Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 27, 2020 | Feb. 17, 2021 | Jun. 28, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 27, 2020 | ||
Document Fiscal Year Focus | 2021 | ||
Document Transition Report | false | ||
Entity File Number | 0-2166050 | ||
Entity Incorporation, State or Country Code | DE | ||
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 | ||
Trading Symbol | PZZA | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | 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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 2,554,281,121 | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 32,928,113 | ||
Entity Registrant Name | PAPA JOHNS INTERNATIONAL INC | ||
Entity Central Index Key | 0000901491 | ||
Current Fiscal Year End Date | --12-27 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Revenues: | |||
Total revenues | $ 1,813,234 | $ 1,619,248 | $ 1,662,871 |
Costs and expenses: | |||
General and administrative expenses | 204,242 | 223,460 | 193,534 |
Depreciation and amortization | 49,705 | 47,281 | 46,403 |
Total costs and expenses | 1,722,981 | 1,599,452 | 1,631,029 |
Refranchising gains (losses) | 4,739 | (289) | |
Operating income | 90,253 | 24,535 | 31,553 |
Investment income | 2,131 | 1,104 | 817 |
Interest expense | (17,022) | (20,593) | (25,673) |
Income before income taxes | 75,362 | 5,046 | 6,697 |
Income tax expense (benefit) | 14,748 | (611) | 2,624 |
Net income before attribution to noncontrolling interests | 60,614 | 5,657 | 4,073 |
Net income attributable to noncontrolling interests | (2,682) | (791) | (1,599) |
Net income attributable to the Company | 57,932 | 4,866 | 2,474 |
Calculation of net income (loss) for earnings (loss) per share: | |||
Net income attributable to the Company | 57,932 | 4,866 | 2,474 |
Dividends paid to participating securities and accretion | (14,059) | (12,499) | |
Net income attributable to participating securities | (2,136) | ||
Net income (loss) attributable to common shareholders | $ 41,737 | $ (7,633) | $ 2,474 |
Basic earnings (loss) per common share | $ 1.29 | $ (0.24) | $ 0.08 |
Diluted earnings (loss) per common share | $ 1.28 | $ (0.24) | $ 0.08 |
Basic weighted average common shares outstanding | 32,421 | 31,632 | 32,083 |
Diluted weighted average common shares outstanding | 32,717 | 31,632 | 32,299 |
Dividends declared per common share | $ 0.90 | $ 0.90 | $ 0.90 |
Domestic Company-owned restaurants | |||
Revenues: | |||
Total revenues | $ 700,757 | $ 652,053 | $ 692,380 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 563,799 | 526,237 | 577,658 |
Refranchising gains (losses) | 4,700 | 1,600 | |
North America franchising | |||
Revenues: | |||
Total revenues | 96,732 | 71,828 | 79,293 |
North America commissaries | |||
Revenues: | |||
Total revenues | 680,793 | 612,652 | 609,866 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 630,937 | 569,180 | 575,103 |
International | |||
Revenues: | |||
Total revenues | 123,963 | 102,924 | 110,349 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | 73,994 | 57,702 | 67,775 |
Other segment | |||
Revenues: | |||
Total revenues | 210,989 | 179,791 | 170,983 |
Costs and expenses: | |||
Operating costs (excluding depreciation and amortization shown separately below): | $ 200,304 | $ 175,592 | $ 170,556 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net income before attribution to noncontrolling interests | $ 60,614 | $ 5,657 | $ 4,073 |
Other comprehensive loss, before tax: | |||
Foreign currency translation adjustments | 2,344 | 1,638 | (4,903) |
Interest rate swaps | (7,517) | (10,783) | 4,254 |
Other comprehensive loss, before tax | (5,173) | (9,145) | (649) |
Income tax effect: | |||
Foreign currency translation adjustments | (539) | (377) | 1,110 |
Interest rate swaps | 1,729 | 2,480 | (1,032) |
Income tax effect | 1,190 | 2,103 | 78 |
Other comprehensive loss, net of tax | (3,983) | (7,042) | (571) |
Comprehensive income (loss) before attribution to noncontrolling interests | 56,631 | (1,385) | 3,502 |
Less: comprehensive (income) loss, redeemable noncontrolling interests | (824) | 519 | 488 |
Less: comprehensive (income), nonredeemable noncontrolling interests | (1,858) | (1,310) | (2,087) |
Comprehensive income (loss) attributable to the Company | $ 53,949 | $ (2,176) | $ 1,903 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) $ in Thousands | Jun. 15, 2018USD ($)restaurant | Dec. 27, 2020USD ($) | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) |
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Income tax expense (benefit) | $ 14,748 | $ (611) | $ 2,624 | |
Stores in Beijing and Tianjin, China | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Number of Restaurants Sold | restaurant | 34 | |||
Other Comprehensive Income (Loss), Foreign Currency Transaction And Translation Reclassification Adjustment From AOCI | $ 1,300 | |||
Reversal of deferred tax related to foreign currency translation on refranchised stores | $ (300) | |||
Interest expense | Interest rate swap | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | (5,068) | 660 | (22) | |
Qualifying as hedges | Interest rate swap | Amount reclassified from AOCL | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Income tax expense (benefit) | (1,140) | 152 | (5) | |
Qualifying as hedges | Interest expense | Interest rate swap | Amount reclassified from AOCL | ||||
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | $ (5,068) | $ 660 | $ (22) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 130,204 | $ 27,911 |
Accounts receivable (less allowance for credit losses of $3,622 in 2020 and $7,341 in 2019) | 90,135 | 70,462 |
Notes receivable, current portion | 11,318 | 7,790 |
Income tax receivable | 1,273 | 4,024 |
Inventories | 30,265 | 27,529 |
Prepaid expenses and other current assets | 43,212 | 43,830 |
Total current assets | 306,407 | 181,546 |
Property and equipment, net | 200,895 | 211,741 |
Finance lease right-of-use assets, net | 16,840 | 9,383 |
Operating lease right-of-use assets | 148,110 | 148,229 |
Notes receivable, less current portion (less allowance for credit losses of $3,211 in 2020 and $3,572 in 2019) | 36,538 | 33,010 |
Goodwill | 80,791 | 80,340 |
Deferred income taxes, net | 10,800 | 1,839 |
Other assets | 72,389 | 64,633 |
Total assets | 872,770 | 730,721 |
Current liabilities: | ||
Accounts payable | 37,370 | 29,141 |
Income and other taxes payable | 10,263 | 7,599 |
Accrued expenses and other current liabilities | 174,563 | 108,517 |
Current deferred revenue | 19,590 | 17,673 |
Current finance lease liabilities | 3,545 | 1,789 |
Current operating lease liabilities | 23,538 | 23,226 |
Current portion of long-term debt | 20,000 | 20,000 |
Total current liabilities | 288,869 | 207,945 |
Deferred revenue | 13,664 | 14,722 |
Long-term finance lease liabilities | 13,531 | 7,629 |
Long-term operating lease liabilities | 124,666 | 125,297 |
Long-term debt, less current portion, net | 328,292 | 347,290 |
Deferred income taxes | 948 | 2,649 |
Other long-term liabilities | 111,364 | 84,927 |
Total liabilities | 881,334 | 790,459 |
Series B Convertible Preferred Stock; $0.01 par value; 260.0 shares authorized, 252.5 shares issued and outstanding at December 27, 2020 and December 29, 2019 | 251,901 | 251,133 |
Redeemable noncontrolling interests | 6,474 | 5,785 |
Stockholders' deficit: | ||
Common stock ($0.01 par value per share; issued 45,288 at December 27, 2020 and 44,748 at December 29, 2019) | 453 | 447 |
Additional paid-in capital | 254,103 | 219,047 |
Accumulated other comprehensive loss | (14,168) | (10,185) |
Retained earnings | 219,158 | 205,697 |
Treasury stock (12,743 shares at December 27, 2020 and 12,854 shares at December 29, 2019, at cost) | (741,724) | (747,327) |
Total stockholders' deficit | (282,178) | (332,321) |
Noncontrolling interests in subsidiaries | 15,239 | 15,665 |
Total Stockholders' deficit | (266,939) | (316,656) |
Total liabilities, Series B Convertible Preferred Stock, Redeemable noncontrolling interests and Stockholders' deficit | $ 872,770 | $ 730,721 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 3,622 | $ 7,341 |
Notes receivable, less current portion, allowance for doubtful accounts | $ 3,211 | $ 3,572 |
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 | 252,500 |
Series B Convertible Preferred Stock, shares outstanding | 252,500 | 252,500 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 45,288,000 | 44,748,000 |
Treasury stock, shares | 12,743,000 | 12,854,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | AdjustmentAccumulated Other Comprehensive Income (Loss) | AdjustmentRetained Earnings | Adjustment | Adjusted BalanceCommon Stock | Adjusted BalanceAdditional Paid-In Capital | Adjusted BalanceAccumulated Other Comprehensive Income (Loss) | Adjusted BalanceRetained Earnings | Adjusted BalanceTreasury Stock | Adjusted BalanceNoncontrolling Interests in Subsidiaries | Adjusted Balance | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Noncontrolling Interests in Subsidiaries | Total |
Balance (ASU 2014-09) at Dec. 31, 2017 | $ (24,359) | $ (24,359) | $ 442 | $ 184,785 | $ (2,117) | $ 267,892 | $ (597,072) | $ 15,757 | $ (130,313) | ||||||||
Balance (ASU 2018-02) at Dec. 31, 2017 | $ (455) | 455 | |||||||||||||||
Balance at Dec. 31, 2017 | $ 442 | $ 184,785 | $ (2,117) | $ 292,251 | $ (597,072) | $ 15,757 | $ (105,954) | ||||||||||
Balance (in shares) (ASU 2014-09) at Dec. 31, 2017 | 33,931,000 | ||||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 33,931,000 | ||||||||||||||||
Net income (loss) | 2,474 | 1,874 | 4,348 | ||||||||||||||
Other comprehensive income (loss), net of tax | (571) | (571) | |||||||||||||||
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 | |||||||||||||||
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 | ||||||||||||||||
Tax effect of restricted stock awards | (1,521) | (1,521) | |||||||||||||||
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 (loss) | 4,866 | 1,310 | 6,176 | ||||||||||||||
Other comprehensive income (loss), net of tax | (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 | |||||||||||||||
Stock-based compensation expense | 15,303 | $ 15,303 | |||||||||||||||
Issuance of restricted stock | (3,681) | 3,681 | |||||||||||||||
Issuance of restricted stock (in shares) | 63,000 | ||||||||||||||||
Tax effect of restricted stock awards | (1,433) | (1,433) | |||||||||||||||
Distributions to noncontrolling interests | (870) | (870) | |||||||||||||||
Other | (341) | (297) | 696 | 58 | |||||||||||||
Other (in shares) | 12,000 | ||||||||||||||||
Balance (ASU 2016-13) at Dec. 29, 2019 | $ (1,066) | $ (1,066) | $ 447 | $ 219,047 | $ (10,185) | $ 204,631 | $ (747,327) | $ 15,665 | $ (317,722) | ||||||||
Balance at Dec. 29, 2019 | $ 447 | 219,047 | (10,185) | 205,697 | (747,327) | 15,665 | (316,656) | ||||||||||
Balance (in shares) (ASU 2016-13) at Dec. 29, 2019 | 31,894,000 | ||||||||||||||||
Balance (in shares) at Dec. 29, 2019 | 31,894,000 | ||||||||||||||||
Net income (loss) | 57,932 | 1,858 | 59,790 | ||||||||||||||
Other comprehensive income (loss), net of tax | (3,983) | (3,983) | |||||||||||||||
Cash dividends on common stock | 141 | (29,503) | (29,362) | ||||||||||||||
Cash dividends on preferred stock | (13,649) | (13,649) | |||||||||||||||
Exercise of stock options | $ 6 | 30,616 | $ 30,622 | ||||||||||||||
Exercise of stock options (in shares) | 540,000 | 541,000 | |||||||||||||||
Acquisition of Company common stock | (2,701) | $ (2,701) | |||||||||||||||
Acquisition of Company common stock (in shares) | (32,000) | ||||||||||||||||
Stock-based compensation expense | 16,310 | 16,310 | |||||||||||||||
Issuance of restricted stock | (6,922) | 6,922 | |||||||||||||||
Issuance of restricted stock (in shares) | 119,000 | ||||||||||||||||
Tax effect of restricted stock awards | (3,974) | (3,974) | |||||||||||||||
Distributions to noncontrolling interests | (2,284) | (2,284) | |||||||||||||||
Other | (1,115) | (253) | 1,382 | 14 | |||||||||||||
Other (in shares) | 24,000 | ||||||||||||||||
Balance at Dec. 27, 2020 | $ 453 | $ 254,103 | $ (14,168) | $ 219,158 | $ (741,724) | $ 15,239 | $ (266,939) | ||||||||||
Balance (in shares) at Dec. 27, 2020 | 32,545,000 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Deficit (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Apr. 01, 2018 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Income tax expense (benefit) | $ 14,748 | $ (611) | $ 2,624 | |
Accumulated other comprehensive income (loss) | (14,168) | (10,185) | (3,143) | |
Unrealized foreign currency translation gains (losses) | (3,793) | (5,598) | (6,859) | |
Net unrealized gain (loss) on the interest rate swap agreements | (10,375) | (4,587) | 3,716 | |
Adjustment | ASU 2018-02 | ||||
Income tax expense (benefit) | $ 455 | |||
Joint ventures | ||||
Net income (loss) allocated to the redeemable noncontrolling interest from joint venture arrangements | $ 824 | $ (519) | $ (488) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Operating activities | |||
Net income before attribution to noncontrolling interests | $ 60,614 | $ 5,657 | $ 4,073 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
(Credit) provision for allowance for credit losses on accounts and notes receivable | (4,734) | 3,139 | 6,849 |
Depreciation and amortization | 49,705 | 47,281 | 46,403 |
Deferred income taxes | (9,268) | (3,764) | 1,620 |
Preferred stock option mark-to-market adjustment | 5,914 | ||
Stock-based compensation expense | 16,310 | 15,303 | 9,936 |
(Gain) loss on refranchising | (4,739) | 289 | |
Other | 2,257 | 3,203 | 5,677 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (22,420) | (6,181) | 2,157 |
Income tax receivable | 3,760 | 12,122 | (12,157) |
Inventories | (2,736) | (326) | 3,093 |
Prepaid expenses and other current assets | 2,884 | 1,367 | 3,795 |
Other assets and liabilities | 20,879 | (6,354) | 1,464 |
Accounts payable | 8,229 | 2,035 | (400) |
Income and other taxes payable | 2,664 | 1,009 | (3,971) |
Accrued expenses and other current liabilities | 59,353 | (11,331) | 21,753 |
Deferred revenue | (1,058) | (2,586) | 1,873 |
Net cash provided by operating activities | 186,439 | 61,749 | 92,454 |
Investing activities | |||
Purchases of property and equipment | (35,652) | (37,711) | (42,028) |
Notes issued | (16,589) | (15,864) | (10,463) |
Repayments of notes issued | 11,154 | 5,616 | 5,805 |
Proceeds from divestitures of restaurants | 13,495 | 7,707 | |
Other | 16 | 1,889 | 180 |
Net cash used in investing activities | (41,071) | (32,575) | (38,799) |
Financing activities | |||
Repayments of term loan | (20,000) | (15,000) | (20,000) |
Net (repayments) proceeds of revolving credit facilities | (240,026) | 163,585 | |
Debt issuance costs | (1,913) | ||
Proceeds from exercise of stock options | 30,622 | 16,010 | 2,699 |
Dividends paid to common stockholders | (29,362) | (28,552) | (28,985) |
Dividends paid to preferred stockholders | (13,649) | (10,020) | |
Tax payments for equity award issuances | (3,974) | (1,433) | (1,521) |
Acquisition of Company common stock | (2,701) | (158,049) | |
Proceeds from issuance of preferred stock | 252,530 | ||
Issuance costs associated with preferred stock | (7,527) | ||
Contributions from noncontrolling interests | 840 | ||
Distributions to noncontrolling interests | (2,420) | (870) | (4,269) |
Other | (1,977) | (526) | 356 |
Net cash used in financing activities | (43,461) | (34,574) | (48,097) |
Effect of exchange rate changes on cash and cash equivalents | 386 | 53 | (191) |
Change in cash and cash equivalents | 102,293 | (5,347) | 5,367 |
Cash and cash equivalents at beginning of period | 27,911 | 33,258 | 27,891 |
Cash and cash equivalents at end of period | $ 130,204 | $ 27,911 | $ 33,258 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 27, 2020 | |
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 48 countries and territories as of December 27, 2020. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties and sales of franchise and development rights, printing and promotional items and information systems equipment, and software and related services. We generated revenues from the operation of our Quality Control Centers (“QC Centers”) which supply pizza sauce, dough, food products, paper products, smallwares and cleaning supplies to restaurants. We also derived revenue from contributions received by our North America Marketing funds. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 27, 2020 | |
