Total revenues | 179,791 | 170,983 | 72,179 | ||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | $ 175,592 | 170,556 | $ 69,335 | ||||||||
As reported | |||||||||||
Revenues: | |||||||||||
Total revenues | 1,573,316 | ||||||||||
Costs and expenses: | |||||||||||
General and administrative expenses | 192,551 | ||||||||||
Total costs and expenses | 1,542,647 | ||||||||||
Operating income | 30,380 | ||||||||||
Interest expense | (25,306) | ||||||||||
Income before income taxes | 5,891 | ||||||||||
Income tax expense | 2,646 | ||||||||||
Net income before attribution to noncontrolling interests | 3,245 | ||||||||||
Net income attributable to the Company | 1,646 | ||||||||||
Net income attributable to common shareholders | $ 1,646 | ||||||||||
Basic earnings per common share | $ 0.05 | ||||||||||
Diluted earnings per common share | $ 0.05 | ||||||||||
As reported | Domestic Company-owned restaurants | |||||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | $ 576,799 | ||||||||||
As reported | Other segment | |||||||||||
Revenues: | |||||||||||
Total revenues | 81,428 | ||||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | 84,016 | ||||||||||
Total Adjustments | |||||||||||
Revenues: | |||||||||||
Total revenues | 89,555 | ||||||||||
Costs and expenses: | |||||||||||
General and administrative expenses | 983 | ||||||||||
Total costs and expenses | 88,382 | ||||||||||
Operating income | 1,173 | ||||||||||
Interest expense | (367) | ||||||||||
Income before income taxes | 806 | ||||||||||
Income tax expense | (22) | ||||||||||
Net income before attribution to noncontrolling interests | 828 | ||||||||||
Net income attributable to the Company | 828 | ||||||||||
Net income attributable to common shareholders | $ 828 | ||||||||||
Basic earnings per common share | $ 0.03 | ||||||||||
Diluted earnings per common share | $ 0.03 | ||||||||||
Total Adjustments | Domestic Company-owned restaurants | |||||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | $ 859 | ||||||||||
Total Adjustments | Other segment | |||||||||||
Revenues: | |||||||||||
Total revenues | 89,555 | ||||||||||
Costs and expenses: | |||||||||||
Operating costs (excluding depreciation and amortization shown separately below): | $ 86,540 |
Restatement of 2018 Consolida_5
Restatement of 2018 Consolidated Financial Statements - Impact of Corrections on Statement of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Operating activities | |||
Net income before attribution to noncontrolling interests | $ 5,657 | $ 4,073 | $ 106,525 |
Changes in operating assets and liabilities: | |||
Provision for uncollectible accounts and notes receivable | 3,139 | 6,849 | 29 |
Deferred income taxes | (3,764) | 1,620 | 498 |
Accounts receivable | (5,329) | 2,157 | (7,358) |
Income tax receivable | 12,122 | (12,157) | (1,531) |
Prepaid expenses | 792 | (1,039) | (4,414) |
Accounts payable | 2,035 | (400) | (8,743) |
Accrued expenses and other current liabilities | (11,331) | 21,753 | (3,012) |
Deferred revenue | 1,873 | ||
Net cash provided by operating activities | 61,749 | 92,454 | 134,975 |
Financing activities | |||
Net (repayments) proceeds of revolving credit facility | (240,026) | 163,585 | (225,575) |
Net cash used in financing activities | (34,574) | (48,097) | (72,060) |
Change in cash and cash equivalents | (5,347) | 5,367 | 6,782 |
Cash and cash equivalents at beginning of period | 33,258 | 27,891 | |
Cash and cash equivalents at end of period | 27,911 | 33,258 | 27,891 |
As reported | |||
Operating activities | |||
Net income before attribution to noncontrolling interests | 3,245 | ||
Changes in operating assets and liabilities: | |||
Provision for uncollectible accounts and notes receivable | 4,761 | ||
Deferred income taxes | 1,705 | ||
Accounts receivable | 1,386 | ||
Income tax receivable | (12,170) | ||
Prepaid expenses | (2,165) | ||
Accounts payable | (1,694) | ||
Accrued expenses and other current liabilities | 10,273 | ||
Deferred revenue | (271) | ||
Net cash provided by operating activities | 72,795 | ||
Financing activities | |||
Net (repayments) proceeds of revolving credit facility | 175,000 | ||
Net cash used in financing activities | (36,682) | ||
Change in cash and cash equivalents | (2,877) | ||
Cash and cash equivalents at beginning of period | 19,468 | 22,345 | |
Cash and cash equivalents at end of period | 19,468 | 22,345 | |
Total Adjustments | |||
Operating activities | |||
Net income before attribution to noncontrolling interests | 828 | ||
Changes in operating assets and liabilities: | |||
Provision for uncollectible accounts and notes receivable | 2,088 | ||
Deferred income taxes | (85) | ||
Accounts receivable | 771 | ||
Income tax receivable | 13 | ||
Prepaid expenses | 1,126 | ||
Accounts payable | 1,294 | ||
Accrued expenses and other current liabilities | 11,480 | ||
Deferred revenue | 2,144 | ||
Net cash provided by operating activities | 19,659 | ||
Financing activities | |||
Net (repayments) proceeds of revolving credit facility | (11,415) | ||
Net cash used in financing activities | (11,415) | ||
Change in cash and cash equivalents | 8,244 | ||
Cash and cash equivalents at beginning of period | $ 13,790 | 5,546 | |
Cash and cash equivalents at end of period | $ 13,790 | $ 5,546 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | $ 15,757 | $ 10,733 | $ 9,707 |
Charged to costs and expenses | 2,844 | 5,095 | |
Recovered from costs and expenses | (378) | ||
Additions | 3,019 | 1,404 | |
Deductions | (71) | ||
Balance at End of Year | 21,620 | 15,757 | 10,733 |
Reserve for uncollectible accounts receivable | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 4,205 | 2,271 | 1,486 |
Charged to costs and expenses | 3,216 | 7,242 | 1,744 |
Deductions | (80) | (5,308) | (959) |
Balance at End of Year | 7,341 | 4,205 | 2,271 |
Reserve for franchisee notes receivable | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 3,369 | 1,047 | 2,759 |
Recovered from costs and expenses | (77) | (393) | (1,715) |
Additions | 280 | 2,715 | 3 |
Balance at End of Year | 3,572 | 3,369 | 1,047 |
Valuation allowance on deferred tax assets | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 8,183 | 7,415 | 5,462 |
Recovered from costs and expenses | (295) | (1,754) | (407) |
Additions | 2,819 | 2,522 | 2,360 |
Balance at End of Year | $ 10,707 | $ 8,183 | $ 7,415 |