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 International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. Fiscal Year Our fiscal year ends on the last Sunday in December of each year. All fiscal years presented consist of 52 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 the allowance for credit losses on 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 following describes principal activities, separated by major product or service, from which the Company generates its revenues: Domestic Company-owned Restaurant Sales The domestic Company-owned restaurants principally generate revenue from retail sales of high-quality pizza, Papadias, which are flatbread-style sandwiches, and 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 for dollar off discounts (“Papa Dough”) to 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 and when the points or Papa Dough reward expires. 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. Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5% of sales, and the majority of our existing franchised restaurants have a 5% contractual royalty rate in effect. Incentives offered from time to time, including new store incentives, will reduce the contractual royalty rate paid. 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 included in deferred revenue in the Consolidated Balance Sheets and amortized over the life of the renewal period. 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 Revenues Commissary revenues 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 revenues 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 Franchise Marketing Fund revenues represent a required established percentage of monthly restaurant sales collected by Papa John’s Marketing Fund, Inc. (“PJMF”), which is our national marketing fund, 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 domestic Papa John’s restaurants, of which approximately 80% are franchised restaurant members. Contributions are based on a percentage of monthly restaurant sales and are billed monthly. 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 revenues. Commissions on gift cards sold by third parties are recorded as a reduction to Deferred revenue and a reduction to Other revenues based upon estimated redemption patterns. Fees for information services, including software maintenance fees, help desk fees, centralized call center fees, and online ordering fees are recognized as revenue as such services are provided and are included in Other revenues. 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. Advertising and Related Costs Domestic Company-owned advertising and related costs of $56.7 million, $54.3 million and $60.8 million in 2020, 2019, and 2018, respectively, include the costs of domestic Company-owned local restaurant activities such as mail coupons, door hangers and promotional items and advertising activities administered through PJMF and various local market cooperative advertising funds. 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 2020 and 2019, the Company contributed additional amounts of $15.0 million and $27.5 million, respectively, to PJMF, representing incremental discretionary marketing fund investments in excess of contractual Company-owned restaurant-level contributions as part of our temporary financial support package to our franchisees. The marketing fund investments are included in General and administrative expenses within the accompanying Consolidated Statements of Operations. Leases Lease expense is recognized on a straight-line basis over the expected life of the lease term for operating leases, whereas lease expense follows an accelerated expense recognition for finance leases. 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 primarily include 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. The Company adopted ASU 2016-02 “ 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 (graded vesting 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 21. 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, marketing and royalties. Credit is extended based on an evaluation of the franchisee’s financial condition and collateral is generally not required. An allowance for credit losses is an estimate, even if remote, based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics and macroeconomic factors. Account balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements Notes Receivable The Company has provided financing to select domestic and international 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. The Company has provided long-term financing to certain franchisees with royalty payment plans. We establish an allowance for credit losses 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. Interest income recorded on franchisee loans was approximately $2.1 million in 2020, $800,000 in 2019 and $750,000 in 2018 and is reported in Investment income in the accompanying Consolidated Statements of Operations. 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, twenty to forty years for buildings and improvements, and five years for technology and communication assets). Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including the first renewal period (generally five to ten years ). Depreciation expense was $46.6 million in 2020, $45.9 million in 2019 and $45.6 million in 2018. 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 capitalized were approximately $3.3 million in 2020, $3.5 million in 2019 and $4.3 million in 2018. The unamortized information systems development costs approximated $10.5 million and $11.5 million as of December 27, 2020 and December 29, 2019, 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 2020. 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 12 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 the 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. 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. See Note 18 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 $1,000 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 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 ($7.5) million (($5.8) million after tax) in 2020, ($10.8) million (($8.3) million after tax) in 2019, and $4.3 million ($3.2 million after tax) in 2018 in other comprehensive loss for the net change in the fair value of our interest rate swaps. See Note 13 for additional information on our debt and credit arrangements. Noncontrolling Interests At December 27, 2020, the Company had four joint ventures consisting of 188 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 Consolidated 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 10 and 11 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. Recent Accounting Pronouncements Financial Instruments – Credit Losses The Company adopted ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and interest receivable (classified as Other assets in the Consolidated Balance Sheets) from franchisees. The impact of the adoption was not material to our consolidated financial statements. Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Accounts and notes receivable balances are charged off against the allowance for credit losses after recovery efforts have ceased. The following table summarizes changes in our allowances for credit losses for accounts receivable, notes receivable and interest receivable: (in thousands) Accounts Receivable Notes Receivable Interest Receivable Balance at December 29, 2019 $ 7,341 $ 3,572 $ 910 Cumulative effect of adoption of ASU 2016-13 912 463 — Balance at December 30, 2019 8,253 4,035 910 Current period (credit) provision for expected credit losses (3,843) (191) 144 Write-offs charged against the allowance (788) (843) — Recoveries collected — (844) — Transfers — 1,054 (1,054) Balance at December 27, 2020 $ 3,622 $ 3,211 $ — Reference Rate Reform – Hedging In March 2020, the FASB issued ASU 2020-04, “ Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Accounting Standards to be Adopted in Future Periods Convertible Instruments In August 2020, the FASB issued ASU 2020-06, “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Reclassifications Certain prior year amounts in the Consolidated Balance Sheet and Consolidated Statement of Cash Flows have been reclassified to conform to the current year presentation. |
Leases
Leases | 12 Months Ended |
Dec. 27, 2020 | |
Leases | |
Leases | 3. 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 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 first day of fiscal 2019). 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. 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 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 date of adoption of Topic 842 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. 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 Sheets as of December 27, 2020 and December 29, 2019 (in thousands): December 27, December 29, Leases Classification 2020 2019 Assets Finance lease assets, net Finance lease right-of-use assets, net $ 16,840 $ 9,383 Operating lease assets, net Operating lease right-of-use assets 148,110 148,229 Total lease assets $ 164,950 $ 157,612 Liabilities Current finance lease liabilities Current finance lease liabilities $ 3,545 $ 1,789 Current operating lease liabilities Current operating lease liabilities 23,538 23,226 Noncurrent finance lease liabilities Long-term finance lease liabilities 13,531 7,629 Noncurrent operating lease liabilities Long-term operating lease liabilities 124,666 125,297 Total lease liabilities $ 165,280 $ 157,941 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 primarily include 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 years ended December 27, 2020 and December 29, 2019 are as follows: Year Ended Year Ended (in thousands) December 27, 2020 December 29, 2019 Finance lease: Amortization of right-of-use assets $ 2,342 $ 815 Interest on lease liabilities 606 251 Operating lease: Operating lease cost 40,026 42,487 Short-term lease cost 3,960 2,704 Variable lease cost 6,503 9,558 Total lease costs $ 53,437 $ 55,815 Sublease income (10,407) (10,879) Total lease costs, net of sublease income $ 43,030 $ 44,936 Future minimum lease payments under contractually-obligated leases and associated sublease income as of December 27, 2020 are as follows (in thousands): Fiscal Year Finance Operating Expected 2021 $ 4,348 $ 32,456 $ 10,246 2022 4,344 31,973 10,073 2023 4,338 26,251 9,778 2024 3,361 21,730 9,534 2025 1,731 17,342 9,057 Thereafter 1,054 61,024 46,642 Total future minimum lease payments 19,176 190,776 95,330 Less imputed interest (2,100) (42,572) — Total present value of lease liabilities (a) $ 17,076 $ 148,204 $ 95,330 (a) Excludes expected minimum lease payments of approximately $33.0 million associated with our new office in Atlanta, Georgia which is expected to commence in fiscal 2021 . Lessor Operating Leases We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At December 27, 2020, we leased and subleased 385 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 80 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of December 27, 2020, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $14.3 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 years ended December 27, 2020 and December 29, 2019 are as follows: Year Ended (in thousands) December 27, 2020 December 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 606 $ 269 Financing cash flows from finance leases 2,139 781 Operating cash flows from operating leases (a) 37,113 40,152 Right-of-use assets obtained in exchange for new finance lease liabilities 9,152 10,199 Right-of-use assets obtained in exchange for new operating lease liabilities 30,266 20,903 Cash received from sublease income 10,545 10,139 Weighted-average remaining lease term (in years): Finance leases 4.71 4.75 Operating leases 7.00 7.00 Weighted-average discount rate: Finance leases 5.34% 6.38% Operating leases 6.65% 6.94% (a) Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion. |
Papa John's Marketing Fund, Inc
Papa John's Marketing Fund, Inc. | 12 Months Ended |
Dec. 27, 2020 | |
Papa John's Marketing Fund, Inc. | |
Papa John's Marketing Fund, Inc. | 4. Papa John’s Marketing Fund, Inc. PJMF, which is a consolidated variable interest entity where the Company has been identified as the primary beneficiary, 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. PJMF also has a wholly-owned subsidiary, Papa Card, Inc., which administers the Company’s gift card programs. Assets and liabilities of PJMF, which are restricted in their use, included in the Consolidated Balance Sheets were as follows (in thousands): December 27, December 29, 2020 2019 Assets Current assets: Cash and cash equivalents $ 9,394 $ 4,569 Accounts receivable, net 23,711 11,196 Income tax receivable 192 103 Prepaid expenses and other current assets 1,914 1,316 Total current assets 35,211 17,184 Deferred income taxes, net 588 410 Total assets $ 35,799 $ 17,594 Liabilities Current liabilities: Accounts payable $ 5,429 $ 764 Income and other taxes payable 2 - Accrued expenses and other current liabilities 32,578 14,287 Current deferred revenue 3,938 3,252 Total current liabilities 41,947 18,303 Deferred revenue 2,419 2,094 Total liabilities $ 44,366 $ 20,397 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 27, 2020 | |
Revenue Recognition | |
Revenue Recognition | 5. Revenue Recognition Contract Balances Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify as Deferred revenue on the Consolidated Balance Sheets. During the years ended December 27, 2020 and December 29, 2019, the Company recognized $33.2 million and $34.0 million in revenue, respectively, related to deferred revenue. The contract liability balances are included in the following (in thousands): Contract Liabilities December 27, 2020 December 29, 2019 Change Franchise fees and unredeemed gift cards $ 19,890 $ 20,346 $ (456) Customer loyalty program 13,364 12,049 1,315 Total contract liabilities $ 33,254 $ 32,395 $ 859 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 incentive agreement. As of December 27, 2020 and December 29, 2019, the contract assets were approximately $5.1 million and $6.0 million, respectively. For the years ended December 27, 2020 and December 29, 2019, respectively, revenue was reduced approximately $3.2 million and $3.5 million for the amortization of contract assets over the applicable contract terms. Contract assets are included in Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets. 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 $ 2,288 $ 2,090 $ 1,822 $ 1,591 $ 1,352 $ 2,857 $ 12,000 Approximately $1.5 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 $6.4 million, included in Deferred revenue, will be recognized in 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. 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' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 27, 2020 | |
Stockholders' Deficit | |
Stockholders' Deficit | 6. Stockholders’ 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, net of repurchased common stock, were 32.5 million shares at December 27, 2020 and 31.9 million shares at December 29, 2019. There were 252,530 shares of Series B Preferred Stock outstanding at December 27, 2020 and December 29, 2019. Share Repurchase Program Our Board of Directors has authorized the repurchase of up to $75.0 million of common stock under a share repurchase program that began on November 4, 2020 and is effective through December 31, 2021. In fiscal 2020, a total of 32,000 shares with an aggregate cost of $2.7 million and an average price of $83.90 per share were repurchased under this program. Funding for the share repurchase program has been provided through our operating cash flows. The Company repurchased 2.7 million shares for $158.0 million in 2018, which were funded through a credit facility, operating cash flow, stock option exercises, and cash and cash equivalents. There were no share repurchases during fiscal 2019. Subsequent to year-end, we acquired an additional 15,000 shares at an aggregate cost of $1.3 million. Approximately $71.0 million remained available under the Company’s share repurchase program as of February 17, 2021. The timing and volume of share repurchases may be executed at the discretion of management on an opportunistic basis, subject to market and business conditions, regulatory requirements and other factors, or pursuant to trading plans or other arrangements. Repurchases under the new program may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, at times and in such amounts as management deems appropriate. Repurchases under the Company’s share repurchase program may be commenced or suspended from time to time at the Company’s discretion without prior notice. Funding for the share repurchase program will be provided through our credit facility, operating cash flow, stock option exercises and cash and cash equivalents. Dividends The Company recorded dividends of approximately $43.1 million for the year ended December 27, 2020 consisting of the following: ● $29.4 million paid to common stockholders ( $0.90 per share); ● $4.6 million in common stock “pass-through” dividends paid to Series B Preferred Stockholders on an as-converted basis ( $0.90 per share); and ● $9.1 million in preferred dividends on the Series B Preferred Stock ( 3.6% of the investment per annum). The Company paid common stock dividends of $28.6 million and $29.0 million in 2019 and 2018, respectively. Additionally, the Company paid common stock “pass-through” dividends to Series B Preferred Stockholders of $4.3 million and $5.7 million in preferred dividends on the Series B Preferred Stock in 2019. There were no dividends to holders of Series B Preferred stock in 2018. On January 25, 2021 , our Board of Directors declared a first quarter dividend of $0.225 per share of common stock (approximately $7.4 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 25, 2021 . The common stock dividend was paid on February 19, 2021 to stockholders of record as of the close of business on February 8, 2021 . The first quarter preferred dividend of $2.3 million will be paid to holders of Series B Preferred Stock on April 1, 2021 . |
Series B Convertible Preferred
Series B Convertible Preferred Stock | 12 Months Ended |
Dec. 27, 2020 | |
Series B Convertible Preferred Stock | |
Series B Convertible Preferred Stock | 7. 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 $200.0 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 $50.0 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. On the third anniversary of the date of issuance, each holder of Series B Preferred Stock will have the right to increase the dividend on the shares of Series B Preferred Stock to 5.6%, and on the fifth anniversary of the date of issuance, each holder will have the right to increase the dividend on the shares of Series B Preferred Stock to 7.6%, subject in each case to the Company’s right to redeem some or all of such shares of Series B Preferred Stock for cash. 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 redeemable for cash at the option of either party from and after the eight-year anniversary of issuance, subject to certain conditions. Holders of the Series B Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series B Preferred Stock upon certain change of control events. 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 $251.9 million on the Consolidated Balance Sheet as of December 27, 2020. 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 in 2019 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 in 2019 with no associated tax benefit. Over the initial eight-year term, the $251.9 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 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 Tax deduction on issuance costs 702 Accretion 66 Balance at December 27, 2020 $ 251,901 |
Earnings (Loss) per Share
Earnings (Loss) per Share | 12 Months Ended |
Dec. 27, 2020 | |
Earnings (Loss) per Share | |
Earnings (Loss) Per Share | 8. Earnings (Loss) per Share We compute earnings (loss) per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings (loss) per share for common shareholders 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 participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net income (loss) attributable to common shareholders. Additionally, any accretion to the redemption value for the Series B Preferred Stock is treated as a deemed dividend in the two-class EPS calculation. Basic earnings (loss) per common share are computed by dividing net income (loss) attributable to common shareholders by the weighted-average common shares outstanding. Diluted earnings (loss) per common share are computed by dividing the net income (loss) 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 earnings (loss) per common share and diluted earnings (loss) per common share for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 are as follows (in thousands, except per share data): 2020 2019 2018 Basic earnings (loss) per common share Net income attributable to the Company $ 57,932 $ 4,866 $ 2,474 Dividends paid to participating securities and accretion (14,059) (12,499) — Net income attributable to participating securities (2,136) — — Net income (loss) attributable to common shareholders $ 41,737 $ (7,633) $ 2,474 Basic weighted average common shares outstanding 32,421 31,632 32,083 Basic earnings (loss) per common share $ 1.29 $ (0.24) $ 0.08 Diluted earnings (loss) per common share Net income (loss) attributable to common shareholders $ 41,737 $ (7,633) $ 2,474 Weighted average common shares outstanding 32,421 31,632 32,083 Dilutive effect of outstanding equity awards (a) 296 — 216 Diluted weighted average common shares outstanding (b) 32,717 31,632 32,299 Diluted earnings (loss) per common share $ 1.28 $ (0.24) $ 0.08 (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 100 in 2020 and 1,200 in 2018, respectively ( no ne in 2019). (b) The Company had 252.5 shares of Series B Preferred Stock outstanding as of December 27, 2020 and December 29, 2019, respectively. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net income (loss) attributable to common shareholders. 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 for both periods presented and as such was excluded. See Note 21 for additional information regarding our equity awards, including restricted stock. |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 12 Months Ended |
Dec. 27, 2020 | |
Fair Value Measurements and Disclosures | |
Fair Value Measurements and Disclosures | 9. 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 and, accounts receivable, net of credit losses, and accounts payable. The carrying value of our notes receivable, net of credit losses, 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 27, 2020 and December 29, 2019 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 December 27, 2020 Financial assets: Cash surrender value of life insurance policies (a) $ 37,578 $ 37,578 $ — $ — Financial liabilities: Interest rate swaps (b) 13,452 — 13,452 — 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 — (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 2020 or 2019. |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 27, 2020 | |
Noncontrolling Interests | |
Noncontrolling Interests | 10. Noncontrolling Interests Papa John’s has four joint venture arrangements in which there are noncontrolling interests held by third parties. These joint venture arrangements include 188 restaurants and 192 restaurants at December 27, 2020 and December 29, 2019 respectively. Net income attributable to these joint ventures for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 were as follows (in thousands): 2020 2019 2018 Papa John’s International, Inc. $ 5,654 $ 2,560 $ 5,794 Noncontrolling interests 2,682 791 1,599 Total net income $ 8,336 $ 3,351 $ 7,393 As of December 27, 2020, 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 2020 and 2019 (in thousands): Balance at December 30, 2018 $ 5,464 Net loss (519) Contributions 840 Balance at December 29, 2019 $ 5,785 Net income 824 Distributions (135) Balance at December 27, 2020 $ 6,474 |
Divestitures
Divestitures | 12 Months Ended |
Dec. 27, 2020 | |
Divestitures | |
Divestitures | 11. Divestitures 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. 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 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. 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 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. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 27, 2020 | |
Goodwill. | |
Goodwill | 12. 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 30, 2018 $ 68,689 $ 15,391 $ 436 $ 84,516 Divestitures (b) (4,435) — — (4,435) Foreign currency adjustments — 259 — 259 Balance as of December 29, 2019 64,254 15,650 436 80,340 Foreign currency adjustments — 451 — 451 Balance as of December 27, 2020 $ 64,254 $ 16,101 $ 436 $ 80,791 (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 46 restaurants located primarily in two domestic markets. |
Debt
Debt | 12 Months Ended |
Dec. 27, 2020 | |
Debt | |
Debt | 13. Debt Long-term debt, net consists of the following (in thousands): December 27, December 29, 2020 2019 Outstanding debt $ 350,000 $ 370,000 Unamortized debt issuance costs (1,708) (2,710) Current portion of long-term debt (20,000) (20,000) Total long-term debt, net $ 328,292 $ 347,290 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 27, 2020, and a secured term loan facility with an outstanding balance of $340.0 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 $35.0 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 4.75 to 1.0, decreasing over time to 4.00 to 1.0 by 2022; and a fixed charge coverage ratio of 2.25 to 1.0, which increases to 2.50 to 1.0 in 2021 and thereafter. We were in compliance with these financial covenants at December 27, 2020. 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 $350.0 million at December 27, 2020 under the PJI Facilities was composed of $340.0 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 27, 2020 was approximately $344.2 million. As of December 27, 2020, the Company had approximately $1.7 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 rate 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. As of December 27, 2020, we have the following interest rate swap agreements with a total notional value of $350.0 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 27, December 29, Balance Sheet Location 2020 2019 Other current and long-term liabilities $ 13,452 $ 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 AOCL AOCL into AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps: 2020 $ (5,788) Interest expense $ (5,068) $ (17,022) 2019 $ (8,303) Interest expense $ 660 $ (20,593) 2018 $ 3,222 Interest expense $ (22) $ (25,673) The weighted average interest rates on our PJI Facilities, including the impact of the interest rate swap agreements, were 3.8% , 4.1% , and 3.9% in fiscal 2020, 2019, and 2018, respectively. Interest paid, including payments made or received under the swaps, was $15.8 million in 2020, $18.1 million in 2019, and $23.5 million in 2018. As of December 27, 2020, the portion of the aggregate $13.5 million interest rate swap liability that would be reclassified into interest expense during the next twelve months approximates $7.2 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. The PJMF Revolving Facility is secured by substantially all assets of PJMF. The PJMF Revolving Facility matures on September 30, 2021. 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 2.7%, 4.1%, and 3.4% in fiscal 2020, 2019, and 2018, respectively. There was no balance outstanding under the PJMF Revolving Facility as of December 27, 2020 and December 29, 2019. The PJMF operating results and the related debt outstanding do not impact the financial covenants under the PJI Credit Agreement. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 27, 2020 | |
Property and Equipment, Net | |
Property and Equipment, Net | 14. Property and Equipment, Net Property and equipment, net consists of the following (in thousands): December 27, December 29, 2020 2019 Land $ 33,381 $ 33,349 Buildings and improvements 91,335 91,514 Leasehold improvements 123,167 121,127 Equipment and other 436,678 423,556 Construction in progress 7,954 6,860 Total property and equipment 692,515 676,406 Accumulated depreciation and amortization (491,620) (464,665) Property and equipment, net $ 200,895 $ 211,741 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 27, 2020 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 15. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): December 27, December 29, 2020 2019 Marketing $ 47,885 $ 15,930 Salaries, benefits and bonuses 46,352 24,627 Insurance reserves, current 32,947 30,025 Purchases 16,550 10,768 Interest rate swaps, current portion 6,970 2,061 Strategic corporate reorganization costs 4,861 — Deposits 3,782 2,026 Consulting and professional fees 3,148 10,667 Rent 3,080 4,274 Other 8,988 8,139 Total $ 174,563 $ 108,517 |
Other Long-term Liabilities
Other Long-term Liabilities | 12 Months Ended |
Dec. 27, 2020 | |
Other Long-term Liabilities | |
Other Long-term Liabilities | 16. Other Long-term Liabilities Other long-term liabilities consist of the following (in thousands): December 27, December 29, 2020 2019 Insurance reserves $ 49,002 $ 45,151 Deferred compensation plan 35,793 33,220 Employer payroll taxes (1) 18,473 — Other 8,096 6,556 Total $ 111,364 $ 84,927 (1) Represents deferred employer payroll taxes under the Coronavirus Aid, Relief, and Economic Security Act, of which approximately half of the deferral is due on December 31, 2021 and December 31, 2022. |
Strategic Corporate Reorganizat
Strategic Corporate Reorganization for Long-term Growth | 12 Months Ended |
Dec. 27, 2020 | |
Strategic Corporate Reorganization for Long-term Growth | |
Strategic Corporate Reorganization for Long-term Growth | 17. Strategic Corporate Reorganization for Long-term Growth On September 17, 2020, we announced plans to open an office in Atlanta, Georgia located in Three Ballpark Center at The Battery Atlanta. The 60,000 square foot modern space will be designed to drive continued menu innovation and optimized integration across marketing, communications, customer experience, operations, human resources, diversity, equity and inclusion, communications, financial planning and analysis, investor relations and development functions. The opening of the office in Atlanta and related organizational changes are projected to be completed by the summer of 2021. All affected employees were either offered an opportunity to continue with the organization or were offered a severance package. As a result, we expect to incur certain one-time corporate reorganization costs of approximately $15.0 to $20.0 million related to employee severance and transition, recruitment and relocation, and third party and other costs through 2021. We record severance as a one-time termination benefit and recognize the expense ratably over the employees’ required future service period. All other costs, including employee transition costs, recruitment and relocation costs, and third-party costs, are recognized in the period incurred. All strategic corporate reorganization costs have been recorded in General and administrative expenses on the Consolidated Statement of Operations. Strategic corporate reorganization costs recorded for the year ended December 27, 2020 consist of the following: Year Ended Dec. 27, 2020 Employee severance and other employee transition costs $ 4,775 Recruiting and professional fees 1,598 Other costs 552 Total strategic corporate reorganization costs 6,925 Stock-based compensation forfeitures on unvested awards (940) Total strategic corporate reorganization costs, net of stock forfeitures $ 5,985 As of December 27, 2020, the estimate of unpaid strategic corporate reorganization costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet. The following table summarizes the activity for the year ended December 27, 2020: Balance at Balance at Dec. 29 Dec. 27 2019 Charges Payments 2020 Employee severance and other employee transition costs $ — $ 4,775 $ (160) $ 4,615 Recruiting and professional fees — 1,598 (1,453) 145 Other costs — 552 (451) 101 Total strategic corporate reorganization liability $ — $ 6,925 $ (2,064) $ 4,861 We expect to recognize additional costs associated with the corporate reorganization in 2021 of approximately $9.0 to $14.0 million, including expenditures related to (i) employee severance and other employee transition costs of approximately $2.0 million to $3.0 million, (ii) relocation and recruiting costs of $6.0 million to $9.0 million, and (iii) third-party and other costs of $1.0 million to $2.0 million. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 27, 2020 | |
Income Taxes | |
Income Taxes | 18. Income Taxes The following table presents the domestic and foreign components of income (loss) before income taxes for 2020, 2019 and 2018 (in thousands): 2020 2019 2018 Domestic income (loss) $ 48,616 $ (16,065) $ (9,665) Foreign income 26,746 21,111 16,362 Total income $ 75,362 $ 5,046 $ 6,697 Included within the foreign income before income taxes above is $14.7 million, $15.6 million, and $12.1 million of foreign sourced income subject to foreign withholding taxes in 2020, 2019, and 2018, respectively. A summary of the expense (benefit) for income tax follows (in thousands): 2020 2019 2018 Current: Federal $ 16,400 $ (2,734) $ (5,262) Foreign 6,047 5,077 4,736 State and local 1,569 810 1,530 Deferred: Federal (7,375) (1,989) 2,256 Foreign 357 (662) (153) State and local (2,250) (1,113) (483) Total income tax expense (benefit) $ 14,748 $ (611) $ 2,624 Significant deferred tax assets (liabilities) follow (in thousands): December 27, December 29, 2020 2019 Accrued liabilities $ 17,740 $ 16,686 Accrued bonuses 6,155 2,308 Other liabilities and asset reserves 18,763 16,244 Equity awards 6,760 7,196 Lease liabilities 32,374 30,756 Other 2,563 2,418 Net operating losses 8,139 8,205 Foreign tax credit carryforwards 14,405 10,049 Total deferred tax assets 106,899 93,862 Valuation allowances (22,972) (17,303) Total deferred tax assets, net of valuation allowances 83,927 76,559 Deferred expenses (9,623) (9,521) Accelerated depreciation (21,337) (27,299) Goodwill (9,801) (9,510) Right-of-use assets (32,065) (30,257) Other (1,249) (782) Total deferred tax liabilities (74,075) (77,369) Net deferred tax assets (liabilities) $ 9,852 $ (810) The Company had approximately $8.0 million and $6.6 million of state deferred tax assets primarily related to state net operating loss carryforwards as of December 27, 2020 and December 29, 2019, respectively. 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 $8.0 million and $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 27, 2020 and December 29, 2019, respectively. The Company had approximately $6.3 million and $6.2 million of foreign net operating loss and capital loss carryovers as of December 27, 2020 and December 29, 2019, respectively. The Company had approximately $0.6 million and $0.5 million of valuation allowances primarily related to the foreign capital losses as of December 27, 2020 and December 29, 2019, respectively. A substantial majority of our foreign net operating losses do not have an expiration date. In addition, the Company had approximately $14.4 million and $10.0 million in foreign tax credit carryforwards as of December 27, 2020 and December 29, 2019, respectively, that expire ten years from inception in years 2025 through 2029. 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 $14.4 million and $10.0 million for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 27, 2020 and December 29, 2019, respectively. The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense (benefit) for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 is as follows in both dollars and as a percentage of income before income taxes ($ in thousands): 2020 2019 2018 Income Tax Income Income Tax Income Income Tax Income Expense Tax Rate (Benefit) Tax Rate Expense Tax Rate Tax at U.S. federal statutory rate $ 15,826 21.0 % $ 1,060 21.0 % $ 1,406 21.0 % State and local income taxes 1,149 1.5 % 79 1.6 % 150 2.2 % Foreign income taxes 6,463 8.6 % 5,058 100.2 % 4,879 72.9 % Income of consolidated partnerships attributable to noncontrolling interests (603) (0.8) % (177) (3.5) % (371) (5.6) % Non-qualified deferred compensation plan (income) loss (898) (1.2) % (1,260) (25.0) % 483 7.2 % Excess tax (benefits) expense on equity awards (2,029) (2.7) % (212) (4.2) % 447 6.7 % Preferred stock option mark-to-market adjustment — — % 1,338 26.5 % — — % Tax credits (6,002) (8.0) % (6,128) (121.4) % (6,945) (103.7) % Disposition of China — — % — — % 4,118 61.5 % Other 842 1.1 % (369) (7.3) % (1,543) (23.0) % Total $ 14,748 19.6 % $ (611) (12.1) % $ 2,624 39.2 % Cash for income taxes paid (received) were $19.3 million in 2020, ($6.2) million in 2019 and $14.0 million in 2018. 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 2016. 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 $140,000 during the next 12 months. The Company had $1.0 million of unrecognized tax benefits at December 27, 2020 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 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 Additions for tax positions of prior years 60 Reductions for tax positions of prior years (426) Reductions for lapse of statute of limitations (183) Balance at December 27, 2020 $ 1,030 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company’s 2020 and 2019 income tax expense (benefit) includes interest benefit of ($18,000) and ($11,000), respectively. The Company has accrued approximately $136,000 and $154,000 for the payment of interest and penalties as of December 27, 2020 and December 29, 2019, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 27, 2020 | |
Related Party Transactions | |
Related Party Transactions | 19. Related Party Transactions 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. On July 27, 2020, the Company and PJMF entered into Amendment No. 1 (the “Amendment”) to the Endorsement Agreement with ABG-Shaq. Pursuant to the Amendment, the Company and PJMF developed a co-branded extra-large pizza product using the Personality Rights. ABG-Shaq did not receive any additional royalty fees from the Company beyond the cash payment already contemplated under his Endorsement Agreement under the Amendment. In addition, the Company donated one U.S. dollar for each unit of the pizza sold in the United States and one Canadian dollar for each unit sold in Canada to The Papa John’s Foundation for Building Community. |
Litigation, Commitments and Con
Litigation, Commitments and Contingencies | 12 Months Ended |
Dec. 27, 2020 | |
Litigation, Commitments and Contingencies | |
Litigation, Commitments and Contingencies | 20. 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 Durling et al v. Papa John’s International, Inc. , 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 alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The District Court appointed the Oklahoma Law Enforcement Retirement System to lead the case. An amended complaint was filed on February 13, 2019, which the Company moved to dismiss. On March 16, 2020, the Court granted the Company’s motion to dismiss, on the ground that the complaint failed to state any viable cause of action. The Plaintiffs subsequently filed a second amended complaint on April 30, 2020, which the Company moved to dismiss. The Company believes that it has valid and meritorious defenses to the second amended complaint and intends to vigorously defend against the case. The Company has t recorded any liability related to this lawsuit as of December 27, 2020 as it does not believe a loss is probable or reasonably estimable |
Equity Compensation
Equity Compensation | 12 Months Ended |
Dec. 27, 2020 | |
Equity Compensation | |
Equity Compensation | 21. 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 4.7 million shares of common stock authorized for issuance and remaining available under the 2018 Omnibus Incentive Plan as of December 27, 2020, which includes 5.9 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 27, 2020 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 $16.3 million in 2020, $15.3 million in 2019 and $9.9 million in 2018. At December 27, 2020, there was $16.0 million of unrecognized compensation cost related to nonvested awards, of which the Company expects to recognize $10.1 million in 2021, $4.7 million in 2022 and $1.2 million in 2023. Stock Options Options exercised, which were issued from authorized shares, included 541,000 shares in 2020, 448,000 shares in 2019 and 75,000 shares in 2018. The total intrinsic value of the options exercised during 2020, 2019 and 2018 was $13.8 million, $10.6 million and $1.5 million, respectively. Information pertaining to option activity during 2020 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 29, 2019 1,205 $ 55.67 Exercised (541) 56.73 Cancelled (100) 54.70 Outstanding at December 27, 2020 564 $ 54.82 6.58 $ 18,453 Exercisable at December 27, 2020 337 $ 59.31 5.68 $ 9,512 The following is a summary of the significant assumptions used in estimating the fair value of options granted in 2019 and 2018 (none in 2020): 2019 2018 Assumptions (weighted average): Risk-free interest rate 2.5 % 2.7 % Expected dividend yield 2.1 % 1.5 % Expected volatility 31.2 % 27.6 % Expected term (in years) 5.7 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 and 2018 was $11.69 and $15.27, respectively. The Company granted options to purchase 353,000 and 456,000 shares in 2019 and 2018, respectively. There were no options granted in 2020. Restricted Stock We granted shares of restricted stock that are time-based and generally vest in equal installments over three years ( 207,000 in 2020, 212,000 in 2019 and 260,000 in 2018). 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 $366,000 ( $0.90 per share) in 2020, $310,000 ( $0.90 per share) in 2019 and $185,000 ( $0.90 per share) in 2018 to holders of time-based restricted stock. We granted 15,000 and 113,000 restricted stock units that are time-based and vest over a period of one to three years in 2020 and 2019, respectively. 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 (92,000 units in 2020, 89,000 units in 2019, and 70,000 units in 2018). The 2020 and 2019 performance-based restricted stock units require the achievement of certain performance and market 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 2020 and 2019: 2020 2019 Assumptions: Risk-free interest rate 0.9 % 2.5 % Expected volatility 36.3 % 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 2020 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 2020 and 2019 was $59.52 and $44.95 , respectively. In 2018, 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 2020 is as follows (shares in thousands): Weighted Average Grant-Date Shares Fair Value Total as of December 29, 2019 616 $ 50.90 Granted 314 61.31 Forfeited (64) 52.44 Vested (199) 54.63 Total as of December 27, 2020 667 $ 54.33 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 27, 2020 | |
Employee Benefit Plans | |
Employee Benefit Plans | 22. 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 ($37.6 million and $33.2 million at December 27, 2020 and December 29, 2019, respectively) and the associated liabilities ($35.8 million and $33.2 million at December 27, 2020 and December 29, 2019, 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 2020, 2.1% in 2019 and 1.5% in 2018, 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 $1.8 million in 2020, $1.5 million in 2019 and $1.1 million in 2018. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 27, 2020 | |
Segment Information | |
Segment Information | 23. 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, Papadias, which are flatbread-style sandwiches, 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 others,” 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. 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. During the fourth quarter of 2020, we updated our segment profit measure to operating income from income before income taxes. This change in the segment profit measure eliminated interest expense, the majority of which impacted unallocated corporate expenses. Prior period amounts have been recast to reflect this change. Our segment information is as follows: (In thousands) 2020 2019 2018 Revenues: (Note) (Note) Domestic Company-owned restaurants $ 700,757 $ 652,053 $ 692,380 North America franchising 96,732 71,828 79,293 North America commissaries 680,793 612,652 609,866 International 150,939 126,077 131,268 All others 184,013 156,638 150,064 Total revenues $ 1,813,234 $ 1,619,248 $ 1,662,871 Intersegment revenues: North America franchising $ 3,229 $ 2,782 $ 2,965 North America commissaries 192,332 187,073 201,325 International - 191 283 All others 83,635 88,286 72,066 Total intersegment revenues $ 279,196 $ 278,332 $ 276,639 Depreciation and amortization: Domestic Company-owned restaurants $ 11,905 $ 12,883 $ 15,411 North America commissaries 9,660 8,131 7,397 International 1,975 1,722 1,696 All others 10,254 10,738 8,513 Unallocated corporate expenses 15,911 13,807 13,386 Total depreciation and amortization $ 49,705 $ 47,281 $ 46,403 Operating income: Domestic Company-owned restaurants (1) $ 37,049 $ 33,957 $ 18,988 North America franchising 89,801 64,362 70,732 North America commissaries 33,185 30,690 27,961 International (2) 24,034 18,738 14,203 All others 7,043 (1,966) (5,716) Unallocated corporate expenses (3) (100,069) (120,280) (93,610) Elimination of intersegment (profits) (790) (966) (1,005) Total operating income $ 90,253 $ 24,535 $ 31,553 (Note) During the fourth quarter of 2020, we updated our segment profit measure to operating income. Amounts in 2019 and 2018 have been recast to reflect this change. (1) Includes $4.7 million and $1.6 million of refranchising gains (losses) in 2019 and 2018, respectively. See Note 11 for additional information. (2) Includes a $1.9 million net loss associated with refranchising in 2018. See Note 11 for additional information. (3) Includes Special charges of $14.2 million and $25.3 million for the years ended December 29, 2019 and December 30, 2018, respectively. (In thousands) 2020 2019 2018 Property and equipment, net: Domestic Company-owned restaurants $ 228,077 $ 221,420 $ 236,526 North America commissaries 145,282 142,946 140,309 International 13,604 16,031 17,218 All others 91,724 84,167 71,880 Unallocated corporate assets 213,828 211,842 199,239 Accumulated depreciation and amortization (491,620) (464,665) (438,278) Property and equipment, net $ 200,895 $ 211,741 $ 226,894 Expenditures for property and equipment: Domestic Company-owned restaurants $ 12,848 $ 8,811 $ 13,568 North America commissaries 4,447 3,773 3,994 International 1,065 1,143 986 All others 11,700 11,541 13,438 Unallocated corporate 5,592 12,443 10,042 Total expenditures for property and equipment $ 35,652 $ 37,711 $ 42,028 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 27, 2020 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 700,757 $ - $ - $ - $ - $ 700,757 Franchise royalties and fees - 99,961 - 39,920 - 139,881 Commissary sales - - 873,125 84,043 - 957,168 Other revenues - - - 26,976 267,648 294,624 Eliminations - (3,229) (192,332) - (83,635) (279,196) Total segment revenues $ 700,757 $ 96,732 $ 680,793 $ 150,939 $ 184,013 $ 1,813,234 International other revenues (1) - - - (26,976) 26,976 - Total revenues $ 700,757 $ 96,732 $ 680,793 $ 123,963 $ 210,989 $ 1,813,234 Reportable Segments Year Ended December 29, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 652,053 $ - $ - $ - $ - $ 652,053 Franchise royalties and fees - 74,610 - 38,745 - 113,355 Commissary sales - - 799,725 64,179 - 863,904 Other revenues - - - 23,344 244,924 268,268 Eliminations - (2,782) (187,073) (191) (88,286) (278,332) Total segment revenues $ 652,053 $ 71,828 $ 612,652 $ 126,077 $ 156,638 $ 1,619,248 International other revenues (1) - - - (23,344) 23,344 - International eliminations (1) - - - 191 (191) - Total revenues $ 652,053 $ 71,828 $ 612,652 $ 102,924 $ 179,791 $ 1,619,248 Reportable Segments Year Ended December 30, 2018 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 692,380 $ - $ - $ 6,237 $ - $ 698,617 Franchise royalties and fees - 82,258 - 35,988 - 118,246 Commissary sales - - 811,191 68,124 - 879,315 Other revenues - - - 21,202 222,130 243,332 Eliminations - (2,965) (201,325) (283) (72,066) (276,639) Total segment revenues $ 692,380 $ 79,293 $ 609,866 $ 131,268 $ 150,064 $ 1,662,871 International other revenues (1) - - - (21,202) 21,202 - International eliminations (1) - - - 283 (283) - Total revenues $ 692,380 $ 79,293 $ 609,866 $ 110,349 $ 170,983 $ 1,662,871 (1) Other revenues as reported in the Consolidated Statements of Operations include $27.0 million, $23.2 million and $20.9 million of revenue for the years ended December 27, 2020, 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. 27, 2020 | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | 24. Quarterly Data - Unaudited, in Thousands, except Per Share Data Our quarterly select financial data is as follows: Quarter 2020 1st 2nd 3rd 4th Total revenues $ 409,859 $ 460,623 $ 472,941 $ 469,811 Operating income (a) 15,472 30,534 24,549 19,698 Net income attributable to the Company (a) 8,443 20,614 15,708 13,167 Basic earnings per common share (a) 0.15 0.49 0.35 0.29 Diluted earnings per common share (a) 0.15 0.48 0.35 0.28 Dividends declared per common share 0.225 0.225 0.225 0.225 Quarter 2019 1st 2nd 3rd 4th Total revenues $ 398,405 $ 399,623 $ 403,706 $ 417,514 Operating income (loss) (b) 5,509 14,231 4,927 (132) Net (loss) income attributable to the Company (b) (1,731) 8,354 385 (2,142) Basic (loss) earnings per common share (b) (0.12) 0.15 (0.10) (0.18) Diluted (loss) earnings per common share (b) (0.12) 0.15 (0.10) (0.18) Dividends declared per common share 0.225 0.225 0.225 0.225 (a) The year ended December 27, 2020 was impacted by the following: i. The fourth quarter of 2020 includes costs of $6.0 million, after tax loss of $4.0 million and basic and diluted loss per common share of $0.12 from strategic corporate reorganization costs. (b) The year ended December 29, 2019 was impacted by the following: i. The first, second, and third quarters of 2019 include costs of $11.0 million, $400,000 and $2.8 million, respectively; after tax losses of $9.8 million, $0.4 million, and $2.2 million, respectively; and basic and diluted loss per common share of $0.31, $0.01, and $0.07, respectively, from Special charges. ii. The third and fourth quarters of 2019 include gains of $1.7 million and $2.9 million, respectively; after tax gains of $1.3 million and $2.2 million, respectively; and basic and diluted earnings per common share of $0.04 and $0.07, respectively, 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. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Account | 12 Months Ended |
Dec. 27, 2020 | |
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 27, 2020 Deducted from asset accounts: Valuation allowance on deferred tax assets $ 17,303 $ 1,313 $ 4,356 $ 22,972 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 6,301 2,819 17,303 $ 15,757 $ 9,440 $ 3,019 $ 28,216 Fiscal year ended December 30, 2018 Deducted from asset accounts: Reserve for uncollectible accounts receivable $ 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 (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. 27, 2020 | |
Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of Papa John’s International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. |
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. |
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 the allowance for credit losses on 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 following describes principal activities, separated by major product or service, from which the Company generates its revenues: Domestic Company-owned Restaurant Sales The domestic Company-owned restaurants principally generate revenue from retail sales of high-quality pizza, Papadias, which are flatbread-style sandwiches, and 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 for dollar off discounts (“Papa Dough”) to 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 and when the points or Papa Dough reward expires. 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. Our current standard franchise agreement requires the franchisee to pay a royalty fee of 5% of sales, and the majority of our existing franchised restaurants have a 5% contractual royalty rate in effect. Incentives offered from time to time, including new store incentives, will reduce the contractual royalty rate paid. 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 included in deferred revenue in the Consolidated Balance Sheets and amortized over the life of the renewal period. 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 Revenues Commissary revenues 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 revenues 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 Franchise Marketing Fund revenues represent a required established percentage of monthly restaurant sales collected by Papa John’s Marketing Fund, Inc. (“PJMF”), which is our national marketing fund, 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 domestic Papa John’s restaurants, of which approximately 80% are franchised restaurant members. Contributions are based on a percentage of monthly restaurant sales and are billed monthly. 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 revenues. Commissions on gift cards sold by third parties are recorded as a reduction to Deferred revenue and a reduction to Other revenues based upon estimated redemption patterns. Fees for information services, including software maintenance fees, help desk fees, centralized call center fees, and online ordering fees are recognized as revenue as such services are provided and are included in Other revenues. 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. |
Advertising and Related Costs | Advertising and Related Costs Domestic Company-owned advertising and related costs of $56.7 million, $54.3 million and $60.8 million in 2020, 2019, and 2018, respectively, include the costs of domestic Company-owned local restaurant activities such as mail coupons, door hangers and promotional items and advertising activities administered through PJMF and various local market cooperative advertising funds. 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 2020 and 2019, the Company contributed additional amounts of $15.0 million and $27.5 million, respectively, to PJMF, representing incremental discretionary marketing fund investments in excess of contractual Company-owned restaurant-level contributions as part of our temporary financial support package to our franchisees. The marketing fund investments are included in General and administrative expenses within the accompanying Consolidated Statements of Operations. |
Leases | Leases Lease expense is recognized on a straight-line basis over the expected life of the lease term for operating leases, whereas lease expense follows an accelerated expense recognition for finance leases. 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 primarily include 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. The Company adopted ASU 2016-02 “ 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 (graded vesting 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 21. |
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, marketing and royalties. Credit is extended based on an evaluation of the franchisee’s financial condition and collateral is generally not required. An allowance for credit losses is an estimate, even if remote, based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics and macroeconomic factors. Account balances are charged off against the allowance after recovery efforts have ceased. See Recent Accounting Pronouncements |
Notes Receivable | Notes Receivable The Company has provided financing to select domestic and international 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. The Company has provided long-term financing to certain franchisees with royalty payment plans. We establish an allowance for credit losses 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. Interest income recorded on franchisee loans was approximately $2.1 million in 2020, $800,000 in 2019 and $750,000 in 2018 and is reported in Investment income in the accompanying Consolidated Statements of Operations. 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, twenty to forty years for buildings and improvements, and five years for technology and communication assets). Leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases, including the first renewal period (generally five to ten years ). Depreciation expense was $46.6 million in 2020, $45.9 million in 2019 and $45.6 million in 2018. |
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 capitalized were approximately $3.3 million in 2020, $3.5 million in 2019 and $4.3 million in 2018. The unamortized information systems development costs approximated $10.5 million and $11.5 million as of December 27, 2020 and December 29, 2019, 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 2020. 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 12 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 the 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. 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. See Note 18 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 $1,000 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 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 ($7.5) million (($5.8) million after tax) in 2020, ($10.8) million (($8.3) million after tax) in 2019, and $4.3 million ($3.2 million after tax) in 2018 in other comprehensive loss for the net change in the fair value of our interest rate swaps. See Note 13 for additional information on our debt and credit arrangements. |
Noncontrolling Interests | Noncontrolling Interests At December 27, 2020, the Company had four joint ventures consisting of 188 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 Consolidated 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 10 and 11 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Financial Instruments – Credit Losses The Company adopted ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and interest receivable (classified as Other assets in the Consolidated Balance Sheets) from franchisees. The impact of the adoption was not material to our consolidated financial statements. Estimates of expected credit losses, even if remote, are based upon historical account write-off trends, facts about the current financial condition of the debtor, forecasts of future operating results based upon current trends of select operating metrics, and macroeconomic factors. Credit quality is monitored through the timing of payments compared to the prescribed payment terms and known facts regarding the financial condition of the franchisee or customer. Accounts and notes receivable balances are charged off against the allowance for credit losses after recovery efforts have ceased. The following table summarizes changes in our allowances for credit losses for accounts receivable, notes receivable and interest receivable: (in thousands) Accounts Receivable Notes Receivable Interest Receivable Balance at December 29, 2019 $ 7,341 $ 3,572 $ 910 Cumulative effect of adoption of ASU 2016-13 912 463 — Balance at December 30, 2019 8,253 4,035 910 Current period (credit) provision for expected credit losses (3,843) (191) 144 Write-offs charged against the allowance (788) (843) — Recoveries collected — (844) — Transfers — 1,054 (1,054) Balance at December 27, 2020 $ 3,622 $ 3,211 $ — Reference Rate Reform – Hedging In March 2020, the FASB issued ASU 2020-04, “ Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Accounting Standards to be Adopted in Future Periods Convertible Instruments In August 2020, the FASB issued ASU 2020-06, “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Reclassifications | Reclassifications Certain prior year amounts in the Consolidated Balance Sheet and Consolidated Statement of Cash Flows have been reclassified to conform to the current year presentation. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 Consolidated 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 |
Schedule rollforward of the allowance for credit losses for accounts receivable, notes receivable and other assets | (in thousands) Accounts Receivable Notes Receivable Interest Receivable Balance at December 29, 2019 $ 7,341 $ 3,572 $ 910 Cumulative effect of adoption of ASU 2016-13 912 463 — Balance at December 30, 2019 8,253 4,035 910 Current period (credit) provision for expected credit losses (3,843) (191) 144 Write-offs charged against the allowance (788) (843) — Recoveries collected — (844) — Transfers — 1,054 (1,054) Balance at December 27, 2020 $ 3,622 $ 3,211 $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 Sheets as of December 27, 2020 and December 29, 2019 (in thousands): December 27, December 29, Leases Classification 2020 2019 Assets Finance lease assets, net Finance lease right-of-use assets, net $ 16,840 $ 9,383 Operating lease assets, net Operating lease right-of-use assets 148,110 148,229 Total lease assets $ 164,950 $ 157,612 Liabilities Current finance lease liabilities Current finance lease liabilities $ 3,545 $ 1,789 Current operating lease liabilities Current operating lease liabilities 23,538 23,226 Noncurrent finance lease liabilities Long-term finance lease liabilities 13,531 7,629 Noncurrent operating lease liabilities Long-term operating lease liabilities 124,666 125,297 Total lease liabilities $ 165,280 $ 157,941 |
Schedule of components of lease expense | Year Ended Year Ended (in thousands) December 27, 2020 December 29, 2019 Finance lease: Amortization of right-of-use assets $ 2,342 $ 815 Interest on lease liabilities 606 251 Operating lease: Operating lease cost 40,026 42,487 Short-term lease cost 3,960 2,704 Variable lease cost 6,503 9,558 Total lease costs $ 53,437 $ 55,815 Sublease income (10,407) (10,879) Total lease costs, net of sublease income $ 43,030 $ 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 27, 2020 are as follows (in thousands): Fiscal Year Finance Operating Expected 2021 $ 4,348 $ 32,456 $ 10,246 2022 4,344 31,973 10,073 2023 4,338 26,251 9,778 2024 3,361 21,730 9,534 2025 1,731 17,342 9,057 Thereafter 1,054 61,024 46,642 Total future minimum lease payments 19,176 190,776 95,330 Less imputed interest (2,100) (42,572) — Total present value of lease liabilities (a) $ 17,076 $ 148,204 $ 95,330 (a) Excludes expected minimum lease payments of approximately $33.0 million associated with our new office in Atlanta, Georgia which is expected to commence in fiscal 2021 . |
Schedule of supplemental cash flow information | Year Ended (in thousands) December 27, 2020 December 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 606 $ 269 Financing cash flows from finance leases 2,139 781 Operating cash flows from operating leases (a) 37,113 40,152 Right-of-use assets obtained in exchange for new finance lease liabilities 9,152 10,199 Right-of-use assets obtained in exchange for new operating lease liabilities 30,266 20,903 Cash received from sublease income 10,545 10,139 Weighted-average remaining lease term (in years): Finance leases 4.71 4.75 Operating leases 7.00 7.00 Weighted-average discount rate: Finance leases 5.34% 6.38% Operating leases 6.65% 6.94% (a) Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion. |
Papa John's Marketing Fund, I_2
Papa John's Marketing Fund, Inc. (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 27, December 29, 2020 2019 Assets Current assets: Cash and cash equivalents $ 9,394 $ 4,569 Accounts receivable, net 23,711 11,196 Income tax receivable 192 103 Prepaid expenses and other current assets 1,914 1,316 Total current assets 35,211 17,184 Deferred income taxes, net 588 410 Total assets $ 35,799 $ 17,594 Liabilities Current liabilities: Accounts payable $ 5,429 $ 764 Income and other taxes payable 2 - Accrued expenses and other current liabilities 32,578 14,287 Current deferred revenue 3,938 3,252 Total current liabilities 41,947 18,303 Deferred revenue 2,419 2,094 Total liabilities $ 44,366 $ 20,397 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Revenue Recognition | |
Schedule of information about contract liabilities | The contract liability balances are included in the following (in thousands): Contract Liabilities December 27, 2020 December 29, 2019 Change Franchise fees and unredeemed gift cards $ 19,890 $ 20,346 $ (456) Customer loyalty program 13,364 12,049 1,315 Total contract liabilities $ 33,254 $ 32,395 $ 859 |
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 $ 2,288 $ 2,090 $ 1,822 $ 1,591 $ 1,352 $ 2,857 $ 12,000 |
Series B Convertible Preferre_2
Series B Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Series B Convertible Preferred Stock | |
Schedule of Series B Preferred Stock | The following summarizes changes to our Series B Preferred Stock (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 Tax deduction on issuance costs 702 Accretion 66 Balance at December 27, 2020 $ 251,901 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Earnings (Loss) per Share | |
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The calculations of basic earnings (loss) per common share and diluted earnings (loss) per common share for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 are as follows (in thousands, except per share data): 2020 2019 2018 Basic earnings (loss) per common share Net income attributable to the Company $ 57,932 $ 4,866 $ 2,474 Dividends paid to participating securities and accretion (14,059) (12,499) — Net income attributable to participating securities (2,136) — — Net income (loss) attributable to common shareholders $ 41,737 $ (7,633) $ 2,474 Basic weighted average common shares outstanding 32,421 31,632 32,083 Basic earnings (loss) per common share $ 1.29 $ (0.24) $ 0.08 Diluted earnings (loss) per common share Net income (loss) attributable to common shareholders $ 41,737 $ (7,633) $ 2,474 Weighted average common shares outstanding 32,421 31,632 32,083 Dilutive effect of outstanding equity awards (a) 296 — 216 Diluted weighted average common shares outstanding (b) 32,717 31,632 32,299 Diluted earnings (loss) per common share $ 1.28 $ (0.24) $ 0.08 (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 100 in 2020 and 1,200 in 2018, respectively ( no ne in 2019). (b) The Company had 252.5 shares of Series B Preferred Stock outstanding as of December 27, 2020 and December 29, 2019, respectively. For the fully diluted calculation, the Series B Preferred stock dividends were added back to net income (loss) attributable to common shareholders. 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 for both periods presented and as such was excluded. |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 27, 2020 and December 29, 2019 are as follows (in thousands): Carrying Fair Value Measurements Value Level 1 Level 2 Level 3 December 27, 2020 Financial assets: Cash surrender value of life insurance policies (a) $ 37,578 $ 37,578 $ — $ — Financial liabilities: Interest rate swaps (b) 13,452 — 13,452 — 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 — (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. 27, 2020 | |
Noncontrolling Interests | |
Schedule of net income Attributable to Joint Ventures | 2020 2019 2018 Papa John’s International, Inc. $ 5,654 $ 2,560 $ 5,794 Noncontrolling interests 2,682 791 1,599 Total net income $ 8,336 $ 3,351 $ 7,393 |
Summary of Changes in Redeemable Noncontrolling Interests | The following summarizes changes in our redeemable noncontrolling interests in 2020 and 2019 (in thousands): Balance at December 30, 2018 $ 5,464 Net loss (519) Contributions 840 Balance at December 29, 2019 $ 5,785 Net income 824 Distributions (135) Balance at December 27, 2020 $ 6,474 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 30, 2018 $ 68,689 $ 15,391 $ 436 $ 84,516 Divestitures (b) (4,435) — — (4,435) Foreign currency adjustments — 259 — 259 Balance as of December 29, 2019 64,254 15,650 436 80,340 Foreign currency adjustments — 451 — 451 Balance as of December 27, 2020 $ 64,254 $ 16,101 $ 436 $ 80,791 (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 46 restaurants located primarily in two domestic markets. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Debt | |
Schedule of Long-Term Debt, Net | Long-term debt, net consists of the following (in thousands): December 27, December 29, 2020 2019 Outstanding debt $ 350,000 $ 370,000 Unamortized debt issuance costs (1,708) (2,710) Current portion of long-term debt (20,000) (20,000) Total long-term debt, net $ 328,292 $ 347,290 |
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 27, December 29, Balance Sheet Location 2020 2019 Other current and long-term liabilities $ 13,452 $ 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 AOCL AOCL into AOCL into Statements of Relationships on Derivative Income Income Operations Interest rate swaps: 2020 $ (5,788) Interest expense $ (5,068) $ (17,022) 2019 $ (8,303) Interest expense $ 660 $ (20,593) 2018 $ 3,222 Interest expense $ (22) $ (25,673) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Property and Equipment, Net | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following (in thousands): December 27, December 29, 2020 2019 Land $ 33,381 $ 33,349 Buildings and improvements 91,335 91,514 Leasehold improvements 123,167 121,127 Equipment and other 436,678 423,556 Construction in progress 7,954 6,860 Total property and equipment 692,515 676,406 Accumulated depreciation and amortization (491,620) (464,665) Property and equipment, net $ 200,895 $ 211,741 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 27, December 29, 2020 2019 Marketing $ 47,885 $ 15,930 Salaries, benefits and bonuses 46,352 24,627 Insurance reserves, current 32,947 30,025 Purchases 16,550 10,768 Interest rate swaps, current portion 6,970 2,061 Strategic corporate reorganization costs 4,861 — Deposits 3,782 2,026 Consulting and professional fees 3,148 10,667 Rent 3,080 4,274 Other 8,988 8,139 Total $ 174,563 $ 108,517 |
Other Long-term Liabilities (Ta
Other Long-term Liabilities (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Other Long-term Liabilities | |
Schedule of Other Long-term Liabilities | Other long-term liabilities consist of the following (in thousands): December 27, December 29, 2020 2019 Insurance reserves $ 49,002 $ 45,151 Deferred compensation plan 35,793 33,220 Employer payroll taxes (1) 18,473 — Other 8,096 6,556 Total $ 111,364 $ 84,927 (1) Represents deferred employer payroll taxes under the Coronavirus Aid, Relief, and Economic Security Act, of which approximately half of the deferral is due on December 31, 2021 and December 31, 2022. |
Strategic Corporate Reorganiz_2
Strategic Corporate Reorganization for Long-term Growth (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Strategic Corporate Reorganization for Long-term Growth | |
Schedule of corporate restructuring costs | Year Ended Dec. 27, 2020 Employee severance and other employee transition costs $ 4,775 Recruiting and professional fees 1,598 Other costs 552 Total strategic corporate reorganization costs 6,925 Stock-based compensation forfeitures on unvested awards (940) Total strategic corporate reorganization costs, net of stock forfeitures $ 5,985 |
Summary of activity of restructuring liability | Balance at Balance at Dec. 29 Dec. 27 2019 Charges Payments 2020 Employee severance and other employee transition costs $ — $ 4,775 $ (160) $ 4,615 Recruiting and professional fees — 1,598 (1,453) 145 Other costs — 552 (451) 101 Total strategic corporate reorganization liability $ — $ 6,925 $ (2,064) $ 4,861 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
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 2020, 2019 and 2018 (in thousands): 2020 2019 2018 Domestic income (loss) $ 48,616 $ (16,065) $ (9,665) Foreign income 26,746 21,111 16,362 Total income $ 75,362 $ 5,046 $ 6,697 |
Summary of the Provision for Income Taxes | A summary of the expense (benefit) for income tax follows (in thousands): 2020 2019 2018 Current: Federal $ 16,400 $ (2,734) $ (5,262) Foreign 6,047 5,077 4,736 State and local 1,569 810 1,530 Deferred: Federal (7,375) (1,989) 2,256 Foreign 357 (662) (153) State and local (2,250) (1,113) (483) Total income tax expense (benefit) $ 14,748 $ (611) $ 2,624 |
Schedule of Significant Deferred Tax Assets (Liabilities) | Significant deferred tax assets (liabilities) follow (in thousands): December 27, December 29, 2020 2019 Accrued liabilities $ 17,740 $ 16,686 Accrued bonuses 6,155 2,308 Other liabilities and asset reserves 18,763 16,244 Equity awards 6,760 7,196 Lease liabilities 32,374 30,756 Other 2,563 2,418 Net operating losses 8,139 8,205 Foreign tax credit carryforwards 14,405 10,049 Total deferred tax assets 106,899 93,862 Valuation allowances (22,972) (17,303) Total deferred tax assets, net of valuation allowances 83,927 76,559 Deferred expenses (9,623) (9,521) Accelerated depreciation (21,337) (27,299) Goodwill (9,801) (9,510) Right-of-use assets (32,065) (30,257) Other (1,249) (782) Total deferred tax liabilities (74,075) (77,369) Net deferred tax assets (liabilities) $ 9,852 $ (810) |
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 (benefit) for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 is as follows in both dollars and as a percentage of income before income taxes ($ in thousands): 2020 2019 2018 Income Tax Income Income Tax Income Income Tax Income Expense Tax Rate (Benefit) Tax Rate Expense Tax Rate Tax at U.S. federal statutory rate $ 15,826 21.0 % $ 1,060 21.0 % $ 1,406 21.0 % State and local income taxes 1,149 1.5 % 79 1.6 % 150 2.2 % Foreign income taxes 6,463 8.6 % 5,058 100.2 % 4,879 72.9 % Income of consolidated partnerships attributable to noncontrolling interests (603) (0.8) % (177) (3.5) % (371) (5.6) % Non-qualified deferred compensation plan (income) loss (898) (1.2) % (1,260) (25.0) % 483 7.2 % Excess tax (benefits) expense on equity awards (2,029) (2.7) % (212) (4.2) % 447 6.7 % Preferred stock option mark-to-market adjustment — — % 1,338 26.5 % — — % Tax credits (6,002) (8.0) % (6,128) (121.4) % (6,945) (103.7) % Disposition of China — — % — — % 4,118 61.5 % Other 842 1.1 % (369) (7.3) % (1,543) (23.0) % Total $ 14,748 19.6 % $ (611) (12.1) % $ 2,624 39.2 % |
Schedule of Reconciliation of the Beginning and Ending Liability for Unrecognized Tax Benefits | The Company had $1.0 million of unrecognized tax benefits at December 27, 2020 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 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 Additions for tax positions of prior years 60 Reductions for tax positions of prior years (426) Reductions for lapse of statute of limitations (183) Balance at December 27, 2020 $ 1,030 |
Equity Compensation (Tables)
Equity Compensation (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Equity Compensation | |
Schedule of Information Pertaining to Option Activity | Information pertaining to option activity during 2020 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 29, 2019 1,205 $ 55.67 Exercised (541) 56.73 Cancelled (100) 54.70 Outstanding at December 27, 2020 564 $ 54.82 6.58 $ 18,453 Exercisable at December 27, 2020 337 $ 59.31 5.68 $ 9,512 |
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 and 2018 (none in 2020): 2019 2018 Assumptions (weighted average): Risk-free interest rate 2.5 % 2.7 % Expected dividend yield 2.1 % 1.5 % Expected volatility 31.2 % 27.6 % Expected term (in years) 5.7 5.6 |
Summary of the Significant Assumptions Used in Estimating the Fair Value of Performance based Restricted Stock Units Granted | 2020 2019 Assumptions: Risk-free interest rate 0.9 % 2.5 % Expected volatility 36.3 % 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 2020 is as follows (shares in thousands): Weighted Average Grant-Date Shares Fair Value Total as of December 29, 2019 616 $ 50.90 Granted 314 61.31 Forfeited (64) 52.44 Vested (199) 54.63 Total as of December 27, 2020 667 $ 54.33 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 27, 2020 | |
Segment Information | |
Schedule of Segment Reporting Information, by Segment | (In thousands) 2020 2019 2018 Revenues: (Note) (Note) Domestic Company-owned restaurants $ 700,757 $ 652,053 $ 692,380 North America franchising 96,732 71,828 79,293 North America commissaries 680,793 612,652 609,866 International 150,939 126,077 131,268 All others 184,013 156,638 150,064 Total revenues $ 1,813,234 $ 1,619,248 $ 1,662,871 Intersegment revenues: North America franchising $ 3,229 $ 2,782 $ 2,965 North America commissaries 192,332 187,073 201,325 International - 191 283 All others 83,635 88,286 72,066 Total intersegment revenues $ 279,196 $ 278,332 $ 276,639 Depreciation and amortization: Domestic Company-owned restaurants $ 11,905 $ 12,883 $ 15,411 North America commissaries 9,660 8,131 7,397 International 1,975 1,722 1,696 All others 10,254 10,738 8,513 Unallocated corporate expenses 15,911 13,807 13,386 Total depreciation and amortization $ 49,705 $ 47,281 $ 46,403 Operating income: Domestic Company-owned restaurants (1) $ 37,049 $ 33,957 $ 18,988 North America franchising 89,801 64,362 70,732 North America commissaries 33,185 30,690 27,961 International (2) 24,034 18,738 14,203 All others 7,043 (1,966) (5,716) Unallocated corporate expenses (3) (100,069) (120,280) (93,610) Elimination of intersegment (profits) (790) (966) (1,005) Total operating income $ 90,253 $ 24,535 $ 31,553 (Note) During the fourth quarter of 2020, we updated our segment profit measure to operating income. Amounts in 2019 and 2018 have been recast to reflect this change. (1) Includes $4.7 million and $1.6 million of refranchising gains (losses) in 2019 and 2018, respectively. See Note 11 for additional information. (2) Includes a $1.9 million net loss associated with refranchising in 2018. See Note 11 for additional information. (3) Includes Special charges of $14.2 million and $25.3 million for the years ended December 29, 2019 and December 30, 2018, respectively. (In thousands) 2020 2019 2018 Property and equipment, net: Domestic Company-owned restaurants $ 228,077 $ 221,420 $ 236,526 North America commissaries 145,282 142,946 140,309 International 13,604 16,031 17,218 All others 91,724 84,167 71,880 Unallocated corporate assets 213,828 211,842 199,239 Accumulated depreciation and amortization (491,620) (464,665) (438,278) Property and equipment, net $ 200,895 $ 211,741 $ 226,894 Expenditures for property and equipment: Domestic Company-owned restaurants $ 12,848 $ 8,811 $ 13,568 North America commissaries 4,447 3,773 3,994 International 1,065 1,143 986 All others 11,700 11,541 13,438 Unallocated corporate 5,592 12,443 10,042 Total expenditures for property and equipment $ 35,652 $ 37,711 $ 42,028 |
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 27, 2020 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 700,757 $ - $ - $ - $ - $ 700,757 Franchise royalties and fees - 99,961 - 39,920 - 139,881 Commissary sales - - 873,125 84,043 - 957,168 Other revenues - - - 26,976 267,648 294,624 Eliminations - (3,229) (192,332) - (83,635) (279,196) Total segment revenues $ 700,757 $ 96,732 $ 680,793 $ 150,939 $ 184,013 $ 1,813,234 International other revenues (1) - - - (26,976) 26,976 - Total revenues $ 700,757 $ 96,732 $ 680,793 $ 123,963 $ 210,989 $ 1,813,234 Reportable Segments Year Ended December 29, 2019 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 652,053 $ - $ - $ - $ - $ 652,053 Franchise royalties and fees - 74,610 - 38,745 - 113,355 Commissary sales - - 799,725 64,179 - 863,904 Other revenues - - - 23,344 244,924 268,268 Eliminations - (2,782) (187,073) (191) (88,286) (278,332) Total segment revenues $ 652,053 $ 71,828 $ 612,652 $ 126,077 $ 156,638 $ 1,619,248 International other revenues (1) - - - (23,344) 23,344 - International eliminations (1) - - - 191 (191) - Total revenues $ 652,053 $ 71,828 $ 612,652 $ 102,924 $ 179,791 $ 1,619,248 Reportable Segments Year Ended December 30, 2018 Major Products/Services Lines Domestic Company-owned restaurants North America franchising North America commissaries International All others Total Company-owned restaurant sales $ 692,380 $ - $ - $ 6,237 $ - $ 698,617 Franchise royalties and fees - 82,258 - 35,988 - 118,246 Commissary sales - - 811,191 68,124 - 879,315 Other revenues - - - 21,202 222,130 243,332 Eliminations - (2,965) (201,325) (283) (72,066) (276,639) Total segment revenues $ 692,380 $ 79,293 $ 609,866 $ 131,268 $ 150,064 $ 1,662,871 International other revenues (1) - - - (21,202) 21,202 - International eliminations (1) - - - 283 (283) - Total revenues $ 692,380 $ 79,293 $ 609,866 $ 110,349 $ 170,983 $ 1,662,871 (1) Other revenues as reported in the Consolidated Statements of Operations include $27.0 million, $23.2 million and $20.9 million of revenue for the years ended December 27, 2020, 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. 27, 2020 | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | |
Schedule of Quarterly Select Financial Data | Quarter 2020 1st 2nd 3rd 4th Total revenues $ 409,859 $ 460,623 $ 472,941 $ 469,811 Operating income (a) 15,472 30,534 24,549 19,698 Net income attributable to the Company (a) 8,443 20,614 15,708 13,167 Basic earnings per common share (a) 0.15 0.49 0.35 0.29 Diluted earnings per common share (a) 0.15 0.48 0.35 0.28 Dividends declared per common share 0.225 0.225 0.225 0.225 Quarter 2019 1st 2nd 3rd 4th Total revenues $ 398,405 $ 399,623 $ 403,706 $ 417,514 Operating income (loss) (b) 5,509 14,231 4,927 (132) Net (loss) income attributable to the Company (b) (1,731) 8,354 385 (2,142) Basic (loss) earnings per common share (b) (0.12) 0.15 (0.10) (0.18) Diluted (loss) earnings per common share (b) (0.12) 0.15 (0.10) (0.18) Dividends declared per common share 0.225 0.225 0.225 0.225 (a) The year ended December 27, 2020 was impacted by the following: i. The fourth quarter of 2020 includes costs of $6.0 million, after tax loss of $4.0 million and basic and diluted loss per common share of $0.12 from strategic corporate reorganization costs. (b) The year ended December 29, 2019 was impacted by the following: i. The first, second, and third quarters of 2019 include costs of $11.0 million, $400,000 and $2.8 million, respectively; after tax losses of $9.8 million, $0.4 million, and $2.2 million, respectively; and basic and diluted loss per common share of $0.31, $0.01, and $0.07, respectively, from Special charges. ii. The third and fourth quarters of 2019 include gains of $1.7 million and $2.9 million, respectively; after tax gains of $1.3 million and $2.2 million, respectively; and basic and diluted earnings per common share of $0.04 and $0.07, respectively, related to the Company’s refranchising of Company-owned restaurants. |
Description of Business (Detail
Description of Business (Details) | Dec. 27, 2020item |
Description of Business | |
Number of countries in which the entity operates | 48 |
Significant Accounting Polici_4
Significant Accounting Policies - Fiscal Year, Revenue Recognition and Advertising Costs (Details) - USD ($) | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Percentage of domestic restaurants franchised | 80.00% | ||
Length of fiscal year | 364 days | 364 days | 364 days |
Franchisee royalty fee for new and existing franchised restaurants (as a percent) | 5.00% | ||
Term of franchise agreement | 10 years | ||
Advertising and related costs | $ 56,700,000 | $ 54,300,000 | $ 60,800,000 |
Interest income on franchisee loans | 2,100,000 | 800,000 | $ 750,000 |
PJMF | |||
Contributions for additional advertising | $ 15,000,000 | $ 27,500,000 | |
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. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Property and Equipment | |||
Depreciation expense | $ 46.6 | $ 45.9 | $ 45.6 |
Deferred Costs | |||
Deferred costs, maximum amortization period | 5 years | ||
Deferred costs | $ 3.3 | 3.5 | $ 4.3 |
Unamortized systems development costs | $ 10.5 | $ 11.5 | |
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 - Insurance Reserves and Derivatives (Details) - USD ($) | 12 Months Ended | |||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | Apr. 28, 2019 | |
Derivative Financial Instruments | ||||
Other comprehensive income (loss), before tax | $ (7,517,000) | $ (10,783,000) | $ 4,254,000 | |
Other comprehensive income (loss), net of tax | (5,800,000) | $ (8,300,000) | $ 3,200,000 | |
Minimum | ||||
Insurance Reserves | ||||
Employee insurance retention limit per occurrence | 1,000 | |||
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_7
Significant Accounting Policies - Noncontrolling Interests and Foreign Currency Translation (Details) $ in Thousands | Jun. 15, 2018USD ($)restaurant | Jul. 01, 2018USD ($)restaurant | Dec. 27, 2020entityrestaurant | Dec. 29, 2019restaurantentity |
Noncontrolling Interests | ||||
Number of joint ventures having noncontrolling interests | entity | 4 | 4 | ||
Stores in Beijing and Tianjin, China | ||||
Noncontrolling Interests | ||||
Number of restaurants divested | 34 | 34 | ||
Reversal of accumulated other comprehensive income related to foreign currency translation | $ | $ 1,300 | $ 1,300 | ||
Joint ventures | ||||
Noncontrolling Interests | ||||
Number of Restaurants | 188 | 192 |
Significant Accounting Polici_8
Significant Accounting Policies - Schedule rollforward of the allowance for credit losses for accounts receivable, notes receivable and other assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Allowance for Credit Loss | |||
Current period (credit) provision for expected credit losses | $ (4,734) | $ 3,139 | $ 6,849 |
Accounts Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 7,341 | ||
Current period (credit) provision for expected credit losses | (3,843) | ||
Write-offs charged against the allowance | (788) | ||
Balance at end of period | 3,622 | 7,341 | |
Notes Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 3,572 | ||
Current period (credit) provision for expected credit losses | (191) | ||
Write-offs charged against the allowance | (843) | ||
Recoveries collected | (844) | ||
Transfers | 1,054 | ||
Balance at end of period | 3,211 | 3,572 | |
Interest Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 910 | ||
Current period (credit) provision for expected credit losses | 144 | ||
Transfers | (1,054) | ||
Balance at end of period | 910 | ||
Adjustment | ASU 2016-13 | Accounts Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 912 | ||
Balance at end of period | 912 | ||
Adjustment | ASU 2016-13 | Notes Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 463 | ||
Balance at end of period | 463 | ||
Adjusted Balance | ASU 2016-13 | Accounts Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 8,253 | ||
Balance at end of period | 8,253 | ||
Adjusted Balance | ASU 2016-13 | Notes Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | 4,035 | ||
Balance at end of period | 4,035 | ||
Adjusted Balance | ASU 2016-13 | Interest Receivable | |||
Allowance for Credit Losses | |||
Balance at beginning of period | $ 910 | ||
Balance at end of period | $ 910 |
Leases - Lease Terms, Assets an
Leases - Lease Terms, Assets and Liabilities (Details) $ in Thousands | 12 Months Ended | |
Dec. 27, 2020USD ($)installment | Dec. 29, 2019USD ($) | |
Assets | ||
Finance lease assets, net | $ 16,840 | $ 9,383 |
Operating lease assets, net | 148,110 | 148,229 |
Total lease assets | 164,950 | 157,612 |
Liabilities | ||
Current finance lease liabilities | 3,545 | 1,789 |
Current operating lease liabilities | 23,538 | 23,226 |
Noncurrent finance lease liabilities | 13,531 | 7,629 |
Noncurrent operating lease liabilities | 124,666 | 125,297 |
Total lease liabilities | $ 165,280 | $ 157,941 |
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) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
Leases | ||
Amortization of right-of-use assets | $ 2,342 | $ 815 |
Interest on lease liabilities | 606 | 251 |
Operating lease cost | 40,026 | 42,487 |
Short-term lease cost | 3,960 | 2,704 |
Variable lease cost | 6,503 | 9,558 |
Total lease costs | 53,437 | 55,815 |
Sublease income | (10,407) | (10,879) |
Total lease costs, net of sublease income | $ 43,030 | $ 44,936 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments, Lessor Operating Leases, and Lease Guarantees (Details) $ in Thousands | Dec. 26, 2021USD ($) | Dec. 27, 2020USD ($)restaurantlease |
Finance Lease Costs | ||
2021 | $ 4,348 | |
2022 | 4,344 | |
2023 | 4,338 | |
2024 | 3,361 | |
2025 | 1,731 | |
Thereafter | 1,054 | |
Total future minimum lease payments | 19,176 | |
Less imputed interest | (2,100) | |
Total present value of Lease Liabilities | 17,076 | |
Operating Lease Costs | ||
2021 | 32,456 | |
2022 | 31,973 | |
2023 | 26,251 | |
2024 | 21,730 | |
2025 | 17,342 | |
Thereafter | 61,024 | |
Total future minimum lease payments | 190,776 | |
Less imputed interest | (42,572) | |
Total present value of Lease Liabilities | 148,204 | |
Expected Sublease Income: | ||
2021 | 10,246 | |
2022 | 10,073 | |
2023 | 9,778 | |
2024 | 9,534 | |
2025 | 9,057 | |
Thereafter | 46,642 | |
Total future minimum lease payments | $ 95,330 | |
Number of units leased and subleased | restaurant | 385 | |
Initial lease terms on franchised sites | 15 years | |
Number of domestic leases for which the Company is contingently liable | lease | 80 | |
Estimated maximum amount of undiscounted payments in the event of nonpayment by primary lessees | $ 14,300 | |
Corporate Headquarters Atlanta, Georgia | ||
Operating Lease Costs | ||
Total future minimum lease payments | $ 33,000 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
Leases | ||
Operating cash flows from finance leases | $ 606 | $ 269 |
Financing cash flows from finance leases | 2,139 | 781 |
Operating cash flows from operating leases | 37,113 | 40,152 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 9,152 | 10,199 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 30,266 | 20,903 |
Cash received from sublease income | $ 10,545 | $ 10,139 |
Weighted-average remaining lease term of finance leases | 4 years 8 months 15 days | 4 years 9 months |
Weighted-average remaining lease term of operating leases | 7 years | 7 years |
Weighted-average discount rate of finance leases | 5.34% | 6.38% |
Weighted-average discount rate of operating leases | 6.65% | 6.94% |
Papa John's Marketing Fund, I_3
Papa John's Marketing Fund, Inc. (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 130,204 | $ 27,911 |
Accounts receivable, net | 90,135 | 70,462 |
Income tax receivable | 1,273 | 4,024 |
Prepaid expenses and other current assets | 43,212 | 43,830 |
Total current assets | 306,407 | 181,546 |
Deferred income taxes, net | 10,800 | 1,839 |
Total assets | 872,770 | 730,721 |
Current liabilities: | ||
Accounts payable | 37,370 | 29,141 |
Income and other taxes payable | 10,263 | 7,599 |
Accrued expenses and other current liabilities | 174,563 | 108,517 |
Current deferred revenue | 19,590 | 17,673 |
Total current liabilities | 288,869 | 207,945 |
Deferred revenue | 13,664 | 14,722 |
Total liabilities | 881,334 | 790,459 |
Papa John's Marketing Fund Inc. | ||
Current assets: | ||
Cash and cash equivalents | 9,394 | 4,569 |
Accounts receivable, net | 23,711 | 11,196 |
Income tax receivable | 192 | 103 |
Prepaid expenses and other current assets | 1,914 | 1,316 |
Total current assets | 35,211 | 17,184 |
Deferred income taxes, net | 588 | 410 |
Total assets | 35,799 | 17,594 |
Current liabilities: | ||
Accounts payable | 5,429 | 764 |
Income and other taxes payable | 2 | |
Accrued expenses and other current liabilities | 32,578 | 14,287 |
Current deferred revenue | 3,938 | 3,252 |
Total current liabilities | 41,947 | 18,303 |
Deferred revenue | 2,419 | 2,094 |
Total liabilities | $ 44,366 | $ 20,397 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Revenue disaggregation | ||||
Cumulative effect of adoption of Topic 606 | $ (266,939) | $ (316,656) | $ (304,013) | $ (105,954) |
Revenue recognized related to deferred revenue and customer loyalty program | 33,200 | 34,000 | ||
Contract liabilities | 33,254 | 32,395 | ||
Change | 859 | |||
Contract assets | 5,100 | 6,000 | ||
Amortization expense related to contract assets | 3,200 | 3,500 | ||
Franchise fees and unredeemed gift cards | ||||
Revenue disaggregation | ||||
Contract liabilities | 19,890 | 20,346 | ||
Change | (456) | |||
Customer loyalty program | ||||
Revenue disaggregation | ||||
Contract liabilities | 13,364 | $ 12,049 | ||
Change | $ 1,315 |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to Remaining Performance Obligations (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Performance Obligations by Period | ||
Total deferred revenue | $ 33,254 | $ 32,395 |
Franchise royalties and fees | ||
Performance Obligations by Period | ||
Less than 1 Year | 2,288 | |
1-2 Years | 2,090 | |
2-3 Years | 1,822 | |
3-4 Years | 1,591 | |
4-5 Years | 1,352 | |
Thereafter | 2,857 | |
Total deferred revenue | 12,000 | |
Area development fees | ||
Performance Obligations by Period | ||
Total deferred revenue | 1,500 | |
Gift Card | ||
Performance Obligations by Period | ||
Total deferred revenue | $ 6,400 |
Stockholders' Deficit - Shares
Stockholders' Deficit - Shares Authorized and Outstanding (Details) - shares | Dec. 27, 2020 | Dec. 29, 2019 |
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 | 32,500,000 | 31,900,000 |
Series B Convertible Preferred Stock, shares outstanding | 252,500 | 252,500 |
Series B Preferred Stock | ||
Authorized shares of preferred stock | 260,000 | |
Series B Convertible Preferred Stock, shares outstanding | 252,530 | 252,530 |
Stockholders' Deficit - Share R
Stockholders' Deficit - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | 12 Months Ended | |||
Feb. 17, 2021 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | Nov. 04, 2020 | |
Share repurchase program | |||||
Stock repurchased during period, shares | 0 | 2,700,000 | |||
Stock repurchased during period, value | $ 158 | ||||
Common stock repurchase program | |||||
Share repurchase program | |||||
Stock repurchase program, authorized amount | $ 75 | ||||
Stock repurchased during period, shares | 32,000 | ||||
Stock repurchased during period, value | $ 2.7 | ||||
Share repurchased during period, average cost per share | $ 83.90 | ||||
Common stock repurchase program | Subsequent event | |||||
Share repurchase program | |||||
Stock repurchased during period, shares | 15,000 | ||||
Stock repurchased during period, value | $ 1.3 | ||||
Stock repurchase program, remaining authorized amount | $ 71 |
Stockholders' Deficit - Cash Di
Stockholders' Deficit - Cash Dividend (Details) - USD ($) | Apr. 01, 2021 | Feb. 19, 2021 | Feb. 08, 2021 | Jan. 25, 2021 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
Cash Dividend | |||||||
Total dividends paid | $ 43,100,000 | ||||||
Dividends paid to common shareholders | $ 29,362,000 | $ 28,552,000 | $ 28,985,000 | ||||
Dividend paid per common share (in dollars per share) | $ 0.90 | ||||||
Preferred stock dividend rate | 3.60% | ||||||
Common Stock | |||||||
Cash Dividend | |||||||
Total dividends paid | $ 29,400,000 | 28,600,000 | 29,000,000 | ||||
Subsequent event | |||||||
Cash Dividend | |||||||
Quarterly dividend declared, per share (in dollars per share) | $ 0.225 | ||||||
Subsequent event | Common Stock | |||||||
Cash Dividend | |||||||
Quarterly dividend, date of declaration | Jan. 25, 2021 | ||||||
Quarterly dividend declared | $ 7,400,000 | ||||||
Quarterly dividend, date of distribution | Feb. 19, 2021 | ||||||
Quarterly dividend, date of record | Feb. 8, 2021 | ||||||
Subsequent event | Preferred Stock | |||||||
Cash Dividend | |||||||
Quarterly dividend, date of declaration | Jan. 25, 2021 | ||||||
Quarterly dividend, date of distribution | Apr. 1, 2021 | ||||||
Series B Preferred Stock | |||||||
Cash Dividend | |||||||
Common stock dividends paid to preferred shareholders | 4,600,000 | 4,300,000 | |||||
Preferred dividends | $ 9,100,000 | $ 5,700,000 | $ 0 | ||||
Series B Preferred Stock | Subsequent event | |||||||
Cash Dividend | |||||||
Preferred dividends | $ 1,100,000 | ||||||
Quarterly dividend declared | $ 2,300,000 |
Series B Convertible Preferre_3
Series B Convertible Preferred Stock (Details) - USD ($) | Feb. 03, 2024 | Feb. 03, 2022 | Mar. 28, 2019 | Feb. 03, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
Redeemable Preferred Shares | |||||||
Preferred stock dividend rate | 3.60% | ||||||
Temporary equity | $ 251,133,000 | $ 251,133,000 | |||||
Dividends paid to preferred shareholders | 13,649,000 | 10,020,000 | |||||
Series B Preferred Stock rollforward | |||||||
Balance at beginning of period | 251,133,000 | ||||||
Balance at end of period | 251,901,000 | 251,133,000 | |||||
General and administrative expenses | |||||||
Redeemable Preferred Shares | |||||||
Temporary equity adjustment | 5,900,000 | ||||||
Series B Preferred Stock | |||||||
Redeemable Preferred Shares | |||||||
Temporary equity | 251,901,000 | 251,133,000 | |||||
Preferred dividends | 9,100,000 | 5,700,000 | 0 | ||||
Common stock dividends paid to preferred shareholders | 4,600,000 | 4,300,000 | |||||
Series B Preferred Stock rollforward | |||||||
Balance at beginning of period | 251,133,000 | ||||||
Issuance of preferred stock | 252,530,000 | ||||||
One time market-to-market adjustment | 5,914,000 | ||||||
Issuance costs | (7,527,000) | ||||||
Tax deduction - transaction cost study | 702,000 | ||||||
Accretion | 66,000 | 216,000 | |||||
Balance at end of period | 251,901,000 | 251,133,000 | |||||
Series B Preferred Stock | Franchisee | |||||||
Redeemable Preferred Shares | |||||||
Aggregate purchase price of shares | $ 2,500,000 | ||||||
Temporary equity adjustment | 300,000 | ||||||
Series B Preferred Stock | Securities Purchase Agreement | |||||||
Redeemable Preferred Shares | |||||||
Aggregate purchase price of shares | $ 50,000,000 | $ 200,000,000 | |||||
Purchase price per share | $ 1,000 | ||||||
Preferred stock dividend rate | 7.60% | 5.60% | 3.60% | ||||
Conversion rate (as a percent) | $ 50.06 | ||||||
Initial redemption term | 8 years | ||||||
Exchange Cap (as a percent) | 19.99% | ||||||
Issuance costs | 7,500,000 | ||||||
Redemption value | $ 252,500,000 | ||||||
Series B Preferred Stock | General and administrative expenses | |||||||
Redeemable Preferred Shares | |||||||
Aggregate purchase price of shares | $ 50,000,000 | ||||||
Series B Preferred Stock | General and administrative expenses | Securities Purchase Agreement | |||||||
Redeemable Preferred Shares | |||||||
Temporary equity adjustment | $ 5,600,000 |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2020 | Sep. 27, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Basic (loss) earnings per common share: | |||||||||||
Net income (loss) attributable to the Company | $ 13,167 | $ 15,708 | $ 20,614 | $ 8,443 | $ (2,142) | $ 385 | $ 8,354 | $ (1,731) | $ 57,932 | $ 4,866 | $ 2,474 |
Dividends paid to participating securities and accretion | (14,059) | (12,499) | |||||||||
Net income attributable to participating securities | (2,136) | ||||||||||
Net income (loss) attributable to common shareholders | $ 41,737 | $ (7,633) | $ 2,474 | ||||||||
Basic weighted average common shares outstanding | 32,421,000 | 31,632,000 | 32,083,000 | ||||||||
Basic earnings (loss) per common share | $ 0.29 | $ 0.35 | $ 0.49 | $ 0.15 | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ 1.29 | $ (0.24) | $ 0.08 |
Diluted (loss) earnings per common share: | |||||||||||
Net income (loss) attributable to common shareholders | $ 41,737 | $ (7,633) | $ 2,474 | ||||||||
Basic weighted average common shares outstanding | 32,421,000 | 31,632,000 | 32,083,000 | ||||||||
Dilutive effect of outstanding equity awards | 296,000 | 216,000 | |||||||||
Diluted weighted average common shares outstanding | 32,717,000 | 31,632,000 | 32,299,000 | ||||||||
Diluted earnings (loss) per common share | $ 0.28 | $ 0.35 | $ 0.48 | $ 0.15 | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ 1.28 | $ (0.24) | $ 0.08 |
Weighted average antidilutive awards excluded from computation of earnings per share | 100,000 | 0 | 1,200,000 | ||||||||
Joint ventures | |||||||||||
Basic (loss) earnings per common share: | |||||||||||
Net income (loss) attributable to the Company | $ 8,336 | $ 3,351 | $ 7,393 | ||||||||
Series B Preferred Stock | |||||||||||
Diluted (loss) earnings per common share: | |||||||||||
Weighted average antidilutive awards excluded from computation of earnings per share | 252,500,000 | 252,500,000 | |||||||||
Weighted average antidilutive awards if converted | 5,000,000 | 5,000,000 |
Fair Value Measurements and D_3
Fair Value Measurements and Disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
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 | 37,578 | 33,220 |
Measured on Recurring Basis | Level 2 | ||
Measurement of financial assets and liabilities at fair value on a recurring basis | ||
Interest rate swap liabilities | 13,452 | 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 | 37,578 | 33,220 |
Interest rate swap liabilities | $ 13,452 | $ 6,168 |
Noncontrolling Interests - Join
Noncontrolling Interests - Joint Ventures (Details) | Dec. 27, 2020entityrestaurant | Dec. 29, 2019restaurantentity |
Noncontrolling Interests | ||
Number of joint ventures | entity | 4 | 4 |
Joint ventures | ||
Noncontrolling Interests | ||
Number of Restaurants | restaurant | 188 | 192 |
Noncontrolling Interests - Inco
Noncontrolling Interests - Income Before Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2020 | Sep. 27, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Noncontrolling Interests | |||||||||||
Noncontrolling interests | $ 2,682 | $ 791 | $ 1,599 | ||||||||
Net income attributable to the Company | $ 13,167 | $ 15,708 | $ 20,614 | $ 8,443 | $ (2,142) | $ 385 | $ 8,354 | $ (1,731) | 57,932 | 4,866 | 2,474 |
Joint ventures | |||||||||||
Noncontrolling Interests | |||||||||||
Papa John's International, Inc. | 5,654 | 2,560 | 5,794 | ||||||||
Noncontrolling interests | 2,682 | 791 | 1,599 | ||||||||
Net income attributable to the Company | $ 8,336 | $ 3,351 | $ 7,393 |
Noncontrolling Interests - Chan
Noncontrolling Interests - Changes in Redeemable Noncontrolling Interests (Details) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020USD ($)item | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) | |
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 | $ 5,785 | ||
Distributions to noncontrolling interests | (2,284) | $ (870) | $ (2,406) |
Balance at the end of the period | 6,474 | 5,785 | |
Joint ventures | |||
Changes in redeemable noncontrolling interests | |||
Balance at the beginning of the period | 5,785 | 5,464 | |
Net income (loss) allocated to the redeemable noncontrolling interest from joint venture arrangements | 824 | (519) | (488) |
Contributions | 840 | ||
Distributions to noncontrolling interests | (135) | ||
Balance at the end of the period | $ 6,474 | $ 5,785 | $ 5,464 |
Divestitures - Divestitures (De
Divestitures - Divestitures (Details) | Jun. 15, 2018USD ($)restaurant | Dec. 29, 2019USD ($)restaurant | Sep. 29, 2019USD ($)restaurant | Sep. 30, 2018USD ($)restaurant | Jul. 01, 2018USD ($)restaurant | Apr. 01, 2018USD ($)restaurant | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Goodwill written off | $ 4,435,000 | ||||||||
Proceeds from divestitures of restaurants | 13,495,000 | $ 7,707,000 | |||||||
Refranchising gains (losses), net | 4,739,000 | $ (289,000) | |||||||
Stores in Macon, GA | |||||||||
Number of restaurants divested | restaurant | 19 | ||||||||
Total consideration for asset sale | $ 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 | $ 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 | $ 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 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 | $ 3,750,000 | ||||||||
Refranchising gains (losses), net | 930,000 | ||||||||
Goodwill written off | $ 600,000 | ||||||||
Stores in Beijing and Tianjin, China | |||||||||
Number of restaurants divested | restaurant | 34 | 34 | |||||||
Impairment loss | $ 1,700,000 | ||||||||
Refranchising 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. 27, 2020USD ($) | Dec. 29, 2019USD ($)restaurantitem | Dec. 30, 2018USD ($) | |
Goodwill | |||
Goodwill, Beginning Balance | $ 80,340 | $ 84,516 | |
Divestitures | (4,435) | ||
Foreign currency adjustments | 451 | 259 | |
Goodwill, Ending Balance | 80,791 | 80,340 | |
Domestic Company-owned Restaurants | |||
Goodwill | |||
Goodwill, Beginning Balance | 64,254 | 68,689 | |
Divestitures | (4,435) | ||
Goodwill, Ending Balance | 64,254 | $ 64,254 | |
Number of restaurants divested | restaurant | 46 | ||
Number of domestic markets in which restaurants divested | item | 2 | ||
International | |||
Goodwill | |||
Goodwill, Beginning Balance | 15,650 | $ 15,391 | |
Foreign currency adjustments | 451 | 259 | |
Goodwill, Ending Balance | 16,101 | 15,650 | |
Goodwill, accumulated impairment | 2,300 | 2,300 | $ 2,300 |
All others | |||
Goodwill | |||
Goodwill, Beginning Balance | 436 | 436 | |
Goodwill, Ending Balance | $ 436 | $ 436 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Debt | ||
Outstanding debt | $ 350,000 | $ 370,000 |
Unamortized debt issuance costs | (1,708) | (2,710) |
Current portion of long-term debt | (20,000) | (20,000) |
Total long-term debt, net | $ 328,292 | $ 347,290 |
Debt - Credit Agreements (Detai
Debt - Credit Agreements (Details) | 12 Months Ended | ||
Dec. 27, 2020USD ($)item$ / shares | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) | |
Debt | |||
Outstanding debt | $ 350,000,000 | $ 370,000,000 | |
Quarterly dividend paid per common share (in dollars per share) | $ / shares | $ 0.90 | ||
Dividends paid to common shareholders | $ 29,362,000 | 28,552,000 | $ 28,985,000 |
Debt issuance costs | 1,708,000 | 2,710,000 | |
PJI Facilities | |||
Debt | |||
Outstanding debt | $ 350,000,000 | ||
Number of quarters in interest margin period | item | 4 | ||
Line of credit facility, remaining availability | $ 344,200,000 | ||
Debt issuance costs | $ 1,700,000 | ||
PJI Facilities | Minimum | Modification of financial covenants beginning in the third quarter of 2018 | |||
Debt | |||
Fixed charge coverage ratio | 2.25 | ||
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 | 4.75 | ||
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 | $ 0 | |
Applicable interest rate | 2.70% | 4.10% | 3.40% |
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 | 340,000,000 | ||
Quarterly amortization payment | $ 5,000,000 |
Debt - Derivatives (Details)
Debt - Derivatives (Details) - USD ($) $ in Millions | Dec. 27, 2020 | 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 - Interest Rate Swaps (Det
Debt - Interest Rate Swaps (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Interest rate swap | Other current and long-term Liabilities | ||
Debt and Credit Arrangements | ||
Derivatives designated as hedging instruments, fair value | $ 13,452 | $ 6,168 |
Debt - Effect of Derivatives on
Debt - Effect of Derivatives on Financial Statements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Debt and Credit Arrangements | |||
Total interest expense on Consolidated Statements of Operations | $ (17,022) | $ (20,593) | $ (25,673) |
Weighted average interest rates on debt, including the impact of interest rate swap agreements | 3.80% | 4.10% | 3.90% |
Interest paid, including payments made or received under the swaps | $ 15,800 | $ 18,100 | $ 23,500 |
Interest rate swap | |||
Debt and Credit Arrangements | |||
Portion of derivative liability that would be reclassified into earnings | 13,500 | ||
Interest expense | Interest rate swap | |||
Debt and Credit Arrangements | |||
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative | (5,788) | (8,303) | 3,222 |
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income | (5,068) | 660 | (22) |
Total interest expense on Consolidated Statements of Operations | (17,022) | $ (20,593) | $ (25,673) |
Portion of derivative liability that would be reclassified into earnings | $ 7,200 | ||
Estimate of period of time over which portion of derivative liability would be reclassified into earnings | 12 months |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
Property, Plant and Equipment | |||
Property and equipment, gross | $ 692,515 | $ 676,406 | |
Accumulated depreciation and amortization | (491,620) | (464,665) | $ (438,278) |
Property and equipment, net | 200,895 | 211,741 | $ 226,894 |
Land | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 33,381 | 33,349 | |
Buildings and improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 91,335 | 91,514 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 123,167 | 121,127 | |
Equipment and other | |||
Property, Plant and Equipment | |||
Property and equipment, gross | 436,678 | 423,556 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Property and equipment, gross | $ 7,954 | $ 6,860 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Accrued Expenses and Other Current Liabilities | ||
Marketing | $ 47,885 | $ 15,930 |
Salaries, benefits and bonuses | 46,352 | 24,627 |
Insurance reserves, current | 32,947 | 30,025 |
Purchases | 16,550 | 10,768 |
Interest rate swap, current portion | 6,970 | 2,061 |
Strategic corporation reorganization costs | 4,861 | |
Deposits | 3,782 | 2,026 |
Consulting and professional fees | 3,148 | 10,667 |
Rent | 3,080 | 4,274 |
Other | 8,988 | 8,139 |
Total | $ 174,563 | $ 108,517 |
Other Long-term Liabilities (De
Other Long-term Liabilities (Details) - USD ($) $ in Thousands | Dec. 27, 2020 | Dec. 29, 2019 |
Other Long-term Liabilities | ||
Insurance reserves | $ 49,002 | $ 45,151 |
Deferred compensation plan | 35,793 | 33,220 |
Employer payroll taxes | 18,473 | |
Other | 8,096 | 6,556 |
Total | $ 111,364 | $ 84,927 |
Strategic Corporate Reorganiz_3
Strategic Corporate Reorganization for Long-term Growth (Details) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020USD ($) | Dec. 26, 2021USD ($) | Sep. 17, 2020ft² | |
New Corporate Headquarters | |||
Square footage of new leased facilities | ft² | 60,000 | ||
Restructuring costs | $ 5,985 | ||
Restructuring Reserve [Roll Forward] | |||
Charges | 6,925 | ||
Payments | (2,064) | ||
Restructuring reserve, ending balance | 4,861 | ||
Total strategic corporate reorganization costs excluding Stock-based compensation forfeitures | |||
New Corporate Headquarters | |||
Restructuring costs | 6,925 | ||
Employee severance and other employee transition costs | |||
New Corporate Headquarters | |||
Restructuring costs | 4,775 | ||
Restructuring Reserve [Roll Forward] | |||
Charges | 4,775 | ||
Payments | (160) | ||
Restructuring reserve, ending balance | 4,615 | ||
Recruiting and professional fees | |||
New Corporate Headquarters | |||
Restructuring costs | 1,598 | ||
Restructuring Reserve [Roll Forward] | |||
Charges | 1,598 | ||
Payments | (1,453) | ||
Restructuring reserve, ending balance | 145 | ||
Other costs | |||
New Corporate Headquarters | |||
Restructuring costs | 552 | ||
Restructuring Reserve [Roll Forward] | |||
Charges | 552 | ||
Payments | (451) | ||
Restructuring reserve, ending balance | 101 | ||
Stock-based compensation benefit | |||
New Corporate Headquarters | |||
Restructuring costs | $ (940) | ||
Forecast | Minimum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | $ 9,000 | ||
Forecast | Maximum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 14,000 | ||
Forecast | Employee severance and other employee transition costs | Minimum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 2,000 | ||
Forecast | Employee severance and other employee transition costs | Maximum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 3,000 | ||
Forecast | Recruitment and relocation costs | Minimum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 6,000 | ||
Forecast | Recruitment and relocation costs | Maximum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 9,000 | ||
Forecast | Other costs | Minimum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 1,000 | ||
Forecast | Other costs | Maximum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 2,000 | ||
Forecast | One-time corporate reorganization costs | Minimum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | 15,000 | ||
Forecast | One-time corporate reorganization costs | Maximum | |||
New Corporate Headquarters | |||
Reorganizational expected costs | $ 20,000 |
Income Taxes - Domestic and For
Income Taxes - Domestic and Foreign Components of Income and Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Components of income (loss) before income taxes | |||
Domestic (loss) income | $ 48,616 | $ (16,065) | $ (9,665) |
Foreign income | 26,746 | 21,111 | 16,362 |
Income before income taxes | 75,362 | 5,046 | 6,697 |
Foreign income subject to foreign withholding taxes | 14,700 | 15,600 | 12,100 |
Current: | |||
Federal | 16,400 | (2,734) | (5,262) |
Foreign | 6,047 | 5,077 | 4,736 |
State and local | 1,569 | 810 | 1,530 |
Deferred: | |||
Federal | (7,375) | (1,989) | 2,256 |
Foreign | 357 | (662) | (153) |
State and local | (2,250) | (1,113) | (483) |
Total income taxes | $ 14,748 | $ (611) | $ 2,624 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
Deferred tax assets | ||
Accrued liabilities | $ 17,740 | $ 16,686 |
Accrued bonuses | 6,155 | 2,308 |
Other liabilities and asset reserves | 18,763 | 16,244 |
Equity awards | 6,760 | 7,196 |
Lease liability | 32,374 | 30,756 |
Other | 2,563 | 2,418 |
Net operating losses | 8,139 | 8,205 |
Foreign tax credit carryforwards | 14,405 | 10,049 |
Total deferred tax assets | 106,899 | 93,862 |
Valuation allowances | (22,972) | (17,303) |
Total deferred tax assets, net of valuation allowances | 83,927 | 76,559 |
Deferred tax liabilities | ||
Deferred expenses | (9,623) | (9,521) |
Accelerated depreciation | (21,337) | (27,299) |
Goodwill | (9,801) | (9,510) |
Right-of-use asset | (32,065) | (30,257) |
Other | (1,249) | (782) |
Total deferred tax liabilities | (74,075) | (77,369) |
Net deferred tax liabilities | (810) | |
Net deferred tax assets (liabilities) | 9,852 | |
Other tax disclosures | ||
Net operating loss carryovers | 8,000 | 6,600 |
Valuation allowance related to net operating losses | $ 8,000 | 6,600 |
Expiration term of foreign tax credit carryforwards | 10 years | |
Foreign tax authority | ||
Other tax disclosures | ||
Net operating loss carryovers | $ 6,300 | 6,200 |
Valuation allowance related to net operating losses | 600 | 500 |
Foreign tax credit carryforwards | ||
Deferred tax assets | ||
Valuation allowances | $ (14,400) | $ (10,000) |
Income Taxes - Reconciliation a
Income Taxes - Reconciliation and Tax Act (Details) - USD ($) | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Income Tax Expense | |||
Tax at U.S. federal statutory rate | $ 15,826,000 | $ 1,060,000 | $ 1,406,000 |
State and local income taxes | 1,149,000 | 79,000 | 150,000 |
Foreign income taxes | 6,463,000 | 5,058,000 | 4,879,000 |
Income of consolidated partnerships attributable to noncontrolling interests | (603,000) | (177,000) | (371,000) |
Non-qualified deferred compensation plan (income) loss | (898,000) | (1,260,000) | 483,000 |
Excess tax (benefits) expense on equity awards | (2,029,000) | (212,000) | 447,000 |
Preferred stock option mark-to-market adjustment | 1,338,000 | ||
Tax credits | (6,002,000) | (6,128,000) | (6,945,000) |
Disposition of China | 4,118,000 | ||
Other | 842,000 | (369,000) | (1,543,000) |
Total income taxes | $ 14,748,000 | $ (611,000) | $ 2,624,000 |
Income Tax Rate | |||
Tax at U.S. federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State and local income taxes (as a percent) | 1.50% | 1.60% | 2.20% |
Foreign income taxes (as a percent) | 8.60% | 100.20% | 72.90% |
Income of consolidated partnerships attributable to noncontrolling interests (as a percent) | (0.80%) | (3.50%) | (5.60%) |
Non-qualified deferred compensation plan (income) loss (as a percent) | (1.20%) | (25.00%) | 7.20% |
Excess tax (benefits) expense on equity awards (as a percent) | (2.70%) | (4.20%) | 6.70% |
Preferred stock option mark-to-market adjustment (as a percent) | 26.50% | ||
Tax credits (as a percent) | (8.00%) | (121.40%) | (103.70%) |
Disposition of China (as a percent) | 61.50% | ||
Other (as a percent) | 1.10% | (7.30%) | (23.00%) |
Total (as a percent) | 19.60% | (12.10%) | 39.20% |
Income taxes (received) paid | $ 19,300,000 | $ (6,200,000) | $ 14,000,000 |
Decrease in liability for unrecognized tax benefits resulting from finalization of current examinations and other issues in the next 12 months | $ 140,000 |
Income Taxes - Tax Benefits (De
Income Taxes - Tax Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
Income Taxes | ||
Balance at the beginning of the period | $ 1,579,000 | $ 2,023,000 |
Additions for tax positions of prior years | 60,000 | 179,000 |
Reductions for tax positions of prior years | (426,000) | (623,000) |
Reductions for lapse of statute of limitations | (183,000) | |
Balance at the end of the period | 1,030,000 | 1,579,000 |
Interest expense (benefit) included in income tax expense | 18,000 | 11,000 |
Income tax expense, accrued interest and penalties | $ 136,000 | $ 154,000 |
Related Party Transactions - Fr
Related Party Transactions - Franchisees (Details) | Jun. 11, 2019USD ($)shares | May 27, 2019USD ($)restaurant | Dec. 31, 2020USD ($) | Dec. 31, 2020CAD ($) | Dec. 27, 2020 |
Related party transactions | |||||
Related Party Restricted Stock Units Shares Issued | shares | 87,136 | ||||
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 | ||||
Papa John's Foundation for Building Community | |||||
Related party transactions | |||||
The amount of donation for every pizza sold in the United States of America | $ 1 | ||||
The amount of donation for every pizza sold in Canada. | $ 1 |
Litigation, Commitments and C_2
Litigation, Commitments and Contingencies - Durling (Details) - Pending Litigation | Dec. 27, 2020USD ($) | 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 ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Stock-based employee compensation expense | $ 16,300 | $ 15,300 | $ 9,900 |
Unrecognized compensation cost related to nonvested option awards and restricted stock | 16,000 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock, current | 10,100 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock to be recognized in two years | 4,700 | ||
Unrecognized compensation cost related to nonvested option awards and restricted stock to be recognized in three years | $ 1,200 | ||
Exercise of stock options (in shares) | 541,000 | 448,000 | 75,000 |
Total intrinsic value of the options exercised | $ 13,800 | $ 10,600 | $ 1,500 |
Cash received upon exercise of stock options | $ 30,622 | $ 16,010 | $ 2,699 |
Omnibus Incentive 2018 Plan | |||
Equity Compensation | |||
Shares of common stock authorized for issuance | 4,700,000 | ||
Shares of common stock available for future issuance | 4,700,000 | ||
Omnibus Incentive 2011 Plan | |||
Equity Compensation | |||
Shares of common stock available for future issuance | 5,900,000 | ||
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. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Number of Options | |||
Number of Options, Outstanding (in shares) | 1,205,000 | ||
Number of Options, Granted (in shares) | 0 | 353,000 | 456,000 |
Number of Options, Exercised (in shares) | (541,000) | (448,000) | (75,000) |
Number of Options, Cancelled (in shares) | (100,000) | ||
Number of Options, Outstanding (in shares) | 564,000 | 1,205,000 | |
Number of Options, Exercisable (in shares) | 337,000 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 55.67 | ||
Weighted Average Exercise Price, Exercised (in dollars per share) | 56.73 | ||
Weighted Average Exercise Price, Cancelled (in dollars per share) | 54.70 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | 54.82 | $ 55.67 | |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 59.31 | ||
Options, Additional Disclosures | |||
Weighted Average Remaining Contractual Term, Outstanding | 6 years 6 months 29 days | ||
Weighted Average Remaining Contractual Term, Exercisable | 5 years 8 months 4 days | ||
Aggregate Intrinsic Value, Outstanding | $ 18,453 | ||
Aggregate Intrinsic Value, Exercisable | $ 9,512 |
Equity Compensation - Fair Valu
Equity Compensation - Fair Value (Details) - Options | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Assumptions (weighted average): | ||
Risk-free interest rate (as a percent) | 2.50% | 2.70% |
Expected dividend yield (as a percent) | 2.10% | 1.50% |
Expected volatility (as a percent) | 31.20% | 27.60% |
Expected term (in years) | 5 years 8 months 12 days | 5 years 7 months 6 days |
Equity Compensation - Vesting (
Equity Compensation - Vesting (Details) - $ / shares | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Weighted average grant-date fair values of options granted | $ 11.69 | $ 15.27 | |
Options granted, shares | 0 | 353,000 | 456,000 |
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. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Equity Compensation | |||
Award vesting period, in years | 3 years | ||
Restricted Stock | |||
Equity Compensation | |||
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 61.31 | ||
Restricted Shares, Granted | 314,000 | ||
Restricted Stock Units | |||
Equity Compensation | |||
Restricted Shares, Granted | 15,000 | 113,000 | |
Restricted Stock Units | Minimum | |||
Equity Compensation | |||
Award vesting period, in years | 1 year | 1 year | |
Restricted Stock Units | Maximum | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | 3 years | |
Time based restricted stock | |||
Equity Compensation | |||
Award vesting period, in years | 3 years | 3 years | 3 years |
Restricted Shares, Granted | 207,000 | 212,000 | 260,000 |
Dividends declared to holders of time-based restricted stock (in dollars) | $ 366,000 | $ 310,000 | $ 185,000 |
Dividends declared to holders of time-based restricted stock (in dollars per share) | $ 0.90 | $ 0.90 | $ 0.90 |
Performance based restricted stock units | |||
Equity Compensation | |||
Risk-free interest rate (as a percent) | 0.90% | 2.50% | |
Expected volatility (as a percent) | 36.30% | 33.90% | |
Award vesting period, in years | 3 years | 3 years | |
Award expiration period, in years | 10 years | ||
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 59.52 | $ 44.95 | |
Performance based restricted stock units | Executive Management | |||
Equity Compensation | |||
Restricted Shares, Granted | 92,000 | 89,000 | 70,000 |
Equity Compensation - RSU Rollf
Equity Compensation - RSU Rollforward (Details) - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 27, 2020 | Dec. 29, 2019 | |
Restricted Stock | ||
Shares | ||
Restricted Shares, Beginning Balance | 616 | |
Restricted Shares, Granted | 314 | |
Restricted Shares, Forfeited | (64) | |
Restricted Shares, Vested | (199) | |
Restricted Shares, Ending Balance | 667 | 616 |
Weighted Average Grant Date Fair Value | ||
Weighted Average Grant-Date Fair Value, Beginning Balance (in dollars per share) | $ 50.90 | |
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | 61.31 | |
Weighted Average Grant-Date Fair Value, Forfeited (in dollars per share) | 52.44 | |
Weighted Average Grant-Date Fair Value, Vested (in dollars per share) | 54.63 | |
Weighted Average Grant-Date Fair Value, Ending Balance (in dollars per share) | 54.33 | $ 50.90 |
Performance based restricted stock units | ||
Weighted Average Grant Date Fair Value | ||
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | $ 59.52 | $ 44.95 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Employee Benefit Plans | |||
Deferred compensation plan assets, noncurrent | $ 37,600 | $ 33,200 | |
Deferred compensation liability classified, noncurrent | $ 35,793 | $ 33,220 | |
Employer discretionary matching contribution made to 401(k) plan and non-qualified deferred compensation plan, percentage | 2.10% | 2.10% | 1.50% |
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 | $ 1,800 | $ 1,500 | $ 1,100 |
Segment Information - Concentra
Segment Information - Concentration (Details) | 12 Months Ended |
Dec. 27, 2020segmententity | |
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. 27, 2020 | Sep. 27, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Segment Information | |||||||||||
Total revenues | $ 469,811 | $ 472,941 | $ 460,623 | $ 409,859 | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 1,813,234 | $ 1,619,248 | $ 1,662,871 |
Depreciation and amortization | 49,705 | 47,281 | 46,403 | ||||||||
Operating income | 19,698 | $ 24,549 | $ 30,534 | $ 15,472 | (132) | $ 4,927 | $ 14,231 | $ 5,509 | 90,253 | 24,535 | 31,553 |
Refranchising gains (losses), net | 4,739 | (289) | |||||||||
Property and equipment, gross | 692,515 | 676,406 | 692,515 | 676,406 | |||||||
Accumulated depreciation and amortization | (491,620) | (464,665) | (491,620) | (464,665) | (438,278) | ||||||
Property and equipment, net | 200,895 | 211,741 | 200,895 | 211,741 | 226,894 | ||||||
Expenditures for property and equipment | 35,652 | 37,711 | 42,028 | ||||||||
China Operations | |||||||||||
Segment Information | |||||||||||
Refranchising loss | 1,900 | ||||||||||
Domestic Company-owned restaurants | |||||||||||
Segment Information | |||||||||||
Total revenues | 700,757 | 652,053 | 692,380 | ||||||||
Refranchising gains (losses), net | 4,700 | 1,600 | |||||||||
North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | 96,732 | 71,828 | 79,293 | ||||||||
North America commissaries | |||||||||||
Segment Information | |||||||||||
Total revenues | 680,793 | 612,652 | 609,866 | ||||||||
International | |||||||||||
Segment Information | |||||||||||
Total revenues | 123,963 | 102,924 | 110,349 | ||||||||
All others | |||||||||||
Segment Information | |||||||||||
Total revenues | 210,989 | 179,791 | 170,983 | ||||||||
Operating segments | |||||||||||
Segment Information | |||||||||||
Total revenues | 1,813,234 | 1,619,248 | 1,662,871 | ||||||||
Operating segments | Domestic Company-owned restaurants | |||||||||||
Segment Information | |||||||||||
Total revenues | 700,757 | 652,053 | 692,380 | ||||||||
Depreciation and amortization | 11,905 | 12,883 | 15,411 | ||||||||
Operating income | 37,049 | 33,957 | 18,988 | ||||||||
Property and equipment, gross | 228,077 | 221,420 | 228,077 | 221,420 | 236,526 | ||||||
Expenditures for property and equipment | 12,848 | 8,811 | 13,568 | ||||||||
Operating segments | North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | 96,732 | 71,828 | 79,293 | ||||||||
Operating income | 89,801 | 64,362 | 70,732 | ||||||||
Operating segments | North America commissaries | |||||||||||
Segment Information | |||||||||||
Total revenues | 680,793 | 612,652 | 609,866 | ||||||||
Depreciation and amortization | 9,660 | 8,131 | 7,397 | ||||||||
Operating income | 33,185 | 30,690 | 27,961 | ||||||||
Property and equipment, gross | 145,282 | 142,946 | 145,282 | 142,946 | 140,309 | ||||||
Expenditures for property and equipment | 4,447 | 3,773 | 3,994 | ||||||||
Operating segments | International | |||||||||||
Segment Information | |||||||||||
Total revenues | 150,939 | 126,077 | 131,268 | ||||||||
Depreciation and amortization | 1,975 | 1,722 | 1,696 | ||||||||
Operating income | 24,034 | 18,738 | 14,203 | ||||||||
Property and equipment, gross | 13,604 | 16,031 | 13,604 | 16,031 | 17,218 | ||||||
Expenditures for property and equipment | 1,065 | 1,143 | 986 | ||||||||
Operating segments | All others | |||||||||||
Segment Information | |||||||||||
Total revenues | 184,013 | 156,638 | 150,064 | ||||||||
Depreciation and amortization | 10,254 | 10,738 | 8,513 | ||||||||
Operating income | 7,043 | (1,966) | (5,716) | ||||||||
Property and equipment, gross | 91,724 | 84,167 | 91,724 | 84,167 | 71,880 | ||||||
Expenditures for property and equipment | 11,700 | 11,541 | 13,438 | ||||||||
Elimination | |||||||||||
Segment Information | |||||||||||
Total revenues | (279,196) | (278,332) | (276,639) | ||||||||
Operating income | (790) | (966) | (1,005) | ||||||||
Elimination | North America franchising | |||||||||||
Segment Information | |||||||||||
Total revenues | (3,229) | (2,782) | (2,965) | ||||||||
Elimination | North America commissaries | |||||||||||
Segment Information | |||||||||||
Total revenues | (192,332) | (187,073) | (201,325) | ||||||||
Elimination | International | |||||||||||
Segment Information | |||||||||||
Total revenues | (191) | (283) | |||||||||
Elimination | All others | |||||||||||
Segment Information | |||||||||||
Total revenues | (83,635) | (88,286) | (72,066) | ||||||||
Unallocated corporate | |||||||||||
Segment Information | |||||||||||
Depreciation and amortization | 15,911 | 13,807 | 13,386 | ||||||||
Operating income | (100,069) | (120,280) | (93,610) | ||||||||
Special charges | 14,200 | 25,300 | |||||||||
Property and equipment, gross | $ 213,828 | $ 211,842 | 213,828 | 211,842 | 199,239 | ||||||
Expenditures for property and equipment | $ 5,592 | $ 12,443 | $ 10,042 |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2020 | Sep. 27, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Revenue disaggregation | |||||||||||
Total revenues | $ 469,811 | $ 472,941 | $ 460,623 | $ 409,859 | $ 417,514 | $ 403,706 | $ 399,623 | $ 398,405 | $ 1,813,234 | $ 1,619,248 | $ 1,662,871 |
Domestic Company-owned restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 700,757 | 652,053 | 692,380 | ||||||||
North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 96,732 | 71,828 | 79,293 | ||||||||
North America commissaries | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 680,793 | 612,652 | 609,866 | ||||||||
International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 123,963 | 102,924 | 110,349 | ||||||||
International. | International other revenue | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (26,976) | (23,344) | (21,202) | ||||||||
International. | International eliminations | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 191 | 283 | |||||||||
All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 210,989 | 179,791 | 170,983 | ||||||||
All others | International other revenue | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 26,976 | 23,344 | 21,202 | ||||||||
All others | International eliminations | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (191) | (283) | |||||||||
Operating segments | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 1,813,234 | 1,619,248 | 1,662,871 | ||||||||
Operating segments | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 700,757 | 652,053 | 698,617 | ||||||||
Operating segments | Franchise royalties and fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 139,881 | 113,355 | 118,246 | ||||||||
Operating segments | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 957,168 | 863,904 | 879,315 | ||||||||
Operating segments | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 294,624 | 268,268 | 243,332 | ||||||||
Operating segments | Domestic Company-owned restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 700,757 | 652,053 | 692,380 | ||||||||
Operating segments | Domestic Company-owned restaurants | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 700,757 | 652,053 | 692,380 | ||||||||
Operating segments | North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 96,732 | 71,828 | 79,293 | ||||||||
Operating segments | North America franchising | Franchise royalties and fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 99,961 | 74,610 | 82,258 | ||||||||
Operating segments | North America commissaries | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 680,793 | 612,652 | 609,866 | ||||||||
Operating segments | North America commissaries | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 873,125 | 799,725 | 811,191 | ||||||||
Operating segments | International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 150,939 | 126,077 | 131,268 | ||||||||
Other revenue from marketing fund contributions and sublease rental income | 27,000 | 23,200 | 20,900 | ||||||||
Operating segments | International. | Company-owned Restaurants | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 6,237 | ||||||||||
Operating segments | International. | Franchise royalties and fees | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 39,920 | 38,745 | 35,988 | ||||||||
Operating segments | International. | Commissary Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 84,043 | 64,179 | 68,124 | ||||||||
Operating segments | International. | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 26,976 | 23,344 | 21,202 | ||||||||
Operating segments | All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 184,013 | 156,638 | 150,064 | ||||||||
Operating segments | All others | Other Sales | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | 267,648 | 244,924 | 222,130 | ||||||||
Elimination | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (279,196) | (278,332) | (276,639) | ||||||||
Elimination | North America franchising | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (3,229) | (2,782) | (2,965) | ||||||||
Elimination | North America commissaries | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (192,332) | (187,073) | (201,325) | ||||||||
Elimination | International. | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | (191) | (283) | |||||||||
Elimination | All others | |||||||||||
Revenue disaggregation | |||||||||||
Total revenues | $ (83,635) | $ (88,286) | $ (72,066) |
Quarterly Data - Unaudited, i_3
Quarterly Data - Unaudited, in Thousands, except Per Share Data (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2020 | Sep. 27, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Quarterly Data - Unaudited, in Thousands, except Per Share Data | |||||||||||
Total revenues | $ 469,811,000 | $ 472,941,000 | $ 460,623,000 | $ 409,859,000 | $ 417,514,000 | $ 403,706,000 | $ 399,623,000 | $ 398,405,000 | $ 1,813,234,000 | $ 1,619,248,000 | $ 1,662,871,000 |
Operating income (loss) | 19,698,000 | 24,549,000 | 30,534,000 | 15,472,000 | (132,000) | 4,927,000 | 14,231,000 | 5,509,000 | 90,253,000 | 24,535,000 | 31,553,000 |
Net income (loss) attributable to the Company | $ 13,167,000 | $ 15,708,000 | $ 20,614,000 | $ 8,443,000 | $ (2,142,000) | $ 385,000 | $ 8,354,000 | $ (1,731,000) | $ 57,932,000 | $ 4,866,000 | $ 2,474,000 |
Basic earnings (loss) per common share | $ 0.29 | $ 0.35 | $ 0.49 | $ 0.15 | $ (0.18) | $ (0.10) | $ 0.15 | $ (0.12) | $ 1.29 | $ (0.24) | $ 0.08 |
Diluted (loss) earnings per common share | 0.28 | 0.35 | 0.48 | 0.15 | (0.18) | (0.10) | 0.15 | (0.12) | 1.28 | (0.24) | 0.08 |
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 | $ 0.90 |
Special items charges | $ 6,000,000 | $ 2,800,000 | $ 400,000 | $ 11,000,000 | |||||||
After tax loss from Special charges | $ 4,000,000 | $ 2,200,000 | $ 400,000 | $ 9,800,000 | |||||||
Unfavorable impact on diluted EPS from Special charges | $ (0.12) | $ (0.07) | $ (0.01) | $ (0.31) | |||||||
Gain related to refranchising of restaurants | $ 2,900,000 | $ 1,700,000 | |||||||||
After tax gain related to refranchising of restaurants | $ 2,200,000 | $ 1,300,000 | |||||||||
Favorable impact on diluted EPS related to refranchising of restaurants (per share) | $ 0.07 | $ 0.04 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 | |
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | $ 28,216 | $ 15,757 | $ 10,733 |
Charged to costs and expenses | 9,440 | 5,095 | |
Additions | 3,019 | ||
Deductions | (71) | ||
Balance at End of Year | 28,216 | 15,757 | |
Reserve for uncollectible accounts receivable | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 7,341 | 4,205 | 2,271 |
Charged to costs and expenses | 3,216 | 7,242 | |
Deductions | (80) | (5,308) | |
Balance at End of Year | 7,341 | 4,205 | |
Reserve for franchisee notes receivable | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 3,572 | 3,369 | 1,047 |
Recovered from costs and expenses | (77) | (393) | |
Additions | 280 | 2,715 | |
Balance at End of Year | 3,572 | 3,369 | |
Valuation allowance on deferred tax assets | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Year | 17,303 | 8,183 | 7,415 |
Charged to costs and expenses | 1,313 | 6,301 | |
Recovered from costs and expenses | (1,754) | ||
Additions | 4,356 | 2,819 | 2,522 |
Balance at End of Year | $ 22,972 | $ 17,303 | $ 8,183 |